Exhibit 99.1
FOR IMMEDIATE RELEASE SYMBOL: LANC
Friday, January 28, 2005 TRADED: Nasdaq
LANCASTER COLONY REPORTS SECOND QUARTER SALES AND EARNINGS
COLUMBUS, Ohio, Jan. 28 -- Lancaster Colony Corporation (Nasdaq: LANC)
today reported net income for the company's second fiscal quarter ended December
31, 2004 reached $38,119,000, or $1.08 per diluted share, compared with net
income of $26,650,000, or $.74 per diluted share in the second quarter last
year. Net sales increased two percent to $297 million versus $291 million a year
ago.
Earnings for the quarter included pretax income of $26.2 million (47
cents per share after taxes) associated with a distribution received under the
Continued Dumping and Subsidy Offset Act. A similar distribution contributed
pretax income of $2.0 million (three cents per share after taxes) in the second
quarter a year ago. Also included in the prior year's second quarter results
were pretax income of $1.2 million (two cents per share after taxes) related to
a bad-debt recovery and pretax income of $1.0 million (two cents per share after
taxes) related to the liquidation of LIFO inventories carried at substantially
lower prior years' costs.
For the six months ended December 31, 2004, net income totaled
$56,497,000 compared to $46,350,000 earned in the corresponding period a year
ago. Diluted earnings per share were $1.60 compared to $1.29 for the first six
months last year. Six-month net sales were $579 million compared to $558 million
last year. In the first half this year, LIFO-related pretax income amounted to
$.6 million (one cent per share after taxes) compared with $2.6 million (five
cents per share after taxes) a year ago.
John B. Gerlach, Jr., chairman and CEO of Lancaster Colony Corporation,
said, "Increased sales of specialty foods contributed to the top line
improvement for the quarter, but our operations faced higher nonfood material
costs as well as generally higher freight and energy costs. Pricing relief is
difficult except through new product development."
Specialty Foods net sales totaled $177 million, up eight percent over
the prior year's second quarter total. Segment operating income was essentially
unchanged from the prior year's total at $31 million. Most of the segment's top
line growth was internally generated although Warren Frozen Foods, acquired in
December 2003, contributed approximately $5 million of the sales increase.
Segment operating margins reflect a less favorable sales mix and certain frozen
bread production inefficiencies.
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PAGE 2 / LANCASTER COLONY REPORTS SECOND QUARTER SALES AND EARNINGS
Glassware and Candles net sales totaled $68 million in the second
quarter, a seven percent decline from the year-ago quarter. Segment operating
income totaled $3.7 million, compared to $6.8 million in the year ago quarter.
Comparative operating income was impacted by the prior year's LIFO-related
income and bad-debt recovery. For the year-to-date period, the segment achieved
higher sales and more efficient glassware manufacturing, but remains confronted
by intense competitive pressures in retail markets.
Automotive sales totaled $52 million, a four percent decline from the
second quarter level in the prior year. Improved sales of aluminum truck
accessories were more than offset by a decline in sales of automotive floor
mats. Segment operating income for the quarter was down $2.7 million to $1.1
million, as this segment's profitability remained adversely affected by markedly
higher costs for many key raw materials.
Looking forward, Mr. Gerlach stated, "We continue our efforts to
improve our sales and profitability through new product development and
marketing efforts, including introducing significantly redesigned packaging for
our high-profile line of produce salad dressings. Operating results in the
second half of our fiscal year will likely benefit from a reduction in certain
food ingredient costs, although this benefit will be mitigated by continuing
higher costs for many nonfood raw materials." As of December 31, 2004, the
company remained debt free, with over $204 million in cash and equivalents as
well as $606 million in shareholders' equity.
The company's second quarter conference call is scheduled for this
morning, January 28, at 10:00 a.m. ET. You may access the call through a live
webcast by using the link provided on the company's Internet home page at
www.lancastercolony.com. The webcast will be archived and available on the
company's website.
This news release contains forward-looking statements related to future
growth and earnings opportunities. Such statements are based upon certain
assumptions and assessments made by management of the company in light of its
experience and perception of historical trends, current conditions, expected
future developments and other factors it believes to be appropriate. Actual
results may differ as a result of factors over which the company may have no, or
limited, control including the strength of the economy, slower than anticipated
sales growth, the extent of operational efficiencies achieved, the success of
new product introductions, price and product competition, and increases in raw
materials costs. Management believes these forward-looking statements to be
reasonable; however, undue reliance should not be placed on such statements,
which are based on current expectations. The company undertakes no obligation to
publicly update such forward-looking statements. More detailed statements
regarding significant events which could affect the company's financial results
are included in the company's Forms 10-K and 10-Q filed with the Securities and
Exchange Commission.
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PAGE 3 / LANCASTER COLONY REPORTS SECOND QUARTER SALES AND EARNINGS
LANCASTER COLONY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands except per-share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
---------------------- ----------------------
Net sales $297,349 $291,196 $578,833 $557,848
Cost of sales 237,990 226,145 465,457 436,990
-------- -------- -------- --------
Gross margin 59,359 65,051 113,376 120,858
Selling, general & administrative expenses 25,531 24,903 50,307 49,072
Restructuring and impairment charge 45 -- 487 --
-------- -------- -------- --------
Operating income 33,783 40,148 62,582 71,786
Interest income and other - net 27,059 2,480 27,686 2,826
-------- -------- -------- --------
Income before income taxes 60,842 42,628 90,268 74,612
Taxes based on income 22,723 15,978 33,771 28,262
-------- -------- -------- --------
Net income $ 38,119 $ 26,650 $ 56,497 $ 46,350
======== ======== ======== ========
Net income per common share:(a)
Basic $ 1.09 $ .75 $ 1.60 $ 1.30
Diluted $ 1.08 $ .74 $ 1.60 $ 1.29
Cash dividends per common share $ .25 $ .23 $ .48 $ .43
Weighted average common shares outstanding:
Basic 35,084 35,719 35,220 35,741
Diluted 35,144 35,798 35,276 35,815
(a) Based on the weighted average number of shares outstanding during
each period.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited)
(In thousands)
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
---------------------- ----------------------
NET SALES
Specialty Foods $177,075 $163,888 $337,684 $318,705
Glassware and Candles 67,842 72,709 131,574 128,835
Automotive 52,432 54,599 109,575 110,308
-------- -------- -------- --------
$297,349 $291,196 $578,833 $557,848
======== ======== ======== ========
OPERATING INCOME
Specialty Foods $ 31,036 $ 31,096 $ 58,415 $ 57,409
Glassware and Candles 3,684 6,764 4,763 9,870
Automotive 1,098 3,804 3,354 7,455
Corporate expenses (2,035) (1,516) (3,950) (2,948)
-------- -------- -------- --------
$ 33,783 $ 40,148 $ 62,582 $ 71,786
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PAGE 4 / LANCASTER COLONY REPORTS SECOND QUARTER SALES AND EARNINGS
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, June 30,
2004 2004
------------ --------
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $204,670 $178,503
Receivables - net of allowance for doubtful
accounts 109,001 94,623
Total inventories 142,798 155,076
Deferred income taxes and other current assets 29,224 22,803
-------- --------
Total current assets 485,693 451,005
Net property, plant and equipment 154,350 159,494
Other assets 103,268 102,388
-------- --------
Total assets $743,311 $712,887
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,428 $ 47,383
Accrued liabilities 61,642 45,348
-------- --------
Total current liabilities 104,070 92,731
Other noncurrent liabilities and deferred taxes 33,696 33,371
Shareholders' equity 605,545 586,785
-------- --------
Total liabilities and shareholders' equity $743,311 $712,887
======== ========
SUBJECT TO YEAR-END AUDIT.
# # # #
FOR FURTHER INFORMATION: John B. Gerlach, Jr., Chairman and CEO, or
John L. Boylan, Vice President, Treasurer and CFO
Lancaster Colony Corporation
Phone: 614/224-7141
--or--
Investor Relations Consultants, Inc.
Phone: 727/781-5577 or E-mail: lanc@mindspring.com