EXHIBIT 99.1
LANCE REPORTS THIRD QUARTER NET INCOME INCREASE OF 48%
ON 7% REVENUE GROWTH;
BOARD DECLARES REGULAR QUARTERLY DIVIDEND
CHARLOTTE, NC, OCTOBER 22, 2003 — Lance, Inc. (Nasdaq: LNCE) today reported third quarter net income of $7.6 million or $0.26 per share, on a diluted basis, on net sales and other operating revenue of $145.0 million for the 13 weeks ended September 27, 2003. In the same period last year, net income was $5.1 million or $0.18 per share on net sales and other operating revenue of $135.8 million.
For the 39 weeks ended September 27, 2003, net income was $12.4 million or $0.42 per share, on a diluted basis, compared to net income of $17.4 million or $0.59 per share in the same period last year. Net sales and other operating revenues were $421.5 million for the 39 weeks ended September 27, 2003, compared with $414.5 million for the same period last year. Year-to-date results include charges of approximately $0.19 per share, primarily in the first quarter, related to the previously announced discontinuation of mini sandwich cracker distribution through the Company’s route sales system and severance costs.
Consolidated revenue increased 7% in the third quarter from the same quarter a year ago. Branded product sales increased 4% as higher sales of salty snacks, traditional sandwich crackers and nuts more than offset lower sales of mini sandwich crackers, candy and cakes. Non-branded revenues increased 13% on continued strength from private label products.
During the third quarter, gross margin increased $4.2 million as increased volume ($3.2 million), higher prices ($2.5 million) and improved manufacturing efficiencies ($1.3 million) more than offset the impact of unfavorable product mix ($2.3 million) and higher commodity costs ($0.5 million).
General and administrative expenses increased $1.5 million from the same quarter last year due mainly to higher incentive compensation accruals.
Other expenses declined $0.9 million from the prior year level which included $1.2 million in fixed asset disposal and investment impairment charges.
“We were very pleased to see meaningful growth in branded sales which are responding positively to improvements in our route sales system”, said Paul A. Stroup III, Chairman, President and Chief Executive Officer. “Going forward, we will continue our intense
focus on achieving further improvements in route sales system performance and controlling costs.”
The Company increased its full-year 2003 earnings estimate to a range of $0.50 to $0.55 per share of common stock.
The Board of Directors declared a regular quarterly cash dividend of $0.16 per share on the Company’s common stock. The dividend is payable on November 20, 2003, to stockholders of record at the close of business on November 10, 2003.
Lance, Inc. has scheduled a conference call discussion with investors at 9:00 a.m. eastern daylight time on Thursday, October 23, 2003 to discuss third quarter financial results. To participate in the call, the dial-in number is (800) 789-3681 for U.S. callers, (706) 634-1425 for international callers. The access code is “LANCE.” A continuous replay of the call will be available beginning at 12:00 noon on October 23rd and running through October 30th at midnight. The replay telephone number is (800) 642-1687. The international number is (706) 645-9291. The replay access code is 2902939. A web-based replay of the conference call will also be available in the investor relations section of Lance’s web site, www.lance.com.
Lance, Inc., manufactures and markets snack foods throughout most of the United States and Canada.
This news release contains statements which may be forward looking within the meaning of applicable securities laws. The statements may include projections regarding future earnings and results which are based upon the Company’s current expectations and assumptions, which are subject to a number of risks and uncertainties. Factors that could cause actual results to differ, including price competition, industry consolidation, raw material costs, the effectiveness of sales and marketing activities and interest rate, foreign exchange rate and credit risk, are discussed in the Company’s most recent Form 10-Q filed with the Securities and Exchange Commission.
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
| | | | | | | | | | |
| | | | For the Quarter (13 Weeks) Ended |
| | | |
|
| | | | September 27, 2003 | | September 28, 2002 |
| | | |
| |
|
| Net sales and other operating revenue | | $ | 145,006 | | | $ | 135,753 | |
| Cost of sales | | | 74,917 | | | | 69,818 | |
| | | |
| | | |
| |
| Gross margin | | | 70,089 | | | | 65,935 | |
| | | | | | | | | |
| Selling, marketing and delivery | | | 48,684 | | | | 49,070 | |
| General and administrative | | | 7,294 | | | | 5,759 | |
| Provisions for employees’ retirement plans | | | 911 | | | | 978 | |
| Amortization of intangibles | | | 195 | | | | 173 | |
| Other expense, net | | | 155 | | | | 1,097 | |
| | | |
| | | |
| |
| Earnings before interest and income taxes | | | 12,850 | | | | 8,858 | |
| | | | | | | | | |
| Interest expense, net | | | 766 | | | | 760 | |
| | | |
| | | |
| |
| Earnings before income taxes | | | 12,084 | | | | 8,098 | |
| Income taxes | | | 4,460 | | | | 2,960 | |
| | | |
| | | |
| |
| Net income | | $ | 7,624 | | | $ | 5,138 | |
| | | |
| | | |
| |
| Earnings per share: | | | | | | | | |
| | Basic | | $ | 0.26 | | | $ | 0.18 | |
| | Diluted | | $ | 0.26 | | | $ | 0.18 | |
| Weighted average shares outstanding: | | | | | | | | |
| | Basic | | | 29,011,000 | | | | 29,009,000 | |
| | Diluted | | | 29,195,000 | | | | 29,273,000 | |
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
| | | | | | | | | | |
| | | | For the 39 Weeks Ended |
| | | |
|
| | | | September 27, 2003 | | September 28, 2002 |
| | | |
| |
|
| Net sales and other operating revenue | | $ | 421,512 | | | $ | 414,451 | |
| Cost of sales | | | 219,548 | | | | 210,647 | |
| | | |
| | | |
| |
| Gross margin | | | 201,964 | | | | 203,804 | |
| | | | | | | | | |
| Selling, marketing and delivery | | | 148,144 | | | | 148,209 | |
| General and administrative | | | 21,731 | | | | 20,705 | |
| Provisions for employees’ retirement plans | | | 3,022 | | | | 3,311 | |
| Amortization of intangibles | | | 565 | | | | 516 | |
| Loss on asset impairment | | | 6,354 | | | | — | |
| Other expense, net | | | 533 | | | | 1,175 | |
| | | |
| | | |
| |
| Earnings before interest and income taxes | | | 21,615 | | | | 29,888 | |
| | | | | | | | | |
| Interest expense, net | | | 2,298 | | | | 2,528 | |
| | | |
| | | |
| |
| Earnings before income taxes | | | 19,317 | | | | 27,360 | |
| Income taxes | | | 6,938 | | | | 9,986 | |
| | | |
| | | |
| |
| Net income | | $ | 12,379 | | | $ | 17,374 | |
| | | |
| | | |
| |
| Earnings per share: | | | | | | | | |
| | Basic | | $ | 0.43 | | | $ | 0.60 | |
| | Diluted | | $ | 0.42 | | | $ | 0.59 | |
| Weighted average shares outstanding: | | | | | | | | |
| | Basic | | | 29,011,000 | | | | 28,971,000 | |
| | Diluted | | | 29,164,000 | | | | 29,261,000 | |
LANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
| | | | | | | | | |
| | | September 27, 2003 | | December 28, 2002 |
| | |
| |
|
| Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 16,489 | | | $ | 3,023 | |
| Accounts receivable | | | 49,546 | | | | 38,205 | |
| Inventories | | | 25,429 | | | | 26,777 | |
| Deferred income tax benefit | | | 9,108 | | | | 7,196 | |
| Prepaid expenses and other | | | 4,513 | | | | 4,709 | |
| | | |
| | | |
| |
| | | | 105,085 | | | | 79,910 | |
| Property plant and equipment, net | | | 164,123 | | | | 175,722 | |
| Goodwill and other intangibles, net | | | 51,996 | | | | 48,149 | |
| Other | | | 1,813 | | | | 2,084 | |
| | | |
| | | |
| |
| | | $ | 323,017 | | | $ | 305,865 | |
| | | |
| | | |
| |
| Liabilities and Equity: | | | | | | | | |
| Current portion of long-term debt | | $ | 5,315 | | | $ | 63 | |
| Accounts payable | | | 14,375 | | | | 11,976 | |
| Other current liabilities | | | 42,992 | | | | 33,291 | |
| | | |
| | | |
| |
| | | | 62,682 | | | | 45,330 | |
| Long-term debt | | | 37,037 | | | | 36,089 | |
| Other liabilities | | | 42,674 | | | | 43,905 | |
| Stockholders’ equity | | | 180,624 | | | | 180,541 | |
| | | |
| | | |
| |
| | | $ | 323,017 | | | $ | 305,865 | |
| | | |
| | | |
| |
| | | | | | | | | |
| Common shares outstanding at end of period | | | 29,134,557 | | | | 29,098,582 | |
LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| | | | | | | | | |
| | | For the 39 Weeks Ended |
| | |
|
| | | September 27, 2003 | | September 28, 2002 |
| | |
| |
|
| Operating Activities: | | | | | | | | |
| Net income | | $ | 12,379 | | | $ | 17,374 | |
| | | | | | | | | |
| Depreciation and amortization | | | 21,897 | | | | 21,695 | |
| Loss on asset impairment | | | 6,354 | | | | — | |
| (Gain)/loss on sale of property, net | | | (124 | ) | | | 939 | |
| Deferred income taxes | | | (3,688 | ) | | | 1,995 | |
| Changes in operating assets and liabilities | | | 3,096 | | | | (3,737 | ) |
| | | |
| | | |
| |
| Net cash flows provided by operating activities | | | 39,914 | | | | 38,266 | |
|
| Investing Activities: | | | | | | | | |
| Purchases of property and equipment | | | (14,140 | ) | | | (21,757 | ) |
| Proceeds from sale of property and equipment | | | 651 | | | | 166 | |
| | | |
| | | |
| |
| Net cash used in investing activities | | | (13,489 | ) | | | (21,591 | ) |
|
| Financing Activities: | | | | | | | | |
| Dividends paid | | | (13,982 | ) | | | (13,947 | ) |
| Issuance of common stock, net | | | 9 | | | | 1,124 | |
| Repayments of debt | | | (59 | ) | | | (5,145 | ) |
| Deferred financing costs | | | 360 | | | | 401 | |
| Repayments under revolving credit facilities, net | | | — | | | | (3,500 | ) |
| | | |
| | | |
| |
| Net cash used in financing activities | | | (13,672 | ) | | | (21,067 | ) |
| | | | | | | | | |
| Effect of exchange rate changes on cash | | | 713 | | | | 65 | |
| | | | | | | | | |
| Increase (decrease) in cash and cash equivalents | | | 13,466 | | | | (4,327 | ) |
| Cash and cash equivalents at beginning of period | | | 3,023 | | | | 4,798 | |
| | | |
| | | |
| |
| Cash and cash equivalents at end of period | | $ | 16,489 | | | $ | 471 | |
| | | |
| | | |
| |
