-----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, AFrXVRgYw9IbDHNTC/dIm2PGrBRDfWw/wW2G4Pv1b6J0/8JSZesJYbCYXYtMOgFW 87OrVmsz2Mpiru9Vr1RkBA== 0000950152-98-004259.txt : 19980512 0000950152-98-004259.hdr.sgml : 19980512 ACCESSION NUMBER: 0000950152-98-004259 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 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: 98614925 BUSINESS ADDRESS: STREET 1: 37 W BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 10-Q 1 LANCASTER COLONY CORPORATION FORM 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 March 31, 1998 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 March 31, 1998, there were approximately 43,194,000 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 Condensed Consolidated Balance Sheets - March 31, 1998 and June 30, 1997 3 Condensed Consolidated Statements of Income - Three Months and Nine Months Ended March 31, 1998 and 1997 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 1998 and 1997 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of the Results of Operations and Financial Condition 7-8 Part II. Other Information 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 CONDENSED CONSOLIDATED BALANCE SHEETS
March 31 June 30 1998 1997 ----------- ------------ (Unaudited) ASSETS Current Assets: Cash and equivalents $ 24,951,000 $ 32,109,000 Receivables - net of allowance for doubtful accounts 121,906,000 102,457,000 Inventories: Raw materials and supplies 47,381,000 42,339,000 Finished goods and work in process 106,326,000 118,912,000 ------------ ------------ Total inventories 153,707,000 161,251,000 Prepaid expenses and other current assets 16,611,000 12,966,000 ------------ ------------ Total current assets 317,175,000 308,783,000 Property, Plant and Equipment - At cost 368,304,000 337,301,000 Less Accumulated Depreciation 202,061,000 185,992,000 ------------ ------------ Property, plant and equipment - net 166,243,000 151,309,000 Goodwill - net of accumulated amortization 37,191,000 19,810,000 Other Assets 9,461,000 4,492,000 ------------ ------------ Total Assets $530,070,000 $484,394,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 550,000 $ 545,000 Accounts payable 44,726,000 33,203,000 Accrued liabilities 32,280,000 39,956,000 ------------ ------------ Total current liabilities 77,556,000 73,704,000 Long-Term Debt - Less current portion 30,275,000 30,685,000 Other Noncurrent Liabilities 7,768,000 7,895,000 Deferred Income Taxes 3,777,000 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 March 31, 1998 - no par value - 47,072,000 shares; June 30, 1997 - no par value - 31,247,000 shares 49,824,000 43,573,000 Retained earnings 460,089,000 404,783,000 Foreign currency translation adjustment 89,000 75,000 ------------ ------------ Total 510,002,000 448,431,000 Less: Common stock in treasury, at cost March 31, 1998 - 3,878,000 shares; June 30, 1997 - 2,230,000 shares 99,308,000 80,431,000 ------------ ------------ Total shareholders' equity 410,694,000 368,000,000 ------------ ------------ Total Liabilities and Shareholders' Equity $530,070,000 $484,394,000 ============ ============
See Notes to Condensed Consolidated Financial Statements 3 of 10 4 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended March 31 March 31 1998 1997 1998 1997 ------------ ------------ ------------ ------------ Net Sales $237,628,000 $218,141,000 $775,556,000 $696,082,000 Cost of Sales 161,378,000 148,984,000 529,106,000 478,290,000 ------------ ------------ ------------ ------------ Gross Margin 76,250,000 69,157,000 246,450,000 217,792,000 Selling, General and Administrative Expenses 39,964,000 34,499,000 127,582,000 111,403,000 ------------ ------------ ------------ ------------ Operating Income 36,286,000 34,658,000 118,868,000 106,389,000 Other Income (Expense): Interest expense (637,000) (633,000) (1,995,000) (1,941,000) Interest income and other - net 868,000 (11,000) 663,000 30,000 ------------ ------------ ------------ ------------ Income Before Income Taxes 36,517,000 34,014,000 117,536,000 104,478,000 Taxes Based on Income 13,721,000 12,992,000 44,912,000 39,791,000 ------------ ------------ ------------ ------------ Net Income $ 22,796,000 $ 21,022,000 $ 72,624,000 $ 64,687,000 ============ ============ ============ ============ Net Income Per Common Share: Basic $ .53 $ .48 $1.68 $1.46 Diluted $ .53 $ .48 $1.67 $1.46 Cash Dividends Per Common Share $ .140 $ .120 $ .400 $ .353 Weighted Average Common Shares Outstanding: Basic 43,183,000 44,111,000 43,351,000 44,180,000 Diluted 43,297,000 44,156,000 43,445,000 44,231,000
See Notes to Condensed Consolidated Financial Statements 4 of 10 5 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended March 31 1998 1997 ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $72,624,000 $64,687,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,351,000 20,427,000 Deferred income taxes and other noncash charges (2,360,000) (768,000) Loss (gain) on sale of property (747,000) 232,000 Changes in operating assets and liabilities: Receivables (17,684,000) (2,416,000) Inventories 8,855,000 (8,032,000) Prepaid expenses and other current assets (1,673,000) (2,679,000) Accounts payable 10,179,000 5,190,000 Accrued liabilities (8,556,000) 1,240,000 ----------- ----------- Net cash provided by operating activities 84,989,000 77,881,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition, net of cash acquired (19,749,000) Payments on property additions (32,919,000) (28,552,000) Proceeds from sale of property 2,016,000 38,000 Other - net (7,637,000) (3,091,000) ----------- ----------- Net cash used in investing activities (58,289,000) (31,605,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (18,877,000) (16,794,000) Payment of dividends (17,318,000) (15,599,000) Payments on long-term debt, including payment of acquisition debt (3,928,000) (610,000) Common stock issued upon exercise of stock options and related tax benefits 6,251,000 5,048,000 ----------- ----------- Net cash used in financing activities (33,872,000) (27,955,000) ----------- ----------- Effect of exchange rate changes on cash 14,000 28,000 ----------- ----------- Net change in cash and equivalents (7,158,000) 18,349,000 Cash and equivalents at beginning of year 32,109,000 4,670,000 ----------- ----------- Cash and equivalents at end of period $24,951,000 $23,019,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 2,543,000 $ 2,537,000 =========== =========== Income taxes $52,084,000 $44,376,000 =========== ===========
See Notes to Condensed Consolidated Financial Statements 5 of 10 6 LANCASTER COLONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED MARCH 31, 1998 AND 1997 (1) The interim condensed consolidated 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 condensed consolidated 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) 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 March 31, 1997 in the accompanying condensed consolidated financial statements have 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 MARCH 31, 1998 AND 1997 RESULTS OF OPERATIONS Consolidated net sales of $775,556,000 and $237,628,000 for the respective nine month and three month periods ended March 31, 1998 increased 11% and 9% over the corresponding 1997 totals of $696,082,000 and $218,141,000. Sales of the Glassware and Candles segment increased during both periods primarily as a result of the growth in the sales of candles and related products. The sales of the Specialty Foods segment also benefited during these periods from the July 1997 acquisition of the Chatham Village crouton business, greater foodservice opportunities and the success of certain frozen product lines, particularly Texas Garlic Toast. Automotive sales were up modestly for the nine months and slightly declined during the most recent quarter. Improved demand from original equipment manufacturers for floormats and aluminum truck accessories was offset by weaker aftermarket demand as influenced by competitive conditions affecting the bedliner industry. Increased gross margins within the Specialty Foods segment contributed to the higher consolidated gross margin percentages of 31.8% and 32.1% reported for the respective nine month and three month periods ended March 31, 1998 compared to 31.3% and 31.7% achieved in the corresponding periods ended March 31, 1997. The Specialty Foods segment benefited from such factors as production efficiencies, improvement in frozen food margins and lower raw material costs. On the basis of current market conditions, however, these material costs are expected to compare less favorably to fiscal 1997 costs over the remainder of fiscal 1998. Within the Glassware and Candles segment, fiscal 1998 gross margin percentages declined. Among the factors contributing to the nine month decline was unabsorbed overhead associated with a major rebuild of a glass melting tank and generally lower glassware production levels. Increased raw material costs and a less favorable sales mix also contributed to a decline in the margins associated with the sales of candles. Automotive segment margins were adversely affected by the competitive conditions affecting aftermarket bedliner sales. Consolidated selling, general and administrative expenses totaled $127,582,000 and $39,964,000 for the respective nine and three month periods ended March 31, 1998 which reflected an increase of 15% and 16% over the corresponding 1997 totals of $111,403,000 and $34,499,000. This growth was primarily attributable to increased consolidated sales volumes and increased promotional activities within the Specialty Foods Segment and includes certain costs associated with the acquisition of new customers or markets. The increase in interest and other income for the nine and three months ended March 31, 1998 compared to the corresponding periods of fiscal 1997 is attributable to gains on the sales of property, plant and equipment recognized during the third quarter of fiscal 1998. Overall, consolidated operating income increased to $118,868,000 and $36,286,000, a 12% and 5% increase over the $106,389,000 and $34,658,000 realized for the respective nine and three month periods ended March 31, 1997. Consolidated net income also increased to $72,624,000 and $22,796,000 for the nine and three month periods ending March 31, 1998, resulting in a 12% and 8% increase from the prior year's corresponding nine and three month period totals of $64,687,000 and $21,022,000. 7 of 10 8 FINANCIAL CONDITION Net working capital at March 31, 1998 totaled $239,619,000 compared to $235,079,000 as of the preceding June 30. The Company's working capital ratio decreased slightly from 4.2:1.0 at June 30 to 4.1:1.0 at March 31. Consolidated accounts receivable increased $19,449,000 or 19%, as influenced by the relative strength of shipments in the last month of the most recent period. With respect to cash flows, net cash provided by operating activities for the nine months ended March 31, 1998 totaled $84,989,000 compared to $77,881,000 for the corresponding periods of 1997. The increase in net income contributed to this increase. Notable investing activities for the nine months ended March 31, 1998 included $32,919,000 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. Significant financing activities of the Company during the first nine months of fiscal 1998 included $18,877,000 paid to purchase treasury stock and $17,318,000 paid in dividends. The latter amount compared to $15,599,000 paid during the comparable period of 1997. The increase in dividends paid reflects an increase in the stated dividend rate from $.353 paid through March, 1997 to $.40 paid through March, 1998 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 information systems in order to address potential processing deficiencies regarding the year 2000. In accordance with current accounting guidance, all 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 to information systems 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 operation in any given year. However, due to the nature of this issue, it is possible that a failure by the Company, its customers or its suppliers to make a complete and timely assessment of the necessary requirements could have a material adverse affect on the Company's business, results of operations and/or financial position. 8 of 10 9 PART II. OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit 27 - Financial Data Schedule (b) Reports of Form 8-K - There were no reports filed on Form 8-K for the three months ended March 31, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registration has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LANCASTER COLONY CORPORATION Date: May 8, 1998 BY: /s/ John B. Gerlach, Jr. -------------- ------------------------------ JOHN B. GERLACH, JR. Chairman, Chief Executive Officer and President Date: May 8, 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 CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUN-30-1998 MAR-31-1998 24,951 0 125,602 3,696 153,707 317,175 368,304 202,061 530,070 77,556 30,275 0 0 49,824 360,870 530,070 775,556 775,556 529,106 529,106 0 0 1,995 117,536 44,912 72,624 0 0 0 72,624 1.68 1.67
-----END PRIVACY-ENHANCED MESSAGE-----