<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
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X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- ----- THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 1995
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- ----- THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-398
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Lance, Inc.
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(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0292920
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8600 South Boulevard (P. O. Box 32368), Charlotte, North Carolina 28232
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(Address of principal executive offices) (Zip Code)
(704) 554-1421
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(Registrant's telephone number, including area code)
Not Applicable
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(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
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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 - 30,433,407 shares outstanding
as of May 2, 1995.
<PAGE> 2
LANCE, INC. AND SUBSIDIARIES
INDEX
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<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Financial Statements:
Condensed Consolidated Balance Sheets -
March 25, 1995 (Unaudited) and December 31, 1994 3
Condensed Statements of Consolidated Income and
Retained Earnings (Unaudited) - Twelve Weeks Ended
March 25, 1995 and March 19, 1994 4
Condensed Statements of Consolidated Cash Flows
(Unaudited) - Twelve Weeks Ended
March 25, 1995 and March 19, 1994 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION 8
Exhibits and Reports on Form 8-K 8
SIGNATURES 8
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
LANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS,
MARCH 25, 1995 (UNAUDITED) AND DECEMBER 31, 1994
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<TABLE>
<CAPTION>
ASSETS 1995 1994
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(In thousands, except share data)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 17,905 $ 12,964
Marketable securities 30,822 32,946
Accounts receivable (less
allowance for doubtful accounts) 29,868 30,155
Accrued interest receivable 451 599
Refundable income taxes 1,959 1,959
Inventories - Finished goods, goods
in process, materials, etc. (Note 3) 37,696 38,952
Deferred income tax benefit 5,891 5,800
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Total current assets 124,592 123,375
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PROPERTY, NET 162,083 165,390
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OTHER ASSETS:
Deposits 285 335
Prepayments, etc. 7,935 7,896
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Total other assets 8,220 8,231
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TOTAL $294,895 $296,996
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable $ 4,295 $ 8,572
Accrued liabilities 27,438 24,287
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Total current liabilities 31,733 32,859
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OTHER LIABILITIES AND DEFERRED CREDITS:
Deferred income taxes 18,830 19,243
Accrued postretirement health care costs 8,317 8,078
Supplemental retirement benefits 3,347 3,322
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Total other liabilities and deferred credits 30,494 30,643
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STOCKHOLDERS' EQUITY:
Common stock, $.83-1/3 par value (authorized:
75,000,000 shares; issued: 30,433,407
shares) 25,361 25,361
Retained earnings 207,474 208,800
Net unrealized loss on marketable securities (167) (667)
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Total stockholders' equity 232,668 233,494
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TOTAL $294,895 $296,996
======== ========
</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 ENDED MARCH 25, 1995 AND MARCH 19, 1994
<TABLE>
<CAPTION>
1995 1994
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(In thousands, except per share data)
<S> <C> <C>
NET SALES AND OTHER OPERATING REVENUE $112,716 $108,133
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COST OF SALES AND OPERATING EXPENSES:
Cost of sales 54,980 52,438
Selling and delivery expenses 42,935 41,297
General and administrative expenses 4,899 4,826
Contributions to employees' profit-
sharing retirement fund 1,294 1,282
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Total 104,108 99,843
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PROFIT FROM OPERATIONS 8,608 8,290
OTHER INCOME, NET 1,119 966
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INCOME BEFORE INCOME TAXES 9,727 9,256
INCOME TAXES 3,749 3,465
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NET INCOME 5,978 5,791
RETAINED EARNINGS AT BEGINNING OF
FISCAL PERIOD 208,800 221,205
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TOTAL 214,778 226,996
LESS:
CASH DIVIDENDS 7,304 7,440
RETIREMENT OF COMMON STOCK 287
EXERCISE OF STOCK OPTIONS 2
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RETAINED EARNINGS AT END OF FISCAL
PERIOD $207,474 $219,267
======== ========
PER SHARE AMOUNTS (Note 4):
Net income $ .20 $ .19
======== ========
Cash dividends $ .24 $ .24
======== ========
</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 TWELVE WEEKS ENDED MARCH 25, 1995 AND MARCH 19, 1994
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<TABLE>
<CAPTION>
1995 1994
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(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,978 $ 5,791
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 5,876 5,688
Deferred income taxes (504) (1,115)
Other, net 203 206
Changes in operating assets and liabilities 681 3,602
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Net cash flow from operating activities 12,234 14,172
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INVESTING ACTIVITIES:
Purchases of property (2,785) (3,269)
Proceeds from sale of property 293 166
Purchases of marketable securities (1,296) (8,837)
Sales of marketable securities 2,931 6,103
Maturities of marketable securities 861 685
Other, net 7 16
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Net cash provided by (used in) investing
activities 11 (5,136)
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FINANCING ACTIVITIES:
Dividends paid (7,304) (7,440)
Sales (purchase) of Lance common stock, net (298)
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Net cash used in financing activities (7,304) (7,738)
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INCREASE IN CASH 4,941 1,298
CASH AT BEGINNING OF PERIOD 12,964 20,328
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CASH AT END OF PERIOD $17,905 $21,626
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SUPPLEMENTAL INFORMATION:
Cash paid for income taxes $ 151 $ 138
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</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
March 25, 1995 and December 31, 1994, the consolidated results of
operations for the twelve weeks ended March 25, 1995 and March 19, 1994,
and the consolidated cash flows for the twelve weeks ended March 25, 1995
and March 19, 1994.
2. The results of consolidated operations for the twelve weeks ended March
25, 1995 and March 19, 1994 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 inventory. 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 level 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 March 25, 1995 and December 31, 1994 consisted of (in
thousands):
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Finished goods $16,246 $16,979
Goods in process 34 11
Raw materials 19,040 19,679
Supplies, etc. 9,020 9,058
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Total inventories at FIFO cost 44,340 45,727
Less: Adjustment to reduce FIFO
cost to LIFO cost 6,644 6,775
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Total inventories at LIFO cost $37,696 $38,952
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</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 ended March 25, 1995 and March 19,
1994 were computed based on 30,433,407 and 31,000,360 shares of common
stock outstanding, respectively. The dilutive effect of stock options is
not material.
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<PAGE> 7
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 operations
and investments.
Current commitments for capital expenditures, including machinery and equipment
and further renovation and expansion of facilities, total approximately $11
million.
Marketable securities, cash and cash equivalents increased from December 31,
1994 due mainly to the timing of quarterly income tax payments, the decrease in
inventories and the purchase of company stock during the fourth quarter of
1994. Accounts payable are down since December 31, 1994 due to the timing of
purchases. Accrued liabilities are up due to the timing of income tax
payments, an increase in accrued wages and related payroll taxes offset by a
reduction in accrued profit-sharing and retirement.
Net sales and other operating revenue were up $4.6 million (4.2%) compared to
the first quarter of 1994 due primarily to increased unit volume. More
favorable sales conditions, including better weather, in the first quarter of
1995 as compared to the first quarter of 1994 had a positive impact on sales.
Sales revenues continued to be affected by intense price competition in most
markets.
Sales of products produced at the Midwest Biscuit and Vista Bakery plants were
down; however, results of these operations remained flat as compared to the
first quarter of 1994. Production efficiencies at these plants have improved
but over capacity and high overhead continue to negatively impact operations.
Net income was up $187,000 for the quarter ($.01 per share) compared to the
first quarter of 1994. The impact of the increase in sales was offset by
higher raw material and packaging costs, increased selling expenses and a sales
mix reflecting an increased percentage of sales of products purchased for resale
which generally have a lower gross margin.
Cost of sales was up both in dollars and as a percent of sales due to higher
raw material costs, including fruit fillings, flour, sweetners and peanuts and
higher packaging costs, including corrugated boxes and package film.
Selling and delivery expenses were up $1.6 million due to increased marketing
and advertising expenses, salaries and commissions. Other income was up
primarily due to gain on sale of fixed assets. Income taxes were up due to
higher effective state income tax rates.
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<PAGE> 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule. (Filed in electronic format
only. Pursuant to Rule 402 of Regulation S-T, this
schedule shall not be deemed filed for purposes of
Section 11 of the Securities Act of 1933 or Section 18
of the Securities Exchange Act of 1934.)
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the 12 weeks ended March 25,
1995.
Items 1 through 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.
Dated: May 8, 1995
LANCE, INC.
By /s/ E. D. Leake
---------------------------------
E. D. Leake
Vice President and Principal
Financial Officer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LANCE, INC. FOR THE QUARTER ENDED MARCH 25, 1995, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-25-1995
<CASH> 17,905
<SECURITIES> 30,822
<RECEIVABLES> 30,806
<ALLOWANCES> 938
<INVENTORY> 37,696
<CURRENT-ASSETS> 124,592
<PP&E> 363,377
<DEPRECIATION> 201,294
<TOTAL-ASSETS> 294,895
<CURRENT-LIABILITIES> 31,733
<BONDS> 0
<COMMON> 25,361
0
0
<OTHER-SE> 207,307
<TOTAL-LIABILITY-AND-EQUITY> 294,895
<SALES> 112,716
<TOTAL-REVENUES> 112,716
<CGS> 54,980
<TOTAL-COSTS> 104,108
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,727
<INCOME-TAX> 3,749
<INCOME-CONTINUING> 5,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,978
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
