<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, 1997
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, 1997, there were approximately 29,309,000 shares of common
stock, no par value per share, outstanding.
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I. Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1997 and June 30, 1996 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months
Ended March 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended March 31, 1997 and 1996 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
</TABLE>
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 June 30
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 23,019,000 $ 4,670,000
Receivables - net of allowance for doubtful accounts 107,819,000 105,403,000
Inventories:
Raw materials and supplies 41,411,000 33,148,000
Finished goods and work in process 118,216,000 118,447,000
------------ ------------
Total inventories 159,627,000 151,595,000
Prepaid expenses and other current assets 14,353,000 11,674,000
------------ ------------
Total current assets 304,818,000 273,342,000
Property, Plant and Equipment - At cost 334,110,000 316,895,000
Less Accumulated Depreciation 185,604,000 177,800,000
------------ ------------
Property, plant and equipment - net 148,506,000 139,095,000
Goodwill - net of accumulated amortization 20,222,000 20,715,000
Other Assets 4,235,000 2,207,000
------------ ------------
Total Assets $477,781,000 $435,359,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 545,000 $ 610,000
Accounts payable 39,493,000 34,303,000
Accrued liabilities 35,681,000 34,441,000
------------ ------------
Total current liabilities 75,719,000 69,354,000
Long-Term Debt - Less current portion 30,685,000 31,230,000
Other Noncurrent Liabilities 7,875,000 7,714,000
Deferred Income Taxes 2,517,000 3,498,000
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, 1997 - no
par value - 31,247,000 shares; June 30, 1996 -
no par value - 31,102,000 shares 43,539,000 38,491,000
Retained earnings 386,293,000 337,153,000
Foreign currency translation adjustment 103,000 75,000
------------ ------------
Total 429,935,000 375,719,000
Less:
Common stock in treasury, at cost
March 31, 1997 - 1,938,000 shares;
June 30, 1996 - 1,538,000 shares 67,671,000 50,877,000
Amount due from ESOP 1,279,000 1,279,000
------------ ------------
Total shareholders' equity 360,985,000 323,563,000
------------ ------------
Total Liabilities and Shareholders' Equity $477,781,000 $435,359,000
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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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
1997 1996 1997 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net Sales $218,141,000 $200,459,000 $696,082,000 $640,416,000
Cost of Sales 148,984,000 140,151,000 478,290,000 445,168,000
------------ ------------ ------------ ------------
Gross Margin 69,157,000 60,308,000 217,792,000 195,248,000
Selling, General and
Administrative Expenses 34,499,000 30,920,000 111,403,000 102,289,000
------------ ------------ ------------ ------------
Operating Income 34,658,000 29,388,000 106,389,000 92,959,000
Other Income (Expense):
Interest expense (633,000) (659,000) (1,941,000) (2,218,000)
Interest income and
other - net (11,000) (19,000) 30,000 (128,000)
------------ ------------ ----------- ------------
Income Before Income Taxes 34,014,000 28,710,000 104,478,000 90,613,000
Taxes Based on Income 12,992,000 10,943,000 39,791,000 35,069,000
------------ ------------ ------------ ------------
Net Income $ 21,022,000 $ 17,767,000 $ 64,687,000 $ 55,544,000
============ ============ ============ ============
Net Income Per Common Share $ .71 $ .60 $2.19 $ 1.87
Cash Dividends Per Common
Share $ .18 $ .17 $ .53 $ .49
Weighted Average Common
Shares Outstanding 29,437,000 29,818,000 29,487,000 29,781,000
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $64,687,000 $55,544,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 20,427,000 17,846,000
Deferred income taxes and other noncash charges (768,000) (1,220,000)
Loss on sale of property 232,000 94,000
Changes in operating assets and liabilities:
Receivables (2,416,000) (21,191,000)
Inventories (8,032,000) (3,651,000)
Prepaid expenses and other current assets (2,679,000) (1,175,000)
Accounts payable 5,190,000 12,892,000
Accrued liabilities 1,240,000 (491,000)
----------- -----------
Net cash provided by operating activities 77,881,000 58,648,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (28,552,000) (31,601,000)
Proceeds from sale of property 38,000 1,739,000
Other - net (3,091,000) (195,000)
----------- -----------
Net cash used in investing activities (31,605,000) (30,057,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (16,794,000) (14,652,000)
Payment of dividends (15,599,000) (14,566,000)
Payments on long-term debt (610,000) (791,000)
Common stock issued upon exercise of stock
options and related tax benefits 5,048,000 1,520,000
----------- -----------
Net cash used in financing activities (27,955,000) (28,489,000)
----------- -----------
Effect of exchange rate changes on cash 28,000 57,000
----------- -----------
Net change in cash and equivalents 18,349,000 159,000
Cash and equivalents at beginning of year 4,670,000 8,239,000
----------- -----------
Cash and equivalents at end of period $23,019,000 $ 8,398,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS:
Cash paid during the period for:
Interest $ 2,537,000 $ 2,767,000
=========== ===========
Income taxes $44,376,000 $36,833,000
=========== ===========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 1997 AND 1996
(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, 1996.
(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.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS" No. 128), "Earnings per Share"
which when adopted, will replace the current methodology for calculating and
presenting earnings per share under the Accounting Principles Board ("APB")
Opinion No. 15 "Earnings per Share." Under SFAS No. 128, companies with
complex capital structures will be required to present basic earnings per
share and diluted earnings per share while companies with simple capital
structures will only be required to present basic earnings per share. Basic
earnings per share excludes dilution and is computed by dividing income
available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share is computed
similarly to the current computation of fully diluted earnings per share
required under APB No. 15. The standard, which is effective for financial
statements for periods ending after December 15, 1997 including interim
periods, requires restatement of all prior-period EPS data. Earlier
application is not permitted. Management does not expect the presentation
required by SFAS No. 128 to materially differ from the current presentation
of earnings per share.
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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, 1997 AND 1996
RESULTS OF OPERATIONS
Consolidated net sales increased to $696,082,000 and $218,141,000 for
the nine and three month periods ended March 31, 1997, reflecting a nine
percent increase of $55,666,000 and $17,682,000 over the corresponding periods
of 1996. All three segments contributed to this growth. Candles and related
accessories continue to be the Company's most rapidly growing product lines,
although internal growth also yielded increased sales within the Specialty
Foods and Automotive segments. Contributing to the sales increase achieved by
the Specialty Foods segment were the continued success of produce-related
products, the market acceptance of several recently introduced products, and
the Cardini brand of upscale salad dressings which was acquired in November
1995. Within the Automotive segment, sales of products for light trucks, vans
and sport utility vehicles boosted this segment's fiscal 1997 growth.
Consolidated gross margins of 31.3% and 31.7% for the nine and three
month periods ended March 31, 1997 showed improvement as compared to 30.5% and
30.1% achieved during the corresponding periods of one year ago. The Specialty
Foods and Automotive segments contributed higher margins for both the nine and
three month periods as a result of production efficiency gains and some relief
in raw material costs. The Specialty Foods segment also continued to benefit
from a more favorable shift in retail product sales. Gross margins within the
Glassware and Candles segment were generally comparable to the prior year with
the effect of certain higher raw material costs offset by improved
manufacturing efficiencies.
Consolidated selling, general and administrative expenses totaled
$111,403,000 and $34,499,000 for the respective nine and three month periods
ended March 31, 1997, resulting in a 9% and 12% increase from the prior March
31, 1996 nine and three month periods ended. Such increases are primarily
attributable to the increased sales volume as well as increased promotional
activity within the Specialty Foods segment affecting the quarterly
comparisons.
Overall, consolidated operating income increased to $106,389,000 and
$34,658,000, a 14% and 18% increase over the $92,959,000 and $29,388,000
realized for the nine and three month periods ended March 31, 1996.
Consolidated net income also increased to $64,687,000 and $21,022,000 for the
nine and three month periods ending March 31, 1997, resulting in a 16% and 18%
increase from the prior year's nine and three month period totals of
$55,544,000 and $17,767,000, respectively.
FINANCIAL CONDITION
Net cash provided by operating activities totaling $77,881,000 for
the nine months ended March 31, 1997 increased 33% over the prior year's
comparable total of $58,648,000. Contributing to this increase was the 16%
increase in net income as well as improved working capital utilization. Net
working capital as of March 31, 1997 totaled $229,099,000 as compared to
$203,988,000 at June 30, 1996. Similarly, the Company's current ratio also
increased slightly from 3.9:1.0 at June 30, 1996 to 4.0:1.0 at March 31, 1997.
Financing activities for the nine months totaled $27,955,000 and
included $16,794,000 utilized to purchase treasury stock and $15,599,000 paid
for cash dividends. It is anticipated that stock repurchases will continue to
be made in the fiscal fourth quarter although there is no commitment on
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the part of the Company as to a specific quantity to be purchased.
Investing activities during the nine months ended March 31, 1997
included the payment of $28,552,000 for property additions compared to
$31,601,000 for the comparable period of a year ago. Management anticipates
that cash provided from operations 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 1997.
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, 1997.
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 9, 1997 BY: /S/ John B. Gerlach, Jr.
--------------------- -------------------------------
JOHN B. GERLACH, JR.
Chairman, Chief Executive
Officer and President
Date: May 9, 1997 BY: /S/ John L. Boylan
--------------------- -------------------------------
JOHN L. BOYLAN
Treasurer, Assistant Secretary
and Chief Financial Officer
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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, 1997 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-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 23,019
<SECURITIES> 0
<RECEIVABLES> 107,819
<ALLOWANCES> 3,516
<INVENTORY> 159,627
<CURRENT-ASSETS> 304,818
<PP&E> 334,110
<DEPRECIATION> 185,604
<TOTAL-ASSETS> 477,781
<CURRENT-LIABILITIES> 75,719
<BONDS> 30,685
0
0
<COMMON> 43,539
<OTHER-SE> 317,446
<TOTAL-LIABILITY-AND-EQUITY> 477,781
<SALES> 696,082
<TOTAL-REVENUES> 696,082
<CGS> 478,290
<TOTAL-COSTS> 478,290
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,941
<INCOME-PRETAX> 104,478
<INCOME-TAX> 39,791
<INCOME-CONTINUING> 64,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,687
<EPS-PRIMARY> 2.19
<EPS-DILUTED> 0
</TABLE>
