<PAGE> 1
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 December 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 December 31, 1994, there were approximately 29,848,000 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> <C>
Part I. Financial Information
Consolidated Condensed Balance Sheets -
December 31, 1994 and June 30, 1994 3
Consolidated Condensed Statements of Income -
Three Months and Six Months
Ended December 31, 1994 and 1993 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended December 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 1 - Legal Proceedings 8
Item 4 - Submission of Matters to a Vote of
Security Holders 9
Item 6 - Exhibits and Reports on Form 8-K 9
Signatures 9
Exhibit 27 - Financial Data Schedule 10
</TABLE>
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<PAGE> 3
<TABLE>
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
December 31 June 30
1994 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 15,023,000 $ 30,423,000
Receivables 109,775,000 83,076,000
Less allowance for doubtful accounts 3,002,000 2,339,000
------------ ------------
Receivables - net 106,773,000 80,737,000
Inventories:
Raw materials and supplies 34,417,000 27,614,000
Finished goods and work in process 87,159,000 90,034,000
------------ ------------
Total inventories 121,576,000 117,648,000
Prepaid expenses and other current assets 12,065,000 8,995,000
------------ ------------
Total current assets 255,437,000 237,803,000
Property, Plant and Equipment - At cost 273,423,000 264,697,000
Less Accumulated Depreciation 168,666,000 163,127,000
------------ ------------
Property, plant and equipment - net 104,757,000 101,570,000
Other Assets 15,389,000 16,072,000
------------ ------------
Total Assets $375,583,000 $355,445,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,200,000 $ 1,301,000
Accounts payable 36,934,000 31,054,000
Accrued liabilities 43,809,000 41,902,000
------------ ------------
Total current liabilities 81,943,000 74,257,000
Long-Term Debt - Less current portion 32,244,000 32,933,000
Other Noncurrent Liabilities 8,158,000 8,093,000
Deferred Income Taxes 1,832,000 3,315,000
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 December 31, 1994 -
no par value - 30,659,000 shares; June 30, 1994 -
no par value - 22,977,000 shares 26,081,000 25,437,000
Retained earnings 253,928,000 226,412,000
Foreign currency translation adjustment 409,000 440,000
------------ ------------
Total 280,418,000 252,289,000
Less:
Common stock in treasury, at cost
December 31, 1994 - 811,000 shares;
June 30, 1994 - 303,000 shares 25,176,000 11,606,000
Amount due from ESOP 3,836,000 3,836,000
------------ ------------
Total shareholders' equity 251,406,000 236,847,000
------------ ------------
Total Liabilities and Shareholders' Equity $375,583,000 $355,445,000
============ ============
<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 Six Months Ended
December 31 December 31
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $225,248,000 $192,757,000 $414,378,000 $365,578,000
Cost of Sales 155,304,000 130,555,000 287,418,000 248,968,000
------------ ------------ ------------ ------------
Gross Margin 69,944,000 62,202,000 126,960,000 116,610,000
Selling, General and
Administrative Expenses 36,591,000 36,457,000 68,165,000 68,305,000
------------ ------------ ------------ ------------
Operating Income 33,353,000 25,745,000 58,795,000 48,305,000
Other Income (Expense):
Interest expense (673,000) (802,000) (1,388,000) (1,496,000)
Interest income and
other - net (183,000) 184,000 226,000 203,000
------------ ------------ ------------ ------------
Income Before Income Taxes 32,497,000 25,127,000 57,633,000 47,012,000
Taxes Based on Income 12,516,000 9,610,000 22,332,000 18,475,000
------------ ------------ ------------ ------------
Net Income $ 19,981,000 $ 15,517,000 $ 35,301,000 $ 28,537,000
============ ============ ============ ============
Net Income Per Common Share $ .66 $ .51 $1.17 $ .94
Cash Dividends Per Common
Share $ .14 $ .1125 $ .26 $ .21
Weighted Average Common
Shares Outstanding 30,082,000 30,350,000 30,168,000 30,344,000
============ ============ ============ ============
<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>
Six Months Ended
December 31
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $35,301,000 $28,537,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,031,000 11,921,000
Deferred income taxes and other noncash charges (2,740,000) (329,000)
Loss (gain) on sale of property 195,000 (18,000)
Changes in operating assets and liabilities:
Receivables (26,036,000) (12,263,000)
Inventories (3,928,000) (3,739,000)
Prepaid expenses and other current assets (1,725,000) (604,000)
Accounts payable 5,880,000 1,981,000
Accrued liabilities 1,907,000 3,973,000
----------- -----------
Net cash provided by operating activities 20,885,000 29,459,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition (5,438,000)
Payments on property additions (14,916,000) (9,390,000)
Proceeds from sale of property 412,000 90,000
Other - net (252,000) (1,456,000)
----------- -----------
Net cash used in investing activities (14,756,000) (16,194,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (13,570,000) (3,815,000)
Payment of dividends (7,808,000) (6,348,000)
Payments on long-term debt (790,000) (1,010,000)
Common stock issued upon exercise of stock
options including related tax benefits 644,000 1,869,000
----------- -----------
Net cash used in financing activities (21,524,000) (9,304,000)
----------- -----------
Effect of exchange rate changes on cash (5,000) 3,000
----------- -----------
Net change in cash and equivalents (15,400,000) 3,964,000
Cash and equivalents at beginning of year 30,423,000 16,502,000
----------- -----------
Cash and equivalents at end of period $15,023,000 $20,466,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS:
Cash paid during the period for:
Interest $ 1,375,000 $ 1,484,000
=========== ===========
Income taxes $24,405,000 $18,992,000
=========== ===========
<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 DECEMBER 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. Accordingly, 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, 1994.
(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) On July 20, 1994, 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. Accordingly,
all per share data and the weighted average common shares outstanding
for the three and six month periods ended December 31, 1993 in the
accompanying consolidated condensed financial statements have been
retroactively adjusted for this split.
(4) As approved by its shareholders, the Company has an incentive stock
option plan by which 3,625,000 common shares may be issued under
options granted pursuant to terms of the plan. As of December 31,
1994, employee options for 2,633,542 shares have been granted and
2,434,509 have been exercised.
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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 DECEMBER 31, 1994 AND 1993
RESULTS OF OPERATIONS
For the six months ended December 31, 1994, consolidated net sales of
Lancaster Colony Corporation totaled $414,378,000, reflecting a 13% increase
from the fiscal 1994 comparable total of $365,578,000. Similarly, net sales
for the three months ended December 31, 1994 increased by 17% to $225,248,000
from the fiscal 1994 comparable total of $192,757,000.
The majority of the sales growth achieved within each of the fiscal
1995 periods was contributed by the Glassware and Candles segment, with sales
of candle products demonstrating particular strength. The most recent
quarter's sales of the Glassware and Candle segment were also affected by
customers shifting the timing of certain recurring product orders to the fiscal
second quarter. Throughout the first six months of fiscal 1995, sales growth
of the Specialty Foods segment was led by increased foodservice sales. Within
the Automotive segment, sales growth was primarily achieved as a result of
increased orders for light truck and van accessories.
Consolidated gross margin percentages during fiscal 1995 have
declined from the comparable periods of fiscal 1994 primarily from a
combination of increased raw material costs and changes in sales mix. Material
cost increases have most adversely impacted the margins of the Specialty Foods
and Automotive segments. The average cost of soybean oil, a significant raw
material ingredient cost for salad dressings, was significantly higher during
fiscal 1995 compared to fiscal 1994. Within the Automotive segment,
substantial increases have been incurred in certain plastic, aluminum and
rubber costs. Where possible, the Company has negotiated increases in the sale
price of the affected product lines. However, such increases often lag in
timing, if not also in magnitude, with the related changes in raw material
costs. Also affecting margins in the Specialty Foods segment was a greater
proportion of foodservice sales included within the fiscal 1995 totals. Such
sales typically yield a lower gross margin than do that of retail food sales.
Selling, general and administrative expenses as a percentage of net
sales have declined from 18.7% and 18.9% in the respective six and three-month
periods of fiscal 1994 to 16.4% and 16.2% during fiscal 1995. A sales mix with
proportionally less retail food sales, as well as the planned curtailment of
related food promotional expenditures, has contributed to this decline.
Additionally, the fixed portion of such expenses serve to lower these
percentages in a trend of increasing net sales.
The increases in consolidated net income of 24% and 29% for the
respective six and three-month periods ended December 31, 1994 were generally
comparable to the fluctuations in consolidated income before income taxes.
However, the provision for taxes based on income for the six months ended
December 31, 1993 included a first-quarter charge of approximately $400,000
related to certain retroactive provisions brought about by the August 1993
enactment of the Omnibus Budget Reconciliation Act of 1993.
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FINANCIAL CONDITION
Net cash flows provided by operating activities for the six months
ended December 31, 1994 totaled $20,885,000 compared to $29,459,000 recorded in
the comparable period of fiscal 1994. The working capital ratio at December 31
was 3.1:1.0 compared to 3.2:1.0 at June 30. Within working capital, increased
sales contributed to the higher levels of accounts receivable.
Non-operating uses of cash during the six months ended December 1994
include $14,916,000 for capital expenditures, $13,570,000 for the purchase of
treasury stock and $7,808,000 for payments of dividends on common stock. When
compared to the amount paid through December 1993, total dividends paid in 1994
increased 23% which is reflective of a higher dividend payout rate.
Including both short- and long-term debt within total capitalization,
such debt was 12% of total capitalization at December 31 compared to 13% as of
June 30. The Company continues to maintain discretionary bank lines of credit
in excess of $150,000,000 as a contingent source of short-term financing for
future capital or other temporary cash requirements. However, absent a
significant business acquisition or other unforeseen events, management
currently believes that cash internally generated from operating activities
will be sufficient to meet foreseeable cash requirements for the remainder of
fiscal 1995.
PART II. OTHER INFORMATION
Item 1 - 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 for the Southern District of Ohio in a
proceeding styled UNITED STATES VS. PRETTY PRODUCTS, ET AL. The complaint
sought recovery of response costs allegedly incurred or to be incurred by the
United States Environmental Protection Agency ("EPA") in connection with the
cleanup of the Coshocton City Landfill. During the second quarter of fiscal
1995, the parties reached a settlement for all claims in an amount totaling
$1,750,000 plus interest from July 1, 1994. The settlement was approved and
entered by the Court on January 4, 1995 and the registrant subsequently paid
approximately $1,800,000 in February 1995 to the EPA as settlement of this
obligation. Of this settlement, $1,700,000 had been accrued by the registrant
as of June 30, 1994, with the balance recognized in the second quarter of
fiscal 1995.
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Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The registrant held its annual meeting of the shareholders on
November 21, 1994. Proxies for the meeting were solicited pursuant to Section
14(a) of Securities Exchange Act of 1934. There were no matters discussed or
voted upon at the annual meeting, except for the election of the following
three directors whose term will expire in 1997:
<TABLE>
<CAPTION>
Shares Shares
Voted Shares Not
"For" "Withheld" Voted
---------- ---------- ---------
<S> <C> <C> <C>
Morris S. Halpern 26,119,834 204,290 3,720,411
Robert S. Hamilton 26,262,093 62,031 3,720,411
David J. Zuver 26,229,612 94,512 3,720,411
</TABLE>
In addition to the newly elected directors, the following individuals
continue to serve as directors of the registrant until such time that their
term expires in 1995 or 1996:
John B. Gerlach Frank W. Batsch
John B. Gerlach, Jr. Robert L. Fox
Edward H. Jennings Henry M. O'Neill, Jr.
Richard R. Murphey, Jr.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K - There were no reports filed on Form 8-K
for the three months ended December 31, 1994.
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: February 10, 1995 BY:/S/John B. Gerlach
---------------------------- ------------------
JOHN B. GERLACH
Chairman, Chief
Executive Officer and
Principal Financial Officer
Date: February 10, 1995 BY:/S/John L. Boylan
---------------------------- -----------------
JOHN L. BOYLAN
Treasurer and
Assistant Secretary
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED CONDENSED BALANCE SHEET AND STATEMENT OF INCOME FOR
THE SIX-MONTHS ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 15,023
<SECURITIES> 0
<RECEIVABLES> 109,775
<ALLOWANCES> 3,002
<INVENTORY> 121,576
<CURRENT-ASSETS> 255,437
<PP&E> 273,423
<DEPRECIATION> 168,666
<TOTAL-ASSETS> 375,583
<CURRENT-LIABILITIES> 81,943
<BONDS> 32,244
<COMMON> 26,081
0
0
<OTHER-SE> 225,325
<TOTAL-LIABILITY-AND-EQUITY> 375,583
<SALES> 414,378
<TOTAL-REVENUES> 414,378
<CGS> 287,418
<TOTAL-COSTS> 287,418
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,388
<INCOME-PRETAX> 57,633
<INCOME-TAX> 22,332
<INCOME-CONTINUING> 35,301
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,301
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 0
</TABLE>
