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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter (Twelve Weeks) Ended June 17, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-398
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LANCE, INC.
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(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0292920
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8600 South Boulevard (P. O. Box 32368), Charlotte, North Carolina 28232
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(Address of principal executive offices) (Zip Code)
(704) 554-1421
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(Registrant's telephone number, including area code)
Not Applicable
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(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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.83-1/3 par value - 30,447,265 shares
outstanding as of July 19, 1995.
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LANCE, INC. AND SUBSIDIARIES
INDEX
Page
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PART I. FINANCIAL INFORMATION
Financial Statements:
Condensed Consolidated Balance Sheets -
June 17, 1995 (Unaudited) and December 31, 1994 3
Condensed Statements of Consolidated Income and
Retained Earnings (Unaudited) - Twelve Weeks and
Twenty-Four Weeks Ended June 17, 1995 and June 11, 1994 4
Condensed Statements of Consolidated Cash Flows
(Unaudited) - Twenty-Four Weeks
Ended June 17, 1995 and June 11, 1994 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 8
Submission of Matters to a Vote of Security Holders 8
Exhibits and Reports on Form 8-K 8
SIGNATURES 8
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LANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, June 17, 1995 (UNAUDITED) AND
December 31, 1994
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(In thousands, except share data)
ASSETS 1995 1994
- ------ ---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 21,526 $ 12,964
Marketable securities 30,877 32,946
Accounts receivable (less
allowance for doubtful accounts) 29,825 30,155
Accrued interest receivable 460 599
Refundable income taxes 815 1,959
Inventories - Finished goods, goods
in process, materials, etc. (Note 3) 33,249 38,952
Deferred income tax benefit 6,254 5,800
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Total current assets 123,006 123,375
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PROPERTY, NET 158,460 165,390
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OTHER ASSETS:
Deposits 43 335
Prepayments, etc. 8,141 7,896
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Total other assets 8,184 8,231
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TOTAL $289,650 $296,996
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LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
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CURRENT LIABILITIES:
Accounts payable $ 3,429 $ 8,572
Accrued liabilities 25,469 24,287
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Total current liabilities 28,898 32,859
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OTHER LIABILITIES AND DEFERRED CREDITS:
Deferred income taxes 18,288 19,243
Accrued postretirement health care costs 8,557 8,078
Supplemental retirement benefits 3,344 3,322
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Total other liabilities and deferred credits 30,189 30,643
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STOCKHOLDERS' EQUITY:
Common stock, $.83-1/3 par value (authorized:
75,000,000, shares; issued: 30,441,935
shares in 1995; 30,433,407 shares in 1994) 25,368 25,361
Retained earnings 205,104 208,800
Net unrealized gain <loss> on marketable
securities 91 (667)
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Total stockholders' equity 230,563 233,494
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TOTAL $289,650 $296,996
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See notes to condensed consolidated financial statements (unaudited).
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LANCE, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS (UNAUDITED)
FOR THE TWELVE WEEKS AND TWENTY-FOUR WEEKS ENDED June 17, 1995 AND June 11, 1994
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......TWELVE WEEKS ENDED...... ....TWENTY-FOUR WEEKS ENDED.....
(In thousands, except per share data)
June 17, 1995 June 11, 1994 June 17, 1995 June 11, 1994
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NET SALES AND OTHER OPERATING REVENUE $114,249 $117,541 $226,965 $225,674
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COST OF SALES AND OPERATING EXPENSES:
Cost of sales 56,522 55,704 111,502 108,142
Selling and delivery expenses 44,432 42,858 87,367 84,155
General and administrative expenses 4,926 4,457 9,825 9,283
Contributions to employees' profit-
sharing retirement fund 1,117 1,773 2,411 3,055
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Total 106,997 104,792 211,105 204,635
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PROFIT FROM OPERATIONS 7,252 12,749 15,860 21,039
OTHER INCOME, NET 871 1,035 1,990 2,001
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INCOME BEFORE INCOME TAXES 8,123 13,784 17,850 23,040
INCOME TAXES 3,265 5,338 7,014 8,803
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NET INCOME 4,858 8,446 10,836 14,237
RETAINED EARNINGS AT BEGINNING OF
FISCAL PERIOD 207,474 219,267 208,800 221,205
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TOTAL 212,332 227,713 219,636 235,442
LESS:
CASH DIVIDENDS 7,304 7,433 14,608 14,873
RETIREMENT OF COMMON STOCK 2,667 2,954
EXERCISE OF STOCK OPTIONS (76) (76) 2
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RETAINED EARNINGS AT END OF
FISCAL PERIOD $205,104 $217,613 $205,104 $217,613
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PER SHARE AMOUNTS (NOTE 4):
Net income $ .16 $ .27 $ .36 $ .46
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Cash dividends $ .24 $ .24 $ .48 $ .48
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See notes to condensed consolidated financial statements (unaudited).
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LANCE, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
FOR THE TWENTY-FOUR WEEKS ENDED June 17, 1995 AND June 11, 1994
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1995 1994
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(In thousands)
OPERATING ACTIVITIES:
Net income $ 10,836 $ 14,237
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 11,768 11,421
Deferred income taxes (1,409) (847)
Other, net (31) 810
Changes in operating assets and liabilities 3,719 6,841
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Net cash flow from operating activities 24,883 32,462
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INVESTING ACTIVITIES:
Purchases of property (4,885) (7,420)
Proceeds from sale of property 455 974
Purchases of marketable securities (3,738) (18,491)
Sales of marketable securities 3,375 10,838
Maturities of marketable securities 2,984 4,310
Other, net 14 81
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Net cash used in investing activities (1,795) (9,708)
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FINANCING ACTIVITIES:
Dividends paid (14,608) (14,873)
Sales (purchases) of Lance common stock, net 82 (3,093)
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Net cash used in financing activities (14,526) (17,966)
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INCREASE IN CASH 8,562 4,788
CASH AT BEGINNING OF PERIOD 12,964 20,328
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CASH AT END OF PERIOD $ 21,526 $25,116
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SUPPLEMENTAL INFORMATION:
Cash paid for income taxes $ 7,557 $ 3,448
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See notes to condensed consolidated financial statements (unaudited).
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LANCE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the
consolidated financial position of the Company and its subsidiaries as of
June 17, 1995 and December 31, 1994, the consolidated results of
operations for the twelve weeks and twenty-four weeks ended June 17, 1995
and June 11, 1994, and the consolidated cash flows for the twenty-four
weeks ended June 17, 1995 and June 11, 1994.
2. The consolidated results of operations for the twelve weeks and
twenty-four weeks ended June 17, 1995 and June 11, 1994 are not
necessarily indicative of the results to be expected for a full year.
3. The Company utilizes the dollar value last-in, first-out (LIFO) method of
determining the cost of substantially all of its inventories. Because
inventory valuations under the LIFO method are based on annual
determinations, the determination of interim LIFO valuations requires
that estimates be made of year-end costs and levels of inventories. The
possibility of variation between estimated year-end costs and levels of
LIFO inventories and the actual year-end amounts may materially affect
the results of operations as finally determined for the full year.
Inventories at June 17, 1995 and December 31, 1994 consisted of (in
thousands):
1995 1994
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Finished goods $13,630 $16,979
Goods in process 56 11
Raw materials 16,506 19,679
Supplies, etc. 9,565 9,058
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Total inventories at FIFO cost 39,757 45,727
Less: Adjustment to reduce FIFO
cost to LIFO cost 6,508 6,775
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Total inventories at LIFO cost $33,249 $38,952
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Use of the dollar value LIFO method with natural business unit method of
pooling makes presentation of inventory components on a LIFO basis
impractical.
4. Per share amounts for the twelve weeks and twenty-four weeks ended June
17, 1995 were computed based on 30,437,375 and 30,435,391 shares of
common stock outstanding, respectively. Per share amounts for the twelve
weeks and twenty-four weeks ended June 11, 1994 were computed based on
30,926,627 and 30,963,494 shares of common stock outstanding,
respectively. The dilutive effect of stock options is not material.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company continues to maintain the financial strength and liquidity to meet
its regular operating needs, cash dividend payments, capital investment
program, and stock repurchase program through cash flow from current operations
and investments.
Current commitments for capital expenditures, including machinery and equipment
and further renovation and expansion of facilities, total approximately $11
million.
Marketable securities, cash and cash equivalents increased from December 31,
1994 due mainly to the decrease in inventories and the purchase of company
stock during the fourth quarter of 1994. Inventories are down due to use of
the large 1994 peanut inventory, reduction in finished goods inventories at the
Midwest Biscuit plant and fewer goods purchased for resale for the summer.
Property, net is down due to fewer property additions and continued high
depreciation expense. Deposits are down due to the delivery to the Company of
machinery on order at year end.
Accounts payable are down since December 31, 1994 due to the timing of
purchases. Accrued liabilities are up due to an increase in accrued insurance
and accrued property taxes.
For the quarter net sales and other operating revenue were down $3.3 million
compared to the second quarter of 1994 due primarily to decreased unit volume,
especially at the Midwest Biscuit and Vista Bakery plants. Sales revenues
continued to be affected by intense price competition in most markets. Net
income was down $3.6 million ($.11 per share) due primarily to higher
insurance, raw material and packaging costs and lower revenues.
For the year to date net sales and other operating revenue were up $1.3 million
due primarily to increased unit volume. More favorable sales conditions,
including better weather, in the first quarter of 1995 as compared to the first
quarter of 1994 had a positive impact on sales. Net income was down $3.4
million ($.10 per share) due primarily to higher insurance, raw material and
packaging costs.
Sales of products produced at the Midwest Biscuit and Vista Bakery plants were
down; however, results of these operations remained flat as compared to 1994.
Production efficiencies at these plants have improved but over capacity and
high overhead continue to negatively impact operations.
For both the quarter and the year to date, cost of sales was up in dollars and
as a percent of sales due to higher insurance and raw material costs, including
fruit fillings, flour and peanuts and higher packaging costs, including
corrugated boxes and package film.
Selling and delivery expenses were up $1.6 million for the quarter and $3.2
million year to date due to higher insurance costs, salaries and commissions.
General and administrative expenses were up due to higher insurance costs.
Other income was down due primarily to the loss on sale of assets. Income
taxes were up due to higher effective state income tax rates.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Registrant's Annual Meeting of Stockholders held on April 21,
1995, the following matters were submitted to a vote of the
stockholders of the Registrant:
1. Election of five nominees to the Board of Directors of the
Registrant for terms ending in 1998:
Shares
Voted Shares
Nominee in Favor Withheld
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Thomas B. Horack 25,199,534 173,393
Alan T. Dickson 25,198,076 174,851
S. Lance Van Every 25,210,253 162,674
Nancy Van Every McLaurin 25,218,433 154,494
James H. Hance, Jr. 25,205,371 167,556
2. Election of two nominees to the Board of Directors of the
Registrant for terms ending in 1997:
Shares
Voted Shares
Nominee in Favor Withheld
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Richard A. Zimmerman 25,252,382 120,545
Isaiah Tidwell 25,203,844 169,083
3. Approval of the Lance, Inc. 1995 Nonqualified Stock Option
Plan for Non-Employee Directors by a vote of 23,832,535 shares
in favor and 788,472 shares against, with 801,609 shares
abstaining and 518,216 shares of broker non-votes.
4. Ratification of the selection of KPMG Peat Marwick LLP as
auditors for the fiscal year ending December 30, 1995, which
was approved by a vote of 25,302,613 shares in favor and 78,251
shares against, with 559,968 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.2 Bylaws of Lance, Inc. as amended on April 21, 1995 to
rewrite Article 5 thereof.
27. Financial Data Schedule. (Filed in electronic format
only. Pursuant to Rule 402 of Regulation S-T, this
schedule shall not be deemed filed for purposes of
Section 11 of the Securities Act of 1933 or Section
18 of the Securities Exchange Act of 1934).
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the 12 weeks ended
June 17, 1995.
Items 1 through 3 and 5 are inapplicable and have been omitted.
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.
LANCE, INC.
By /s/ E. D. Leake
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E. D. Leake
Vice President and Principal
Financial Officer
Dated: July 28, 1995
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