<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 March 31, 1995
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, 1995, there were 29,831,000 shares of common stock, no
par value per share, outstanding.
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
Part I. Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1995 and June 30, 1994 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months
Ended March 31, 1995 and 1994 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended March 31, 1995 and 1994 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 8
Exhibit 27 - Financial Data Schedule 9
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<TABLE>
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
March 31 June 30
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 13,816,000 $ 30,423,000
Receivables 99,329,000 83,076,000
Less allowance for doubtful accounts 3,197,000 2,339,000
------------ ------------
Receivables - net 96,132,000 80,737,000
Inventories:
Raw materials and supplies 37,767,000 27,614,000
Finished goods and work in process 97,439,000 90,034,000
------------ ------------
Total inventories 135,206,000 117,648,000
Prepaid expenses and other current assets 12,251,000 8,995,000
------------ ------------
Total current assets 257,405,000 237,803,000
Property, Plant and Equipment - At cost 276,918,000 264,697,000
Less Accumulated Depreciation 169,328,000 163,127,000
------------ ------------
Property, plant and equipment - net 107,590,000 101,570,000
Other Assets 15,137,000 16,072,000
------------ ------------
Total Assets $380,132,000 $355,445,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,126,000 $ 1,301,000
Accounts payable 39,333,000 31,054,000
Accrued liabilities 35,709,000 41,902,000
------------ ------------
Total current liabilities 76,168,000 74,257,000
Long-Term Debt - Less current portion 32,082,000 32,933,000
Other Noncurrent Liabilities 8,191,000 8,093,000
Deferred Income Taxes 1,695,000 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 March 31, 1995 - no par value -
30,742,000 shares; June 30, 1994 -
no par value - 22,977,000 shares 27,708,000 25,437,000
Retained earnings 266,184,000 226,412,000
Foreign currency translation adjustment 468,000 440,000
------------ ------------
Total 294,360,000 252,289,000
Less:
Common stock in treasury, at cost
March 31, 1995 - 911,000 shares;
June 30, 1994 - 303,000 shares 28,528,000 11,606,000
Amount due from ESOP 3,836,000 3,836,000
------------ ------------
Total shareholders' equity 261,996,000 236,847,000
------------ ------------
Total Liabilities and Shareholders' Equity $380,132,000 $355,445,000
============ ============
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1995 1994 1995 1994
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net Sales $191,975,000 $171,492,000 $606,353,000 $537,070,000
Cost of Sales 132,770,000 117,634,000 420,188,000 366,602,000
------------ ------------ ------------ ------------
Gross Margin 59,205,000 53,858,000 186,165,000 170,468,000
Selling, General and
Administrative Expenses 31,899,000 31,497,000 100,064,000 99,802,000
------------ ------------ ------------ ------------
Operating Income 27,306,000 22,361,000 86,101,000 70,666,000
Other Income (Expense):
Interest expense (672,000) (700,000) (2,060,000) (2,196,000)
Interest income and
other - net 197,000 79,000 423,000 282,000
------------ ------------ ----------- ------------
Income Before Income Taxes 26,831,000 21,740,000 84,464,000 68,752,000
Taxes Based on Income 10,418,000 8,501,000 32,750,000 26,976,000
------------ ------------ ------------ ------------
Net Income $ 16,413,000 $ 13,239,000 $ 51,714,000 $ 41,776,000
============ ============ ============ ============
Net Income Per Common Share $ .55 $ .44 $1.72 $ 1.38
Cash Dividends Per Common
Share $ .14 $ .1125 $ .40 $ .3225
Weighted Average Common
Shares Outstanding 29,905,000 30,365,000 30,080,000 30,351,000
============ ============ ============ ============
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
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $51,714,000 $41,776,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17,322,000 18,009,000
Deferred income taxes and other noncash charges (2,622,000) (753,000)
Loss (gain) on sale of property 311,000 (13,000)
Changes in operating assets and liabilities:
Receivables (15,395,000) (15,897,000)
Inventories (17,295,000) (8,471,000)
Prepaid expenses and other current assets (2,086,000) (806,000)
Accounts payable 8,279,000 6,852,000
Accrued liabilities (6,193,000) 2,923,000
----------- -----------
Net cash provided by operating activities 34,035,000 43,620,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (22,502,000) (15,460,000)
Acquisition (554,000) (5,438,000)
Proceeds from sale of property 439,000 144,000
Other - net (383,000) (1,072,000)
----------- -----------
Net cash used in investing activities (23,000,000) (21,826,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (12,012,000) (9,750,000)
Payments on long-term debt (1,026,000) (1,331,000)
Purchase of treasury stock (16,922,000) (6,212,000)
Common stock issued upon exercise of stock
options including related tax benefits 2,271,000 3,156,000
----------- -----------
Net cash used in financing activities (27,689,000) (14,137,000)
----------- -----------
Effect of exchange rate changes on cash 47,000 (4,000)
----------- -----------
Net change in cash and equivalents (16,607,000) 7,653,000
Cash and equivalents at beginning of year 30,423,000 16,502,000
----------- -----------
Cash and equivalents at end of period $13,816,000 $24,155,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS:
Cash paid during the period for:
Interest $ 2,575,000 $ 2,708,000
=========== ===========
Income taxes $41,541,000 $30,811,000
=========== ===========
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, 1995 AND 1994
(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 nine month periods ended March 31, 1994 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. During the third
quarter of fiscal 1995, the Company granted approximately 210,000
options to employees and officers of the Company. As of March 31,
1995, options for approximately 2,840,000 shares have been granted
and 2,518,000 have been exercised under the plan.
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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, 1995 AND 1994
RESULTS OF OPERATIONS
Consolidated net sales of $606,353,000 and $191,975,000 for the
respective nine and three months ended March 31, 1995 increased 13% and 12%
over the corresponding totals of $537,070,000 and $171,492,000 of fiscal 1994.
The sales of the Glassware and Candles segment contributed most prominently to
this increase with sales of the segment's candle products experiencing
significant growth throughout fiscal 1995. For the nine month period,
Automotive segment sales benefitted from a generally increased level of
domestic new vehicle sales, particularly with respect to light trucks and vans.
The implementation of certain cost-driven price increases during this period
also contributed to progressively increased sales revenues. Within the
Specialty Foods segment, greater foodservice volumes led to an increase in
sales for each of the comparable periods presented.
Consolidated gross margins have been adversely affected throughout
1995 by certain increased raw material costs. The impact of increased raw
material costs has been most pronounced within the Automotive segment where
aluminum, rubber and resin-based plastic materials have undergone increases in
excess of the segment's ability to increase related sales prices. Impacting
the nine month results were increased costs for soybean oil, a major ingredient
of the Specialty Foods segment. The increased foodservice mix within the
Specialty Foods segment also reduced consolidated gross margins during fiscal
1995. Finally, all segments have experienced significantly higher corrugated
costs during fiscal 1995. The foregoing factors were partially offset by
certain productivity improvements, particularly in the Glassware and Candles
segment, where increased volume, recent capital expenditures and process
improvements combined to enhance this segment's margins.
Selling, general and administrative expenses of $100,064,000 and
$31,899,000 for the respective nine and three month periods ended March 31,
1995 increased less than 2% from the totals recorded during the comparable
periods of 1994. Mitigating the increase in such costs were efforts to reduce
promotional costs in the Specialty Foods segment as well as issues involving
changes in sales mix. Additionally, the fixed portion of such operating costs
generally serves to hold the fluctuations of these costs below that of net
sales.
As a percentage of net sales, income before income taxes and net
income for both periods of fiscal 1995 were approximately 14% and 9%,
respectively, compared to 13% and 8% during the comparable fiscal 1994 periods.
The provision for income taxes for the nine-month period ended March 31, 1994
was impacted by a first-quarter charge of approximately $400,000 to record the
effect of the August 1993 enactment of the Omnibus Budget Reconciliation Act of
1993.
FINANCIAL CONDITION
As of March 31, the Company's balance sheet reflected net working
capital of $181,237,000 and a current ratio of 3.4:1.0. As of June 30, 1994,
the respective comparable totals were $163,546,000 and 3.2:1.0. Cash flows
from operations through March 1995 totaled $34,035,000 compared to $43,620,000
during the nine months ended March 1994. Contributing to the increase in
accounts receivable at March 31 was the higher level of sales occurring in
March 1995 compared to June 1994. Inventories were impacted by the general
increase in sales volumes, rising material costs and contingency stocks built
in anticipation of certain labor negotiations.
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FINANCIAL CONDITION (CONTINUED)
Significant nonoperating uses of cash during the nine months ended
March 1995 included $16,922,000 for the repurchase of common stock, $22,502,000
for capital expenditures and $12,012,000 for common stock dividends. The
latter amount reflects the increased dividend rate which totaled $.40 versus
$.32 for the nine months ended March 31, 1995 and 1994, respectively. Through
March 31, the Company's capital structure remains generally unchanged with
debt (including the short-term portion) comprising 11% of capitalization at
March 31 compared to 13% at 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 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 March 31, 1995.
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 10, 1995 BY: /S/John B. Gerlach
---------------------- ---------------------------
JOHN B. GERLACH
Chairman, Chief Executive
Officer and Principal
Financial Officer
Date: May 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 NINE-MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 13,816
<SECURITIES> 0
<RECEIVABLES> 99,329
<ALLOWANCES> 3,197
<INVENTORY> 135,206
<CURRENT-ASSETS> 257,405
<PP&E> 276,918
<DEPRECIATION> 169,328
<TOTAL-ASSETS> 380,132
<CURRENT-LIABILITIES> 76,168
<BONDS> 32,082
<COMMON> 27,708
0
0
<OTHER-SE> 234,288
<TOTAL-LIABILITY-AND-EQUITY> 380,132
<SALES> 606,353
<TOTAL-REVENUES> 606,353
<CGS> 420,188
<TOTAL-COSTS> 420,188
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,060
<INCOME-PRETAX> 84,464
<INCOME-TAX> 32,750
<INCOME-CONTINUING> 51,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51,714
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 0
</TABLE>
