<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, 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 December 31, 1996, there were approximately 29,450,000 shares of common
stock, no par value per share, outstanding.
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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Consolidated Condensed Balance Sheets -
December 31, 1996 and June 30, 1996 3
Consolidated Condensed Statements of Income -
Three Months and Six Months
Ended December 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended December 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 4 - Submission of Matters to a Vote of
Security Holders 8
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
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 June 30
1996 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 25,580,000 $ 4,670,000
Receivables - net of allowance for doubtful accounts 113,402,000 105,403,000
Inventories:
Raw materials and supplies 42,848,000 33,148,000
Finished goods and work in process 112,740,000 118,447,000
------------ ------------
Total inventories 155,588,000 151,595,000
Prepaid expenses and other current assets 14,542,000 11,674,000
------------ ------------
Total current assets 309,112,000 273,342,000
Property, Plant and Equipment - At cost 330,800,000 316,895,000
Less Accumulated Depreciation 182,911,000 177,800,000
------------ ------------
Property, plant and equipment - net 147,889,000 139,095,000
Goodwill - net of accumulated amortization 20,441,000 20,715,000
Other Assets 3,678,000 2,207,000
------------ ------------
Total Assets $481,120,000 $435,359,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 545,000 $ 610,000
Accounts payable 42,844,000 34,303,000
Accrued liabilities 45,569,000 34,441,000
------------ ------------
Total current liabilities 88,958,000 69,354,000
Long-Term Debt - Less current portion 30,825,000 31,230,000
Other Noncurrent Liabilities 7,855,000 7,714,000
Deferred Income Taxes 1,198,000 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 December 31, 1996 - no par value -
31,198,000 shares; June 30, 1996 -
no par value - 31,102,000 shares 41,851,000 38,491,000
Retained earnings 370,539,000 337,153,000
Foreign currency translation adjustment 101,000 75,000
------------ ------------
Total 412,491,000 375,719,000
Less:
Common stock in treasury, at cost
December 31, 1996 - 1,748,000 shares;
June 30, 1996 - 1,538,000 shares 58,928,000 50,877,000
Amount due from ESOP 1,279,000 1,279,000
------------ ------------
Total shareholders' equity 352,284,000 323,563,000
------------ ------------
Total Liabilities and Shareholders' Equity $481,120,000 $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 Six Months Ended
December 31 December 31
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 259,023,000 $ 239,055,000 $ 477,941,000 $ 439,957,000
Cost of Sales 176,733,000 163,434,000 329,306,000 305,017,000
------------- ------------- ------------- -------------
Gross Margin 82,290,000 75,621,000 148,635,000 134,940,000
Selling, General and
Administrative Expenses 40,716,000 37,945,000 76,904,000 71,369,000
------------- ------------- ------------- -------------
Operating Income 41,574,000 37,676,000 71,731,000 63,571,000
Other Income (Expense):
Interest expense (673,000) (843,000) (1,308,000) (1,559,000)
Interest income and
other - net (194,000) 41,000 (109,000)
------------- ------------- ------------- -------------
Income Before Income Taxes 40,901,000 36,639,000 70,464,000 61,903,000
Taxes Based on Income 15,496,000 14,270,000 26,799,000 24,126,000
------------- ------------- ------------- -------------
Net Income $ 25,405,000 $ 22,369,000 $ 43,665,000 $ 37,777,000
============= ============= ============= =============
Net Income Per Common Share $ .86 $ .75 $ 1.48 $ 1.27
Cash Dividends Per Common
Share $ .18 $ .17 $ .35 $ .32
Weighted Average Common
Shares Outstanding 29,496,000 29,800,000 29,512,000 29,762,000
============= ============= ============= =============
</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>
Six Months Ended
December 31
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 43,665,000 $ 37,777,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 13,453,000 11,987,000
Deferred income taxes and other noncash charges (2,123,000) (1,192,000)
Loss on sale of property 51,000 56,000
Changes in operating assets and liabilities:
Receivables (7,999,000) (27,613,000)
Inventories (3,993,000) 2,189,000
Prepaid expenses and other current assets (2,868,000) (1,280,000)
Accounts payable 8,541,000 10,437,000
Accrued liabilities 11,128,000 8,671,000
------------ ------------
Net cash provided by operating activities 59,855,000 41,032,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on property additions (21,267,000) (20,140,000)
Proceeds from sale of property 8,000 1,737,000
Other - net (2,236,000) (205,000)
------------ ------------
Net cash used in investing activities (23,495,000) (18,608,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (8,051,000) (9,911,000)
Payment of dividends (10,315,000) (9,510,000)
Payments on long-term debt (470,000) (689,000)
Common stock issued upon exercise of stock
options including related tax benefits 3,360,000 738,000
------------ ------------
Net cash used in financing activities (15,476,000) (19,372,000)
------------ ------------
Effect of exchange rate changes on cash 26,000 68,000
------------ ------------
Net change in cash and equivalents 20,910,000 3,120,000
Cash and equivalents at beginning of year 4,670,000 8,239,000
------------ ------------
Cash and equivalents at end of period $ 25,580,000 $ 11,359,000
============ ============
SUPPLEMENTAL DISCLOSURE OF OPERATING CASH FLOWS:
Cash paid during the period for:
Interest $ 1,315,000 $ 1,581,000
============ ============
Income taxes $ 24,446,000 $ 20,041,000
============ ============
</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 DECEMBER 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, 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.
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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 DECEMBER 31, 1996 AND 1995
RESULTS OF OPERATIONS
Consolidated net sales increased to $477,941,000 and $259,023,000 for
the respective six and three month periods ended December 31, 1996, reflecting a
nine and eight percent increase over the $439,957,000 and $239,055,000 recorded
in the corresponding periods of 1995. Continuing the trend from the first
quarter, candle-related products remained a primary contributor to the increased
sales in the second quarter. This sales growth was achieved not only through
increases in sales to existing customers, but also through the acquisition of
new customer accounts during calendar 1996. The Automotive segment's sales
improved modestly as a result of increased sales of light truck and van
accessories. The Specialty Foods segment achieved increased sales through the
continued success of retail produce-related products, the prior year's
acquisition of the Cardini brand of upscale salad dressings and through the
successful introduction of new products.
Consolidated gross margin percentages of 31.1% and 31.8% for the six
and three month periods ended December 31, 1996, showed improvement as compared
to 30.7% and 31.6% for the corresponding periods of one year ago. The Specialty
Foods segment contributed higher margins for both the six and three month
periods as a result of modestly higher selling prices, a more favorable shift in
the mix of retail product sales and some relief in raw material costs. The
Automotive segment's margins were affected by year-to-date improvements
associated with increased production efficiencies as well as relief in certain
raw material costs. Gross margin percentages within the Glassware and Candles
segment declined for both the year-to-date and quarterly periods primarily as a
result of production inefficiencies associated with the shutdown of glass
melting tanks and product rework believed to be of a nonrecurring nature.
Consolidated selling, general and administrative expenses totaled
$76,904,000 and $40,716,000 for the respective six and three month periods ended
December 31, 1996, representing an eight and seven percent increase from the
corresponding periods of 1995. Such increases are primarily attributable to the
increased sales volume.
Overall, consolidated operating income increased to $71,731,000 and
$41,574,000, a 13% and 10% increase over the $63,571,000 and $37,676,000
realized for the respective six and three month periods ended December 31, 1995.
Consolidated net income also increased to $43,665,000 and $25,405,000 for the
six and three month periods ending December 31, 1996, resulting in a 16% and 14%
increase from the prior year's corresponding six and three month period totals
of $37,777,000 and $22,369,000.
FINANCIAL CONDITION
Improved net income and working capital utilization were primarily
responsible for cash flows from operating activities improving to $59,855,000
for the six months ended December 31, 1996, as compared to $41,032,000 provided
in the corresponding period of fiscal 1996. Net working capital as of December
31, 1996, totaled $220,154,000 as compared to $203,988,000 at June 30, 1996. The
working capital ratio, however, decreased slightly to 3.5:1.0 from 3.9:1.0 at
June 30.
Significant financing activities of the Company during the first six
months of fiscal 1997 included the purchase of treasury stock totaling
$8,051,000 and the payment of dividends on common stock of $10,315,000. The
latter total reflects a dividend payout rate of $.35 per common share through
December 31, 1996, as compared to $.32 paid during the corresponding
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<PAGE> 8
period of a year ago. 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 1997.
The Company's total indebtedness at December 31, 1996, continues to be
less than 10% of total capitalization as no new long-term indebtedness has been
incurred by the Company since fiscal 1992. The Company's return on average
shareholder equity for the 1996 calendar year was approximately 25% as compared
to approximately 26% for calendar 1995.
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The registrant held its annual meeting of the shareholders on November
18, 1996. Proxies for the meeting were solicited pursuant to Section 14(a) of
the 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 1999.
<TABLE>
<CAPTION>
Shares Shares
Voted Shares Not
"For" "Withheld" Voted
----- ---------- -----
<S> <C> <C> <C>
Robert L. Fox 26,374,434 217,802 2,845,615
John B. Gerlach, Jr. 26,369,049 223,187 2,845,615
Edward H. Jennings 26,372,980 219,256 2,845,615
</TABLE>
As of November 18, 1996, the following individuals also continued to
serve as directors of the registrant:
Frank W. Batsch Richard R. Murphy, Jr.
John B. Gerlach Henry M. O'Neill, Jr.
Morris S. Halpern David J. Zuver
Robert S. Hamilton
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<PAGE> 9
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, 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: February 7, 1997 BY:/S/John B. Gerlach, Jr.
--------------------------- -----------------------
JOHN B. GERLACH, JR.
President
Date: February 7, 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
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 25,580
<SECURITIES> 0
<RECEIVABLES> 116,593
<ALLOWANCES> 3,191
<INVENTORY> 155,588
<CURRENT-ASSETS> 309,112
<PP&E> 330,800
<DEPRECIATION> 182,911
<TOTAL-ASSETS> 481,120
<CURRENT-LIABILITIES> 88,958
<BONDS> 30,825
<COMMON> 41,851
0
0
<OTHER-SE> 310,433
<TOTAL-LIABILITY-AND-EQUITY> 481,120
<SALES> 477,941
<TOTAL-REVENUES> 477,941
<CGS> 329,306
<TOTAL-COSTS> 329,306
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,308
<INCOME-PRETAX> 70,464
<INCOME-TAX> 26,799
<INCOME-CONTINUING> 43,665
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,665
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 0
</TABLE>
