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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 March 23, 1996
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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 Identification No.)
incorporation or organization)
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 - 30,172,265 shares
outstanding as of April 30, 1996.
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LANCE, INC. AND SUBSIDIARIES
INDEX
Page
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PART I. FINANCIAL INFORMATION:
Financial Statements:
Condensed Consolidated Balance Sheets
March 23, 1996 (Unaudited) and December 30, 1995 .............. 3
Condensed Statements of Consolidated Income and
Retained Earnings (Unaudited) - Twelve Weeks
Ended March 23, 1996 and March 25, 1995 ....................... 4
Condensed Statements of Consolidated Cash Flows (Unaudited) -
Twelve Weeks Ended March 23, 1996 and March 25, 1995 .......... 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
SIGNATURES ............................................................ 8
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LANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, MARCH 23, 1996 (UNAUDITED) AND DECEMBER
30, 1995
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(In thousands, except share data)
ASSETS: 1996 1995
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CURRENT ASSETS:
Cash and cash equivalents $ 15,664 $ 12,585
Marketable securities 26,674 31,905
Accounts receivable (less
allowance for doubtful accounts) 33,890 29,429
Accrued interest receivable 455 493
Refundable income taxes 2,007 4,765
Inventories - (Note 3) 28,969 32,521
Deferred income tax benefit 10,509 10,494
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Total current assets 118,168 122,192
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PROPERTY, NET 126,343 126,656
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OTHER ASSETS:
Deposits 1,974 2,345
Prepayments, etc. 4,781 5,267
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Total other assets 6,755 7,612
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TOTAL $251,266 $256,460
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LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
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CURRENT LIABILITIES:
Accounts payable $ 5,538 $ 6,202
Accrued liabilities 24,517 25,744
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Total current liabilities 30,055 31,946
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OTHER LIABILITIES AND DEFFERED CREDITS:
Deferred income taxes 7,362 7,300
Accrued postretirement health care costs 9,035 8,808
Accrual for insurance claims 7,940 7,989
Supplemental retirement benefits 3,825 3,874
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Total other liabilities and deferred credits 28,162 27,971
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STOCKHOLDERS' EQUITY:
Common stock, $.83-1/3 par value (authorized:
75,000,000 shares; issued 30,272,265
shares in 1996; 30,337,265 shares in 1995) 25,227 25,281
Retained earnings 167,787 170,964
Net unrealized gain on marketable securities 35 298
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Total stockholders' equity 193,049 196,543
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TOTAL $251,266 $256,460
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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 ENDED MARCH 23, 1996 AND MARCH 25, 1995
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(In thousands, except per share data) 1996 1995
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NET SALES AND OTHER OPERATING REVENUE $109,959 $112,716
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COST OF SALES AND OPERATING EXPENSES:
Cost of sales 55,523 54,980
Selling and delivery expenses 42,315 42,935
General and administrative expenses 4,859 4,899
Contributions to employees' profit sharing retirement fund 1,003 1,294
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Total 103,700 104,108
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PROFIT FROM OPERATIONS 6,259 8,608
OTHER INCOME, NET 2,031 1,119
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INCOME BEFORE INCOME TAXES 8,290 9,727
INCOME TAXES 3,199 3,749
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NET INCOME 5,091 5,978
RETAINED EARNINGS AT BEGINNING OF FISCAL PERIOD 170,964 208,800
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TOTAL 176,055 214,778
LESS:
CASH DIVIDENDS 7,265 7,304
RETIREMENT OF COMMON STOCK 1,003
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RETAINED EARNINGS AT END OF FISCAL PERIOD $167,787 $207,474
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PER SHARE AMOUNTS (NOTE 4):
Net income $ .17 $ .20
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Cash dividends $ .24 $ .24
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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 TWELVE WEEKS ENDED MARCH 23, 1996 AND MARCH 25, 1995
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(In thousands) 1996 1995
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OPERATING ACTIVITIES:
Net Income $ 5,091 $ 5,978
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 5,095 5,876
Deferred income taxes 47 (504)
Gain on sale of property (965) (27)
Other, net 542 230
Changes in operating assets and liabilities 88 681
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Net cash flow from operating activities 9,898 12,234
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INVESTING ACTIVITIES:
Purchases of property (4,606) (2,785)
Proceeds from sale of property 1,160 293
Purchases of marketable securities (1,143) (1,296)
Sales of marketable securities 1,967 2,931
Maturities of marketable securities 4,108 861
Other, net 18 7
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Net cash provided by investing activities 1,504 11
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FINANCING ACTIVITIES:
Dividends paid (7,265) (7,304)
Purchases of the Company's common stock (1,058)
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Net cash used in financing activities (8,323) (7,304)
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INCREASE IN CASH 3,079 4,941
CASH AT BEGINNING PERIOD 12,585 12,964
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CASH AT END OF PERIOD $ 15,664 $17,905
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SUPPLEMENTAL INFORMATION:
Cash paid for income taxes $ 113 $ 151
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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
March 23, 1996 and December 30, 1995, the consolidated results of
operations for the twelve weeks ended March 23, 1996 and March 25, 1995,
and the consolidated cash flows for the twelve weeks ended March 23, 1996
and March 25, 1995.
2. The consolidated results of operations for the twelve weeks ended March
23, 1996 and March 25, 1995 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
determing the cost of substantially all of its inventories. Because
inventory caluations 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 March 23, 1996 and December 30, 1995 consisted of (in
thousands):
1996 1995
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Finished goods $14,990 $16,501
Goods in process 53 21
Raw materials 13,465 15,350
Supplies, etc. 7,089 7,128
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Total inventories at FIFO cost 35,597 39,000
Less: Adjustment to reduce FIFO
cost to LIFO cost 6,628 6,479
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Total inventories at LIFO cost $28,969 $32,521
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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 ended March 23, 1996 and March 25,
1995 are computed based on 30,276,432 and 30,433,407 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 a strong position of liquidity and has the
financial strength to meet its regular operating needs, cash dividend payments,
capital investment program, and stock repurchases 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 $3
million.
Marketable securities, cash and cash equivalents decreased from December 30,
1995 largely as a result of dividends paid, purchases of property, the purchase
of Company stock during the quarter and a decrease in accrued liabilities. The
lower inventory balances reflect the use of peanut inventory, the closing of
the Vista Bakery plant in Columbia, South Carolina and the Greenville, Texas
production facility in February, 1996 and the seasonal reduction in goods
purchased for resale.
Accounts receivable are $4.5 million higher since year end due to the timing of
the billing cycle.
Depreciation expense is lower because of the closing of the Greenville, Texas
production facility and the Vista Bakery plant in Columbia, South Carolina in
February, 1996.
Accounts payable have decreased since year end 1995 reflecting the timing of
purchases. Accrued liabilities are down due to payments in the first quarter
of 1996 of a portion of the accruals associated with the closing of the
Greenville, Texas production facility and the Vista Bakery plant in Columbia,
South Carolina.
Net sales and other operating revenue decreased approximately $2.8 million
compared with the first quarter 1995 due primarily to decreased unit volume.
Severe weather, especially in January, had a major negative impact on sales.
Also, the consolidation and elimination of sales territories impacted sales
negatively during the quarter. Sales revenues continue to be affected by
intense price competition in most markets.
Sales of products produced at the Vista Bakery plants were up for the quarter
due to anticipation of the sales price increase instituted in March 1996.
Results of operations at Vista Bakery were profitable for the quarter.
For the quarter, cost of sales increased in dollars and as a percentage of
sales. Higher raw material costs, especially flour, and inefficiencies at the
Greenville and Columbia plants adversely affected cost of sales for the
quarter.
Other income was higher due to gain on sale of fixed assets.
Net income decreased $900,000 as a result of the foregoing factors.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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
March 23, 1996.
Items 1 through 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 dully authorized.
LANCE, INC.
By /s/ E. D. Leake
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E. D. Leake
Vice President and Principal
Financial Officer
Dated: May 6, 1996
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