-----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, VfC+dQ++rFH9JgvlKszmr7sCfHj02Q2nEONrqMnwj9qY1tXtHNvtdJvRf4ifcfcI WSi9uafYLQSQXGAH5dAGnQ== 0000950152-98-008587.txt : 19981109 0000950152-98-008587.hdr.sgml : 19981109 ACCESSION NUMBER: 0000950152-98-008587 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981106 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: 98739415 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 September 30, 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 September 30, 1998, there were approximately 42,330,000 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 Condensed Consolidated Balance Sheets - September 30, 1998 and June 30, 1998 3 Condensed Consolidated Statements of Income - Three Months Ended September 30, 1998 and 1997 4 Condensed Consolidated Statements of Cash Flows - Three Months Ended September 30, 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 8 Signatures 8 Exhibit 27 - Financial Data Schedule 9 2 of 9 3 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 June 30 1998 1998 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and equivalents $ 3,944,000 $ 23,224,000 Receivables - net of allowance for doubtful accounts 130,840,000 99,870,000 Inventories: Raw materials and supplies 49,072,000 44,915,000 Finished goods and work in process 141,882,000 130,282,000 ------------ ------------ Total inventories 190,954,000 175,197,000 Prepaid expenses and other current assets 13,044,000 13,257,000 ------------ ------------ Total current assets 338,782,000 311,548,000 Property, Plant and Equipment - At cost 382,587,000 374,033,000 Less Accumulated Depreciation 209,328,000 203,267,000 ------------ ------------ Property, plant and equipment - net 173,259,000 170,766,000 Goodwill - net of accumulated amortization 36,675,000 37,045,000 Other Assets 10,793,000 10,008,000 ------------ ------------ Total Assets $559,509,000 $529,367,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term bank loans $ 21,000,000 Current portion of long-term debt 510,000 $ 510,000 Accounts payable 45,500,000 41,804,000 Accrued liabilities 41,518,000 34,203,000 ------------ ------------ Total current liabilities 108,528,000 76,517,000 Long-Term Debt - Less current portion 28,795,000 29,095,000 Other Noncurrent Liabilities 7,339,000 7,325,000 Deferred Income Taxes 3,797,000 5,867,000 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 September 30, 1998 - no par value - 47,086,616 shares; June 30, 1998 - no par value - 47,086,091 shares 50,408,000 50,392,000 Retained earnings 491,968,000 477,587,000 Accumulated other comprehensive income 125,000 98,000 ------------ ------------ Total 542,501,000 528,077,000 Less: Common stock in treasury, at cost September 30, 1998 - 4,757,103 shares; June 30, 1998 - 4,332,603 shares 131,451,000 117,514,000 ------------ ------------ Total shareholders' equity 411,050,000 410,563,000 ------------ ------------ Total Liabilities and Shareholders' Equity $559,509,000 $529,367,000 ============ ============
See Notes to Condensed Consolidated Financial Statements 3 of 9 4 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended September 30 1998 1997 ------------ ------------ Net Sales $244,080,000 $237,174,000 Cost of Sales 170,813,000 162,020,000 ------------ ------------ Gross Margin 73,267,000 75,154,000 Selling, General and Administrative Expenses 39,384,000 40,218,000 ------------ ------------ Operating Income 33,883,000 34,936,000 Other Income (Expense): Interest expense (649,000) (657,000) Interest income and other - net 39,000 (147,000) ------------ ------------ Income Before Income Taxes 33,273,000 34,132,000 Taxes Based on Income 12,935,000 13,271,000 ------------ ------------ Net Income $ 20,338,000 $ 20,861,000 ============ ============ Net Income Per Common Share: Basic $ .48 $ .48 Diluted .48 .48 Cash Dividends Per Common Share $.140 $.127 Weighted Average Common Shares Outstanding: Basic 42,553,000 43,518,000 Diluted 42,607,000 43,598,000
See Notes to Condensed Consolidated Financial Statements 4 of 9 5 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended September 30 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $20,338,000 $20,861,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,674,000 7,688,000 Deferred income taxes and other noncash charges (1,406,000) (1,472,000) (Gain) loss on sale of property (118,000) 5,000 Changes in operating assets and liabilities: Receivables (30,970,000) (25,848,000) Inventories (15,757,000) (11,699,000) Prepaid expenses and other current assets (437,000) (1,138,000) Accounts payable 3,696,000 16,345,000 Accrued liabilities 7,315,000 10,302,000 ----------- ----------- Net cash (used in) provided by operating activities (8,665,000) 15,044,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition, net of cash acquired (19,749,000) Payments on property additions (9,677,000) (10,809,000) Proceeds from sale of property 171,000 149,000 Other - net (1,958,000) (2,052,000) ----------- ----------- Net cash used in investing activities (11,464,000) (32,461,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (13,937,000) (2,357,000) Payment of dividends (5,957,000) (5,511,000) Net change in short-term bank loans 21,000,000 Payments on long-term debt, including payment of acquisition debt (300,000) (3,723,000) Common stock issued upon exercise of stock options including related tax benefits 16,000 975,000 ----------- ----------- Net cash provided by (used in) financing activities 822,000 (10,616,000) ----------- ----------- Effect of exchange rate changes on cash 27,000 (5,000) ----------- ----------- Net change in cash and equivalents (19,280,000) (28,038,000) Cash and equivalents at beginning of year 23,224,000 32,109,000 ----------- ----------- Cash and equivalents at end of period $ 3,944,000 $ 4,071,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS: Cash paid during the period for: Interest $ 1,209,000 $ 1,203,000 =========== =========== Income taxes $ 765,000 $ 744,000 =========== ===========
See Notes to Condensed Consolidated Financial Statements 5 of 9 6 LANCASTER COLONY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED SEPTEMBER 30, 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, 1998. (2) Effective July 1, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 is effective for the Company's fiscal year beginning July 1, 1998 including interim periods and requires reclassification of financial statements for earlier periods presented for comparative purposes. Accordingly, comprehensive income data has been presented in accordance with SFAS No. 130 in the accompanying condensed consolidated financial statements. Under SFAS No. 130, the Company is required to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of the condensed consolidated balance sheet. The only component of other comprehensive income for the Company is foreign currency translation adjustments. Total comprehensive income quarter-to-date and year-to-date, as of September 30, 1998 and 1997, was approximately $20,365,000 and $20,856,000, respectively. (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 September 30, 1997 in the accompanying condensed consolidated financial statements have been retroactively adjusted for this split. 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 SEPTEMBER 30, 1998 AND 1997 RESULTS OF OPERATIONS A record level of net sales for the Company's fiscal first quarter was achieved during the three months ended September 30, 1998. Net sales for the current year's quarter totaled $244,080,000, a 3% increase over the prior year's comparable total of $237,174,000. The Specialty Foods segment contributed to this growth, benefiting from increased sales of recently introduced retail products, cost-driven price increases and greater sales to national foodservice accounts. Sales of the Glassware and Candles segment increased slightly despite a significant reduction in sales to one private label candle customer. This reduction was offset by increased sales to mass merchants of branded candle products. Net sales within the Automotive segment declined as adversely affected by the strike at General Motors, the impact of certain OEM model changeovers and a lackluster aftermarket environment. As a percentage of net sales, consolidated gross margins declined to 30.0% for the three months ended September 30, 1998 compared to 31.7% in the same period of 1997. Margins of the Specialty Foods segment were reduced by higher raw material costs, particularly soybean oil and cream, as well as a less favorable sales mix. Going into the Company's second quarter of fiscal 1999, these material costs are expected to remain at higher than year-ago levels through December 31. Within the Automotive segment, operating efficiencies were adversely impacted by the effects of the GM strike and the generally lower level of sales. Additionally, competitive pricing pressures have affected margins in both the Automotive and Glassware and Candles segments. Selling, general and administrative expenses for the quarter ended September 30, 1998 totaled $39,384,000, a 2% decrease compared to $40,218,000 in 1997. Among factors contributing to this decrease is the reduction in certain advertising costs incurred in 1997 to support the rollout of repackaged pourable salad dressings. As a result of the foregoing, operating income for the 1998 quarter of $33,883,000 reflects a 3% reduction from the 1997 total of $34,936,000. Earnings per share for the quarters ended September 30, 1998 and 1997 totaled $.48 and reflects the reduction in weighted average shares outstanding as such shares outstanding totaled 42,607,000 for the 1998 quarter compared to 43,598,000 in 1997, as adjusted for the three-for-two stock split paid in January 1998. This reduction has occurred as a result of share repurchases made by the Company. FINANCIAL CONDITION Net cash used in operating activities for the three months ended September 30, 1998 totaled $8,665,000 compared to cash provided by such activities of $15,044,000 during the three months ended September 30, 1997. This fluctuation in cash flows largely resulted from relative changes in working capital components. Net working capital totaled $230,254,000 at September 30, 1998 compared to $235,031,000 as of the preceding June 30. Seasonal shipping patterns led to a $30,970,000 increase in net accounts receivable from the June 30, 1998 total of $99,870,000 to $130,840,000 at September 30, 1998. Significant investing activities during the three months ended September 30, 1998 included $9,677,000 expended on property additions. Investing activities in the quarter ended September 30, 1997 included $19,749,000 expended to acquire the Chatham Village crouton business. 7 of 9 8 Financing activities of the Company during the three months ended September 30, 1998 included $21,000,000 of net borrowings under discretionary bank money market lines of credit. Management anticipates that cash provided from operations and the currently available lines of credit will be adequate to meet the Company's foreseeable cash requirements over the remainder of fiscal 1999. Among other significant financing activities occurring during the three months ended September 30, 1998 was $13,937,000 expended on the purchase of approximately 424,000 shares of treasury stock. Additionally, $5,957,000 in dividends were paid in the most recent quarter, which was an 8% increase over the prior year's comparable total of $5,511,000. This increase reflects an effective $.013 increase in the stated dividend rate between periods. The Company continues to make investments to address Year 2000 compliance issues. For further information regarding this matter, reference is made to the comments under the "Year 2000" section of the Management's Discussion and Analysis contained within the Annual Report to Shareholders for the fiscal year ended June 30, 1998. No significant changes in scope or expected outcome have occurred since this disclosure. PART II. OTHER INFORMATION 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 September 30, 1998. 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: November 6, 1998 BY: /S/ John B. Gerlach, Jr. ------------------------------ -------------------------- JOHN B. GERLACH, JR. Chairman, Chief Executive Officer and President Date: November 6, 1998 BY: /S/ John L. Boylan ------------------------------ -------------------------- JOHN L. BOYLAN Treasurer, Vice President, Assistant Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) 8 of 9 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 QUARTER ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1999 SEP-30-1998 3,944 0 133,484 2,644 190,954 338,782 382,587 209,328 559,509 108,528 28,795 0 0 50,408 360,642 559,509 244,080 244,080 170,813 170,813 0 0 649 33,273 12,935 20,338 0 0 0 20,338 .48 .48
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