<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
- - ---
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- - --- THE SECURITIES EXCHANGE ACT OF 1934
For Quarter (Twelve Weeks) Ended June 11, 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 0-398
---------------
LANCE, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0292920
- - ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8600 South Boulevard (P. O. Box 32368), Charlotte, North Carolina 28232
- - ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(704) 554-1421
- - ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- - ------------------------------------------------------------------------------
(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 (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X . No .
------- -------
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
Common Stock, $.83-1/3 par value - 30,707,907 shares
outstanding as of July 19, 1994.
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<PAGE> 2
LANCE, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Financial Statements:
Condensed Consolidated Balance Sheets -
June 11, 1994 (Unaudited) and December 25, 1993 3
Condensed Statements of Consolidated Income and
Retained Earnings (Unaudited) - Twelve Weeks and
Twenty-Four Weeks Ended June 11, 1994 and June 12, 1993 4
Condensed Statements of Consolidated Cash Flows
(Unaudited) - Twenty-Four Weeks
Ended June 11, 1994 and June 12, 1993 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 10
Submission of Matters to a Vote of Security Holders 10
Exhibits and Reports on Form 8-K 10
SIGNATURES 10
</TABLE>
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<PAGE> 3
LANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, JUNE 11, 1994 (UNAUDITED) AND
DECEMBER 25, 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
- - ------ ---- ----
(In thousands, except share data)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 25,116 $ 20,328
Marketable securities (Note 6) 18,638 19,228
Accounts receivable (less
allowance for doubtful accounts) 31,976 28,906
Accrued interest receivable 679 724
Refundable income taxes 1,750
Inventories - Finished goods, goods
in process, materials, etc. (Note 3) 29,131 33,673
Deferred income tax benefit (Note 8) 5,953 5,333
-------- --------
Total current assets 111,493 109,942
-------- --------
PROPERTY, NET 169,458 173,639
-------- --------
OTHER ASSETS:
Marketable securities (Note 6) 18,126 14,452
Deposits 1,436 2,296
Prepayments, etc. 8,073 8,145
-------- --------
Total other assets 27,635 24,893
-------- --------
TOTAL $308,586 $308,474
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
- - ------------------------------------ ---- ----
CURRENT LIABILITIES:
Accounts payable $ 3,505 $ 6,907
Accrued liabilities 31,586 24,583
-------- --------
Total current liabilities 35,091 31,490
-------- --------
OTHER LIABILITIES AND DEFERRED CREDITS:
Deferred income taxes (Note 8) 19,298 19,525
Accrued postretirement health care costs (Note 7) 7,556 7,096
Supplemental retirement benefits 3,330 3,323
-------- --------
Total other liabilities and deferred credits 30,184 29,944
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.83-1/3 par value (authorized:
75,000,000, shares; issued: 30,837,907
shares in 1994; 31,001,185 shares in 1993) 25,698 25,835
Retained earnings 217,613 221,205
-------- --------
Total stockholders' equity 243,311 247,040
-------- --------
TOTAL $308,586 $308,474
======== ========
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
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<PAGE> 4
LANCE, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS (UNAUDITED)
FOR THE TWELVE WEEKS AND TWENTY-FOUR WEEKS ENDED JUNE 11, 1994 AND
JUNE 12, 1993
<TABLE>
<CAPTION>
......TWELVE WEEKS ENDED...... ....TWENTY-FOUR WEEKS ENDED...
(In thousands, except per share data)
JUNE 11, 1994 JUNE 12, 1993 JUNE 11, 1994 JUNE 12, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES AND OTHER OPERATING REVENUE $117,541 $113,184 $225,674 $219,607
-------- -------- -------- --------
COST OF SALES AND OPERATING EXPENSES:
Cost of sales 55,704 52,287 108,142 101,235
Selling and delivery expenses 42,858 42,519 84,155 83,188
General and administrative expenses 4,457 4,625 9,283 9,250
Contributions to employees' profit-
sharing retirement fund 1,773 1,699 3,055 3,202
-------- -------- -------- --------
Total 104,792 101,130 204,635 196,875
-------- -------- -------- --------
PROFIT FROM OPERATIONS 12,749 12,054 21,039 22,732
OTHER INCOME, NET 1,035 1,402 2,001 2,503
-------- -------- -------- -------
INCOME BEFORE INCOME TAXES 13,784 13,456 23,040 25,235
INCOME TAXES 5,338 5,014 8,803 9,357
-------- ------- -------- --------
NET INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING PRINCIPLE CHANGES 8,446 8,442 14,237 15,878
CUMULATIVE EFFECT ON PRIOR YEARS OF
CHANGES IN ACCOUNTING PRINCIPLES FOR:
INCOME TAXES (Note 8) 3,538
POSTRETIREMENT HEALTH CARE COSTS (Note 7) (3,916)
-------- -------- ------- --------
NET INCOME 8,446 8,442 14,237 15,500
RETAINED EARNINGS AT BEGINNING OF
FISCAL PERIOD 219,267 225,765 221,205 226,060
-------- -------- -------- --------
TOTAL 227,713 234,207 235,442 241,560
LESS:
CASH DIVIDENDS 7,433 7,510 14,873 15,020
RETIREMENT OF COMMON STOCK 2,667 2,954
EXERCISE OF STOCK OPTIONS 2 (157)
-------- -------- -------- --------
RETAINED EARNINGS AT END OF
FISCAL PERIOD $217,613 $226,697 $217,613 $226,697
======== ======== ======== ========
PER SHARE AMOUNTS (NOTE 4):
Net Income before cumulative effect
of accounting principle changes $.27 $.27 $.46 $.51
Cumulative effect on prior years of
changes in accounting principles (.01)
---- ---- ---- ----
Net income $.27 $.27 $.46 $.50
==== ==== ==== ====
Cash dividends $.24 $.24 $.48 $.48
==== ==== ==== ====
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
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<PAGE> 5
LANCE, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
FOR THE TWENTY-FOUR WEEKS ENDED JUNE 11, 1994 AND JUNE 12, 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $14,237 $15,500
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 11,421 11,830
Deferred income taxes (847) (6,647)
Other, net 810
Changes in operating assets and liabilities 6,841 7,361
------- -------
Net cash flow from operating activities 32,462 28,044
------- -------
INVESTING ACTIVITIES:
Purchases of property (7,420) (10,559)
Proceeds from sale of property 974 459
Purchases of marketable securities (18,491) (7,380)
Sales of marketable securities 10,838
Maturities of marketable securities 4,310 7,525
Other, net 81 (280)
------- -------
Net cash used in investing activities (9,708) (10,235)
------- -------
FINANCING ACTIVITIES:
Dividends paid (14,873) (15,020)
Sales (purchases) of Lance common stock, net (3,093) 157
------- -------
Net cash used in financing activities (17,966) (14,863)
------- -------
INCREASE IN CASH 4,788 2,946
CASH AT BEGINNING OF PERIOD 20,328 21,323
------- -------
CASH AT END OF PERIOD $25,116 $24,269
======= =======
SUPPLEMENTAL INFORMATION:
Cash paid for income taxes $ 3,448 $ 4,080
======= =======
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
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<PAGE> 6
LANCE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments (consisting of only normal recurring accruals)
necessary to present fairly the consolidated financial
position of the Company and its subsidiaries as of June 11,
1994 and December 25, 1993, the consolidated results of
operations for the twelve weeks and twenty-four weeks ended
June 11, 1994 and June 12, 1993, and the consolidated cash
flows for the twenty-four weeks ended June 11, 1994 and June
12, 1993.
2. The consolidated results of operations for the twelve weeks
and twenty-four weeks ended June 11, 1994 and June 12, 1993
are not necessarily indicative of the results to be expected
for a full year.
3. The Company utilizes the dollar value last-in, first-out
(LIFO) method of determining the cost of substantially all of
its inventories. Because inventory valuations under the LIFO
method are based on annual determinations, the determination
of interim LIFO valuations requires that estimates be made of
year-end costs and levels of inventories. The possibility of
variation between estimated year-end costs and levels of LIFO
inventories and the actual year-end amounts may materially
affect the results of operations as finally determined for the
full year.
Inventories at June 11, 1994 and December 25, 1993 consisted
of (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Finished goods $14,875 $15,653
Goods in process 48 22
Raw materials 11,052 14,932
Supplies, etc. 8,554 8,222
------- -------
Total inventories at FIFO cost 34,529 38,829
Less: Adjustment to reduce FIFO
cost to LIFO cost 5,398 5,156
------- -------
Total inventories at LIFO cost $29,131 $33,673
======= =======
</TABLE>
Use of the dollar value LIFO method with natural business unit
method of pooling makes presentation of inventory components on a
LIFO basis impractical.
4. Per share amounts for the twelve weeks and twenty-four weeks ended
June 11, 1994 were computed based on 30,926,627 and 30,963,494
shares of common stock outstanding, respectively. Per share amounts
for the twelve weeks and twenty-four weeks ended June 12, 1993 were
computed based on 31,292,851 and 31,292,372 shares of common stock
outstanding, respectively. The dilutive effect of stock options is
not material.
5. For comparative purposes certain 1993 amounts shown in the
accompanying unaudited condensed consolidated financial statements
have been reclassified to conform with 1994 classifications.
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<PAGE> 7
6. MARKETABLE SECURITIES
Effective at the beginning of fiscal 1994, the Company adopted
Statement of Financial Accounting Standards (SFAS) 115, "Accounting
for Certain Investments in Debt and Equity Securities". SFAS 115
applies to investments in equity securities with readily
determinable fair values and to all investments in debt securities.
Securties are classified into three categories and are accounted for
as follows. Debt securities that the Company has the positive
intent and ability to hold to maturity are classified as
held-to-maturity securities and are reported at amortized cost.
Debt and equity securities that are bought and held principally for
the purpose of selling them in the near term, generally
characterized by active and frequent buying and selling with the
objective of generating profits on short-term differences in price,
are classified as trading securities and are reported at fair value,
with unrealized gains and losses included in earnings. Debt and
equity securities not classified as either held-to-maturity or
trading securities are classified as available-for-sale and are
reported at fair value, with unrealized gains and losses excluded
from earnings and reported in a separate component of stockholders'
equity. On June 11, 1994 fair value and amortized cost of
securities available-for-sale were not materially different. SFAS
115 is effective for fiscal years beginning after December 15, 1993,
with the initial adoption reflectd prospectively. Due to the nature
of the Company's investment portfolio, SFAS 115 does not have a
material effect on the consolidated financial statements.
Marketable securities at June 11, 1994 are reported at amortized
cost and consist of:
<TABLE>
<S> <C>
Available-for-sale $14,647
Held-to-maturity 22,117
-------
$36,764
=======
</TABLE>
The amortized cost, gross unrealized holding losses and fair value
for available-for-sale and held-to-maturity securities by major
security type at June 11, 1994 were as follows:
<TABLE>
Gross
Unrealized
Amortized Holding
Cost Losses Fair Value
---- ------ ----------
<S> <C> <C> <C>
Available-for-sale:
Municipal securities $14,647 $ (114) $14,533
======= ====== =======
Held-to-maturity:
U. S. Treasury securities 4,530 (101) 4,429
Municipal securities 16,951 (49) 16,902
Other securities 636 157 793
------- ------ -------
$22,117 $ 7 $22,124
======= ====== =======
</TABLE>
7. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Effective at the beginning of fiscal 1993, the Company adopted SFAS
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." SFAS 106 requires the Company to accrue the estimated
cost of retiree benefit payments during the years the employee
provides services. The Company previously expensed the cost of
these benefits, which are principally health care, as claims were
incurred. SFAS 106 allows recognition of the cumulative
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<PAGE> 8
effect of the liability in the year of adoption or the amortization
of the obligation over a period of up to twenty years. The Company
has elected to recognize the cumulative effect of this obligation on
the immediate recognition basis. The cumulative effects of adopting
SFAS 106 as of the beginning of fiscal 1993 were an increase in
accrued postretirement health care costs of $6,309,000 and a
decrease in net income of $3,916,000 ($.125 per share), which is
reported separately in the Company's consolidated statement of
income for the twenty-four weeks ended June 12, 1993.
8. INCOME TAXES
Effective at the beginning of fiscal 1993, the Company adopted SFAS
109, "Accounting for Income Taxes," and has reported the cumulative
effect of that change in the method of accounting for income taxes
in the first quarter 1993 consolidated statement of earnings.
SFAS 109 requires a change from the deferred method of accounting
for income taxes of APB Opinion 11 to the asset and liability method
of accounting for income taxes. Under the asset and liability
method of SFAS 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences
are expected to be recovered or settled. Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The cumulative effect of the change in accounting for income taxes
of $3,538,000 is determined as of the beginning of fiscal 1993 and
is reported separately in the Company's consolidated statement of
income for the twenty-four weeks ended June 12, 1993. Prior years'
financial statements have not been restated to apply the provisions
of SFAS 109.
-8-
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company continues to maintain the financial strength and liquidity to meet
its regular operating needs, cash dividend payments, capital investment
program, and stock repurchase program through cash flow from current and prior
years' operations.
Current commitments for capital expenditures, including machinery and equipment
and further renovation and expansion of facilities, total approximately $5
million.
Cash and marketable securities increased due mainly to increased cash flow from
operations and decreased capital expenditures but was reduced by purchases of
Lance common stock. Accounts receivable are up since December 25, 1993 due to
increased sales, the timing of sales and the timing of collections on
receivables. Inventories are down due to the purchase of fewer peanuts because
of a poor 1993 peanut crop. Property, net is down due to fewer property
additions and continued high depreciation expense. Deposits are down due to
the delivery to the Company of vans and machinery on order at year end.
Accounts payable are down since December 25, 1993 due to the timing of invoice
payments. Accrued liabilities are up due to the timing of income tax payments
and an increase in accrued wages and related payroll taxes.
Net sales and other operating revenue were up $4.4 million (3.8%) for the
quarter and $6.1 million (2.8%) year to date compared with 1993 due primarily
to increased unit volume. Sales revenues continued to be affected by intense
price competition in most markets. Also, bad weather throughout most of the
Company's sales territories in the first quarter of 1994 had a negative impact
on year to date sales. Net income was flat for the quarter and was down $1.3
million year to date ($.04 per share) compared to 1993. Net income was
primarily affected by a shift in sales mix to lower margin products, high
production costs at the Vista Bakery plant, increased delivery expenses and an
increase in the federal income tax rate from 34% to 35%. Net income for 1993
was affected by the cumulative effect on prior years of changes in accounting
principles for income taxes and retiree health care benefits. The increase in
cost of sales was due primarily to a shift in product mix to higher cost items
and continued high production costs at the Vista Bakery plant. Other income
decreased due to lower interest income and the loss on sale of fixed assets
recorded in the second quarter of 1993.
Effective at the beginning of fiscal 1994, the Company adopted SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities". The
provisions of SFAS 115 apply to investments in equity securities with readily
determinable fair values and to all investments in debt securities. Initial
adoption of SFAS 115 is reflected prospectively. Due to the nature of the
Company's investment portfolio, SFAS 115 does not have a material effect on the
consolidated financial statements.
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<PAGE> 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Registrant's Annual Meeting of Stockholders held on
April 15, 1994, the following matters were submitted to a
vote of the stockholders of the Registrant:
1. Election of five nominees to the Board of Directors
of the Registrant for terms ending in 1997:
<TABLE>
<CAPTION>
Shares
Voted Shares
Nominee in Favor Withheld
------- ---------- --------
<S> <C> <C>
A. F. Sloan 26,811,183 36,941
Paul A. Stroup, III 26,801,997 49,952
Stephen H. Van Every, Jr. 26,805,567 42,157
William R. Holland 26,787,750 64,499
Scott C. Lea 26,755,699 96,550
</TABLE>
2. Ratification of the selection of KPMG Peat Marwick as
auditors for the fiscal year ending December 31,
1994, which was approved by a vote of 26,837,500
shares in favor and 25,147 shares against, with
63,810 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10(vi). Lance, Inc. Benefit Restoration Plan dated
April 15, 1994.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the 12 weeks
ended June 11, 1994.
Items 1 through 3 and 5 are inapplicable and have been omitted.
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.
LANCE, INC.
By s/T. B. Horack
--------------------------------
T. B. Horack
Vice President, and Principal
Financial Officer
Dated: July 25, 1994
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<PAGE> 1
EXHIBIT 10(vi)
LANCE, INC. BENEFIT RESTORATION PLAN
THIS INSTRUMENT, is executed as of the 15th day of April, 1994, by
LANCE, INC. a North Carolina corporation (the "Company").
Statement of Purpose
The Company maintains a tax-qualified, defined contribution plan known
as the "Lance, Inc. Profit Sharing Retirement Plan" (the "PSR Plan") for the
benefit of its eligible employees and the eligible employees of the Company's
affiliates which have adopted the PSR Plan. The Company desires to adopt and
establish a benefit restoration plan to provide benefits, on a nonqualified and
unfunded basis, to certain executive employees whose benefits under the PSR
Plan are adversely affected by the limitations of Sections 401(a)(17) and 415
of the Internal Revenue Code. The restoration plan shall be known as the
"Lance, Inc. Benefit Restoration Plan" and shall be effective as of December
27, 1992.
NOW, THEREFORE, the Company does hereby declare that the Lance, Inc.
Benefit Restoration Plan is hereby adopted effective as of December 27, 1992 to
consist of the following Articles I through V:
ARTICLE I
NAME, PURPOSE, CONSTRUCTION AND DEFINITIONS
Section 1.1. Name. The Plan shall be known as the "Lance, Inc.
Benefit Restoration Plan."
Section 1.2. Purpose. The purpose of the Plan is to provide
Participants the benefits (if any) that could not be provided to them under the
PSR Plan because of the limitations and restrictions of Section 401(a)(17) and
Section 415 of the Code.
Section 1.3. Construction. Article, Section and paragraph headings
have been inserted for convenience of reference only in the Plan and are to be
ignored in any construction of the provisions hereof. If any provision of the
Plan shall for any reason be invalid or unenforceable, the remaining provisions
shall nevertheless be valid, enforceable and fully effective. The Plan shall
be construed, administered, regulated and governed in all respects under and by
the laws of the United States to the extent applicable and, to the extent such
laws are not applicable, by the laws of the State of North Carolina.
Section 1.4. Definitions. Whenever used in the Plan, and unless the
context clearly indicates otherwise, the following terms shall have the
following meanings:
<PAGE> 2
(a) Amendment or Termination Date means the date on which
an amendment to or the termination of the Plan is adopted by the Board
of Directors or, if later, the effective date of such amendment or
termination.
(b) Beneficiary means, with respect to a Participant, the
person(s) or entity(ies) designated as the Participant's "Beneficiary"
under (and as defined in) the PSR Plan.
(c) Board or Board of Directors means the Board of
Directors of the Company or any committee or committees of the Board
of Directors of the Company to which, and to the extent, the Board of
Directors of the Company has delegated some or all of its power,
authority, duties or responsibilities with respect to the Plan.
(d) Code means the Internal Revenue Code of 1986, as the
same may be amended from time to time, and references thereto shall
include the valid Treasury regulations issued thereunder.
(e) Committee means the Committee described in Article III
hereof.
(f) Company means Lance, Inc., a North Carolina
corporation.
(g) General Fund means the separate investment fund
maintained in the trust for the PSR Plan and known as the "General
Fund."
(h) Participant means an employee of a Participating
Employer who has been designated a Participant in the Plan as provided
in Section 2.1.
(i) Participating Employers means the Company and those
subsidiary, affiliate or associated corporations of the Company which
hereafter adopt the Plan.
(j) Plan means the Lance, Inc. Benefit Restoration Plan,
as set forth herein, together with any and all amendments thereto.
(k) Plan Year means the taxable year of the Company
determined under Section 441 of the Code.
(l) PSR Plan means the defined contribution profit-sharing
plan maintained by the Company known as the "Lance, Inc.
Profit-Sharing Retirement Plan," as amended from time to time.
<PAGE> 3
(m) Restoration Account means the bookkeeping account
maintained under the Plan for a Participant, as adjusted from time to
time pursuant to Section 2.2.
(n) Valuation Date means the last day of each Plan Year.
ARTICLE II
PARTICIPATION AND BENEFITS
Section 2.1. Participation. No person shall become a Participant
unless or until such person becomes an employee of a Participating Employer and
has been designated a Participant in the Plan. The Board of Directors, in its
sole and exclusive discretion, shall determine which employees of the
Participating Employers shall become Participants. Designation of employees as
Participants shall be made in such manner as the Board of Directors shall
determine from time to time. No employee shall have any right to participate
in the Plan unless and until designated as a Participant by the Board of
Directors even though such employee's benefits under the PSR Plan are adversely
affected by the limitations of Sections 415 and 401(a)(17) of the Code.
Section 2.2. PSR Plan Restoration Benefits. A Restoration Account
shall be established on the books and records of the Plan for a Participant
effective as of the date the Participant commences participation in the Plan.
The amount of benefits payable under the Plan to a Participant (or if the
Participant is deceased, the Participant's Beneficiary) shall be the amount
credited to the Participant's Restoration Account. The Participant's
Restoration Account shall be adjusted as of each Valuation Date as follows:
(i) First, the Participant's Restoration Account shall be
debited with an amount equal to all distributions from such
Restoration Account since the immediately preceding Valuation Date;
(ii) Second, the Participant's Restoration Account shall be
credited or debited, as the case may be, with an amount equal to the
income, dividend, expense, gain, loss or other appreciation or
depreciation in value which would have been earned (or lost) by the
amount credited to the Participant's Restoration Account as of the
immediately preceding Valuation Date less the amount of all
distributions from such Restoration Account since the immediately
preceding Valuation Date if said amount less said distributions had
been held and invested during that period in the General Fund; and
(iii) Third, the Participant's Restoration Account shall be
credited with an amount equal to the excess, if any, of:
3
<PAGE> 4
(A) the aggregate amount of the "Contribution" and
"Forfeitures" that would have been allocated to the
Participant's "Individual Account" under the PSR Plan as of
such date had the limitation imposed by Section 415 of the
Code not been in effect, and had the amount of the
Participant's compensation used in calculating the amount of
said "Contribution" and "Forfeitures" so allocated to said
account under the terms of the PSR Plan not been limited by
Section 401(a)(17) of the Code, over
(B) the amount of the "Contribution" and
"Forfeitures" actually allocated to the Participant's
"Individual Account" under the PSR Plan as of such date.
Section 2.3. Benefit Payments.
(a) Time and Method of Payment. No payments under the Plan shall be
made until after a Participant's termination of employment with the
Participating Employers. The Participant's Restoration Account shall be paid
to the Participant (or the Participant's Beneficiary if the Participant is
deceased) in annual installments commencing on the April 1 following the Plan
Year during which such termination of employment occurs and continuing on each
April 1 thereafter until paid in full in annual amounts equal to the lesser of
(i) Twenty-Five Thousand Dollars ($25,000) or (ii) the balance of such
Restoration Account. In the event a Participant dies prior to receiving such
single cash payment, the remaining payment(s) from the Participant's
Restoration Account shall be paid to the Participant's Beneficiary at the same
time the payment(s) would have been paid to the Participant. The Participant's
Restoration Account shall continue to be adjusted in accordance with the
applicable provisions of Section 2.2 during the distribution period.
(b) Tax Withholding. The Participating Employers shall withhold from
any payment under the Plan to a Participant or Beneficiary all federal, state
or local income or employment taxes required by law to be withheld from such
payment and shall remit such taxes to the proper taxing authority(ies).
ARTICLE III
COMMITTEE
Section 3.1. General. The Committee shall consist at any time of
those individuals who are serving at such time as the members of the "Advisory
Committee" for the PSR Plan.
Section 3.2. Powers of Committee. The Committee shall administer the
Plan and shall have all powers necessary to enable it to carry out its duties
under the Plan. Not in limitation of
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the foregoing, the Committee shall have the power to construe and interpret the
Plan and to determine all questions that shall arise thereunder. The Committee
shall have such other and further specified duties, powers, authority and
discretion as are elsewhere in the Plan either expressly or by necessary
implication conferred upon it. The Committee shall act by majority vote and
may adopt such bylaws, rules and regulations as it deems desirable for the
conduct of its affairs. The Committee may appoint such agents, who need not be
members of the Committee, as it may deem necessary for the effective
performance of its duties, and may delegate to such agents such powers and
duties, whether ministerial or discretionary, as the Committee may deem
expedient or appropriate. The decision of the Committee upon all matters
within the scope of its authority shall be final and conclusive on all persons,
except to the extent otherwise provided by law. Not in limitation of the
foregoing, the Committee shall have the discretion to decide any factual or
interpretive issues in its administration of the Plan, and the Committee's
exercise of such discretion shall be conclusive and binding on all affected
parties as long as it is not arbitrary or capricious.
Section 3.3. Expenses of Committee. The reasonable expenses incurred
by the Committee in the performance of its duties under the Plan, including
without limitation reasonable counsel fees and the expenses of other agents,
shall be paid by the Participating Employers.
Section 3.4. Indemnification of Committee. To the extent permitted by
applicable law, the Participating Employers shall indemnify and hold harmless
each member of the Committee from and against any and all liability, claims,
demands, costs and expenses (including the costs and expenses of attorneys
incurred in connection with the investigation or defense of claims) in any
manner connected with or arising out of any actions or inactions in connection
with the administration of the Plan except for such actions or inactions which
are not in good faith or which constitute willful misconduct.
ARTICLE IV
AMENDMENT AND TERMINATION
Section 4.1. Amendment of Plan. Subject to the provisions of Section
4.4 of the Plan, the Participating Employers expressly reserve the right, at
any time and from time to time, to amend in whole or in part any of the terms
and provisions of the Plan for whatever reason(s) the Participating Employers
may deem appropriate.
Section 4.2. Termination of Plan. Subject to the provisions of
Section 4.4 of the Plan, the Participating Employers expressly reserve the
right, at any time and for whatever reason they may deem appropriate, to
terminate the Plan.
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Section 4.3. Effective Date and Procedure for Amendment or
Termination. Subject to the provisions of Section 4.4, any amendment to the
Plan or termination of the Plan may be retroactive to the extent not prohibited
by applicable law. Any amendment to the Plan or termination of the Plan shall
be made by the Participating Employers by resolution of the Board of Directors
and shall not require the approval or consent of any Participant or Beneficiary
in order to be effective.
Section 4.4. Effect of Amendment or Termination on Certain Benefits.
No amendment or termination of the Plan may reduce or eliminate the benefits
that would have been payable under Article II (without regard to such amendment
or termination) to a Participant determined as if such Participant had
terminated employment with the Participating Employers immediately prior to the
Amendment or Termination Date and had been otherwise entitled to receive the
benefits (if any) payable to such Participant at such time under Article II.
ARTICLE V
MISCELLANEOUS
Section 5.1. Adoption by a Affiliated Entities. Any entity which is a
"Participating Employer" under (and as defined in) the PSR Plan may, with the
approval of the Board of Directors, elect to adopt the Plan as of a date
mutually agreeable to the Board of Directors and such entity. Any such
adoption of the Plan shall be evidenced by an appropriate instrument of
adoption executed by such entity.
Section 5.2. Authorization and Delegation to the Board of Directors.
Each entity which hereafter becomes a Participating Employer authorizes and
empowers the Board of Directors (i) to amend or terminate the Plan as provided
in Article IV without further action by said entity and (ii) to perform such
other acts and to do such other things as the Board of Directors is expressly
directed, authorized or permitted to perform or do as provided herein.
Section 5.3. Spendthrift Clause. To the extent permitted by law, none
of the benefits payable under the Plan shall be subject to the claim of any
creditor of any Participant or Beneficiary or to any legal process by any
creditor of any Participant or Beneficiary, and no Participant or Beneficiary
entitled to benefits hereunder shall have any right whatsoever to alienate,
commute, anticipate or assign any benefits under the Plan.
Section 5.4. No Employment Rights. Participation in the Plan shall
not give any Participant any right to remain in the employ of any Participating
Employer or upon dismissal, any right or interest in the Plan except as
expressly provided herein.
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Section 5.5. Payments to Minors and Incompetents. If a Participant or
Beneficiary entitled to receive any benefits hereunder is a minor or is deemed
by the Committee or is adjudged to be legally incapable of giving a valid
receipt and discharge for such benefits, such benefits shall be paid to the
duly appointed guardian of such minor or incompetent or to such other legally
appointed person as the Committee may designate. Such payment shall, to the
extent made, be deemed a complete discharge of any liability for such payment
under the Plan.
Section 5.6. Nature of the Plan and Rights. The Plan is unfunded and
intended to constitute a deferred compensation plan for a select group of key
management employees of the Participating Employers. The Restoration Accounts
established and maintained under the Plan are for accounting purposes only and
shall not be deemed or construed to create a trust fund of any kind or to grant
a property interest of any kind to any Participant or Beneficiary. The amounts
credited to such Restoration Accounts are and for all purposes shall continue
to be a part of the general assets of the Participating Employers, and to the
extent a Participant or Beneficiary acquires a right to receive benefits under
the Plan, such right shall be no greater than the right of any unsecured
general creditor of the Participating Employers.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers, all as of the 15th day of April,
1994.
LANCE, INC.
By: S/J.W. Disher
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President
[CORPORATE SEAL]
Attest:
S/E. D. Leake
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Assistant Secretary
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