<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
_X_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JUNE 30, 1994
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from................. to .................
COMMISSION FILE NUMBER 0-4065-1
LANCASTER COLONY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
OHIO 13-1955943
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
37 WEST BROAD STREET, COLUMBUS, OHIO 43215
(Address of principal executive offices) (Zip Code)
</TABLE>
614-224-7141
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
COMMON STOCK--NO PAR VALUE PER SHARE
(INCLUDING SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.___
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_____
The aggregate market value of Common Stock held by non-affiliates on
September 1, 1994 was approximately $817,000,000.
As of September 1, 1994, there were approximately 30,057,000 shares of
Common Stock, no par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference to this
annual report: Registrant's 1994 Annual Report to Shareholders - Parts I and
II. Proxy Statement for the Annual Meeting of Shareholders to be held November
21, 1994; to be filed - Part III. The 1994 Annual Report to Shareholders and
1994 Proxy Statement shall be deemed to have been "filed" only to the extent
portions thereof are expressly incorporated by reference.
1
<PAGE> 2
PART I
Item 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Lancaster Colony Corporation was reincorporated in Ohio effective January
2, 1992. Prior to this date Lancaster Colony Corporation had been a Delaware
Corporation organized in 1961. As used herein the term "registrant," unless
the context otherwise requires, refers to Lancaster Colony Corporation and its
subsidiaries.
DESCRIPTION OF AND FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
The registrant operates in three business segments - specialty foods,
automotive, and glassware and candles - which accounted for approximately 40%,
33% and 27%, respectively, of consolidated net sales for the fiscal year ended
June 30, 1994. The financial information relating to business segments for the
three years ended June 30, 1994, appearing in Exhibit 13 in this Form 10-K
Annual Report, is incorporated by reference. Further description of each
business segment the registrant operates within is provided below.
SPECIALTY FOODS
The food products manufactured and sold by the registrant include salad
dressings and sauces marketed under the brand names "Marzetti," "Pfeiffer" and
"Girard's"; frozen unbaked pies marketed under the brand names "Mountain Top"
and "Reames"; hearth-baked frozen breads marketed under the brand name "New
York Frozen Foods"; refrigerated chip and produce dips, dairy snacks and
desserts marketed under the brand names "Oak Lake Farms," "Allen" and/or
"Marzetti"; premium dry egg noodles marketed under the brand names "Inn Maid"
and "Amish Kitchen"; frozen specialty noodles, pastas, and breaded specialty
items marketed under the brand name "Reames" and caviar marketed under the
brand name "Romanoff."
The salad dressings and sauces are manufactured in Columbus, Ohio;
Wilson, New York; Atlanta, Georgia and Milpitas, California. The dressings are
sold in various metropolitan areas with sales being made both to retail and
foodservice markets.
The frozen unbaked pies are marketed principally in the midwestern United
States through salesmen and food brokers to institutional distributors and
retail outlets. A significant portion of the frozen bread sales is directed to
the foodservice market.
The refrigerated chip and produce dips, dairy snacks and desserts are
sold through food brokers and distributors primarily in the midwestern and
southeastern parts of the United States. The distribution of these products to
other parts of the country has significantly increased over the last three
years.
The dry egg noodles are marketed by brokers principally in Ohio,
Michigan, Indiana and Kentucky.
The "Reames" line is sold through brokers and distributors in various
metropolitan areas principally in the central and midwestern United States.
This segment is not dependent upon a single customer or a few customers,
the loss of any one or more of which would have a significant adverse effect on
operating results. Although the Company is a leading producer of salad
dressings, all of the markets in which the registrant sells food products are
highly competitive in the areas of price, quality and customer service.
2
<PAGE> 3
During fiscal year 1994, the registrant obtained adequate supplies of raw
materials for this segment.
The registrant's firm order backlog at June 30, 1994, in this business
segment, was approximately $3,089,000 as compared to a backlog of approximately
$2,749,000 as of the end of the preceding fiscal year. It is expected that all
of these orders will be filled during the current fiscal year. The operations
of this segment are not affected to any material extent by seasonal
fluctuations. The registrant does not utilize any franchises or concessions in
this business segment. The trade names under which it operates are significant
to the overall success of this segment. However, the patents and licenses
under which it operates are not essential to the overall success of this
segment.
AUTOMOTIVE
The registrant manufactures and sells a complete line of rubber, vinyl
and carpeted car mats both in the aftermarket and to original equipment
manufacturers. Other products are pickup truck bed mats, running boards, bed
liners and other accessories for pickup trucks and vans, truck and trailer
splash guards and quarter fenders, accessories such as tissue holders, litter
caddies and oil drain pans and new car components. The automotive aftermarket
products are marketed primarily through mass merchandisers and automotive
outlets under the name "Rubber Queen" and the registrant sells bed liners under
the "Protecta" and "Line-A-Bed" trademarks, running boards under the "Dee Zee"
name, as well as under private labels. Although minor, rubber matting sales
are also included in this segment. The aggregate sales of two customers
accounted for approximately 32% of this segment's total net sales during 1994.
No other customer accounted for more than 10% of this segment's total net
sales. Although the Company is a market leader in many of its product lines,
all the markets in which the registrant sells automotive products are highly
competitive in the areas of design, price, quality and customer service.
During fiscal year 1994, the registrant obtained adequate supplies of raw
materials for this segment.
The registrant's firm order backlog at June 30, 1994, in this business
segment, was approximately $12,503,000 as compared to a backlog of
approximately $7,257,000 as of the end of the preceding fiscal year. It is
expected that all of these orders will be filled during the current fiscal
year. The operations of this segment are not affected to any material extent
by seasonal fluctuations. The registrant does not utilize any significant
franchises or concessions in this segment. The patents, trademarks and
licenses under which it operates are generally not essential to the overall
success of this segment.
GLASSWARE AND CANDLES
Glass products include a broad range of machine pressed and machine blown
consumer glassware and technical glass products such as cathode ray tubes,
lighting components, lenses and silvered reflectors.
Consumer glassware includes a diverse line of decorative and ornamental
products such as tumblers, bowls, pitchers, jars and barware. These products
are marketed under a variety of trademarks, the most important of which are
"Indiana Glass," "Tiara," "Colony" and "Fostoria." The registrant also
purchases domestic and imported blown glassware which is sold through Colony, a
marketing division, and some domestic handcrafted ware sold through its Tiara
home party marketing plan.
Glass vases and containers are sold both in the retail and wholesale
florist markets under the trade name "Brody" as well as under private label.
Candles of all sizes, forms and scents are sold in the mass merchandise
markets as well as to supermarkets, drug stores and specialty shops under
3
<PAGE> 4
the name "Candle-lite." Private label business is also an important part of
the candle market.
The registrant's glass and candle products are sold to discount,
department, variety and drug stores, as well as to jobbers and directly to
retail customers. Commercial markets such as foodservice, hotels, hospitals
and schools are also served by this segment's products. All the markets in
which the registrant sells houseware products are highly competitive in the
areas of design, price, quality and customer service. During 1994, sales of
glassware and candles to one customer accounted for approximately 12% of this
segment's total net sales. No other customer accounted for more than 10% of
this segment's total net sales.
During fiscal year 1994, the registrant obtained adequate supplies of raw
materials for this business segment.
The registrant's firm order backlog at June 30, 1994, in this business
segment, was approximately $24,229,000 as compared to approximately $23,142,000
as of the end of the preceding fiscal year. It is expected that all of these
orders will be filled during the current fiscal year. Seasonal retail stocking
patterns cause certain of this segment's products to experience increased sales
in the first half of the fiscal year. The registrant does not use any
franchises or concessions in this segment. The patents and licenses under
which it operates are not essential to the overall success of this segment.
However, certain trademarks are important to this segment's marketing efforts.
NET SALES BY CLASS OF PRODUCTS
The following table sets forth business segment information with respect
to the percentage of net sales contributed by each class of similar products
which accounted for at least 10% of the Company's consolidated net sales in any
fiscal year from 1992 through 1994.
<TABLE>
<CAPTION>
1994 1993 1992
- - ------------------------------------------------------------------------
<S> <C> <C> <C>
Specialty Foods 40% 40% 38%
Automotive:
Aftermarket 18% 18% 20%
Original Equipment Manufacturers 15% 14% 12%
Glassware and Candles:
Consumer Table and Giftware 22% 22% 23%
</TABLE>
GENERAL BUSINESS
RESEARCH AND DEVELOPMENT
The estimated amount spent during each of the last three fiscal years on
research and development activities determined in accordance with generally
accepted accounting principles is not considered material.
ENVIRONMENTAL MATTERS
Certain of the registrant's operations are subject to compliance with
various air emission standards promulgated under Title V of the Federal Clean
Air Act. The effective date of compliance with such standards is scheduled to
occur in the registrant's fiscal year ending June 30, 1996. The registrant is
currently developing a compliance strategy to submit to the related Federal
agency for approval. Based upon available information, compliance with the
Federal Clean Air Act provisions, as well as other various Federal, state and
local environmental protection laws and regulations, is not expected to have a
material adverse effect upon the level of capital expenditures, earnings or the
competitive position of the registrant for the remainder of the current and
succeeding fiscal year. See also Item 3 for a discussion of pending
environmental matters.
4
<PAGE> 5
EMPLOYEES
The registrant has approximately 5,600 employees.
FOREIGN OPERATIONS AND EXPORT SALES
Financial information relating to foreign operations and export sales
have not been significant in the past and are not expected to be significant in
the future based on existing operations.
Item 2. PROPERTIES
The registrant uses approximately 5,382,000 square feet of space for its
operations. Of this space, approximately 1,560,000 square feet are leased.
The following table summarizes facilities exceeding 50,000 square feet of
space and which are considered the principal manufacturing and warehousing
operations of the registrant:
<TABLE>
<CAPTION>
Approximate
Location Business Segment(s) Square Feet
- - -------- ------------------- -----------
<S> <C> <C>
Baltimore, MD (1) Glassware and Candles 245,500
Bedford Hts., OH (2) Specialty Foods 52,800
Blue Ash, OH (3) Glassware and Candles 150,000
Columbus, OH Specialty Foods 150,500
Coshocton, OH (4) Automotive 631,400
Des Moines, IA (5) Automotive 296,000
Dunkirk, IN Glassware and Candles 933,700
Elkhart, IN Automotive 96,000
Jackson, OH Automotive and Glassware and Candles 223,000
LaGrange, GA Automotive 133,100
Lancaster, OH Glassware and Candles 465,300
Leesburg, OH Glassware and Candles 234,900
Milpitas, CA (6) Specialty Foods 130,400
Mississauga, Ontario Automotive 66,000
Newport, TN (7) Automotive 81,000
Sapulpa, OK (8) Glassware and Candles 668,500
St. George, UT Automotive 67,500
Wapakoneta, OH (9) Automotive 163,300
Waycross, GA Automotive 122,500
Wilson, NY Specialty Foods 80,000
</TABLE>
(1) Leased until September 30, 1995.
(2) Leased for term expiring 1998 with an option to purchase at
specific occurrences or expiration of lease.
(3) Leased for term expiring 1996.
(4) Part leased on monthly basis.
(5) Part subject to capital lease expiring August 1996. Part leased
for term expiring April 1995. Part leased for term expiring
October 1996.
(6) Part leased for term expiring 1997.
(7) Leased for term expiring May 1996.
(8) Part leased for term expiring in 1997.
(9) Part leased for term expiring 2003 with ownership passing to
registrant at lease expiration.
5
<PAGE> 6
Item 3. LEGAL PROCEEDINGS
On January 28, 1991, a cost recovery action under Section 107 of the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
was filed against Pretty Products, Inc. ("Pretty Products") and the registrant
in the United States District Court ("Court") for the Southern District of Ohio
in a proceeding styled UNITED STATES VS. PRETTY PRODUCTS, ET AL. The complaint
seeks recovery of response costs allegedly incurred or to be incurred by the
EPA in connection with the cleanup of the Coshocton City Landfill. The
complaint also contains a claim for penalties under Section 104(e) of CERCLA
for an alleged failure to respond properly to certain information requests, but
this claim has been partially settled and the Court has indicated it is not
inclined to award penalties against the registrant or Pretty Products on the
record before it. Pretty Products and the registrant are defending the
complaint on various grounds, among them the defense that the EPA's response
costs are overstated. During fiscal 1994, the parties reached a tentative
settlement of all remaining claims totaling approximately $1,700,000, the full
amount of which has been provided for in the registrant's consolidated
financial statements as of June 30, 1994 and is exclusive of any future
insurance recoveries. The tentative settlement is subject to the approval of
the Department of Justice before it is presented to the Court in the form of a
proposed consent decree. The consent decree will become binding on Pretty
Products and the registrant when it is approved and entered by the Court, which
is expected to occur prior to December 31, 1994. If approved, it is
anticipated the registrant will pay the claims during fiscal 1995. It is the
opinion of management that the ultimate resolution of these matters will not
have a material adverse affect on its financial condition or results of
operations, whether or not it obtains recovery from its insurance companies.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
6
<PAGE> 7
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following list is
included as an unnumbered item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Shareholders to be
held November 21, 1994.
The following is a list of names and ages of all of the executive officers
of the registrant indicating all positions and offices with the registrant held
by such person and each person's principal occupation or employment during the
past five years. No person other than those listed below has been chosen to
become an executive officer of the registrant.
<TABLE>
<CAPTION>
First
Elected
Age as of an
September 1 Offices and Executive
Name 1994 Positions Held Officer
---- ---------- -------------- ---------
<S> <C> <C> <C>
John B. Gerlach 67 Chairman and
Chief Executive
Officer 1961
John L. Boylan 39 Treasurer and
Assistant Secretary 1990
John B. Gerlach, Jr. 40 President, Chief
Operating Officer and
Secretary 1982
Larry G. Noble 58 Vice President 1985
</TABLE>
The above named officers were re-elected to their present position at the
annual meeting of the Board of Directors on November 15, 1993. All such
persons have been elected to serve until the next annual election of officers,
which shall occur on November 21, 1994 and their successors are elected or
until their earlier resignation or removal.
John B. Gerlach, Jr. is the son of John B. Gerlach.
Except for Mr. Boylan, each of the executive officers listed above has
served the registrant or its subsidiaries in various executive capacities for
the past five years.
7
<PAGE> 8
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Reference is made to the "Selected Quarterly Financial Data", appearing
in Exhibit 13 of this Form 10-K Annual Report, for information concerning
market prices and related security holder matters on registrant's common shares
during 1994 and 1993. Such information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The presentation of selected financial data as of and for the five years
ended June 30, 1994 is included in the "Operations" and "Financial Position"
sections of the "Five Year Financial Summary" appearing in Exhibit 13 of this
Form 10-K Annual Report and is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Reference is made to the "Management's Discussion and Analysis of Results
of Operations and Financial Condition" appearing in Exhibit 13 of this Form
10-K Annual Report. Such information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information are set
forth in Exhibit 13 of this Form 10-K Annual Report and are incorporated herein
by reference.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the executive officers of the registrant,
see "Executive Officers of the Registrant" at the end of Part I of this report.
For information with respect to the Directors of the registrant, see
"Nomination and Election of Directors" in the Proxy Statement for the Annual
Meeting of Shareholders to be held November 21, 1994, which is incorporated
herein by reference.
Item 11. EXECUTIVE COMPENSATION
Information set forth under the caption "Executive Compensation" in the
Proxy Statement for the Annual Meeting of Shareholders to be held November 21,
1994 is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information set forth under the captions "Nomination and Election of
Directors" and "Security Ownership of Certain Beneficial Owners" in the Proxy
Statement for the Annual Meeting of Shareholders to be held November 21, 1994
is incorporated herein by reference.
8
<PAGE> 9
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information with respect to certain transactions with Directors of
the registrant, see "Other Transactions" in the Proxy Statement for the Annual
Meeting of Shareholders to be held November 21, 1994, which is incorporated
herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The consolidated financial statements as of June 30, 1994 and 1993
and for each of the three years in the period ended June 30, 1994,
together with the report thereon of Deloitte & Touche LLP dated
August 30, 1994, appearing in Exhibit 13 of this Form 10-K Annual
Report are incorporated herein by reference.
INDEX TO FINANCIAL STATEMENTS
Consolidated Statements of Income for the years ended June 30,
1994, 1993 and 1992
Consolidated Balance Sheets at June 30, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended June 30,
1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity for the years
ended June 30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2. FINANCIAL STATEMENT SCHEDULES REQUIRED BY ITEMS 8 AND 14(d)
Included in Part IV of this report is the following additional
financial data which should be read in conjunction with the
consolidated financial statements in the 1994 Annual Report to
Shareholders.
Independent Auditors' Report
Supplemental Consolidated Schedules for each of the three years
ended June 30, 1994:
Schedule V - Property, Plant and Equipment
Schedule VI - Accumulated Depreciation of Property,
Plant and Equipment
Schedule VIII - Valuation and Qualifying Accounts
Schedule X - Supplementary Income Statement Information
Schedules not included with the additional financial
data have been omitted because they are not applicable
or the required information is shown in the financial
statements or notes thereto.
9
<PAGE> 10
(a) 3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K AND ITEM 14(c)
See Index to Exhibits attached.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth
quarter of the year ended June 30, 1994.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 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 on this 21st day of
September, 1994.
LANCASTER COLONY CORPORATION
(Registrant)
By /S/ John B. Gerlach
-------------------------
John B. Gerlach
Chairman, Chief Executive
Officer and Principal
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/S/ John B. Gerlach Chairman, Chief September 16, 1994
- - --------------------------- Executive Officer and ------------------
John B. Gerlach Principal Financial
Officer
/S/ John B. Gerlach, Jr. President, Chief September 19, 1994
- - --------------------------- Operating Officer ------------------
John B. Gerlach, Jr. and Secretary
/S/ John L. Boylan Treasurer, Assistant September 14, 1994
- - --------------------------- Secretary and Principal ------------------
John L. Boylan Accounting Officer
/S/ Frank W. Batsch Director September 14, 1994
- - --------------------------- ------------------
Frank W. Batsch
/S/ Robert L. Fox Director September 15, 1994
- - --------------------------- ------------------
Robert L. Fox
/S/ Morris S. Halpern Director September 17, 1994
- - --------------------------- ------------------
Morris S. Halpern
/S/ Robert S. Hamilton Director September 15, 1994
- - --------------------------- ------------------
Robert S. Hamilton
/S/ Edward H. Jennings Director September 14, 1994
- - --------------------------- ------------------
Edward H. Jennings
/S/ Richard R. Murphey, Jr. Director September 14, 1994
- - --------------------------- ------------------
Richard R. Murphey, Jr.
/S/ Henry M. O'Neill, Jr. Director September 15, 1994
- - --------------------------- ------------------
Henry M. O'Neill, Jr.
/S/ David J. Zuver Director September 14, 1994
- - --------------------------- ------------------
David J. Zuver
</TABLE>
11
<PAGE> 12
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of
Lancaster Colony Corporation:
We have audited the consolidated financial statements of Lancaster Colony
Corporation and its subsidiaries as of June 30, 1994 and 1993, and for each of
the three years in the period ended June 30, 1994, and have issued our report
thereon dated August 30, 1994; such financial statements and report are
included in your 1994 Annual Report to Shareholders and are incorporated herein
by reference. Our audits also included the consolidated financial statement
schedules of Lancaster Colony Corporation and its subsidiaries, listed in Item
14. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
/S/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
August 30, 1994
<PAGE> 13
<TABLE>
LANCASTER COLONY CORPORATION SCHEDULE V
AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED
JUNE 30, 1994
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
-------- -------- -------- --------
BALANCE AT
BEGINNING ADDITIONS
DESCRIPTION OF YEAR AT COST RETIREMENTS
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
YEAR ENDED JUNE 30, 1992:
Land........................... $ 3,621,000 $ 192,000
Buildings and improvements..... 57,331,000 $ 1,016,000 11,000
Machinery and equipment........ 164,806,000 16,024,000 7,649,000
--------------------------------------------------------------
TOTAL................. $225,758,000 $17,040,000 $ 7,852,000
==============================================================
YEAR ENDED JUNE 30, 1993:
Land........................... $ 4,587,000 $ 7,000
Buildings and improvements..... 59,373,000 4,060,000 $ 124,000
Machinery and equipment........ 175,035,000 14,854,000 7,774,000
--------------------------------------------------------------
TOTAL................. $238,995,000 $18,921,000 $ 7,898,000
==============================================================
YEAR ENDED JUNE 30, 1994:
Land........................... $ 4,558,000 $ 329,000 $ 81,000
Buildings and improvements..... 63,202,000 2,437,000 572,000
Machinery and equipment........ 182,041,000 20,766,000 8,167,000
--------------------------------------------------------------
TOTAL................. $249,801,000 $23,532,000 $ 8,820,000
==============================================================
</TABLE>
<TABLE>
<CAPTION>
COLUMN A COLUMN E COLUMN F
-------- -------- --------
OTHER BALANCE
CHANGES AT END
DESCRIPTION ADD(DEDUCT) OF YEAR
- - -------------------------------------------------------------------------------------
<S> <C> <C>
YEAR ENDED JUNE 30, 1992:
Land........................... $ 1,186,000 (A) $ 4,587,000
(28,000)(B)
Buildings and improvements..... 1,117,000 (A) 59,373,000
(80,000)(B)
Machinery and equipment........ 1,965,000 (A) 175,035,000
(111,000)(B)
----------------------------------------
TOTAL................. $ 4,049,000 $238,995,000
========================================
YEAR ENDED JUNE 30, 1993:
Land........................... $ (36,000)(B) $ 4,558,000
Buildings and improvements..... (107,000)(B) 63,202,000
Machinery and equipment........ (74,000)(B) 182,041,000
----------------------------------------
TOTAL................. $ (217,000) $249,801,000
========================================
YEAR ENDED JUNE 30, 1994:
Land........................... $ (75,000)(B) $ 4,731,000
Buildings and improvements..... (75,000)(B) 64,992,000
Machinery and equipment........ (78,000)(B) 194,974,000
412,000 (A)
----------------------------------------
TOTAL................. $ 184,000 $264,697,000
========================================
(A) Represents the cost of property of acquired business.
(B) Represents the effect of foreign currency translation.
13
</TABLE>
<PAGE> 14
<TABLE>
LANCASTER COLONY CORPORATION SCHEDULE VI
AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED JUNE 30, 1994
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
-------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING COSTS AND
DESCRIPTION OF YEAR EXPENSES RETIREMENTS
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
YEAR ENDED JUNE 30, 1992:
Buildings and improvements.... $ 24,854,000 $ 2,736,000 $ 7,000
Machinery and equipment....... 102,765,000 16,085,000 6,822,000
------------------------------------------------------------
TOTAL.............. $127,619,000 $ 18,821,000 $ 6,829,000
============================================================
YEAR ENDED JUNE 30, 1993:
Buildings and improvements.... $ 27,567,000 $ 3,666,000 $ 83,000
Machinery and equipment....... 111,971,000 15,820,000 7,678,000
------------------------------------------------------------
TOTAL.............. $139,538,000 $ 19,486,000 $ 7,761,000
============================================================
YEAR ENDED JUNE 30, 1994:
Buildings and improvements.... $ 31,128,000 $ 2,681,000 $ 470,000
Machinery and equipment....... 120,076,000 17,464,000 7,684,000
------------------------------------------------------------
TOTAL.............. $151,204,000 $ 20,145,000 $ 8,154,000
============================================================
</TABLE>
<TABLE>
COLUMN A COLUMN E COLUMN F
-------- -------- --------
OTHER BALANCE
CHANGES AT END
DESCRIPTION ADD (DEDUCT) OF YEAR
- - ----------------------------------------------------------------------------
<S> <C> <C>
YEAR ENDED JUNE 30, 1992:
Buildings and improvements.... $ (16,000) $ 27,567,000
Machinery and equipment....... (57,000) 111,971,000
--------------------------------
TOTAL.............. $ (73,000)(A) $139,538,000
================================
YEAR ENDED JUNE 30, 1993:
Buildings and improvements.... (22,000) $ 31,128,000
Machinery and equipment....... (37,000) 120,076,000
--------------------------------
TOTAL.............. $ (59,000)(A) $151,204,000
================================
YEAR ENDED JUNE 30, 1994:
Buildings and improvements.... $ (28,000) $ 33,311,000
Machinery and equipment....... (40,000) 129,816,000
--------------------------------
TOTAL.............. $ (68,000)(A) $163,127,000
================================
<FN>
(A) Represents the effect of foreign currency translation.
</TABLE>
14
<PAGE> 15
<TABLE>
LANCASTER COLONY CORPORATION SCHEDULE VIII
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED JUNE 30, 1994
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OF YEAR
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSET TO WHICH
THEY APPLY - Allowance for doubtful
accounts:
Year ended June 30, 1992................. $1,721,000 $2,198,000 $2,034,000(A) $1,885,000
=================================================================
Year ended June 30, 1993................. $1,885,000 $2,096,000 $1,111,000(A) $2,870,000
=================================================================
Year ended June 30, 1994................. $2,870,000 $1,029,000 $1,560,000(A) $2,339,000
=================================================================
<FN>
(A) Represents uncollectible accounts written off net of recoveries.
</TABLE>
15
<PAGE> 16
<TABLE>
LANCASTER COLONY CORPORATION SCHEDULE X
AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED JUNE 30, 1994
<CAPTION>
COLUMN A COLUMN B
-------- --------
CHARGED TO COSTS
AND EXPENSES
----------------------
........YEAR ENDED JUNE 30........
ITEM 1994 1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
MAINTENANCE AND REPAIRS................$15,506,000 $13,535,000 $13,383,000
=========================================
ADVERTISING COSTS......................$11,226,000 $11,084,000 $ 9,163,000
=========================================
<FN>
Other items contained in Rule 12-11 of Regulation S-X have been omitted from
this schedule because such amounts are less than 1% of total net sales.
</TABLE>
16
<PAGE> 17
<TABLE>
LANCASTER COLONY CORPORATION
FORM 10-K
JUNE 30, 1994
INDEX TO EXHIBITS
<CAPTION>
Located at
Exhibit Manually
Number Description Numbered Page
------- ----------- -------------
<S> <C> <C>
3.1 Certificate of Incorporation of the registrant
approved by the shareholders November 18, 1991. (a)
.2 By-laws of the registrant as amended
through November 18, 1991. (a)
.3 Certificate of Designation, Rights and
Preferences of the Series A Participating
Preferred Stock of Lancaster Colony Corporation. (b)
4.1 Specimen Certificate of Common Stock. (i)
.2 Rights Agreement dated as of April 20, 1990
between Lancaster Colony Corporation and The
Huntington Trust Company, N.A. (c)
10.1 1981 Incentive Stock Option Plan. (d)
.2 Resolution by the Board of Directors to amend
registrant's 1981 Incentive Stock Option Plan,
approved by the shareholders November 21, 1983. (e)
.3 Resolution by the Board of Directors to amend
registrant's 1981 Incentive Stock Option Plan
approved by the shareholders November 18, 1985. (f)
.4 Employee Stock Ownership Plan and Trust
Agreement. (g)
.5 Resolution by the Board of Directors to amend
registrant's 1981 Incentive Stock Option Plan
approved by the shareholders November 19, 1990. (h)
.6 Key Employee Severance Agreement between Lancaster
Colony Corporation and John L. Boylan. (h)
.7 Consulting Agreement by and between Lancaster
Colony Corporation and Morris S. Halpern (j)
13. Annual Report to Shareholders. 19-38
22. Significant Subsidiaries of Registrant. 39
23. The consent of Deloitte & Touche LLP to the
incorporation by reference in Registration
Statement No. 33-39102 on Form S-8 of their
reports dated August 30, 1994, appearing in
this Annual Report on Form 10-K of Lancaster
Colony Corporation for the year ended
June 30, 1994. 40
27. Financial Data Schedule 41
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
(a) Indicates the exhibit is incorporated by reference from filing as an annex to the proxy statement of Lancaster Colony
Corporation for the annual meeting of stockholders held November 18, 1991.
(b) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-Q for the quarter ended March 31, 1990.
(c) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 8-K filed April 20, 1990.
(d) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1982.
(e) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1984.
(f) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1985.
(g) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1987.
(h) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1991.
(i) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1992.
(j) Indicates the exhibit is incorporated by reference from filing as an exhibit to the Lancaster Colony Corporation report
on Form 10-K for the year ended June 30, 1993.
<FN>
Note (1) The registrant and certain of its subsidiaries are parties to
various long-term debt instruments. The amount of securities
authorized under such debt instruments does not, in any case,
exceed 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis. The registrant agrees to
furnish a copy of any such long-term debt instrument to the
Commission upon request.
Note (2) The registrant has included in Exhibit 13 only the specific
Financial Statements and notes thereto of its 1994 Annual Report
to Shareholders which are incorporated by reference in this Form
10-K Annual Report. The registrant agrees to furnish a complete
copy of its 1994 Annual Report to Shareholders to the Commission
upon request.
</TABLE>
18
<PAGE> 1
Exhibit 13
MANAGEMENT'S DISCUSSION
-----------------------
AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SUMMARY OF CONSOLIDATED OPERATIONS
For the third consecutive year, Lancaster Colony Corporation achieved record
levels of net sales and net income. During its fiscal year ended June 30, 1994,
net sales totaled $721,732,000 reflecting a 14% increase over the previous
year's record total of $630,627,000. Net sales totaled $555,793,000 in fiscal
1992. These increases in consolidated net sales primarily reflect the effects
of significant growth in unit volumes recorded by each of the Company's three
operating segments.
Consolidated gross margins, as well as the level of consolidated operating
income, can be significantly affected by the relative proportion of sales
contributed by each of the Company's operating segments. Generally, sales
within the Specialty Foods segment provide higher gross margins but incur
greater selling costs than do sales of the other operating segments. The
segment sales mix and related operating income experienced over the last three
years can be summarized as follows:
<TABLE>
<CAPTION>
SEGMENT SALES MIX(1): 1994 1993 1992
- - -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Specialty Foods 40% 40% 38%
Automotive 33% 32% 32%
Glassware and Candles 27% 28% 30%
OPERATING INCOME(2):
- - -----------------------------------------------------------------------------------
Specialty Foods 15% 15% 14%
Automotive 13% 12% 12%
Glassware and Candles 16% 12% 9%
<FN>
(1) Expressed as a percentage of consolidated net sales
(2) Expressed as a percentage of the related segment's net sales
</TABLE>
For fiscal 1994, the consolidated gross margin percentage of 32.2% remained
essentially unchanged from that of 1993. A favorable sales mix combined with
productivity improvements helped offset the effects of higher raw material
costs incurred within the Specialty Foods segment. Fiscal 1993 margins
increased to 32.2% from 31.5% in 1992 due to an increased proportion of
specialty food sales as well as productivity improvements.
Selling, general and administrative expenses for 1994 totaled $131,428,000,
which reflects a 5% increase in such costs from 1993. Compared to 1992 levels,
such operating expenses increased 8% in 1993 primarily as a result of higher
sales. As a percentage of net sales, operating expenses were 18.2%, 19.8% and
20.8% in 1994, 1993 and 1992, respectively. The 1994 percentage was affected
by the curtailment of selected promotional activities within the Specialty
Foods segment during the latter half of the fiscal year.
As affected by increased sales and improved operating efficiencies discussed
above, operating income for 1994 of $100,668,000 increased 29% over the prior
year total of $78,027,000. For similar reasons, operating income in 1993
increased over the 1992 level of $59,679,000 by 31%.
Interest expense during 1994 totaled $2,849,000 compared to $3,625,000 and
$5,584,000 incurred in 1993 and 1992, respectively. This trend has resulted
from reduced levels of borrowings during the respective periods as well as from
the generally lower interest rates present in 1994 and 1993.
The Company's overall effective tax rate during 1994 increased to 39% compared
to 38% in 1993. This increase reflects the August 1993 enactment of the Omnibus
Budget Reconciliation Act of 1993 which increased the statutory marginal
Federal income tax rate to 35% from 34%. The retroactive provisions of this
legislation also increased the current year's tax provision by $343,000. During
fiscal 1992, the provisions of Statement of Financial Accounting Standards No.
109 were adopted although the impact to that year's financial statements was
not significant. See Note 7 to the accompanying financial statements for
additional information regarding income taxes provided for each period.
3
<PAGE> 2
SEGMENT REVIEW - SPECIALTY FOODS
Net sales of the Specialty Foods segment during 1994 totaled $289,734,000, a
15% increase over 1993 sales of $252,288,000. The latter year's sales had also
increased over 1992 sales of $212,349,000 by 19%. Over the last five years,
sales have grown at an average compound rate of approximately 14%. Contributing
to growth within the last three years has been this segment's expanded
geographic market penetration, particularly toward the West Coast. This effort
has been assisted by the fiscal 1992 acquisition of a California manufacturing
facility. The addition of new national foodservice accounts as well as new
products have also played an important role in recent years, with the 1994
results also being impacted by the July 1993 acquisition of Romanoff caviars
and related product lines.
As a percentage of net sales, operating income of $42,542,000 for 1994 was 15%
which was comparable to the same percentage in 1993 and 14% in 1992. The
increase in operating income over the last three years has been driven
primarily through increases in sales volumes. However, in fiscal 1994, the
effects of increased raw material costs incurred within this segment were
minimized by the reduction of certain promotional activities as well as by the
implementation of selected price increases.
4
<PAGE> 3
SEGMENT REVIEW - AUTOMOTIVE
The Automotive segment's sales increased 16% in fiscal 1994 to $235,287,000
compared to 1993 sales of $203,079,000. The latter year's sales had increased
15% from 1992 sales of $176,762,000. Sales growth of the Company's automotive
products during these periods was influenced by a pattern of increasing
domestic sales of new automobiles and light trucks. The Automotive segment's
sales to original equipment manufacturers over the last three years have
increased as a percentage of total segment sales from 38% in fiscal 1992 to 44%
in 1993 and 45% in 1994. Additionally, growth in the sales of domestic new
light trucks and vans have out-paced the increase in automotive sales causing
the Company's aftermarket lines of truck and van accessories to also experience
strong growth.
The increased sales volumes, combined with the implementation of productivity
improvements, have provided manufacturing efficiencies which permitted this
segment's operating income to increase from 12% of net sales in 1992 and 1993
to 13% in 1994. Operating margins within the Automotive segment are expected
to remain constrained by the restrictive pricing programs present throughout
much of the original equipment markets. Accordingly, continued enhancements of
manufacturing processes will be important in assuring satisfactory levels of
future operating margins.
5
<PAGE> 4
SEGMENT REVIEW -
GLASSWARE AND CANDLES
Increased sales of candles have led the sales growth of this segment during
each of the last two years. Net sales in 1994 totaled $196,711,000, a 12%
increase over the 1993 total of $175,260,000. Sales of new candle products,
particularly wax-filled glass items marketed under the brand name Candle-lite,
have significantly contributed to this growth. Also affecting this segment's
sales during 1994 was a recovery in the sales of industrial glassware products
which had experienced a decline in 1993 due to unfavorable economic conditions
faced by customers in this market.
Operating income of the Glassware and Candles segment during 1994 increased to
16% of net sales compared to 12% during 1993 and 9% in 1992. Factors
contributing to this improved operating margin include the presence of a more
favorable sales mix, volume-driven efficiencies and the installation of new
machinery utilized to improve manufacturing processes. With respect to the new
line of wax-filled glass products, synergies are also being attained through
the production of glass components used within this product line.
6
<PAGE> 5
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities during 1994 totaled $61,092,000 compared
to $61,733,000 in 1993. These amounts were affected by an increase in net
working capital of $37,798,000 in 1994 compared to 1993 and an increase of
$29,641,000 in 1993 compared to 1992. The 1994 working capital increase
reflects a volume-driven increase in accounts receivable as well as a growth in
inventories reflecting higher sales and a planned build of certain seasonal
inventories within the Glassware and Candles segment.
The Company has established a considerable degree of financial flexibility over
the last five years through its reduction of debt and its profit-driven growth
in equity. Including short- and long-term debt within total capitalization, the
Company's debt to capital percentage was 13% at June 30, 1994 compared to 16%
at June 30, 1993. For perspective, this percentage was 40% at June 30, 1989.
Management believes that liquidity for internal expansion and dividend
requirements during fiscal 1995 will be sufficiently provided by cash flows
from operating activities. The Company also continues to maintain discretionary
bank lines of credit in excess of $150,000,000 to provide additional access to
liquidity if required.
Significant uses of cash during 1994 included expenditures for property
additions totaling $23,532,000 compared to $18,921,000 in 1993 and $17,040,000
in 1992. The Company also expended approximately $5,438,000 in July 1993 to
acquire the operating assets of a specialty foods operation specializing in the
distribution of caviar and related products. Other significant 1994
expenditures included $7,718,000 for the purchase of treasury stock. During
fiscal 1995, management will continue to consider opportunities for additional
business acquisitions and review the benefits of further treasury stock
purchases.
Weighted average shares outstanding during each of the last three years were
impacted by the declaration of stock splits including a three-for-two stock
split paid in 1992, a four-for-three stock split paid in 1993 and a
four-for-three stock split declared in fiscal 1994 and paid in July 1994.
Shares issued were affected in 1992 by the retirement of all the treasury
shares then-outstanding. Also during 1992, common stock was converted to stock
with no par value to coincide with the Company's reorganization as an Ohio
corporation. This resulted in the elimination of additional capital as a
separate balance sheet caption.
Not unlike other companies with a significant manufacturing base, the Company
continues to incur certain costs and provide for necessary capital expenditures
needed to comply with various environmental laws and regulations. It is clear
that the trend in recent years has been for these requirements to become
increasingly more complex and stringent. The extent to which these compliance
costs may be ongoing is difficult to measure but is not believed to be material
to financial operations. From time to time, the Company also communicates with
regulatory authorities regarding various environmental matters and is currently
named as a "potentially responsible party" in a legal action brought under the
Comprehensive Environmental Response, Compensation and Liability Act relating
to a landfill site in Ohio. The Company believes that the resolution of this
matter should occur in fiscal 1995 and will not materially affect its results
of operations or financial condition.
IMPACT OF INFLATION
The margins of the Specialty Foods segment were affected during 1994 by
increased average market prices for soybean oil, a primary ingredient in
several product lines of this segment. It is anticipated that the
implementation of selected price adjustments should minimize the impact of
these higher costs which still persist. With the exception of soybean oil, the
last three years have otherwise remained a period of relatively stable costs
and inflation is therefore not believed to have had a significant impact on
gross margins or operating expenses.
As mentioned above, the Company attempts to adjust its selling prices to offset
the effects of increased raw material costs whenever possible. However, these
adjustments have historically been difficult to implement on a timely basis
relative to the increase in costs incurred by the Company. The Company's
presence in diverse operations tends to minimize the inflationary risks
associated with reliance on a limited number and type of purchased materials.
Furthermore, the continuous implementation of productivity improvements in
manufacturing and distribution operations have lead to reduced unit costs of
production over time.
7
<PAGE> 6
<TABLE>
FIVE YEAR FINANCIAL SUMMARY
---------------------------
Lancaster Colony Corporation and Subsidiaries
<CAPTION>
Thousands Except Per Share Figures) 1994 1993 1992 1991 1990
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net Sales $721,732 $630,627 $555,793 $500,475 $504,945
Gross Margin $232,096 $203,106 $175,226 $150,373 $141,395
Percent of sales 32.2% 32.2% 31.5% 30.0% 28.0%
Interest Expense $ 2,849 $ 3,625 $ 5,584 $ 8,735 $ 9,392
Percent of sales 0.4% 0.6% 1.0% 1.7% 1.9%
Income Before Income Taxes $ 98,093 $ 74,319 $ 53,852 $ 33,817(1) $ 27,637(3)
Percent of sales 13.6% 11.8% 9.7% 6.8% 5.5%
Taxes Based on Income $ 38,233 $ 28,094 $ 21,481 $ 12,623 $ 11,587
Net Income $ 59,860 $ 46,225 $ 32,371 $ 20,184(2) $ 16,050
Percent of sales 8.3% 7.3% 5.8% 4.0% 3.2%
Per Common Share:(4)
Net income $ 1.97 $ 1.52 $ 1.06 $ .65(2) $ .51
Cash dividends $ .44 $ .37 $ .32 $ .30 $ .29
- - ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total Assets $355,445 $302,050 $289,951 $286,989 $308,506
Working Capital $164,446 $126,648 $ 97,007 $ 93,570 $ 75,937
Property, Plant and Equipment--Net $101,570 $ 98,597 $ 99,457 $ 98,139 $101,423
Long-Term Debt $ 32,933 $ 34,586 $ 39,984 $ 57,176 $ 60,191
Property Additions $ 23,532 $ 18,921 $ 17,040 $ 13,517 $ 18,223
Provision for Depreciation $ 20,145 $ 19,486 $ 18,821 $ 17,458 $ 17,219
Shareholders' Equity $236,847 $192,010 $159,416 $139,385 $128,915
Per Common Share(4) $ 7.83 $ 6.34 $ 5.25 $ 4.55 $ 4.17
Weighted Average
Common Shares Outstanding(4) 30,317 30,483 30,502 30,825 31,561
- - ----------------------------------------------------------------------------------------------------------------------------------
STATISTICS
Price-Earnings Ratio at Year End 23.9 18.9 15.5 11.9 15.8
Current Ratio 3.2 3.1 2.3 2.3 1.7
Long-Term Debt as
a Percent of Shareholders' Equity 13.9% 18.0% 25.1% 41.0% 46.7%
Dividends Paid as a Percent
of Net Income 22.3% 24.5% 30.5% 45.2% 55.1%
Return on Average Equity 27.9% 26.3% 21.7% 15.0% 12.0%
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Net of a pretax charge of $3,000 for a write-down related to property held for sale.
2 The year's income, before a charge for the cumulative effect of accounting changes of $1,010 or $.04 per share, totaled $21,194
or $.69 per share.
3 Includes pretax litigation charge of $6,750.
4 Adjusted for 4-for-3 stock splits paid July 1994 and April 1993 and the 3-for-2 stock split paid April 1992.
</TABLE>
8
<PAGE> 7
BUSINESS SEGMENTS
-----------------
FOR THE YEARS ENDED 1994, 1993 AND 1992
The business segments of the Company are defined as Specialty Foods, Automotive
and Glassware and Candles.
SPECIALTY FOODS--includes production and marketing of a family of pourable and
refrigerated produce salad dressings, sauces, refrigerated produce vegetable
dips, chip dips, dairy snacks and desserts, dry and frozen egg noodles, caviar,
frozen ready-to-bake pies and frozen hearth-baked breads.
AUTOMOTIVE--includes production and marketing of rubber, vinyl and
carpet-on-rubber car mats both for original equipment manufacturers and
importers and for the auto aftermarket; truck and trailer splash guards; pickup
truck bed mats and liners; aluminum running boards for pickup trucks and vans;
and a broad line of auto accessories and components.
GLASSWARE AND CANDLES--includes the production and marketing of table and
giftware consisting of domestic glassware, both machine pressed and machine
blown, imported glassware and candles in all popular sizes, shapes and scents;
industrial glass and lighting components; distribution of a variety of the
Company's products to commercial markets; and glass floral containers.
Operating income represents net sales less operating expenses related to the
business segments. Expenses of a general corporate nature, including interest
expense and income taxes, have not been allocated to business segments.
Identifiable assets for each segment include those assets used in its
operations and intangible assets allocated to purchased businesses. Corporate
assets consist principally of cash, cash equivalents and deferred income taxes.
The 1992 capital expenditures of the Specialty Foods Group included property
from the purchase of a California manufacturing operation totaling $4,268,000.
Specialty Foods expenditures would have been $2,741,000 and total capital
expenditures would have been $17,040,000 without this purchase.
Foreign operations and export sales are not significant, and no single customer
accounts for 10% or more of consolidated net sales.
The following sets forth certain financial information attributable to the
Company's business segments for the three years ended June 30, 1994, 1993 and
1992:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES
Specialty Foods $289,734 $252,288 $212,349
Automotive 235,287 203,079 176,762
Glassware and Candles 196,711 175,260 166,682
- - --------------------------------------------------------------------------------
Total $721,732 $630,627 $555,793
================================================================================
OPERATING INCOME
Specialty Foods $ 42,542 $ 38,282 $ 30,420
Automotive 31,305 24,280 20,750
Glassware and Candles 31,353 20,546 14,869
- - --------------------------------------------------------------------------------
Total 105,200 83,108 66,039
Corporate expenses (7,107) (8,789) (12,187)
- - --------------------------------------------------------------------------------
Income Before Income Taxes $ 98,093 $ 74,319 $ 53,852
================================================================================
IDENTIFIABLE ASSETS
Specialty Foods $ 71,274 $ 59,933 $ 57,446
Automotive 108,597 99,984 100,722
Glassware and Candles 136,789 118,498 117,870
Corporate 38,785 23,635 13,913
- - --------------------------------------------------------------------------------
Total $355,445 $302,050 $289,951
================================================================================
CAPITAL EXPENDITURES
Specialty Foods $ 4,516 $ 3,414 $ 7,009
Automotive 7,419 6,857 4,982
Glassware and Candles 11,565 8,592 9,247
Corporate 32 58 70
- - --------------------------------------------------------------------------------
Total $ 23,532 $ 18,921 $ 21,308
================================================================================
DEPRECIATION AND AMORTIZATION
Specialty Foods $ 3,512 $ 3,199 $ 2,896
Automotive 8,778 8,633 8,965
Glassware and Candles 10,027 9,913 9,214
Corporate 86 82 140
- - --------------------------------------------------------------------------------
Total $ 22,403 $ 21,827 $ 21,215
================================================================================
</TABLE>
9
<PAGE> 8
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
<CAPTION>
Years Ended June 30
1994 1993 1992
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 721,732,000 $ 630,627,000 $ 555,793,000
COST OF SALES 489,636,000 427,521,000 380,567,000
- - ---------------------------------------------------------------------------------------------------------------------------------
GROSS MARGIN 232,096,000 203,106,000 175,226,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 131,428,000 125,079,000 115,547,000
- - ---------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 100,668,000 78,027,000 59,679,000
OTHER INCOME (EXPENSE):
Interest expense (2,849,000) (3,625,000) (5,584,000)
Interest income and other--net 274,000 (83,000) (243,000)
- - ---------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 98,093,000 74,319,000 53,852,000
TAXES BASED ON INCOME 38,233,000 28,094,000 21,481,000
- - ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 59,860,000 $ 46,225,000 $ 32,371,000
=================================================================================================================================
NET INCOME PER COMMON SHARE $1.97 $1.52 $1.06
=================================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 30,317,445 30,483,467 30,501,695
=================================================================================================================================
<FN>
See Notes to Consolidated Financial Statements
</TABLE>
10
<PAGE> 9
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
JUNE 30, 1994 AND 1993
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
<CAPTION>
June 30
ASSETS 1994 1993
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 30,423,000 $ 16,502,000
Receivables (less allowance for doubtful accounts,
1994--$2,339,000; 1993--$2,870,000) 80,737,000 67,974,000
Inventories:
Raw materials and supplies 27,614,000 22,331,000
Finished goods and work in process 90,034,000 72,900,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Total inventories 117,648,000 95,231,000
Prepaid expenses and other current assets 8,995,000 8,483,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Total current assets 237,803,000 188,190,000
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements 69,723,000 67,760,000
Machinery and equipment 194,974,000 182,041,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Total cost 264,697,000 249,801,000
Less accumulated depreciation 163,127,000 151,204,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment--net 101,570,000 98,597,000
OTHER ASSETS 16,072,000 15,263,000
- - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 355,445,000 $ 302,050,000
==================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ----------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,301,000 $ 1,797,000
Accounts payable 31,054,000 26,334,000
Accrued liabilities 41,902,000 33,411,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 74,257,000 61,542,000
LONG-TERM DEBT--Less current portion 32,933,000 34,586,000
OTHER NONCURRENT LIABILITIES 8,093,000 8,852,000
DEFERRED INCOME TAXES 3,315,000 5,060,000
SHAREHOLDERS' EQUITY:
Preferred stock--authorized 2,650,000 shares;
Outstanding--none
Common stock--authorized 35,000,000 shares; 25,437,000 20,572,000
Shares outstanding, 1994 - 22,674,020; 1993 - 22,716,680
Retained earnings 226,412,000 179,835,000
Foreign currency translation adjustment 440,000 605,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Total 252,289,000 201,012,000
Less:
Common stock in treasury, at cost 11,606,000 3,888,000
Amount due from ESOP 3,836,000 5,114,000
- - ----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 236,847,000 192,010,000
- - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 355,445,000 $ 302,050,000
==================================================================================================================================
<FN>
See Notes to Consolidated Financial Statements
11
</TABLE>
<PAGE> 10
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
<CAPTION>
Years Ended June 30
1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $59,860,000 $46,225,000 $32,371,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 22,403,000 21,827,000 21,215,000
Provision for losses on accounts receivable 1,029,000 2,096,000 2,198,000
Deferred income taxes and other noncash charges (437,000) 364,000 (1,978,000)
Loss on sale of property 254,000 83,000 35,000
Changes in operating assets and liabilities:
Receivables (13,792,000) (5,253,000) (4,251,000)
Inventories (20,752,000) (2,542,000) 3,466,000
Prepaid expenses and other current assets 216,000 (1,232,000) 375,000
Accounts payable and accrued liabilities 12,311,000 165,000 13,869,000
- - --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 61,092,000 61,733,000 67,300,000
- - --------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (23,532,000) (18,921,000) (17,040,000)
Acquisitions net of cash acquired (5,438,000) (5,142,000)
Proceeds from sale of property 412,000 41,000 555,000
Other--net (1,506,000) (1,022,000) (311,000)
- - --------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (30,064,000) (19,902,000) (21,938,000)
- - --------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (13,378,000) (11,336,000) (9,864,000)
Purchase of treasury stock (7,718,000) (3,888,000) (6,983,000)
Payments on long-term debt (2,149,000) (6,689,000) (21,206,000)
Reduction of ESOP debt 1,278,000 1,279,000 1,278,000
Common stock issued upon exercise of
stock options including related tax benefits 4,865,000 501,000 3,393,000
Reduction of short-term bank loans (12,500,000) (13,020,000)
Proceeds of long-term debt 3,250,000
- - --------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (17,102,000) (32,633,000) (43,152,000)
- - --------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (5,000) (114,000) (108,000)
- - --------------------------------------------------------------------------------------------------------------------------------
Net change in cash and equivalents 13,921,000 9,084,000 2,102,000
Cash and equivalents at beginning of year 16,502,000 7,418,000 5,316,000
- - --------------------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $30,423,000 $16,502,000 $ 7,418,000
================================================================================================================================
See Notes to Consolidated Financial Statements
</TABLE>
12
<PAGE> 11
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
FOR THE YEARS ENDED JUNE 30, 1994, 1993 AND 1992
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
<CAPTION>
Outstanding Common Additional Retained
Shares Stock Capital Earnings
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1991 11,484,342 $14,916,000 $51,305,000 $ 122,263,000
YEAR ENDED JUNE 30, 1992 :
Net income 32,371,000
Cash dividends--common stock
($.3250 per share) (9,864,000)
Purchase of treasury shares (241,594)
Shares issued upon exercise of stock
options including related tax benefits 150,364 10,000 1,438,000
Retire treasury stock (47,598,000)
Changes in common stock
from $1 par value to no par value 5,145,000 (5,145,000)
Shares issued in connection with
three-for-two stock split 5,695,824
Cash paid in lieu of fractional
shares in connection with
three-for-two stock split (11,000)
Tax benefit of cash dividends paid
on ESOP unallocated shares 102,000
Reduction of ESOP debt
Translation adjustment
- - ----------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1992 17,088,936 20,071,000 0 144,861,000
- - ----------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1993 :
Net income 46,225,000
Cash dividends--common stock
($.3725 per share) (11,336,000)
Purchase of treasury shares (114,000)
Shares issued upon exercise of stock
options including related tax benefits 37,037 501,000
Shares issued in connection with
four-for-three stock split 5,704,707
Cash paid in lieu of fractional
shares in connection with
four-for-three stock split (12,000)
Tax benefit of cash dividends paid
on ESOP unallocated shares 97,000
Reduction of ESOP debt
Translation adjustment
- - ----------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1993 22,716,680 20,572,000 0 179,835,000
- - ----------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1994 :
Net income 59,860,000
Cash dividends--common stock
($.4425 per share) (13,378,000)
Purchase of treasury shares (189,000)
Shares issued upon exercise of stock
options including related tax benefits 146,340 4,865,000
Tax benefit of cash dividends paid
on ESOP unallocated shares 95,000
Reduction of ESOP debt
Translation adjustment
- - ----------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1994 22,674,020 $25,437,000 $ 0 $ 226,412,000
================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Foreign
Currency Amount
Translation Treasury due from
Adjustment Stock ESOP
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, JUNE 30, 1991 $1,132,000 $42,560,000 $7,671,000
YEAR ENDED JUNE 30, 1992 :
Net income
Cash dividends--common stock
($.3250 per share)
Purchase of treasury shares 6,983,000
Shares issued upon exercise of stock
options including related tax benefits (1,945,000)
Retire treasury stock (47,598,000)
Changes in common stock
from $1 par value to no par value
Shares issued in connection with
three-for-two stock split
Cash paid in lieu of fractional
shares in connection with
three-for-two stock split
Tax benefit of cash dividends paid
on ESOP unallocated shares
Reduction of ESOP debt (1,278,000)
Translation adjustment (255,000)
- - --------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1992 877,000 0 6,393,000
- - --------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1993 :
Net income
Cash dividends--common stock
($.3725 per share)
Purchase of treasury shares 3,888,000
Shares issued upon exercise of stock
options including related tax benefits
Shares issued in connection with
four-for-three stock split
Cash paid in lieu of fractional
shares in connection with
four-for-three stock split
Tax benefit of cash dividends paid
on ESOP unallocated shares
Reduction of ESOP debt (1,279,000)
Translation adjustment (272,000)
- - --------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1993 605,000 3,888,000 5,114,000
- - --------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1994 :
Net income
Cash dividends--common stock
($.4425 per share)
Purchase of treasury shares 7,718,000
Shares issued upon exercise of stock
options including related tax benefits
Tax benefit of cash dividends paid
on ESOP unallocated shares
Reduction of ESOP debt (1,278,000)
Translation adjustment (165,000)
- - --------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1994 $440,000 $11,606,000 $3,836,000
============================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
1. ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements
include the accounts of Lancaster Colony
Corporation and its wholly-owned subsidiaries,
collectively referred to as the "Company". All
significant intercompany transactions have been
eliminated.
CASH EQUIVALENTS
The Company considers all highly liquid
investments purchased with maturities of three
months or less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or
market. Inventories which comprise approximately
25% and 22% of total inventories at June 30, 1994
and 1993, respectively, are costed on a last-in,
first-out (LIFO) basis. Inventories which are
costed by various other methods approximate actual
cost on a first-in, first-out (FIFO) basis.
PROPERTY, PLANT AND EQUIPMENT
The Company uses the straight-line method of
computing depreciation for financial reporting
purposes based on the estimated useful lives of
the corresponding assets. For tax purposes, the
Company generally computes depreciation using
accelerated methods.
OTHER ASSETS
Included in other assets at June 30, 1994 is the
cost in excess of net assets of purchased
subsidiaries. Of this cost, $10,228,000 (net of
accumulated amortization of $3,338,000) relates to
companies acquired after October 31, 1970, and is
being amortized over fifteen to forty years.
Excess cost of $2,243,000 relates to a company
acquired prior to November 1, 1970, and is not
being amortized because, in the opinion of
management, there has been no diminution in value.
The remaining other assets consist of deferred
costs which are amortized over their estimated
useful lives; costs of patents acquired which are
amortized over their estimated remaining economic
lives; and other miscellaneous assets. Management
periodically evaluates the future economic benefit
of its long-lived intangible assets and
appropriately adjusts those assets which are
determined to have been impaired.
REVENUE RECOGNITION
Net sales and related cost of sales are recognized
upon shipment of products. Net sales are recorded
net of estimated sales discounts and returns.
PER SHARE INFORMATION
Net income per common share is computed based on
the weighted average number of shares of common
stock and common stock equivalents (stock options)
outstanding during each period.
On July 20, 1994 and April 15, 1993, a
four-for-three stock split was effected whereby
one additional common share was issued for each
three shares outstanding to shareholders of record
on June 20, 1994 and March 15, 1993, respectively.
Additionally, on April 30, 1992, 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 April 2,
1992. Accordingly, net income per common share and
all other per share information appearing in the
consolidated financial statements and notes
thereto have been retroactively adjusted for these
splits where appropriate.
CREDIT RISK
Financial instruments which potentially subject
the Company to concentrations of credit risk
consist primarily of cash equivalents and trade
accounts receivable. The Company places its cash
equivalents with high-quality institutions and, by
policy, limits the amount of credit exposure to
any one institution. Concentration of credit risk
with respect to trade accounts receivable is not
material, as the Company has a large diverse
customer base with no single customer accounting
for a significant percentage of trade accounts
receivable.
BUSINESS SEGMENTS
The business segments information for 1994, 1993
and 1992 included in this Annual Report is an
integral part of these financial statements.
14
<PAGE> 13
2. ACQUISITIONS In July 1993, the Company acquired substantially
all of the net operating assets and customer base
of a specialty foods marketer of caviar and other
specialty food products for cash of approximately
$5,438,000. In November 1991, the Company
acquired substantially all of the assets of a
California salad dressing operation for cash of
approximately $5,100,000. Both aquisitions were
accounted for under the purchase method of
accounting. The results of operations of these
entities have been included in the consolidated
financial statements from the date of acquisition
and are immaterial in relation to the
consolidated totals.
3. INVENTORIES If the FIFO method (which approximates current
cost) of inventory accounting had been used for
inventories costed on a LIFO basis, these
inventories would have been $12,553,000 and
$13,147,000 higher than reported at June 30, 1994
and 1993, respectively.
It is not practicable to segregate work in
process from finished goods inventories.
Management estimates, however, that work in
process inventories amount to 10% or less of the
combined total of finished goods and work in
process inventories at June 30, 1994 and 1993.
4. SHORT-TERM BANK LOANS Short-term bank loans (generally for terms not
exceeding ninety days) represent unsecured
borrowings under various credit arrangements. The
Company had unused lines of credit for short-term
borrowings from various banks at June 30, 1994,
1993 and 1992 of $169,000,000, $179,000,000 and
$156,500,000, respectively. The lines of credit
are granted at the discretion of the lending
banks and are generally subject to periodic
review.
The weighted average interest rate on short-term
bank borrowings at June 30, 1992 was 4.1%. The
maximum aggregate short-term borrowings
outstanding at any month end during the years
ending June 30, 1994, 1993 and 1992 were
$10,500,000, $21,000,000 and $32,500,000,
respectively. The average amounts of short-term
borrowings outstanding during the respective
years were $1,332,000, $7,590,000 and $25,718,000
and the related weighted average interest rates
(computed based on days outstanding) were 3.2%,
3.4% and 5.3%.
5. ACCRUED LIABILITIES Accrued liabilities at June 30, 1994 and 1993 are
composed of:
<TABLE>
<CAPTION>
1994 1993
- - -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Income and other taxes $ 8,010 $ 6,899
Accrued compensation and employee benefits 17,879 13,926
Accrued marketing and distribution 6,399 5,563
Other 9,614 7,023
- - -----------------------------------------------------------------------------------------------------------------------------------
Total accrued liabilities $ 41,902 $ 33,411
===================================================================================================================================
</TABLE>
6. LONG-TERM DEBT Long-term debt (including current portion) at
June 30, 1994 and 1993 consists of:
<TABLE>
<CAPTION>
1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Notes payable::
8.9%, due in February 2000 $ 25,000 $ 25,000
Other (2% to 5%, due in installments to 1996) 119 175
Obligations with various industrial development
authorities -- collateralized by real
estate and equipment:
7%, due in installments to 2003 1,640 1,942
Floating rate due in installments to to 2005 6,623 7,571
Mortgages payable -- collateralized by real estate
(8.5%, due in installments to 1996) 11 31
Capital lease obligations (10.0% to 15.6%,
due in installments to 1998) 841 1,664
- - -----------------------------------------------------------------------------------------------------------------------------------
Total 34,234 36,383
Less current portion 1,301 1,797
- - -----------------------------------------------------------------------------------------------------------------------------------
Long-term debt $ 32,933 $ 34,586
===================================================================================================================================
</TABLE>
15
<PAGE> 14
The net book value of property subject to lien at June
30, 1994 was approximately $4,327,000. The Company has entered
into various capital lease agreements in connection with
equipment used in its operations. Such equipment at June 30,
1994 and 1993 had a capitalized cost of approximately
$2,028,000 and $2,942,000 and related net book value of
$507,000 and $1,131,000, respectively.
No material debt was assumed for the purchase of property
additions in 1994, 1993 and 1992. Cash payments for interest
were $2,868,000, $3,664,000 and $6,263,000 for 1994,
1993 and 1992, respectively.
Various debt agreements require the maintenance of certain
financial statement amounts and ratios, including a
requirement to maintain a specified minimum net worth, as
defined. At June 30, 1994, the Company exceeded this net
worth requirement by approximately $93,704,000.
<TABLE>
Long-term debt, including capital leases, matures as follows:
<CAPTION>
----------------------------------------------------------
(Dollars in Thousands)
<S> <C>
Year ending June 30:
1995 $ 1,301
1996 1,047
1997 632
1998 570
1999 650
After 1999 30,034
----------------------------------------------------------
Total $34,234
==========================================================
</TABLE>
Based on the borrowing rates currently available for long-term
debt with similar terms and average maturities, the fair value
of total long-term debt is approximately $35,100,000.
<TABLE>
7. INCOME TAXES The Company and its domestic subsidiaries file
consolidated Federal income tax returns. Taxes
based on income have been provided as follows:
<CAPTION>
1994 1993 1992
---------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Currently payable:
Federal $35,441 $26,563 $21,029
State and local 5,265 4,202 3,587
---------------------------------------------------------------------
Total current provision 40,706 30,765 24,616
Deferred Federal, state and
local provision (credit) (2,473) (2,671) (3,135)
---------------------------------------------------------------------
Total taxes based on income $38,233 $28,094 $21,481
=====================================================================
</TABLE>
Tax expense resulting from allocating certain tax benefits
directly to common stock and retained earnings totaled
$455,000, $102,000 and $480,000 for 1994, 1993 and 1992,
respectively. The Company's effective tax rate varies from
the statutory Federal income tax rate as a result of the
following factors:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
----------------------------------------------------------
Statutory rate 35.0% 34.0% 34.0%
State and local income taxes 3.3 3.7 4.2
Change in Federal tax rate .3
Other .4 .1 1.7
----------------------------------------------------------
Effective rate 39.0% 37.8% 39.9%
==========================================================
</TABLE>
<TABLE>
Deferred income taxes recorded in the consolidated balance
sheets at June 30, 1994 and 1993 consist of the following:
<CAPTION>
1994 1993
------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Deferred tax assets (liabilities):
Employee medical and other benefits $ 4,482 $4,110
Inventories 3,105 2,505
Other accrued liabilities 2,693 2,033
Receivable valuation allowances 930 1,088
------------------------------------------------------------------
Total deferred tax assets 11,210 9,736
------------------------------------------------------------------
Property (6,789) (7,412)
Other (306) (682)
------------------------------------------------------------------
Total deferred tax liabilities (7,095) (8,094)
------------------------------------------------------------------
Net deferred tax asset (liability) $ 4,115 $1,642
==================================================================
</TABLE>
Cash payments for income taxes were $39,354,000,
$33,106,000 and $19,596,000 for 1994, 1993 and
1992, respectively.
16
<PAGE> 15
8. SHAREHOLDERS' EQUITY As approved by the Company's shareholders in
November 1991, the Company was reincorporated in
Ohio on January 2, 1992 through a merger with a
newly formed Ohio subsidiary. Each of the
Company's common stock then-outstanding was
thereby changed from having $1.00 par value to no
par value resulting in the elimination of
additional capital as a separate balance sheet
amount. Also pursuant to this reorganization, the
Company is authorized to issue 2,650,000 shares
of preferred stock consisting of 350,000 shares
of Class A Participating Preferred Stock with
$1.00 par value, 1,150,000 shares of Class B
Voting Preferred Stock without par value and
1,150,000 shares of Class C Nonvoting Preferred
Stock without par value.
In April 1990, the Company's Board of Directors
adopted a Rights Agreement, the terms of which
were unaffected by the January 1992
reorganization. This Agreement provides for one
preferred share purchase right to be associated
with each share of the Company's outstanding
common stock. Shareholders exercising these
rights would become entitled to purchase shares
of Class A Participating Preferred Stock. The
rights may be exercised on or after the time when
a person or group of persons without the approval
of the Board of Directors acquire beneficial
ownership of 15 percent or more of the Company's
common stock or announce the initiation of a
tender or exchange offer which if successful
would cause such person or group to beneficially
own 30 percent or more of the common stock. Such
exercise may ultimately entitle the holders of
the rights to purchase for $70 per right common
stock of the Company having a market value of
$140. The person or groups effecting such 15
percent acquisition or undertaking such tender
offer will not be entitled to exercise any
rights. These rights expire April 2000 unless
earlier redeemed by the Company under
circumstances permitted by the Rights Agreement.
9. STOCK OPTIONS Under terms of an incentive stock option plan as
amended and approved by the shareholders, the
Company reserved 3,625,000 common shares for
issuance to qualified key employees. Shares
available for future grants at June 30, 1994
total 990,747 shares. All options granted are
exercisable at prices not less than fair market
value as of the date of grant.
<TABLE>
The following summarizes stock option activity
for each of the three years ended June 30, 1994,
as restated to reflect the stock split in July
1994:
<CAPTION>
Number of Option Price
Options Shares Per Share Total
-------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding--June 30, 1991 570,533 $7.04-$8.77 $4,346,000
Exercised (400,305) $7.04-$7.97 (3,012,000)
Forfeited (1,333) $7.50 (10,000)
-------------------------------------------------------------------------
Outstanding--June 30, 1992 168,895 $7.50-$8.77 1,324,000
Granted 309,793 $25.59-$28.15 7,937,000
Exercised (59,817) $7.50-$25.59 (494,000)
-------------------------------------------------------------------------
Outstanding--June 30, 1993 418,871 $7.50-$28.15 8,767,000
Exercised (195,119) $7.50-$25.59 (4,505,000)
Forfeited (729) $25.59 (19,000)
-------------------------------------------------------------------------
Outstanding--June 30, 1994 223,023 $7.50-$28.15 $4,243,000
=========================================================================
</TABLE>
Of the 223,023 stock options outstanding at June
30, 1994, 110,448 expire in January 1995, 64,575
expire in January 1996 and 48,000 expire in
January 2002.
10. PENSION AND OTHER PENSION PLANS:
POSTRETIREMENT BENEFITS The Company and certain of its operating
subsidiaries sponsor five noncontributory defined
benefit plans which cover the union workers at
such locations. Additionally, the Company and
certain of its operating subsidiaries participate
in two multiemployer defined benefit plans
covering the union workers at such locations.
Benefits under these plans are primarily based on
negotiated rates and years of service. The Company
contributes to these pension funds at least the
minimum amount required by regulation or
contract.
<TABLE>
Net pension cost relating to these plans for each
of the years in the period ended June 1994 is
summarized as follows:
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Company sponsored plans --
Service cost -- benefits earned during the period $ 556 $ 449 $ 404
Interest cost on projected benefit obligations 1,442 1,347 1,273
Actual return on pension plan assets (460) (4,272) (3,024)
Net amortization and deferrals (1,438) 2,688 1,654
--------------------------------------------------------------------------------------------------
Net pension cost for Company plans 100 212 307
Multiemployer plans 487 371 526
--------------------------------------------------------------------------------------------------
Net pension cost $ 587 $ 583 $ 833
==================================================================================================
</TABLE>
17
<PAGE> 16
<TABLE>
The following table summarizes the funded status of
the Company's plans at June 30, 1994 and 1993:
<CAPTION>
1994 1993
---------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Actuarial present value
of benefit obligation:
Vested benefits $20,109 $20,676
========================================================================================
Accumulated benefit obligation $20,240 $20,795
========================================================================================
Projected benefit obligation $20,240 $20,795
Plan assets at fair value 22,014 22,387
----------------------------------------------------------------------------------------
Excess of assets over projected benefit obligation 1,774 1,592
Unrecognized net gain (2,202) (1,601)
Unrecognized prior service costs 1,170 711
Remaining unrecognized net transition obligation 334 366
----------------------------------------------------------------------------------------
Net recorded pension asset $ 1,076 $ 1,068
========================================================================================
</TABLE>
The majority of plan assets are invested in
bonds, short-term investments and common stocks
including shares of the Company's common stock
with a market value of $3,296,000, $4,198,000 and
$3,006,000 as of June 30, 1994, 1993 and 1992,
respectively. The weighted average discount rates
used in determining the projected benefit
obligation for 1994, 1993 and 1992 were 7.7%,
7.0% and 7.7%, respectively. The expected
long-term rate of return on assets was 9.0% for
the three years.
EMPLOYEE STOCK OPTION PLAN:
The Company sponsors an Employee Stock Ownership
Plan (ESOP). In April 1990, the Company loaned
$10,000,000 to the Lancaster Colony Corporation
ESOP for the purpose of purchasing the Company's
common stock in furtherance of the objectives of
the Plan. The Company funded this transaction
primarily through short-term bank borrowings.
With the proceeds and as adjusted for all stock
splits since April 1990, the ESOP effectively
purchased 1,194,390 shares of the Company's
common stock in the open market.
The ESOP is fully paid by the Company and
generally provides coverage to all domestic
employees, except those covered by a collective
bargaining agreement. Contributions to the ESOP
are to be not less than that required by the
terms of the loan agreement between the Company
and the ESOP. The Company uses the
shares-allocated method of accounting in
determining the amount of expense related to each
contribution.
As of June 30, 1994, the amount due from the ESOP
is recorded as a reduction in shareholders'
equity and represents the Company's prepayment of
future contributions to the ESOP. This amount
will be expensed over not more than the next
three years. Dividends accumulated on the
Company's unallocated common stock held by the
ESOP are used to repay the loan to the Company.
Accordingly, the pretax expense associated with
1994, 1993 and 1992 totaled $1,008,000, $994,000
and $981,000, which is net of dividends of
$270,000, $285,000 and $297,000 on the
unallocated shares, respectively.
In November 1993, the Accounting Standards
Executive Committee issued Statement of Position
93-6, "Employers' Accounting for Employee Stock
Ownership Plans". This Statement will not effect
the Company's accounting treatment of existing
shares purchased by the ESOP discussed above.
However, any future purchases of the Company's
stock by the ESOP will require the adoption of
this Statement.
POSTRETIREMENT BENEFITS:
In addition to pension benefits, the Company also
provides certain employees other postretirement
benefits including health care and life insurance
coverage. As of June 30, 1994, the Company
provides such coverage under three active benefit
plans of which two relate to collectively
bargained benefits. In general, all eligible
employees are entitled to receive medical and
life insurance benefits upon meeting certain age
and service requirements at the time of their
retirement.
The Company recognizes the cost of postretirement
medical and life insurance benefits as the
employees render service in accordance with
Statement of Financial Accounting Standards
(SFAS) No. 106. Relevant information with respect
to these postretirement benefits as of June 30,
1994 and 1993 can be summarized as follows:
18
<PAGE> 17
<TABLE>
<CAPTION> 1994 1993
----------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retired participants $1,591 $1,853
Fully eligible active plan participants 244 325
Other active plan participants 530 800
----------------------------------------------------------------------------------------------------
Total 2,365 2,978
Unrecognized net gain (loss) from past experience and changes in assumptions 468 (319)
----------------------------------------------------------------------------------------------------
Accrued postretirement benefit cost $2,833 $2,659
====================================================================================================
Net postretirement benefit cost:
Service cost $ 101 $ 74
Interest cost 211 195
----------------------------------------------------------------------------------------------------
Total $ 312 $ 269
====================================================================================================
Estimated effect of 1% increase in assumed medical cost trend rates:
Increase in accumulated postretirement benefit obligation $ 251 $ 316
====================================================================================================
Increase in net periodic postretirement benefit cost $ 56 $ 36
====================================================================================================
Assumed weighted average discount rate 7.7% 7.0%
====================================================================================================
</TABLE>
For 1994, annual increases in medical costs are
initially assumed to total approximately 10% per
year and gradually declining to 5% by
approximately year 2005. Annual increases in
medical costs for 1993 were assumed to total
approximately 12% per year and gradually
declining to 5% by approximately year 2005.
The Company and certain of its subsidiaries
participate in two multiemployer plans that
provide various postretirement health and welfare
benefits to the union workers at such locations.
The Company's contributions required by its
participation in the multiemployer plans totaled
$996,000, $832,000 and $726,000 in 1994, 1993 and
1992, respectively.
POSTEMPLOYMENT BENEFITS:
The Financial Accounting Standards Board has
issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," which requires
employers to accrue for postemployment benefits
provided to former or inactive employees, their
beneficiaries and covered dependents after
employment, but before retirement. This change
must be implemented by the Company no later than
the fiscal year beginning July 1, 1994.
Management has determined that the new statement
will not have a material effect on the
consolidated financial statements of the Company.
11. COMMITMENTS AND
CONTINGENT LIABILITIES
The Company has operating leases with initial
noncancelable lease terms in excess of one year,
covering the rental of various facilities and
equipment, which expire at various dates through
fiscal 2004. Certain of these leases contain
renewal options, some provide options to purchase
during the lease term and some require contingent
rentals based on usage. The future minimum rental
commitments due under these leases are summarized
as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C>
Year ending June 30:
1995 $ 3,959
1996 3,694
1997 2,986
1998 1,771
1999 979
Thereafter 665
----------------------------------------------------------------------------------------
Total $14,054
========================================================================================
</TABLE>
Total rental expense, including short-term
cancelable leases, during 1994, 1993 and 1992
is summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Operating leases:
Minimum rentals $4,006 $3,814 $4,117
Contingent rentals 306 540 733
Short-term cancelable leases 1,550 1,198 1,170
----------------------------------------------------------------------------------------
Total $5,862 $5,552 $6,020
========================================================================================
</TABLE>
The Company and its subsidiaries are involved
in various litigation, disputes and governmental
proceedings including certain Environmental
Protection Agency matters. In the opinion of
management, the ultimate resolution of these
matters is not expected to be material to the
Company's financial condition or results of
operations.
19
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
----------------------------
TO THE SHAREHOLDERS AND DIRECTORS OF LANCASTER COLONY CORPORATION
We have audited the accompanying consolidated balance sheets of Lancaster
Colony Corporation and its subsidiaries as of June 30, 1994 and 1993, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended June 30, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Lancaster Colony Corporation and
its subsidiaries as of June 30, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1994 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Columbus, Ohio
August 30, 1994
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA
---------------------------------
FOR THE YEARS ENDED JUNE 30, 1994 AND 1993
<CAPTION>
(Thousands Except Per Net Gross Net Earnings Stock Prices1 Dividends Paid
Share Figures) Sales Margin Income Per Share1 High Low Per Share1
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994
FIRST QUARTER $172,821 $ 54,408 $13,020 $ .43 $31.500 $26.875 $.0975
SECOND QUARTER 192,757 62,202 15,517 .51 35.625 30.000 .1125
THIRD QUARTER 171,492 53,858 13,239 .44 34.500 31.125 .1125
FOURTH QUARTER 184,662 61,628 18,084 .60 37.375 29.000 .1200
- - -------------------------------------------------------------------------------------------------------------------------------
YEAR $721,732 $232,096 $59,860 $ 1.97 $37.375 $26.875 $.4425
===============================================================================================================================
1993
First quarter $152,292 $ 47,580 $10,541 $ .35 $19.875 $15.750 $.0850
Second quarter 170,783 55,960 12,037 .39 22.250 17.875 .0950
Third quarter 148,795 44,677 9,627 .32 28.625 20.750 .0950
Fourth quarter 158,757 54,889 14,020 .46 29.000 22.500 .0975
- - -------------------------------------------------------------------------------------------------------------------------------
Year $630,627 $203,106 $46,225 $ 1.52 $29.000 $15.750 $.3725
===============================================================================================================================
<FN>
1 Adjusted for the 4-for-3 stock split paid July 1994.
</TABLE>
Lancaster Colony common shares are traded in the NASDAQ National Market System
(NASDAQ Symbol: LANC). Stock quotations were obtained from the National
Association of Securities Dealers. The number of shareholders as of September
1, 1994 was approximately 15,000.
20
<PAGE> 1
Exhibit 22
LANCASTER COLONY CORPORATION
SIGNIFICANT SUBSIDIARIES OF REGISTRANT
--------------------------------------
<TABLE>
<CAPTION>
State or Province Percent of
Name of Incorporation Ownership
---- -------------------- ----------
<S> <C> <C>
Colony Printing & Labeling, Inc. Indiana 100%
Dee Zee, Inc. Ohio 100%
Fostoria Glass Company West Virginia 100%
Indiana Glass Company Indiana 100%
LRV Acquisition Corp. Ohio 100%
LaGrange Molded Products, Inc. Delaware 100%
Lancaster Colony Canada Inc. Ontario 100%
Lancaster Colony Commercial
Products, Inc. Ohio 100%
Lancaster Glass Corporation Ohio 100%
New York Frozen Foods, Inc. Ohio 100%
Pretty Products, Inc. Ohio 100%
T. Marzetti Company Ohio 100%
The Quality Bakery Company, Inc. Ohio 100%
Reames Foods, Inc. Iowa 100%
Waycross Molded Products, Inc. Ohio 100%
All subsidiaries conduct their business under the names shown.
</TABLE>
39
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME FOR THE YEAR
ENDED JUNE 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<CASH> 30,423
<SECURITIES> 0
<RECEIVABLES> 83,076
<ALLOWANCES> 2,339
<INVENTORY> 117,648
<CURRENT-ASSETS> 237,803
<PP&E> 264,697
<DEPRECIATION> 163,127
<TOTAL-ASSETS> 355,445
<CURRENT-LIABILITIES> 74,257
<BONDS> 32,933
<COMMON> 25,437
0
0
<OTHER-SE> 211,410
<TOTAL-LIABILITY-AND-EQUITY> 355,445
<SALES> 721,732
<TOTAL-REVENUES> 721,732
<CGS> 489,636
<TOTAL-COSTS> 489,636
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,849
<INCOME-PRETAX> 98,093
<INCOME-TAX> 38,233
<INCOME-CONTINUING> 59,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,860
<EPS-PRIMARY> 1.97
<EPS-DILUTED> 1.97
</TABLE>
