-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, N5n7Kwi0qQN4ttE1UwJljnCR/3lkbtSZ74i30hJMk1LALBKXUMYLAcJ8/z5QB5CT zHwg+ZyC5/CFuXQswF1LiA== 0000950152-94-000086.txt : 19940214 0000950152-94-000086.hdr.sgml : 19940214 ACCESSION NUMBER: 0000950152-94-000086 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCASTER COLONY CORP CENTRAL INDEX KEY: 0000057515 STANDARD INDUSTRIAL CLASSIFICATION: 3060 IRS NUMBER: 131955943 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 000-04065 FILM NUMBER: 94505785 BUSINESS ADDRESS: STREET 1: 37 W BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 10-Q 1 LANCASTER COLONY CORP. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 0-4065-1 LANCASTER COLONY CORPORATION (Exact name of registrant as specified in its charter) OHIO 13-1955943 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 37 WEST BROAD STREET, COLUMBUS, OHIO 43215 (Address of principal executive offices) (Zip Code) 614-224-7141 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- As of December 31, 1993, there were 22,668,616 shares of common stock, no par value per share, outstanding. 1 of 9 2
LANCASTER COLONY CORPORATION AND SUBSIDIARIES INDEX Page No. -------- Part I. Financial Information Consolidated Condensed Balance Sheets - December 31, 1993 and June 30, 1993 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended December 31, 1993 and 1992 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended December 31, 1993 and 1992 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of the Results of Operations and Financial Condition 7-8 Part II. Other Information Item 1 - Legal Proceedings 8 Item 6 - Exhibits and Reports on Form 8-K 8 Signatures 9
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS December 31 June 30 1993 1993 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and equivalents $ 20,466,000 $ 16,502,000 Receivables 83,539,000 70,844,000 Less allowance for doubtful accounts 3,302,000 2,870,000 ------------ ------------ Receivables - net 80,237,000 67,974,000 Inventories: Raw materials and supplies 25,749,000 22,331,000 Finished goods and work in process 74,886,000 72,900,000 ------------ ------------ Total inventories 100,635,000 95,231,000 Prepaid expenses and other current assets 9,087,000 8,483,000 ------------ ------------ Total current assets 210,425,000 188,190,000 Property, Plant and Equipment - At cost 256,972,000 249,801,000 Less Accumulated Depreciation 159,644,000 151,204,000 ------------ ------------ Property, plant and equipment - net 97,328,000 98,597,000 Other Assets 18,287,000 15,263,000 ------------ ------------ Total Assets $326,040,000 $302,050,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 1,648,000 $ 1,797,000 Accounts payable 28,315,000 26,334,000 Accrued liabilities 37,384,000 33,411,000 ------------ ------------ Total current liabilities 67,347,000 61,542,000 Long-Term Debt - Less current portion 33,725,000 34,586,000 Other Noncurrent Liabilities 8,968,000 8,852,000 Deferred Income Taxes 3,815,000 5,060,000 Shareholders' Equity: Preferred stock - authorized 2,650,000 shares issuable in series; Class A - $1.00 par value, authorized 350,000 shares; Class B and C - no par value, authorized 1,150,000 shares each; outstanding - none Common stock - authorized 35,000,000 shares; issued December 31, 1993 - no par value - 22,881,616 shares; June 30, 1993 - no par value - 22,830,680 shares 22,441,000 20,572,000 Retained earnings 202,024,000 179,835,000 Foreign currency translation adjustment 537,000 605,000 ------------ ------------ Total 225,002,000 201,012,000 Less: Common stock in treasury, at cost December 31, 1993 - 213,000 shares; June 30, 1993 - 114,000 shares 7,703,000 3,888,000 Amount due from ESOP 5,114,000 5,114,000 ------------ ------------ Total shareholders' equity 212,185,000 192,010,000 ------------ ------------ Total Liabilities and Shareholders' Equity $326,040,000 $302,050,000 ============ ============ See Notes to Consolidated Condensed Financial Statements
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Six Months Ended December 31 December 31 1993 1992 1993 1992 Net Sales $192,757,000 $170,783,000 $365,578,000 $323,075,000 Cost of Sales 130,555,000 114,823,000 248,968,000 219,535,000 ------------ ------------ ------------ ------------ Gross Margin 62,202,000 55,960,000 116,610,000 103,540,000 Selling, General and Administrative Expenses 36,457,000 35,365,000 68,305,000 64,893,000 ------------ ------------ ------------ ------------ Operating Income 25,745,000 20,595,000 48,305,000 38,647,000 Other Income (Expense): Interest expense (802,000) (990,000) (1,496,000) (1,979,000) Interest income and other - net 184,000 (68,000) 203,000 (19,000) ------------ ------------ ----------- ------------ Income Before Income Taxes 25,127,000 19,537,000 47,012,000 36,649,000 Taxes Based on Income 9,610,000 7,500,000 18,475,000 14,071,000 ------------ ------------ ------------ ------------ Net Income $ 15,517,000 $ 12,037,000 $ 28,537,000 $ 22,578,000 ============ ============ ============ ============ Net Income Per Common Share $ .68 $ .53 $1.25 $ .99 Cash Dividends Per Common Share $ .15 $ .13 $ .28 $ .24 Weighted Average Common Shares Outstanding 22,762,669 22,864,031 22,757,640 22,861,215 ============ ============ ============ ============ See Notes to Consolidated Condensed Financial Statements
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended December 31 1993 1992 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $28,537,000 $22,578,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,921,000 10,780,000 Deferred income taxes and other noncash charges (329,000) (1,012,000) Gain on sale of property (18,000) (17,000) Changes in operating assets and liabilities: Receivables (12,263,000) (7,949,000) Inventories (3,739,000) 4,499,000 Prepaid expenses and other current assets (604,000) (2,327,000) Accounts payable 1,981,000 2,285,000 Accrued liabilities 3,973,000 (1,019,000) ----------- ----------- Net cash provided by operating activities 29,459,000 27,818,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition (5,438,000) Payments on property additions (9,390,000) (9,660,000) Proceeds from sale of property 90,000 29,000 Other - net (1,456,000) (625,000) ----------- ----------- Net cash used in investing activities (16,194,000) (10,256,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (3,815,000) Payment of dividends (6,348,000) (5,470,000) Payments on long-term debt (1,010,000) (1,604,000) Common stock issued upon exercise of stock options including related tax benefits 1,869,000 220,000 Payments on short-term bank loans (7,500,000) ----------- ----------- Net cash used in financing activities (9,304,000) (14,354,000) ----------- ----------- Effect of exchange rate changes on cash 3,000 (113,000) ----------- ----------- Net change in cash and equivalents 3,964,000 3,095,000 Cash and equivalents at beginning of year 16,502,000 7,418,000 ----------- ----------- Cash and equivalents at end of period $20,466,000 $10,513,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 1,484,000 $ 1,963,000 =========== =========== Income taxes $18,992,000 $17,912,000 =========== =========== See Notes to Consolidated Condensed Financial Statements
5 of 9 6 LANCASTER COLONY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 1993 AND 1992 (1) The interim consolidated condensed financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim consolidated condensed financial statements are considered to be of a normal recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended June 30, 1993. (2) 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. (3) On April 15, 1993, a four-for-three stock split was effected whereby one additional common share was issued for each three shares outstanding to shareholders of record on March 15, 1993. Accordingly, all per share data and the weighted average common shares outstanding for the three and six month periods ended December 31, 1992 in the accompanying consolidated condensed financial statements have been retroactively adjusted for this split. (4) As approved by its shareholders, the Company has an incentive stock option plan by which 2,718,751 common shares may be issued under options granted pursuant to terms of the plan. As of December 31, 1993, employee options for 1,975,702 shares have been granted and 1,712,483 have been exercised. (5) In July 1993, the Company acquired substantially all of the net operating assets and customer base of Romanoff International, a specialty food marketer of caviar and other specialty food products, for cash of approximately $5,438,000. Its results of operations have been included in the accompanying consolidated condensed financial statements since the date of acquisition and are immaterial in relation to the consolidated totals. 6 of 9 7 LANCASTER COLONY CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE PERIODS ENDED DECEMBER 31, 1993 AND 1992 RESULTS OF OPERATIONS Net sales of $192,757,000 and $365,578,000 for the three and six months ended December 31, 1993 increased 12.9% and 13.2%, respectively, over the comparable periods of 1992. Cyclical improvements in domestic new vehicle sales led to increased sales of the Automotive segment's products, both with respect to automotive floormats sold to original equipment manufacturers and aftermarket items associated with light trucks and vans. Despite increased market competition among certain product lines, sales of the Specialty Foods segment continued to achieve growth during these periods primarily as a result of greater market penetration and the impact of recently introduced products. Similar factors affecting the sales of candle products contributed to improvement in the net sales of the Glassware and Candles segment. The Company's consolidated gross margin percentages were 32.3% and 31.9% for the respective three-and six-month periods ended December 31, 1993, which overall are comparable to the related periods of 1992 of 32.8% and 32.0%. Consolidated gross margins in 1993 have benefitted from the Glassware and Candles segment experiencing a favorable sales mix and greater manufacturing efficiencies. Specialty Foods margins were adversely affected in the most recent quarter by increases in certain food commodity costs as caused by the adverse weather conditions experienced in the summer of 1993. This impact was most significant to the Specialty Foods segment in its effect on the cost of soybean oil, a primary ingredient in several product lines of this segment. Where applicable, sales prices are being adjusted so as to at least partially offset the effects of the increased production costs. Interest expense totalled $802,000 and $1,496,000 for the three and six months ended December 31, 1993, respectively, a decrease from the prior year's comparable totals of $990,000 and $1,979,000. This improvement reflects lower average outstanding borrowings. The overall effective income tax rate for the three months ended December 31, 1993 was 38.2% compared to 38.4% in 1992. For the 1993 six-month period, this percentage was 39.3% compared to 38.4% in 1992. The latter fluctuation results primarily from the effects of the Omnibus Budget Reconciliation Act of 1993 which was enacted in August 1993. This legislation increased the Company's Federal statutory rate from 34% to 35% during the current year and future periods. Additionally, the overall effective rate increased for the six months due to a charge of $400,000 being provided in August for the cumulative effect of the Act's retroactive provisions to July 1, 1993. The foregoing factors combined to permit the Company's net income to increase by 28.9% and 26.4% to $15,517,000 and $28,537,000 for the respective 1993 periods compared to the 1992 comparable totals of $12,037,000 and $22,578,000. FINANCIAL CONDITION As of December 31, 1993, the Company's net working capital totalled $143,078,000 compared to $126,648,000 at June 30. The current ratio has remained unchanged between these two dates at approximately 3.1:1. Net accounts receivable increased $12,263,000 since June 30 to $80,237,000, which is reflective of the increase in sales which occurred in the quarter ending December 31. 7 of 9 8 For the six months ended December 31, 1993, net cash provided by operating activities totalled $29,459,000 compared to $27,818,000 in the corresponding period of 1992. Non-operating uses of cash included $5,438,000 for the July 1993 acquisition of the net operating assets and customer base of a specialty foods marketer. Additionally, the current year cash dividends on the Company's common stock increased 16.1%, which primarily reflects a higher effective dividend rate. Capital expenditures through December 1993 of $9,390,000 are comparable to 1992 levels. Including both short- and long-term debt within total capitalization, such debt was 14.3% of total capitalization at December 31 compared to 15.9% as of June 30. The Company continues to maintain discretionary bank lines of credit in excess of $150,000,000 as a contingent source of short-term financing for future working capital or other temporary cash requirements. PART II. OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS In its Annual Report on Form 10-K for the fiscal year ended June 30, 1993, the registrant reported that the United States had filed an action against it and Pretty Products, Inc. ("Pretty Products") pursuant to Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") seeking recovery of response costs incurred or to be incurred by the United States Environmental Protection Agency ("U.S. EPA") in connection with the clean-up of the Coshocton City Landfill. The litigation, which was expected to come to trial during the first half of 1994, has been temporarily halted to enable the parties to pursue settlement discussions. The parties have reached agreement on certain key issues but no binding settlement agreement or consent decree has been executed. The parties have informed the Court that they anticipate submitting a proposed consent decree during 1994. It remains the opinion of management that the ultimate resolution of this matter will not have a material adverse affect on the registrant's financial condition or results of operations. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (b) Reports on Form 8-K - There were no reports filed on Form 8-K for the three months ended December 31, 1993. 8 of 9 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LANCASTER COLONY CORPORATION Date: February 9, 1994 BY: /S/ John B. Gerlach ------------------------------ ---------------------------- JOHN B. GERLACH President and Chief Financial Officer Date: February 9, 1994 BY: /S/ John L. Boylan ------------------------------ ---------------------------- JOHN L. BOYLAN Treasurer and Assistant Secretary 9 of 9 -----END PRIVACY-ENHANCED MESSAGE-----