-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C4VAstXn93HWqYJxKvEZT6WMwCkxRVvb+WIkyNokqn/BA1N4CHGVnM6GzGHQ6UDe pVPWNuJI0xIePILlRTeqEQ== 0000950152-98-000889.txt : 19980211 0000950152-98-000889.hdr.sgml : 19980211 ACCESSION NUMBER: 0000950152-98-000889 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980210 SROS: NONE 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-Q SEC ACT: SEC FILE NUMBER: 000-04065 FILM NUMBER: 98529745 BUSINESS ADDRESS: STREET 1: 37 W BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 10-Q 1 LANCASTER COLONY CORPORATION/QUARTERLY REPORT 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, 1997 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, 1997, there were approximately 28,794,000 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, 1997 and June 30, 1997 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended December 31, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended December 31, 1997 and 1996 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 4 - Submission of Matters to a Vote of Security Holders 8 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 1997 1997 ---- ---- (Unaudited) ASSETS Current Assets: Cash and equivalents $ 22,389,000 $ 32,109,000 Receivables - net of allowance for doubtful accounts 135,765,000 102,457,000 Inventories: Raw materials and supplies 44,447,000 42,339,000 Finished goods and work in process 96,025,000 118,912,000 ------------ ------------ Total inventories 140,472,000 161,251,000 Prepaid expenses and other current assets 15,158,000 12,966,000 ------------ ------------ Total current assets 313,784,000 308,783,000 Property, Plant and Equipment - At cost 360,334,000 337,301,000 Less Accumulated Depreciation 198,277,000 185,992,000 ------------ ------------ Property, plant and equipment - net 162,057,000 151,309,000 Goodwill - net of accumulated amortization 37,655,000 19,810,000 Other Assets 8,882,000 4,492,000 ------------ ------------ Total Assets $522,378,000 $484,394,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 550,000 $ 545,000 Accounts payable 43,519,000 33,203,000 Accrued liabilities 44,717,000 39,956,000 ------------ ------------ Total current liabilities 88,786,000 73,704,000 Long-Term Debt - Less current portion 30,275,000 30,685,000 Other Noncurrent Liabilities 7,810,000 7,895,000 Deferred Income Taxes 555,000 4,110,000 Shareholders' Equity: Preferred stock - authorized 3,050,000 shares issuable in series; Class A - $1.00 par value, authorized 750,000 shares; Class B and C - no par value, authorized 1,150,000 shares each; outstanding - none Common stock - authorized 75,000,000 shares; issued December 31, 1997 - no par value - 31,295,000 shares; June 30, 1997 - no par value - 31,247,000 shares 45,735,000 43,573,000 Retained earnings 443,344,000 404,783,000 Foreign currency translation adjustment 77,000 75,000 ------------ ------------ Total 489,156,000 448,431,000 Less: Common stock in treasury, at cost December 31, 1997 - 2,501,000 shares; June 30, 1997 - 2,230,000 shares 94,204,000 80,431,000 ------------ ------------ Total shareholders' equity 394,952,000 368,000,000 ------------ ------------ Total Liabilities and Shareholders' Equity $522,378,000 $484,394,000 ============ ============
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 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Net Sales $300,754,000 $259,023,000 $537,928,000 $477,941,000 Cost of Sales 205,708,000 176,733,000 367,728,000 329,306,000 ------------ ------------ ------------ ------------ Gross Margin 95,046,000 82,290,000 170,200,000 148,635,000 Selling, General and Administrative Expenses 47,400,000 40,716,000 87,618,000 76,904,000 ------------ ------------ ------------ ------------ Operating Income 47,646,000 41,574,000 82,582,000 71,731,000 Other Income (Expense): Interest expense (701,000) (673,000) (1,358,000) (1,308,000) Interest income and other - net (58,000) (205,000) 41,000 ------------ ------------ ------------ ------------ Income Before Income Taxes 46,887,000 40,901,000 81,019,000 70,464,000 Taxes Based on Income 17,920,000 15,496,000 31,191,000 26,799,000 ------------ ------------ ------------ ------------ Net Income $ 28,967,000 $ 25,405,000 $ 49,828,000 $ 43,665,000 ============ ============ ============ ============ Net Income Per Common Share: Basic $ .67 $ .57 $1.15 $ .99 Diluted $ .67 $ .57 $1.14 $ .99 Cash Dividends Per Common Share $ .133 $ .12 $ .26 $ .233 Weighted Average Common Shares Outstanding: Basic 43,351,000 44,187,000 43,434,000 44,216,000 Diluted 43,439,000 44,244,000 43,518,000 44,268,000
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 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $49,828,000 $43,665,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,774,000 13,453,000 Deferred income taxes and other noncash charges (3,640,000) (2,123,000) Loss on sale of property 55,000 51,000 Changes in operating assets and liabilities: Receivables (31,543,000) (7,999,000) Inventories 22,090,000 (3,993,000) Prepaid expenses and other current assets (2,120,000) (2,868,000) Accounts payable 8,972,000 8,541,000 Accrued liabilities 3,881,000 11,128,000 ----------- ----------- Net cash provided by operating activities 63,297,000 59,855,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition, net of cash acquired (19,749,000) Payments on property additions (22,162,000) (21,267,000) Proceeds from sale of property 149,000 8,000 Other - net (4,451,000) (2,236,000) ----------- ----------- Net cash used in investing activities (46,213,000) (23,495,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (13,773,000) (8,051,000) Payment of dividends (11,267,000) (10,315,000) Payments on long-term debt, including payment of acquisition debt (3,928,000) (470,000) Common stock issued upon exercise of stock options including related tax benefits 2,162,000 3,360,000 ----------- ----------- Net cash used in financing activities (26,806,000) (15,476,000) ----------- ----------- Effect of exchange rate changes on cash 2,000 26,000 ----------- ----------- Net change in cash and equivalents (9,720,000) 20,910,000 Cash and equivalents at beginning of year 32,109,000 4,670,000 ----------- ----------- Cash and equivalents at end of period $22,389,000 $25,580,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 1,376,000 $ 1,315,000 =========== =========== Income taxes $27,186,000 $24,446,000 =========== ===========
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, 1997 AND 1996 (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, 1997. (2) In December 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No. 128 is effective for financial statements for periods ending after December 15, 1997, including interim periods, and requires restatement of prior periods. Accordingly, all net income per share and weighted average common shares outstanding data has been presented in accordance with SFAS No. 128 in the accompanying consolidated condensed financial statements. Under SFAS No. 128, the Company is required to present basic earnings per share and diluted earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing income available to common stockholders 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. (3) On January 27, 1998, a three-for-two stock split was effected whereby one additional common share was issued for each two shares outstanding to shareholders of record on January 6, 1998. Accordingly, all per share data and the weighted average common shares outstanding for the period ended December 31, 1997 in the accompanying consolidated condensed financial statements has been retroactively adjusted for this split. 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, 1997 AND 1996 RESULTS OF OPERATIONS Consolidated net sales for the six month period ended December 31, 1997 totaled $537,928,000, a 13% increase over the corresponding 1996 total of $477,941,000. Net sales for the three month period ended December 31, 1997 totaled $300,754,000, a 16% increase over the 1996 total of $259,023,000. Sales of the Glassware and Candles segment benefited during both of the 1997 periods from the continued growth in the sales of candles and related products. Fiscal 1998 net sales of the Specialty Foods segment also grew and were enhanced by the July 1997 acquisition of the Chatham Village crouton business, new foodservice opportunities, and improved sales of certain frozen product lines. Net sales of the Automotive segment also increased during each period presented due primarily to improved OEM demand for floormats and aluminum light truck accessories. Aftermarket sales were adversely affected by several factors including a continuation of highly competitive conditions existing in the market for light truck bedliners. The consolidated gross margin percentage was 31.6% for both the six and three month periods ended December 31, 1997. Such percentages were 31.1% and 31.8% for the respective corresponding periods of 1996. Higher gross margins within the Specialty Foods segment were realized during the 1997 periods as a result of a more favorable sales mix, production efficiencies and generally lower raw material costs. On the basis of current market conditions, these material costs are expected to compare less favorably to fiscal 1997 costs over the remainder of fiscal 1998. Gross margins were adversely impacted in the 1997 periods by a decline in the gross margin percentages of the Glassware and Candles segment. Contributing to this decline was unabsorbed overhead associated with a major rebuild of a glass melting tank and generally lower glassware production levels. Increased raw material costs also contributed to a decline in the margins on candles. The Automotive segment also reported reduced gross margin percentages as influenced by such factors as the adverse market conditions affecting bedliner sales as noted above. Consolidated selling, general and administrative expenses totaled $87,618,000 and $47,400,000 for the respective six and three month periods ended December 31, 1997, which reflects increases of 14% and 16%, respectively, over the corresponding 1996 totals of $76,904,000 and $40,716,000. Such increases were primarily attributable to increased consolidated sales volumes and increased promotional activities within the Specialty Foods segment. Overall, consolidated operating income increased to $82,582,000 and $47,646,000, a 15% increase over the $71,731,000 and $41,574,000 realized for the respective six and three month periods ended December 31, 1996. Consolidated net income also increased to $49,828,000 and $28,967,000 for the six and three month periods ending December 31, 1997, also resulting in a 14% increase from the prior year's corresponding six and three month period totals of $43,665,000 and $25,405,000. FINANCIAL CONDITION Net working capital at December 31, 1997 totaled $224,998,000 compared to $235,079,000 as of the preceding June 30. The Company's working capital ratio decreased from 4.2:1.0 at June 30 to 3.5:1.0 as of December 31. Influencing these changes is the seasonal increase in accounts receivable attributable to the Glassware and Candles segment. Consolidated accounts receivable totaled $135,765,000 at December 31 compared to $102,457,000 at 7 of 10 8 June 30. The impact of the Glassware and Candles segment's sales also contributed to the decline in the balance of inventories which totaled $140,472,000 at December 31 compared to $161,251,000 at June 30. With respect to cash flows, for the six months ended December 31, 1997, net cash provided by operating activities totaled $63,297,000 compared to $59,855,000 for the corresponding period of 1996. The increase in net income between these two periods contributed to this increase. Notable investing activities for the six months ended December 31, 1997 included $22,162,000 paid for property additions and $19,749,000 paid to acquire the Chatham Village crouton business in July. These amounts were financed through the use of internally generated funds. The more significant financing activities of the Company during the first six months of fiscal 1998 included $13,773,000 paid to purchase treasury stock and $11,267,000 paid in dividends. The latter amount compares to $10,315,000 paid during the comparable period of 1996. The increase in dividends paid reflects an increase in the stated dividend rate from $.23 paid through December, 1996 to $.26 paid through December, 1997 as adjusted for the 3 for 2 stock split which occurred on January 27, 1998. Management anticipates that cash provided from operations and from the currently available discretionary bank credit lines will be adequate to meet the Company's foreseeable cash requirements over the remainder of fiscal 1998. The Company is currently in the process of modifying or replacing certain management information systems to address issues regarding the year 2000. In accordance with current accounting guidance, modification costs for the year 2000 will be charged to expense as incurred while replacement costs will be capitalized and amortized over the asset's useful life. It is not presently believed that these changes will have an adverse impact on operations or that the expenditures related thereto will be material to the Company's financial position or results of operations in any given year. PART II. OTHER INFORMATION Item 4 - Submission of Matters to a Vote Of Security Holders - ------------------------------------------------------------ The registrant held its annual meeting of the shareholders on November 17, 1997. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934. Matters voted upon at the annual meeting were: (1) the approval of a proposal to amend Article FOURTH of the Corporation's Articles of Incorporation to increase the number of authorized shares of common stock from 35,000,000 to 75,000,000 and the number of authorized shares of Class A Preferred Stock from 350,000 to 750,000, for which 20,743,623 votes were cast for such an approval, 4,574,682 votes were cast against such approval and 3,675,686 were abstained or not voted; (2) the election of the following three directors whose term will expire in 2000:
Shares Shares Voted Shares Not "For" "Withheld" Voted ----- ---------- ----- Kerrii B. Anderson 27,099,463 202,702 1,691,826 Morris S. Halpern 27,015,617 286,548 1,691,826 Robert S. Hamilton 27,105,768 196,397 1,691,826
As of November 17, 1997, the following individuals also continued to serve as directors of the registrant: Frank W. Batsch Edward H. Jennings Robert L. Fox Richard R. Murphey, Jr. John B. Gerlach, Jr. Henry M. O'Neill, Jr. 8 of 10 9 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, 1997. 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, 1998 BY:/S/John B. Gerlach, Jr. --------------------------- ----------------------- JOHN B. GERLACH, JR. Chairman, Chief Executive Officer and President Date: February 10, 1998 BY:/S/John L. Boylan --------------------------- ----------------------- JOHN L. BOYLAN Treasurer, Vice President, Assistant Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) 9 of 10 EX-27 2 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, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JUN-30-1998 DEC-31-1997 22,389 0 139,594 3,829 140,472 313,784 360,334 198,277 522,378 88,786 30,275 0 0 45,735 349,217 522,378 537,928 537,928 367,728 367,728 0 0 1,358 81,019 31,191 49,828 0 0 0 49,828 1.15 1.14
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