<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, 1996
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, 1996, there were approximately 29,753,000 shares of
common stock, no par value per share, outstanding.
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<PAGE> 2
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
Part I. Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1996 and June 30, 1995 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months
Ended March 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended March 31, 1996 and 1995 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
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<PAGE> 3
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 June 30
1996 1995
---- ----
(Unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash and equivalents $ 8,398,000 $ 8,239,000
Receivables - net of allowance for doubtful accounts 110,335,000 88,416,000
Inventories:
Raw materials and supplies 34,634,000 34,020,000
Finished goods and work in process 111,643,000 107,866,000
------------ ------------
Total inventories 146,277,000 141,886,000
Prepaid expenses and other current assets 14,279,000 11,226,000
------------ ------------
Total current assets 279,289,000 249,767,000
Property, Plant and Equipment - At cost 309,609,000 282,525,000
Less Accumulated Depreciation 183,318,000 169,338,000
------------ ------------
Property, plant and equipment - net 126,291,000 113,187,000
Goodwill - net of accumulated amortization 20,744,000 13,761,000
Other Assets 2,522,000 3,189,000
------------ ------------
Total Assets $428,846,000 $379,904,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 705,000 $ 1,026,000
Accounts payable 39,844,000 26,322,000
Accrued liabilities 32,382,000 33,164,000
------------ ------------
Total current liabilities 72,931,000 60,512,000
Long-Term Debt - Less current portion 31,370,000 31,840,000
Other Noncurrent Liabilities 8,273,000 8,223,000
Deferred Income Taxes 2,545,000 2,181,000
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, 1996 - no
par value - 31,094,000 shares; June 30, 1995 -
no par value - 30,765,000 shares 38,226,000 28,086,000
Retained earnings 321,582,000 280,538,000
Foreign currency translation adjustment 548,000 501,000
------------ ------------
Total 360,356,000 309,125,000
Less:
Common stock in treasury, at cost
March 31, 1996 - 1,341,000 shares;
June 30, 1995 - 936,000 shares 44,072,000 29,420,000
Amount due from ESOP 2,557,000 2,557,000
------------ ------------
Total shareholders' equity 313,727,000 277,148,000
------------ ------------
Total Liabilities and Shareholders' Equity $428,846,000 $379,904,000
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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<PAGE> 4
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 200,459,000 $ 191,975,000 $ 640,416,000 $ 606,353,000
Cost of Sales 140,151,000 132,770,000 445,168,000 420,188,000
------------- ------------- ------------- -------------
Gross Margin 60,308,000 59,205,000 195,248,000 186,165,000
Selling, General and
Administrative Expenses 30,920,000 31,899,000 102,289,000 100,064,000
------------- ------------- ------------- -------------
Operating Income 29,388,000 27,306,000 92,959,000 86,101,000
Other Income (Expense):
Interest expense (659,000) (672,000) (2,218,000) (2,060,000)
Interest income and
other - net (19,000) 197,000 (128,000) 423,000
------------- ------------- ------------- -------------
Income Before Income Taxes 28,710,000 26,831,000 90,613,000 84,464,000
Taxes Based on Income 10,943,000 10,418,000 35,069,000 32,750,000
------------- ------------- ------------- -------------
Net Income $ 17,767,000 $ 16,413,000 $ 55,544,000 $ 51,714,000
============= ============= ============= =============
Net Income Per Common Share $ .60 $ .55 $ 1.87 $ 1.72
Cash Dividends Per Common
Share $ .17 $ .14 $ .49 $ .40
Weighted Average Common
Shares Outstanding 29,818,000 29,905,000 29,781,000 30,080,000
============= ============= ============= =============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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<PAGE> 5
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 55,544,000 $ 51,714,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17,846,000 17,322,000
Deferred income taxes and other noncash charges (1,220,000) (2,622,000)
Loss on sale of property 94,000 311,000
Changes in operating assets and liabilities:
Receivables (21,191,000) (15,395,000)
Inventories (3,651,000) (17,295,000)
Prepaid expenses and other current assets (1,175,000) (2,086,000)
Accounts payable 12,892,000 8,279,000
Accrued liabilities (491,000) (6,193,000)
------------ ------------
Net cash provided by operating activities 58,648,000 34,035,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (31,601,000) (22,502,000)
Acquisition (554,000)
Proceeds from sale of property 1,739,000 439,000
Other - net (195,000) (383,000)
------------ ------------
Net cash used in investing activities (30,057,000) (23,000,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (14,652,000) (16,922,000)
Payment of dividends (14,566,000) (12,012,000)
Payments on long-term debt (791,000) (1,026,000)
Common stock issued, including stock issued
upon exercise of stock options and
related tax benefits 1,520,000 2,271,000
------------ ------------
Net cash used in financing activities (28,489,000) (27,689,000)
------------ ------------
Effect of exchange rate changes on cash 57,000 47,000
------------ ------------
Net change in cash and equivalents 159,000 (16,607,000)
Cash and equivalents at beginning of year 8,239,000 30,423,000
------------ ------------
Cash and equivalents at end of period $ 8,398,000 $ 13,816,000
============ ============
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS:
Cash paid during the period for:
Interest $ 2,767,000 $ 2,575,000
============ ============
Income taxes $ 36,833,000 $ 41,541,000
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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<PAGE> 6
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 1996 AND 1995
(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,
1995.
(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) During the second quarter ended December 31, 1995, the Company acquired
all of the common stock of Dolefam Corporation via a stock-for-stock
transaction. Such transaction was accounted for under the purchase
method of accounting. In conjunction with the acquisition, the Company
issued approximately 273,000 shares of Lancaster Colony Corporation
common stock having a fair market value of approximately $9,000,000 in
exchange for cash of $380,000 and other assets and liabilities having a
fair market value of $1,888,000 and $841,000, respectively. The noncash
aspects of this transaction have been excluded from the accompanying
Statement of Cash Flows.
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<PAGE> 7
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE PERIODS ENDED MARCH 31, 1996 AND 1995
RESULTS OF OPERATIONS
For the nine months ended March 31, 1996, consolidated net sales of
$640,416,000 increased 6% over the 1995 total of $606,353,000. Similarly, net
sales for the three months ended March 31, 1996 increased 4% to $200,459,000
compared to $191,975,000 in 1995. These sales increases primarily reflect the
growth of candle-related sales within the Glassware and Candles segment as well
as increased foodservice sales achieved by the Specialty Foods segment.
Automotive segment sales declined as affected by generally unfavorable economic
conditions and competitive market pressures. These trends continue into the
Company's fiscal fourth quarter.
Consolidated gross margin percentages of 30.5% and 30.1% reported for
the respective nine and three month periods ended March 31, 1996 have remained
relatively constant compared to those achieved during the corresponding periods
of fiscal 1995. The increased volume attributable to foodservice customers
contributed to reduced margins in the Specialty Foods segment as have market
constraints on pricing. Additionally, margins within the Automotive segment have
been adversely affected by higher overhead absorption rates associated with
lower production volumes. These negative factors have been offset by an improved
sales mix and production efficiencies achieved within the Glassware and Candles
segment. Despite notable fluctuations in certain specific commodities, the
overall effect of fluctuations in raw material costs throughout the Company
have not been significant.
Selling, general and administrative costs totaled $102,289,000 during
the nine months ended March 31, 1996, a 2% increase from the comparable period
of 1995. For the three months ended March 31, 1996, such costs decreased from
the 1995 period by 3% and totaled $30,920,000. These fluctuations do not
correspond directly to fluctuations in net sales for the related periods
primarily due to changes in sales mix.
The total of other income and expense for both comparable periods
presented was adversely affected by increased interest expense incurred on
short-term borrowings outstanding during the first and second fiscal quarters of
1996, and by a decline in interest income on reduced invested funds during all
of 1996.
As a result of the foregoing factors, consolidated operating income
for both the nine and three months ended March 31, 1996 of $92,959,000 and
$29,388,000, respectively, increased 8% over the comparable periods of fiscal
1995. Similarly, net income of $55,544,000 and $17,767,000 for the respective
nine and three month periods ended March 31, 1996 increased 7% and 8%,
respectively, over each of the corresponding periods ended March 31, 1995.
FINANCIAL CONDITION
Cash flows from operating activities totaled $58,648,000 for the nine
months ended March 31, 1996 compared to $34,035,000 during the corresponding
period ended March 31, 1995. Additionally, net current assets and the current
ratio at March 31, 1996 were $206,358,000 and 3.8:1.0, respectively. The
corresponding amounts at June 30, 1995 were $189,255,000 and 4.1:1.0. The
increases in accounts receivable and inventories at March 31 compared to June 30
are primarily attributable to greater sales recorded in the quarter ended March
31 and changes in sales mix.
Investing activities associated with cash flows included $31,601,000
expended for capital additions during the nine months ended March 31, 1996. Such
additions through March 1995 totaled $22,502,000. The single largest project in
the current year relates to an expansion of distribution capabilities at the
Leesburg, Ohio candle manufacturing facility.
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<PAGE> 8
FINANCIAL CONDITION (CONTINUED)
Notable financing activities during the current fiscal year include
the purchase of $14,652,000 in common stock of the Company as well as
$14,566,000 paid in dividends on common stock. The latter amount is 21% greater
than the dividends paid during the comparable period of fiscal 1995 and reflects
a higher per share dividend rate paid during fiscal 1996. Management anticipates
that cash provided from future operating activities and from the currently
available discretionary bank credit lines will be adequate to meet the Company's
foreseeable cash requirements over the remainder of fiscal 1996.
In a November 1995 transaction accounted for as a purchase, the
Company issued approximately 273,000 shares of its common stock in exchange for
all the common stock of Dolefam Corporation, a manufacturer and distributor of
specialty food products. Dolefam's results of operations have been included in
the consolidated financial statements from the date of acquisition and are
immaterial in relation to the consolidated totals.
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, 1996.
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, 1996 BY: /S/John B. Gerlach
---------------------------------
JOHN B. GERLACH
Chairman, Chief Executive Officer
and Principal Financial Officer
Date: May 10, 1996 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, 1996 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-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,398
<SECURITIES> 0
<RECEIVABLES> 113,272
<ALLOWANCES> 2,937
<INVENTORY> 146,277
<CURRENT-ASSETS> 279,289
<PP&E> 309,609
<DEPRECIATION> 183,318
<TOTAL-ASSETS> 428,846
<CURRENT-LIABILITIES> 72,931
<BONDS> 31,370
0
0
<COMMON> 38,226
<OTHER-SE> 275,501
<TOTAL-LIABILITY-AND-EQUITY> 428,846
<SALES> 640,416
<TOTAL-REVENUES> 640,416
<CGS> 445,168
<TOTAL-COSTS> 445,168
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,218
<INCOME-PRETAX> 90,613
<INCOME-TAX> 35,069
<INCOME-CONTINUING> 55,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,544
<EPS-PRIMARY> 1.87
<EPS-DILUTED> 0
</TABLE>
