-----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, bLNTJmcYBwLTH11cYL2kexLKE9fVtYcbWOxp8/TfPK1IZXjyRjUaPnRzdb4k04rh d3AwZwQCqS6dn6Kk12Tixg== 0000950152-95-000150.txt : 19950515 0000950152-95-000150.hdr.sgml : 19950515 ACCESSION NUMBER: 0000950152-95-000150 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCASTER COLONY CORP CENTRAL INDEX KEY: 0000057515 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 131955943 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04065 FILM NUMBER: 95509392 BUSINESS ADDRESS: STREET 1: 37 W BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 10-Q 1 LANCASTER COLONY CORPORATION 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, 1994 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, 1994, there were approximately 29,848,000 shares of common stock, no par value per share, outstanding. 1 of 10 2 LANCASTER COLONY CORPORATION AND SUBSIDIARIES INDEX
Page No. -------- Part I. Financial Information Consolidated Condensed Balance Sheets - December 31, 1994 and June 30, 1994 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended December 31, 1994 and 1993 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended December 31, 1994 and 1993 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 4 - Submission of Matters to a Vote of Security Holders 9 Item 6 - Exhibits and Reports on Form 8-K 9 Signatures 9 Exhibit 27 - Financial Data Schedule 10
2 of 10 3 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
December 31 June 30 1994 1994 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and equivalents $ 15,023,000 $ 30,423,000 Receivables 109,775,000 83,076,000 Less allowance for doubtful accounts 3,002,000 2,339,000 ------------ ------------ Receivables - net 106,773,000 80,737,000 Inventories: Raw materials and supplies 34,417,000 27,614,000 Finished goods and work in process 87,159,000 90,034,000 ------------ ------------ Total inventories 121,576,000 117,648,000 Prepaid expenses and other current assets 12,065,000 8,995,000 ------------ ------------ Total current assets 255,437,000 237,803,000 Property, Plant and Equipment - At cost 273,423,000 264,697,000 Less Accumulated Depreciation 168,666,000 163,127,000 ------------ ------------ Property, plant and equipment - net 104,757,000 101,570,000 Other Assets 15,389,000 16,072,000 ------------ ------------ Total Assets $375,583,000 $355,445,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 1,200,000 $ 1,301,000 Accounts payable 36,934,000 31,054,000 Accrued liabilities 43,809,000 41,902,000 ------------ ------------ Total current liabilities 81,943,000 74,257,000 Long-Term Debt - Less current portion 32,244,000 32,933,000 Other Noncurrent Liabilities 8,158,000 8,093,000 Deferred Income Taxes 1,832,000 3,315,000 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, 1994 - no par value - 30,659,000 shares; June 30, 1994 - no par value - 22,977,000 shares 26,081,000 25,437,000 Retained earnings 253,928,000 226,412,000 Foreign currency translation adjustment 409,000 440,000 ------------ ------------ Total 280,418,000 252,289,000 Less: Common stock in treasury, at cost December 31, 1994 - 811,000 shares; June 30, 1994 - 303,000 shares 25,176,000 11,606,000 Amount due from ESOP 3,836,000 3,836,000 ------------ ------------ Total shareholders' equity 251,406,000 236,847,000 ------------ ------------ Total Liabilities and Shareholders' Equity $375,583,000 $355,445,000 ============ ============ See Notes to Consolidated Condensed Financial Statements
3 of 10 4 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended December 31 December 31 1994 1993 1994 1993 ------------ ------------ ------------ ------------ Net Sales $225,248,000 $192,757,000 $414,378,000 $365,578,000 Cost of Sales 155,304,000 130,555,000 287,418,000 248,968,000 ------------ ------------ ------------ ------------ Gross Margin 69,944,000 62,202,000 126,960,000 116,610,000 Selling, General and Administrative Expenses 36,591,000 36,457,000 68,165,000 68,305,000 ------------ ------------ ------------ ------------ Operating Income 33,353,000 25,745,000 58,795,000 48,305,000 Other Income (Expense): Interest expense (673,000) (802,000) (1,388,000) (1,496,000) Interest income and other - net (183,000) 184,000 226,000 203,000 ------------ ------------ ------------ ------------ Income Before Income Taxes 32,497,000 25,127,000 57,633,000 47,012,000 Taxes Based on Income 12,516,000 9,610,000 22,332,000 18,475,000 ------------ ------------ ------------ ------------ Net Income $ 19,981,000 $ 15,517,000 $ 35,301,000 $ 28,537,000 ============ ============ ============ ============ Net Income Per Common Share $ .66 $ .51 $1.17 $ .94 Cash Dividends Per Common Share $ .14 $ .1125 $ .26 $ .21 Weighted Average Common Shares Outstanding 30,082,000 30,350,000 30,168,000 30,344,000 ============ ============ ============ ============ See Notes to Consolidated Condensed Financial Statements
4 of 10 5 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended December 31 1994 1993 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $35,301,000 $28,537,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,031,000 11,921,000 Deferred income taxes and other noncash charges (2,740,000) (329,000) Loss (gain) on sale of property 195,000 (18,000) Changes in operating assets and liabilities: Receivables (26,036,000) (12,263,000) Inventories (3,928,000) (3,739,000) Prepaid expenses and other current assets (1,725,000) (604,000) Accounts payable 5,880,000 1,981,000 Accrued liabilities 1,907,000 3,973,000 ----------- ----------- Net cash provided by operating activities 20,885,000 29,459,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition (5,438,000) Payments on property additions (14,916,000) (9,390,000) Proceeds from sale of property 412,000 90,000 Other - net (252,000) (1,456,000) ----------- ----------- Net cash used in investing activities (14,756,000) (16,194,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (13,570,000) (3,815,000) Payment of dividends (7,808,000) (6,348,000) Payments on long-term debt (790,000) (1,010,000) Common stock issued upon exercise of stock options including related tax benefits 644,000 1,869,000 ----------- ----------- Net cash used in financing activities (21,524,000) (9,304,000) ----------- ----------- Effect of exchange rate changes on cash (5,000) 3,000 ----------- ----------- Net change in cash and equivalents (15,400,000) 3,964,000 Cash and equivalents at beginning of year 30,423,000 16,502,000 ----------- ----------- Cash and equivalents at end of period $15,023,000 $20,466,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 1,375,000 $ 1,484,000 =========== =========== Income taxes $24,405,000 $18,992,000 =========== =========== See Notes to Consolidated Condensed Financial Statements
5 of 10 6 LANCASTER COLONY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 1994 AND 1993 (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. Accordingly, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended June 30, 1994. (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 July 20, 1994, 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 June 20, 1994. Accordingly, all per share data and the weighted average common shares outstanding for the three and six month periods ended December 31, 1993 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 3,625,000 common shares may be issued under options granted pursuant to terms of the plan. As of December 31, 1994, employee options for 2,633,542 shares have been granted and 2,434,509 have been exercised. 6 of 10 7 LANCASTER COLONY CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE PERIODS ENDED DECEMBER 31, 1994 AND 1993 RESULTS OF OPERATIONS For the six months ended December 31, 1994, consolidated net sales of Lancaster Colony Corporation totaled $414,378,000, reflecting a 13% increase from the fiscal 1994 comparable total of $365,578,000. Similarly, net sales for the three months ended December 31, 1994 increased by 17% to $225,248,000 from the fiscal 1994 comparable total of $192,757,000. The majority of the sales growth achieved within each of the fiscal 1995 periods was contributed by the Glassware and Candles segment, with sales of candle products demonstrating particular strength. The most recent quarter's sales of the Glassware and Candle segment were also affected by customers shifting the timing of certain recurring product orders to the fiscal second quarter. Throughout the first six months of fiscal 1995, sales growth of the Specialty Foods segment was led by increased foodservice sales. Within the Automotive segment, sales growth was primarily achieved as a result of increased orders for light truck and van accessories. Consolidated gross margin percentages during fiscal 1995 have declined from the comparable periods of fiscal 1994 primarily from a combination of increased raw material costs and changes in sales mix. Material cost increases have most adversely impacted the margins of the Specialty Foods and Automotive segments. The average cost of soybean oil, a significant raw material ingredient cost for salad dressings, was significantly higher during fiscal 1995 compared to fiscal 1994. Within the Automotive segment, substantial increases have been incurred in certain plastic, aluminum and rubber costs. Where possible, the Company has negotiated increases in the sale price of the affected product lines. However, such increases often lag in timing, if not also in magnitude, with the related changes in raw material costs. Also affecting margins in the Specialty Foods segment was a greater proportion of foodservice sales included within the fiscal 1995 totals. Such sales typically yield a lower gross margin than do that of retail food sales. Selling, general and administrative expenses as a percentage of net sales have declined from 18.7% and 18.9% in the respective six and three-month periods of fiscal 1994 to 16.4% and 16.2% during fiscal 1995. A sales mix with proportionally less retail food sales, as well as the planned curtailment of related food promotional expenditures, has contributed to this decline. Additionally, the fixed portion of such expenses serve to lower these percentages in a trend of increasing net sales. The increases in consolidated net income of 24% and 29% for the respective six and three-month periods ended December 31, 1994 were generally comparable to the fluctuations in consolidated income before income taxes. However, the provision for taxes based on income for the six months ended December 31, 1993 included a first-quarter charge of approximately $400,000 related to certain retroactive provisions brought about by the August 1993 enactment of the Omnibus Budget Reconciliation Act of 1993. 7 of 10 8 FINANCIAL CONDITION Net cash flows provided by operating activities for the six months ended December 31, 1994 totaled $20,885,000 compared to $29,459,000 recorded in the comparable period of fiscal 1994. The working capital ratio at December 31 was 3.1:1.0 compared to 3.2:1.0 at June 30. Within working capital, increased sales contributed to the higher levels of accounts receivable. Non-operating uses of cash during the six months ended December 1994 include $14,916,000 for capital expenditures, $13,570,000 for the purchase of treasury stock and $7,808,000 for payments of dividends on common stock. When compared to the amount paid through December 1993, total dividends paid in 1994 increased 23% which is reflective of a higher dividend payout rate. Including both short- and long-term debt within total capitalization, such debt was 12% of total capitalization at December 31 compared to 13% 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 capital or other temporary cash requirements. However, absent a significant business acquisition or other unforeseen events, management currently believes that cash internally generated from operating activities will be sufficient to meet foreseeable cash requirements for the remainder of fiscal 1995. PART II. OTHER INFORMATION Item 1 - Legal Proceedings - -------------------------- On January 28, 1991, a cost recovery action under Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") was filed against Pretty Products, Inc. ("Pretty Products") and the registrant in the United States District Court for the Southern District of Ohio in a proceeding styled UNITED STATES VS. PRETTY PRODUCTS, ET AL. The complaint sought recovery of response costs allegedly incurred or to be incurred by the United States Environmental Protection Agency ("EPA") in connection with the cleanup of the Coshocton City Landfill. During the second quarter of fiscal 1995, the parties reached a settlement for all claims in an amount totaling $1,750,000 plus interest from July 1, 1994. The settlement was approved and entered by the Court on January 4, 1995 and the registrant subsequently paid approximately $1,800,000 in February 1995 to the EPA as settlement of this obligation. Of this settlement, $1,700,000 had been accrued by the registrant as of June 30, 1994, with the balance recognized in the second quarter of fiscal 1995. 8 of 10 9 Item 4 - Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ The registrant held its annual meeting of the shareholders on November 21, 1994. Proxies for the meeting were solicited pursuant to Section 14(a) of Securities Exchange Act of 1934. There were no matters discussed or voted upon at the annual meeting, except for the election of the following three directors whose term will expire in 1997:
Shares Shares Voted Shares Not "For" "Withheld" Voted ---------- ---------- --------- Morris S. Halpern 26,119,834 204,290 3,720,411 Robert S. Hamilton 26,262,093 62,031 3,720,411 David J. Zuver 26,229,612 94,512 3,720,411
In addition to the newly elected directors, the following individuals continue to serve as directors of the registrant until such time that their term expires in 1995 or 1996: John B. Gerlach Frank W. Batsch John B. Gerlach, Jr. Robert L. Fox Edward H. Jennings Henry M. O'Neill, Jr. Richard R. Murphey, Jr. Item 6 - Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K - There were no reports filed on Form 8-K for the three months ended December 31, 1994. 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 10, 1995 BY:/S/John B. Gerlach ---------------------------- ------------------ JOHN B. GERLACH Chairman, Chief Executive Officer and Principal Financial Officer Date: February 10, 1995 BY:/S/John L. Boylan ---------------------------- ----------------- JOHN L. BOYLAN Treasurer and Assistant Secretary 9 of 10 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONSOLIDATED CONDENSED BALANCE SHEET AND STATEMENT OF INCOME FOR THE SIX-MONTHS ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JUN-30-1995 DEC-31-1994 15,023 0 109,775 3,002 121,576 255,437 273,423 168,666 375,583 81,943 32,244 26,081 0 0 225,325 375,583 414,378 414,378 287,418 287,418 0 0 1,388 57,633 22,332 35,301 0 0 0 35,301 1.17 0
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