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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______ to______
Commission file number 0-4065-1
LANCASTER COLONY CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 13-1955943
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
37 WEST BROAD STREET, COLUMBUS, OHIO 43215
(Address of principal executive offices)
(Zip Code)
614-224-7141
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of March 31, 1994, there were 22,656,630 shares of common stock, no par
value per share, outstanding.
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<TABLE>
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
INDEX
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1994 and June 30, 1993 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months
Ended March 31, 1994 and 1993 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended March 31, 1994 and 1993 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of the Results
of Operations and Financial Condition 7-8
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 8
Signatures 9
</TABLE>
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<TABLE>
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
March 31 June 30
1994 1993
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 24,155,000 $ 16,502,000
Receivables 87,535,000 70,844,000
Less allowance for doubtful accounts 3,664,000 2,870,000
------------ ------------
Receivables - net 83,871,000 67,974,000
Inventories:
Raw materials and supplies 27,343,000 22,331,000
Finished goods and work in process 78,024,000 72,900,000
------------ ------------
Total inventories 105,367,000 95,231,000
Prepaid expenses and other current assets 9,289,000 8,483,000
------------ ------------
Total current assets 222,682,000 188,190,000
Property, Plant and Equipment - At cost 262,352,000 249,801,000
Less Accumulated Depreciation 164,343,000 151,204,000
------------ ------------
Property, plant and equipment - net 98,009,000 98,597,000
Other Assets 17,058,000 15,263,000
------------ ------------
Total Assets $337,749,000 $302,050,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,551,000 $ 1,797,000
Accounts payable 33,186,000 26,334,000
Accrued liabilities 36,334,000 33,411,000
------------ ------------
Total current liabilities 71,071,000 61,542,000
Long-Term Debt - Less current portion 33,501,000 34,586,000
Other Noncurrent Liabilities 8,980,000 8,852,000
Deferred Income Taxes 3,379,000 5,060,000
Shareholders' Equity:
Preferred stock - authorized 2,650,000 shares
issuable in series; Class A - $1.00 par value,
authorized 350,000 shares; Class B and C -
no par value, authorized 1,150,000 shares each;
outstanding - none
Common stock - authorized 35,000,000 shares;
issued March 31, 1994 - no par value -
22,924,630 shares; June 30, 1993 -
no par value - 22,830,680 shares 23,728,000 20,572,000
Retained earnings 211,861,000 179,835,000
Foreign currency translation adjustment 443,000 605,000
------------ ------------
Total 236,032,000 201,012,000
Less:
Common stock in treasury, at cost
March 31, 1994 - 268,000 shares;
June 30, 1993 - 114,000 shares 10,100,000 3,888,000
Amount due from ESOP 5,114,000 5,114,000
------------ ------------
Total shareholders' equity 220,818,000 192,010,000
------------ ------------
Total Liabilities and Shareholders' Equity $337,749,000 $302,050,000
============ ============
<FN>
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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<TABLE>
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $171,492,000 $148,795,000 $537,070,000 $471,870,000
Cost of Sales 117,634,000 104,118,000 366,602,000 323,653,000
------------ ------------ ------------ ------------
Gross Margin 53,858,000 44,677,000 170,468,000 148,217,000
Selling, General and
Administrative Expenses 31,497,000 28,263,000 99,802,000 93,156,000
------------ ------------ ------------ ------------
Operating Income 22,361,000 16,414,000 70,666,000 55,061,000
Other Income (Expense):
Interest expense (700,000) (928,000) (2,196,000) (2,907,000)
Interest income and
other - net 79,000 19,000 282,000
------------ ------------ ----------- ------------
Income Before Income Taxes 21,740,000 15,505,000 68,752,000 52,154,000
Taxes Based on Income 8,501,000 5,878,000 26,976,000 19,949,000
------------ ------------ ------------ ------------
Net Income $ 13,239,000 $ 9,627,000 $ 41,776,000 $ 32,205,000
============ ============ ============ ============
Net Income Per Common Share $ .58 $ .42 $1.84 $1.41
Cash Dividends Per Common
Share $ .15 $ .1275 $ .43 $ .3675
Weighted Average Common
Shares Outstanding 22,774,086 22,894,136 22,763,121 22,876,188
============ ============ ============ ============
<FN>
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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<TABLE>
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
March 31
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $41,776,000 $32,205,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 18,009,000 16,244,000
Deferred income taxes and other noncash charges (753,000) (1,104,000)
Loss (gain) on sale of property (13,000) 54,000
Changes in operating assets and liabilities:
Receivables (15,897,000) (8,137,000)
Inventories (8,471,000) 3,388,000
Prepaid expenses and other current assets (806,000) (1,312,000)
Accounts payable 6,852,000 3,021,000
Accrued liabilities 2,923,000 (2,093,000)
----------- -----------
Net cash provided by operating activities 43,620,000 42,266,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (15,460,000) (13,861,000)
Acquisition (5,438,000)
Proceeds from sale of property 144,000 30,000
Other - net (1,072,000) (1,004,000)
----------- -----------
Net cash used in investing activities (21,826,000) (14,835,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (9,750,000) (8,379,000)
Payments on long-term debt (1,331,000) (5,878,000)
Purchase of treasury stock (6,212,000)
Common stock issued upon exercise of stock
options including related tax benefits 3,156,000 380,000
Payments on short-term bank loans (9,500,000)
----------- -----------
Net cash used in financing activities (14,137,000) (23,377,000)
----------- -----------
Effect of exchange rate changes on cash (4,000) (93,000)
----------- -----------
Net change in cash and equivalents 7,653,000 3,961,000
Cash and equivalents at beginning of year 16,502,000 7,418,000
----------- -----------
Cash and equivalents at end of period $24,155,000 $11,379,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS:
Cash paid during the period for:
Interest $ 2,708,000 $ 3,433,000
=========== ===========
Income taxes $30,811,000 $26,774,000
=========== ===========
<FN>
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 1994 AND 1993
(1) The interim consolidated condensed financial statements are unaudited
but, in the opinion of management, reflect all adjustments necessary
for a fair presentation of the results of operations and financial
position for such periods. All such adjustments reflected in the
interim consolidated condensed financial statements are considered to
be of a normal recurring nature. The results of operations for any
interim period are not necessarily indicative of results for the full
year. These financial statements should be read in conjunction with
the financial statements and notes thereto contained in the Company's
annual report on Form 10-K for the year ended June 30, 1993.
(2) 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.
(3) As approved by its shareholders, the Company has an incentive stock
option plan by which 2,718,751 common shares may be issued under
options granted pursuant to terms of the plan. As of March 31, 1994,
employee options for 1,975,169 shares have been granted and 1,755,497
have been exercised.
(4) In July 1993, the Company acquired substantially all of the net
operating assets and customer base of Romanoff International, a
specialty food marketer of caviar and other specialty food products,
for cash of approximately $5,438,000. Its results of operations have
been included in the accompanying consolidated condensed financial
statements since the date of acquisition and are immaterial in
relation to the consolidated totals.
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE PERIODS ENDED MARCH 31, 1994 AND 1993
RESULTS OF OPERATIONS
The Company's consolidated net sales for the nine months ended March
31, 1994 totalled $537,070,000 which represented a 14% increase from the prior
year's comparable sales total of $471,870,000. For the three months ended
March 31, 1994, net sales increased 15% to $171,492,000 from the comparable
1993 total of $148,795,000. These increases reflect growth achieved within
each of the Company's three operating segments.
The net sales of specialty foods products grew primarily as a result
of increased unit volume, although selective selling price increases have been
implemented to at least partially offset the impact of significantly higher
costs of soybean oil, a primary ingredient in several product lines of this
segment. The Automotive segment has benefitted from the ongoing recovery in
the sales of new vehicles, particularly that of light trucks. This cyclical
improvement contributed to greater demand from original equipment manufacturers
for automotive floormats, as well as higher aftermarket demand for light truck
and van accessories. Significant increases in the sales of candles has led the
growth in the Glassware and Candles segment.
The 1994 consolidated gross margin percentages increased slightly
compared to the corresponding periods of 1993. This improvement has been
assisted by volume-driven efficiencies achieved within the Automotive and
Glassware and Candles segments. Gross margins, however, within the Specialty
Foods segment have been adversely affected by the higher commodity costs
mentioned above. The Company anticipates that recently implemented increases
in sales prices will help improve this segment's gross margins over the
remainder of the fiscal year.
As a percentage of net sales, operating expenses totalled 19% and 18%
for the respective nine and three month periods ended March 31, 1994 compared
to 20% and 19% of the corresponding periods of fiscal 1993. In a year with
significant sales increases, this decline is affected by the semivariable
nature of these expenses.
The reduction in interest expense during the 1994 periods is largely
attributable to lower average borrowings outstanding.
As a result of the above factors, income before income taxes
increased by 32% to $68,752,000 for the nine months ended March 31, 1994 and by
40% to $21,740,000 for the fiscal 1994 third quarter.
The Company's overall effective tax rate for fiscal 1994 was effected
by the August, 1993 enactment of the Omnibus Budget Reconciliation Act of 1993.
This legislation increased the Company's Federal statutory rate from 34% to 35%
during the current year and for future periods. Additionally, a charge of
$400,000 was provided in August for the cumulative effect of the Act's
retroactive provisions to July 1, 1993.
The foregoing factors resulted in net income increasing by 30% and
38% to $41,776,000 and $13,239,000 for the respective nine and three month
periods of fiscal 1994 compared to the 1993 comparable totals of $32,205,000
and $9,627,000.
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FINANCIAL CONDITION
Since June 30, the Company's net working capital has increased by 20%
from $126,648,000 to $151,611,000 with the consolidated current ratio remaining
essentially unchanged at 3.1:1.0. The Company's higher sales volume during
fiscal 1994 has resulted in generally corresponding increased levels of
accounts receivable and inventory. The March balance of accounts receivables
was also affected by the relatively greater level of sales occurring in March,
1994 compared to June, 1993. The overall level of profitability contributed to
the increase in cash and equivalents from $16,502,000 at June 30 to $24,155,000
at March 31.
Net cash provided by operating activities for the nine months ended
March 31, 1994 totalled $43,620,000 compared to $42,266,000 during the
corresponding period of fiscal 1993. Significant nonoperating activities
occurring during the current year included the expenditure of $5,438,000 in
August for the operating assets of a specialty foods marketer, the repurchase
of $6,212,000 of the Company's common stock and an increase in total dividend
payments resulting from a higher effective declared dividend rate.
The Company continues to maintain significant discretionary credit
lines with commercial banks as a contingent source of short-term financing for
future working capital or other temporary cash requirements. However, the
overall proportion of debt to capitalization, including both short- and
long-term debt within total capitalization, has declined from 16% at June 30,
1993 to 14% at March 31.
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K - There were no reports filed on Form 8-K
for the three months ended March 31, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LANCASTER COLONY CORPORATION
Date: May 6, 1994 BY:/S/John B. Gerlach
--------------------------- ---------------------------
JOHN B. GERLACH
President and Chief
Financial Officer
Date: May 6, 1994 BY:/S/John L. Boylan
--------------------------- ---------------------------
JOHN L. BOYLAN
Treasurer and
Assistant Secretary
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