<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 of Incorporation) (I.R.S. Employer Identification Number)
8600 SOUTH BOULEVARD, CHARLOTTE, NORTH CAROLINA
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(Address of principal executive offices)
POST OFFICE BOX 32368, CHARLOTTE, NORTH CAROLINA 28232
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(Mailing address of principal executive offices)
Registrant's telephone number, including area code: (704) 554-1421
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: $.83-1/3 PAR VALUE
COMMON STOCK
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of shares of the Registrant's $.83-1/3 par value
Common Stock, its only outstanding class of voting stock, held by
non-affiliates as of February 20, 1996 was $409,890,000.
The number of shares outstanding of the Registrant's $.83-1/3 par value Common
Stock, its only outstanding class of Common Stock, as of February 20, 1996, was
30,272,265 shares.
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following annual report to security holders and proxy statement
are incorporated by reference into the indicated parts of this Annual Report on
Form 10-K:
<TABLE>
<CAPTION>
Incorporated Documents Parts into which Incorporated
---------------------- -----------------------------
<S> <C>
Proxy Statement for Annual Meeting of Parts I and III
Stockholders to be held April 19, 1996
Annual Report to Stockholders for the Part II
fiscal year ended December 30, 1995
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. BUSINESS
The Registrant manufactures and sells snack foods and bakery products
directly and through its subsidiary, Vista Bakery, Inc.
In December 1995, the Registrant began the restructuring of its
operations to concentrate on its core snack food business. Under the
restructuring, the Registrant's baking operations in Greenville, Texas and its
entire baking facility in Columbia, South Carolina, were closed in February
1996. The facility in Greenville continues as a distribution and vending
maintenance center. The Registrant's peanut buying facility in Boykins,
Virginia was also closed. To focus its efforts on the sales of higher margin
products, the Registrant has re-examined its product lines and has eliminated
products constituting approximately 72 SKU's.
Additional information concerning the restructuring is included in the
Registrant's consolidated financial statements, the notes thereto and
management's discussion and analysis of financial position and results of
operations contained in the Registrant's 1995 Annual Report to Stockholders
incorporated by reference in this Report.
The Registrant manufactures, distributes and sells packaged snack and
bread basket items primarily under the LANCE label. The principal snack items
are cracker sandwiches, cookie sandwiches, peanuts, potato chips, corn chips,
popcorn, cakes, cookies, candies, chewing gum, beef snacks and sausages. The
principal new snack items introduced in 1995 include Fat Free Blueberry Bars,
Fat Free Strawberry Bars, Reduced Fat CHOC-O-LUNCH and Reduced Fat VAN-O-LUNCH.
The principal snack items discontinued were Vanilla Big Towns, Banana Big Towns
and CHOC-O-MINT. The principal bread basket items are wafers, crackers, melba
toast and bread sticks, individually packaged and sold to restaurants and
similar institutions.
The Registrant's products are sold under various trade names and
registered trademarks that it owns, including TOASTCHEE, LANCHEE, RYE CHEE,
CHOC-O-LUNCH, VAN-O-LUNCH, NEKOT, GOLD-N-CHEES, BIG TOWN and CAPTAIN'S WAFERS.
The Registrant packages several of its most popular snack and bread
basket items in convenience packs and distributes them to grocers, supermarkets
and discount stores. In addition, the Registrant distributes large bags of
potato chips and large size bags and boxes of its snack and bread basket items
to grocers and supermarkets. Various items that are purchased from others and
resold by the Registrant accounted for 24% of net sales and other operating
revenue.
3
<PAGE> 4
Vista Bakery, Inc. manufactures and sells cookies and crackers,
through its own sales representatives and brokers, to wholesale grocers,
supermarkets and distributors throughout the United States and portions of
Canada, under customer private labels and the VISTA label.
The following table shows the approximate percentages of the
Registrant's net sales and other operating revenue for 1995, 1994 and 1993
contributed by snack items and bread basket items:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Snack items 89% 89% 88%
Bread basket items 8% 8% 9%
</TABLE>
The principal raw materials and supplies used in the manufacture of
snack foods and bakery products are flour, peanuts, oils and shortenings,
potatoes, shelled corn and popcorn, cornmeal, pork skins, tree nuts, starch,
sugar, cheese, corn syrup, cocoa, fig paste, seasonings and packaging
materials. These raw materials and supplies are generally available in
adequate quantities in the open market either from sources in the United States
or from other countries and are generally contracted for a season in advance.
The principal supplies of energy used in the manufacture of these
products are electricity, natural and propane gas, fuel oil and diesel fuel,
all of which are currently available in adequate quantities.
The Registrant sells most of its products through its own sales
organization to convenience stores, independent and chain supermarkets,
discount stores, restaurants, military commissaries and exchanges, schools,
hospitals, caterers, industrial, recreational and commercial establishments,
and similar customers in 36 states and the District of Columbia. Under the
restructuring, the Registrant is evaluating its sales territories. As a
result, certain sales territories have been eliminated or consolidated with
additional eliminations and consolidations expected in 1996. In certain
instances, distributors or brokers will be added to cover sales territories
that are eliminated. The Registrant's distribution operations are administered
through 24 sales districts which are divided into 312 sales branches, each
under the direction of a branch manager. There are 2,148 sales territories,
each serviced by one sales representative. In 1995, the Registrant continued
the development of its distributor and broker network, principally in the
Western United States.
The Registrant owns a fleet of tractors and trailers, which make
weekly deliveries of its products to the sales territories. The Registrant
provides sales representatives with stockroom space for their inventory
requirements. The sales representatives load their own trucks from these
stockrooms for delivery to their customers.
4
<PAGE> 5
A significant portion of the Registrant's total sales is through
vending machines, which are made available to its customers on a rental,
commission or sales basis. The machines are not designed or manufactured
specifically for the Registrant, and their use is not limited to any particular
sales area or class of customer.
Caronuts, Inc., a subsidiary of the Registrant, owns a peanut buying
facility that has been closed and its operations discontinued under the
restructuring.
All of the Registrant's products are sold in highly competitive
markets in which there are many competitors. In the case of many of its
products, the Registrant competes with manufacturers with greater total
revenues and greater resources than the Registrant. The principal methods of
competition are price, delivery, service and product quality. Generally, the
Registrant believes that it is competitive in these methods as a whole. The
methods of competition and the Registrant's competitive position varies
according to the locality, the particular products and the policies of its
competitors. Although reliable statistics are unavailable as to production and
sales by others in the industry, the Registrant believes that in its areas of
distribution it is one of the largest producers of peanut butter filled cracker
sandwiches.
On December 30, 1995, the Registrant and its subsidiaries had 5,578
employees. Under the restructuring, the Registrant has reduced its work force
by approximately 500 employees, most of which occurred after December 30, 1995.
ITEM 2. PROPERTIES
The Registrant's principal plant and general offices are located in
Charlotte, North Carolina on a 288 acre tract owned by the Registrant. The
main facility is an air-conditioned and sprinklered plant, office building and
cafeteria of brick and steel containing approximately 670,000 square feet. The
manufacturing plant houses seven oven lines and is equipped with storage
facilities to handle many of the Registrant's raw materials in bulk. Adjacent
to the main facility is an air-conditioned and sprinklered plant of brick and
steel used for the processing of potato chips, corn chips and similar products
containing approximately 140,000 square feet. Both plants are operated on two
eight-hour shifts. Also adjacent to the main facility are a 70,400 square
foot precast concrete building, which houses a vending machine repair and
maintenance facility, an 11,000 square foot brick and steel building, which
houses vehicle maintenance operations, 40,000 square foot and 13,000 square
foot metal warehouse buildings and a 5,500 square foot brick veneer office
building.
The Registrant owns a plant located on a 105 acre tract in Greenville,
Texas. The plant is an air-conditioned and sprinklered building of brick and
steel containing approximately 290,000 square feet. The plant houses two oven
lines and storage facilities that can handle many of the Registrant's raw
materials in bulk. The Company closed its baking operations at this facility
in February 1996 and its oven lines and related equipment are being offered for
sale.
5
<PAGE> 6
The facility will continue to serve as a distribution and vending maintenance
center. Adjacent to the plant is a building of steel construction which
contains approximately 29,000 square feet of vending repair, office and garage
space.
These facilities, unless otherwise noted, are used to produce both
snack and bread basket items.
The Registrant leases office space and most of its stockroom space in
various towns and cities, mainly on month-to-month tenancies. The Registrant
currently owns 189 stockroom locations with steel frame buildings, which range
in size from 400 to 6,400 square feet and contain an aggregate of 997 stockroom
spaces.
Vista Bakery, Inc. owns a plant located on an 18.5 acre tract in
Burlington, Iowa. The plant is of masonry and steel and contains approximately
230,000 square feet. This plant houses six oven lines and is operated on two
eight-hour shifts. Adjacent to the plant is a steel storage building of
approximately 10,000 square feet.
Vista Bakery, Inc. also owns a 243,000 square foot plant on a 137 acre
tract in Columbia, South Carolina. The plant is of brick and steel
construction and houses three oven lines. The Company closed this facility in
February 1996. The facility and its oven lines are being offered for sale.
The Registrant believes that it has sufficient production capacity to
meet foreseeable demand in 1996.
The peanut buying facility owned by Caronuts, Inc. is located on a 20
acre tract in Boykins, Virginia. The facility consists of six peanut storage
tanks and related metal buildings and sheds. This facility has been closed and
it is being offered for sale.
SEPARATE ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
Information as to executive officers of the Registrant who are
directors or nominees of the Registrant is incorporated herein by reference to
the section captioned Election of Directors in the Registrant's Proxy Statement
for the Annual Meeting of Stockholders to be held April 19, 1996. Information
as to each executive officer of the Registrant who is not a director or a
nominee is as follows:
6
<PAGE> 7
<TABLE>
<CAPTION>
Name Age Information About Officer
- ---- --- -------------------------
<S> <C> <C>
Peter M. Duggan 55 Senior Vice President of the Company since 1995,
Vice President 1994-1995 and a Group Vice
President for the Snacks and International
Consumer Products Division of Borden, Inc.
(consumer products company) 1985-1993
E. D. Leake 44 Vice President of the Company since 1995 and
Treasurer and Assistant Secretary 1988-1995
James W. Helms, Jr. 49 Secretary of the Company since 1988, Treasurer
since 1995 and Assistant Treasurer 1988-1995
G. R. Melvin 59 Vice President of the Company since 1978
R. Gerald Swain 59 Vice President of the Company since 1991,
Assistant Vice President 1989-1991 and
District Sales Manager 1969-1989
</TABLE>
All the Company's executive officers were appointed to their current
positions at the Annual Meeting of the Board of Directors on April 21, 1995.
All of the Registrant's executive officers' terms of office extend until the
next Annual Meeting of the Board of Directors and until their successors shall
have been duly elected and qualified.
Items 3 and 4 are inapplicable and have been omitted.
PART II
Items 5 through 8 are incorporated herein by reference to pages 14
through 32 of the Registrant's 1995 Annual Report to Stockholders.
Item 9 is inapplicable and has been omitted.
PART III
Items 10 through 13 are incorporated herein by reference to the
sections captioned Principal Stockholders and Holdings of Management, Election
of Directors, Compensation/Stock Option Committee Interlocks and Insider
Participation, Director Compensation, Executive Officer Compensation and
Compliance with Section 16(a) of the Securities Exchange Act of 1934 in the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
April 19, 1996 and to the Separate Item in Part I of this Annual Report
captioned Executive Officers of the Registrant.
7
<PAGE> 8
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. Financial Statements.
See Table of Contents to Financial Statements filed
herewith as a separate part of this Annual Report.
2. Financial Schedules.
Schedules have been omitted because of the absence of
conditions under which they are required or because
information required is included in financial statements
or the notes thereto.
3. Exhibits.
3.1 Restated Charter of Lance, Inc. incorporated
herein by reference to Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended December 26, 1992.
3.2 Bylaws of Lance, Inc., as amended through
April 21, 1995, incorporated herein by
reference to Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the twelve
weeks ended June 17, 1995.
4 See 3.1 and 3.2 above.
10.1 Lance, Inc. 1991 Stock Option Plan
incorporated herein by reference to Exhibit
4.1 to the Registrant's Registration
Statement on Form S-8, Registration No.
33-41866.
10.2* The Lance, Inc. Key Executive Employee
Benefit Plan incorporated herein by reference
to Exhibit 10 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1983.
10.3* Form of Executive Employment Agreement
between Lance, Inc. and the Key Executives
incorporated herein by reference to Exhibit
10(c) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December
26, 1992.
- ----------------------
* Management contract.
8
<PAGE> 9
10.4 Lance, Inc. 1983 Incentive Stock Option Plan
incorporated herein by reference to Exhibit
10.1 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 26,
1987.
10.5* Lance, Inc. Key Executive Employee Benefit
Plan Trust, dated December 3, 1993, between
Lance, Inc. and First Union National Bank of
North Carolina incorporated herein by
reference to Exhibit 10(v) to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended December 25, 1993.
10.6 Lance, Inc. 1995 Nonqualified Stock Option
Plan for Non-Employee Directors incorporated
herein by reference to Exhibit 10 to the
Registrant's Registration Statement on Form
S-8, Registration No. 33-58839.
10.7* Lance, Inc. Benefit Restoration Plan
incorporated herein by reference to Exhibit
10(vi) to the Registrant's Quarterly Report
on Form 10-Q for the twelve weeks ended June
11, 1994.
13 The Registrant's 1995 Annual Report to
Stockholders. This Annual Report to
Stockholders is furnished for the information
of the Commission only and, except for the
parts thereof incorporated by reference in
this Report on Form 10-K, is not to be deemed
"filed" as a part of this filing. (Page ___
of the sequentially numbered pages.)
21 List of the Subsidiaries of the Registrant.
(Page ___ of the sequentially numbered
pages.)
23 Consent of KPMG Peat Marwick LLP. (Page ____
of the sequentially numbered pages.)
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
There were no reports on Form 8-K required to be filed
by the Registrant during the 16 weeks ended December 30,
1995.
- ----------------------
* Management contract.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LANCE, INC.
Dated: March 28, 1996
By: /s/ E. D. Leake
------------------------
E. D. Leake
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ J. W. Disher Chairman of the Board March 28, 1996
- -------------------------------------- and Director
J. W. Disher
/s/ P. A. Stroup, III Chief Executive Officer, March 28, 1996
- -------------------------------------- President and Director
P. A. Stroup, III (Principal Executive Officer)
/s/ T. B. Horack Executive Vice President March 28, 1996
- -------------------------------------- and Director
T. B. Horack
/s/ R. G. Swain Vice President March 28, 1996
- -------------------------------------- and Director
R. G. Swain
/s/ E. D. Leake Vice President and March 28, 1996
- -------------------------------------- Director (Principal
E. D. Leake Financial Officer)
/s/ James W. Helms, Jr. Secretary and March 28, 1996
- -------------------------------------- Treasurer (Principal
James W. Helms, Jr. Accounting Officer)
/s/ Alan T. Dickson Director March 28, 1996
- --------------------------------------
Alan T. Dickson
</TABLE>
`
10
<PAGE> 11
<TABLE>
<S> <C> <C>
/s/ James H. Hance, Jr. Director March 28, 1996
- --------------------------------------
James H. Hance, Jr.
/s/ William R. Holland Director March 28, 1996
- --------------------------------------
William R. Holland
/s/ Scott C. Lea Director March 28, 1996
- --------------------------------------
Scott C. Lea
/s/ Nancy Van Every McLaurin Director March 28, 1996
- ------------------------------
Nancy Van Every McLaurin
/s/ Robert V. Sisk Director March 28, 1996
- --------------------------------------
Robert V. Sisk
/s/ Isaiah Tidwell Director March 28, 1996
- --------------------------------------
Isaiah Tidwell
/s/ S. Lance Van Every Director March 28, 1996
- --------------------------------------
S. Lance Van Every
/s/ Richard A. Zimmerman Director March 28, 1996
- --------------------------------------
Richard A. Zimmerman
</TABLE>
11
<PAGE> 12
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-K
FOR CORPORATIONS
ITEM 14(a) - FINANCIAL STATEMENTS
12
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Annual Report
to Stockholders
Page
----
<S> <C>
Data incorporated by reference from the 1995
Annual Report to Stockholders of Lance, Inc.
and Subsidiaries:
Independent Auditors' Report 14
Consolidated Balance Sheets, December 30, 1995
and December 31, 1994 15
For the Fiscal Years Ended December 30, 1995,
December 31, 1994 and December 25, 1993:
Statements of Consolidated Income and
Retained Earnings 16
Statements of Consolidated Cash Flows 17
Notes to Consolidated Financial
Statements 18
</TABLE>
FINANCIAL STATEMENTS AND SCHEDULES OMITTED
The above listed financial statements are presented on only a consolidated
basis since the Company is primarily an operating company and its subsidiaries
included for the periods presented in the consolidated financial statements are
totally-held subsidiaries. Schedules have been omitted because of the absence
of conditions under which they are required or because information required is
included in financial statements or the notes thereto.
13
<PAGE> 14
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
EXHIBITS
Item 14(a)(3)
FORM 10-K
ANNUAL REPORT
For the fiscal year ended Commission File Number
December 30, 1995 0-398
LANCE, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description
- ------- -------------------
<S> <C>
3.1 Restated Charter of Lance, Inc. incorporated herein by
reference to Exhibit 3(a) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 26, 1992.
3.2 Bylaws of Lance, Inc., as amended through April 21, 1995,
incorporated herein by reference to Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the twelve
weeks ended June 17, 1995.
4 See 3.1 and 3.2 above.
10.1 Lance, Inc. 1991 Stock Option Plan incorporated herein by
reference to Exhibit 4.1 to the Registrant's Registration
Statement on Form S-8, Registration No. 33-41866.
10.2* The Lance, Inc. Key Executive Employee Benefit Plan
incorporated herein by reference to Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1983.
</TABLE>
- ----------------------
* Management contract.
14
<PAGE> 15
<TABLE>
<S> <C>
10.3* Form of Executive Employment Agreement between Lance, Inc. and
the Key Executives incorporated herein by reference to Exhibit
10(c) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 26, 1992.
10.4 Lance, Inc. 1983 Incentive Stock Option Plan incorporated
herein by reference to Exhibit 10.1 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 26,
1987.
10.5* Lance, Inc. Key Executive Employee Benefit Plan Trust, dated
December 3, 1993, between Lance, Inc. and First Union National
Bank of North Carolina incorporated herein by reference to
Exhibit 10(v) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 25, 1993.
10.6 Lance, Inc. 1995 Nonqualified Stock Option Plan for
Non-Employee Directors incorporated herein by reference to
Exhibit 10 to the Registrant's Registration Statement on Form
S-8, Registration No. 33- 58839.
10.7* Lance, Inc. Benefit Restoration Plan incorporated herein by
reference to Exhibit 10(vi) to the Registrant's Quarterly
Report on Form 10-Q for the twelve weeks ended June 11, 1994.
13 The Registrant's 1995 Annual Report to Stockholders. This
Annual Report to Stockholders is furnished for the information
of the Commission only and, except for the parts thereof
incorporated by reference in this Report on Form 10-K, is not
to be deemed "filed" as a part of this filing. (Page ___ of
the sequentially numbered pages.)
21 List of the Subsidiaries of the Registrant. (Page ___ of the
sequentially numbered pages.)
23 Consent of KPMG Peat Marwick LLP. (Page ____ of the
sequentially numbered pages.)
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.)
</TABLE>
- ----------------------
* Management contract.
15
<PAGE> 1
EXHIBIT 13
KPMG Peat Marwick LLP
Suite 2800
Two First Union Center
Charlotte, NC 28282-8290
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Lance, Inc.:
We have audited the accompanying consolidated balance sheets of Lance, Inc. and
subsidiaries as of December 30, 1995 and December 31, 1994 and the related
consolidated statements of income and retained earnings and cash flows for each
of the fiscal years in the three-year period ended December 30, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Lance, Inc. and its
subsidiaries as of December 30, 1995 and December 31, 1994, and the results of
their operations and their cash flows for each of the fiscal years in the
three-year period ended December 30, 1995 in conformity with generally accepted
accounting principles.
As discussed in Note 3 to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," during the
fiscal year ended December 30, 1995.
As discussed in Notes 1 and 4 to the consolidated financial statements,
the Company adopted the provisions of the American Institute
of Certified Public Accountants' Statement of Position 93-7, "Reporting on
Advertising Costs," and the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," during the fiscal year
ended December 31, 1994.
February 20, 1996 /s/ KPMG Peat Marwick LLP
[14]
<PAGE> 2
CONSOLIDATED BALANCE SHEETS
December 30, 1995 and December 31, 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
ASSETS NOTES 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 12,585 $ 12,964
Marketable securities 4 31,905 32,946
Accounts receivable (less allowance for doubtful accounts
of $727 in 1995 and $739 in 1994, respectively) 29,429 30,155
Inventories 2 32,521 38,952
Accrued interest receivable 493 599
Refundable income taxes 4,765 1,959
Deferred income tax benefit 7 10,494 5,800
- ----------------------------------------------------------------------------------------------------------------------------
Total current assets 122,192 123,375
- ----------------------------------------------------------------------------------------------------------------------------
PROPERTY, NET 3 126,656 165,390
- ----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS:
Deposits 2,345 335
Notes receivable, prepayments, etc. 8 5,267 7,896
- ----------------------------------------------------------------------------------------------------------------------------
Total other assets 7,612 8,231
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL $256,460 $296,996
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 5
- ----------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 6,202 $ 8,572
Accrued compensation 10 14,216 9,656
Accrued profit-sharing retirement plan 9 1,351 2,482
Accrued income taxes 7 461
Accrual for insurance claims 1 5,879 4,489
Other payables and accrued liabilities 4,298 2,980
- ----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 31,946 28,640
- ----------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES AND DEFERRED CREDITS:
Deferred income taxes 7 7,300 19,243
Accrued postretirement health care costs 8 8,808 8,078
Accrual for insurance claims 1 7,989 4,219
Supplemental retirement benefits 3,874 3,322
- ----------------------------------------------------------------------------------------------------------------------------
Total other liabilities and deferred credits 27,971 34,862
- ----------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY: 6, 9
Common stock, $.83 1/3 par value (authorized: 75,000,000
shares; issued and outstanding: 30,337,265 shares in 1995,
30,433,407 shares in 1994) 25,281 25,361
Retained earnings 170,964 208,800
Net unrealized gain (loss) on marketable securities 4 298 (667)
- ----------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 196,543 233,494
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL $256,460 $296,996
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
[15]
<PAGE> 3
STATEMENTS OF CONSOLIDATED INCOME AND
RETAINED EARNINGS
For the Fiscal Years Ended December 30, 1995, December 31, 1994 and
December 25, 1993
(In thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993
NOTES (52 WEEKS) (53 Weeks) (52 Weeks)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES AND OTHER OPERATING REVENUE $477,468 $487,982 $472,786
- -------------------------------------------------------------------------------------------------------------------------------
COST OF SALES AND OPERATING EXPENSES:
Cost of sales 2 240,624 238,127 221,792
Selling and delivery 187,857 183,164 179,332
General and administrative 21,367 20,722 19,871
Contributions to employees' profit-sharing
retirement plan 9 4,849 5,975 6,599
Loss from restructuring and impairment 3, 10 35,897
- -------------------------------------------------------------------------------------------------------------------------------
Total 490,594 447,988 427,594
- -------------------------------------------------------------------------------------------------------------------------------
(LOSS) PROFIT FROM OPERATIONS (13,126) 39,994 45,192
OTHER INCOME, NET (INCLUDING INTEREST INCOME OF
$2,036 IN 1995, $2,054 IN 1994,
AND $2,965 IN 1993) 3,026 4,333 5,515
- -------------------------------------------------------------------------------------------------------------------------------
(LOSS) INCOME BEFORE INCOME TAXES (10,100) 44,327 50,707
- -------------------------------------------------------------------------------------------------------------------------------
INCOME TAXES: 7
Current 13,477 18,092 18,970
Deferred (benefit) (16,638) (749) 561
- -------------------------------------------------------------------------------------------------------------------------------
Total (3,161) 17,343 19,531
- -------------------------------------------------------------------------------------------------------------------------------
(LOSS) INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES (6,939) 26,984 31,176
- -------------------------------------------------------------------------------------------------------------------------------
Cumulative effect on prior years of changes in
accounting principles for:
Income taxes 7 3,538
Postretirement health care costs 8 (3,916)
- -------------------------------------------------------------------------------------------------------------------------------
(378)
- -------------------------------------------------------------------------------------------------------------------------------
NET (LOSS) INCOME (6,939) 26,984 30,798
RETAINED EARNINGS AT BEGINNING OF FISCAL YEAR 208,800 221,205 226,060
- -------------------------------------------------------------------------------------------------------------------------------
Total 201,861 248,189 256,858
Cash dividends (29,183) (29,583) (29,980)
Retirement of common stock 6 (1,858) (9,802) (5,863)
Stock options exercised 6, 9 144 (4) 190
- -------------------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS AT END OF FISCAL YEAR $170,964 $208,800 $221,205
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE AMOUNTS: 1
(Loss) income before cumulative effect
of changes in accounting principles $ (.23) $ .88 $ 1.00
Cumulative effect on prior years of
changes in accounting principles (.01)
-------- -------- --------
Net (loss) income $ (.23) $ .88 $ .99
======== ======== ========
Cash dividends $ .96 $ .96 $ .96
======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
[16]
<PAGE> 4
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Fiscal Years Ended December 30, 1995, December 31, 1994 and
December 25, 1993
(In thousands)
<TABLE>
<CAPTION>
1995 1994 1993
(52 WEEKS) (53 Weeks) (52 Weeks)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income $ (6,939) $ 26,984 $ 30,798
Adjustments to reconcile net (loss) income to cash provided by
operating activities:
Depreciation 24,626 24,544 24,747
Impairment of fixed assets 29,368
Loss on sale of property 1,505 397 591
Deferred income taxes (16,638) (749) 561
Cumulative effect of changes in
accounting principles 378
Other, net 3,089 750 1,022
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 726 (1,249) (1,187)
(Increase) in refundable income taxes (2,806) (209) (48)
Decrease (increase) in inventory 6,431 (5,279) (1,542)
Increase (decrease) in accounts payable (2,370) 1,665 (118)
Increase (decrease) in accrued income taxes (461) 323 (691)
Increase in other payables and accrued liabilities 11,189 362 862
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash flow from operating activities 47,720 47,539 55,373
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property:
Vending machines (3,086) (3,439) (5,519)
Other property (14,888) (14,502) (16,843)
Machinery deposits (2,010) 1,961 (1,839)
Proceeds from sale of property 1,209 1,249 1,896
Purchases of marketable securities (9,156) (25,849) (30,862)
Maturities of marketable securities 3,274 8,161 20,455
Sales of marketable securities 7,436 17,130 13,550
Other, net 99 249 (1,322)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (17,122) (15,040) (20,484)
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Dividends paid (29,183) (29,583) (29,980)
Purchases of common stock, net (1,794) (10,280) (5,904)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (30,977) (39,863) (35,884)
- ---------------------------------------------------------------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS (379) (7,364) (995)
CASH AND CASH EQUIVALENTS AT BEGINNING OF FISCAL YEAR 12,964 20,328 21,323
- ---------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF FISCAL YEAR $ 12,585 $ 12,964 $ 20,328
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION:
Cash paid for income taxes $ 16,743 $ 17,978 $ 19,789
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
[17]
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include in consolidation the accounts of
Lance, Inc. and its wholly-owned subsidiaries (the Company). All material
intercompany items have been eliminated. For purposes of comparability, certain
1993 and 1994 amounts shown in the accompanying consolidated financial
statements have been reclassified to conform with the 1995 presentation.
OPERATIONS
The Company manufactures and purchases snack foods and bakery products which
are sold and distributed through the Company's own sales organization to
convenience stores, supermarkets, discount stores, restaurants, wholesale
grocery distributors, and similar establishments, and also in schools, office
buildings, manufacturing plants, and similar locations through the operation of
Company vending machines. Sales are concentrated primarily in the Southeastern
and Midwestern United States. The Company's policy is to recognize a sale at
the time the product is delivered to the customer.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
CASH, MARKETABLE SECURITIES, ACCOUNTS AND
NOTES RECEIVABLE AND ACCOUNTS PAYABLE
The carrying amount of cash, accounts and notes receivable and accounts
payable approximates fair value.
Marketable securities at December 30, 1995 are principally instruments of the
U.S. government and its agencies, of state governments, and of municipalities.
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) 115, "Accounting for Certain Investments in Debt and Equity
Securities" effective at the beginning of fiscal 1994. Under SFAS 115, the
Company classifies its debt and marketable equity securities in one of three
categories: trading, available-for-sale, or held-to-maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. Held-to-maturity securities are those securities which the
Company has the ability and intent to hold until maturity. All other securities
not included in trading or held-to-maturity are classified as
available-for-sale. The Company does not have any securities classified as
trading or held-to-maturity.
Under SFAS 115, available-for-sale securities are recorded at fair value.
Unrealized holding gains and losses, net of the related tax effect, on
available-for-sale securities are excluded from earnings and are reported as a
separate component of stockholders' equity until realized.
Dividend and interest income are recognized when earned. Realized gains and
losses for securities classified as available-for-sale are included in earnings
and are derived using the specific identification method for determining the
cost of securities sold.
A decline in the market value of any marketable security below cost that is
deemed other than temporary is charged to earnings, resulting in the
establishment of a new cost basis for the security.
[18]
<PAGE> 6
INVENTORIES
Inventories are valued at the lower of cost or market; 79% of the cost of the
inventories in 1995 and 77% in 1994 was determined using the last-in, first-out
(LIFO) method and the remainder was determined using the first-in, first-out
(FIFO) method.
DEPRECIATION AND PROPERTY
Depreciation is computed over estimated useful lives of depreciable
property, using the straight-line method, generally as follows:
Land improvements 20 years
Buildings 20-50 years
Machinery and equipment 5-12 years
Vending machines on location 8 years
Trucks and automobiles 3-9 years
Furniture and fixtures 10 years
Property is recorded at cost less accumulated depreciation with the
exception of assets held for disposal which are recorded at fair
value. Upon retirement or disposal of any item of property, the cost is removed
from the property account and the accumulated depreciation applicable to such
item is removed from accumulated depreciation. Major renewals and betterments
are capitalized, maintenance and repairs are expensed as incurred, and gains
and losses on dispositions are reflected in income.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements, which include
supplemental retirement benefits, with certain officers. Provision
for these benefits, made over the period of employment of such officers, was
$364,000 in 1995, $296,000 in 1994, and $488,000 in 1993.
INCOME TAXES
Effective at the beginning of fiscal 1993, the Company adopted SFAS 109,
"Accounting for Income Taxes." The cumulative effect of the
change in accounting for income taxes is determined as of the beginning of
fiscal 1993 and is reported separately in the Company's statement of
consolidated income and retained earnings for fiscal 1993.
Under the asset and liability method of SFAS 109, deferred tax assets
and liabilities are recognized for the 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 expected to apply to the
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rate is recognized in income in the period that includes the
enactment date.
Refundable income taxes result from an overpayment of estimated taxes.
POSTRETIREMENT HEALTH CARE COST
Effective at the beginning of fiscal 1993, the Company adopted SFAS 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
cumulative effect of the change in accounting for postretirement health care
costs is determined as of the beginning of fiscal 1993 and is reported
separately in the Company's statement of consolidated income and retained
earnings for fiscal 1993.
[19]
<PAGE> 7
SFAS 106 requires that the Company 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
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.
Under SFAS 106, gains from curtailments are required to be recognized in
the period which the curtailment occurs.
INSURANCE CLAIMS
The accrual for insurance claims represents the estimated liability outstanding
on actual claims reported and an estimate of claims incurred but not yet
reported.
During the year ended December 30, 1995, the Company modified its assumptions
for future cost increases of incurred but unpaid workers' compensation, auto,
general and product liability insurance claims. The result was a change in
accounting estimate which increased insurance expense by $2,958,000 and reduced
net income and net income per share by $1,923,000 and $.06 respectively, in
1995.
EARNINGS PER SHARE
Earnings per share amounts for the fiscal years ended December 30, 1995,
December 31, 1994 and December 25, 1993 were computed based
on 30,399,534; 30,774,472; and 31,236,274 weighted average shares of common
stock outstanding, respectively. The dilutive effect of stock options is not
material.
ADVERTISING COSTS
Effective at the beginning of fiscal 1994, the Company changed its method of
accounting for advertising costs to comply with the American Institute of
Certified Public Accountants' Statement of Position (SOP) 93-7, "Reporting on
Advertising Costs." SOP 93-7 requires that the Company report the costs of all
advertising in the periods in which the costs are incurred or the first time
the advertising takes place, except for certain direct-response advertising
that results in probable and measurable future economic benefits.
Direct-response advertising is to be capitalized and amortized over its
expected period of future benefit.
Previously, the Company capitalized all advertising costs and amortized them
over a period of one to three years. The majority of the Company's advertising
costs do not qualify as direct-response advertising. The Company has elected,
under SOP 93-7, to expense non-qualifying costs as they are incurred. The
effect of the change in accounting method increased advertising expense by
$753,000 and reduced net income and net income per share by $490,000 and $.02
respectively, in 1994.
$353,000 of advertising costs were reported as an asset at December 31, 1994
and were fully amortized at December 30, 1995. This amount relates to costs
capitalized under the previous accounting method, which continued to be
amortized as allowed under SOP 93-7. Advertising expense was $4,209,000,
$4,003,000 and $2,029,000 for the fiscal years 1995, 1994 and 1993,
respectively.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
[20]
<PAGE> 8
2. INVENTORIES
Inventories at December 30, 1995 and December 31, 1994 consisted of (in
thousands):
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 16,501 $ 16,979
Goods in process 21 11
Raw materials 15,350 19,679
Supplies, etc. 7,128 9,058
- --------------------------------------------------------------------------
Total inventories at FIFO cost 39,000 45,727
Less: Adjustment to reduce FIFO cost to LIFO cost (6,479) (6,775)
- --------------------------------------------------------------------------
Total inventories $ 32,521 $ 38,952
==========================================================================
</TABLE>
3. PROPERTY
Property at December 30, 1995 and December 31, 1994 consisted of (in
thousands):
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 11,287 $ 12,235
Buildings 60,834 87,813
Machinery and equipment 99,346 128,598
Vending machines on location 95,164 95,809
Trucks and automobiles 28,633 28,584
Furniture and fixtures 3,427 3,716
Assets held for disposal 11,256
Construction in progress 1,834 5,461
- ------------------------------------------------------------------------------
Total 311,781 362,216
Accumulated depreciation (185,125) (196,826)
- ------------------------------------------------------------------------------
Property, net $126,656 $165,390
- ------------------------------------------------------------------------------
</TABLE>
During 1995, the Company determined that certain fixed assets at its Columbia,
South Carolina and Greenville, Texas manufacturing facilities were impaired.
The impairment was the result of a restructuring of the Company's operations
(note 10) which included the closing of the Columbia facility and the
manufacturing operations at the Greenville facility. Fair value of the impaired
assets was determined through third-party appraisals.
The total amount of the impairment losses for the year ended December 30, 1995
was approximately $29,400,000. These losses are included as a component of
restructuring and impairment expense in the accompanying statement of
consolidated income and retained earnings. The impaired assets have a carrying
value of approximately $11,256,000 at December 30, 1995 and are included in
property as assets held for disposal. The expected disposal date of these
assets is not presently determinable. The amounts the Company will ultimately
realize through sale or abandonment of these assets held for disposal could
differ materially in the near term from amounts assumed in arriving at the
carrying value of these assets.
[21]
<PAGE> 9
4. MARKETABLE SECURITIES
At December 30, 1995 and December 31, 1994, the Company has classified all
investments as available-for-sale.
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair value of the available-for-sale securities by major security
type at December 30, 1995 and December 31, 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Amortized Holding Holding
Cost Gains Losses Fair Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
At December 30, 1995:
U.S. government agencies $ 5,975 $ 12 $ (5) $ 5,982
Municipal obligations 25,578 168 (44) 25,702
Equity securities 54 167 221
- -------------------------------------------------------------------------------
Total $31,607 $347 $ (49) $31,905
- -------------------------------------------------------------------------------
At December 31, 1994:
U.S. government agencies $ 5,519 $ $(247) $ 5,272
Municipal obligations 28,040 (587) 27,453
Equity securities 54 167 221
- -------------------------------------------------------------------------------
Total $33,613 $167 $(834) $32,946
===============================================================================
</TABLE>
Maturities of investment securities classified as available-for-sale
were as follows at December 30, 1995 (in thousands):
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Due within one year $10,372 $10,440
Due after one year through five years 21,181 21,244
Equity securities 54 221
- -------------------------------------------------------------------------------
Total $31,607 $31,905
- -------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of marketable securities were $7,436,000 and
$17,130,000 in 1995 and 1994, respectively and related net realized
losses included in income were $30,000 and $41,333 in 1995 and 1994,
respectively. The net change in the unrealized gain (loss) on marketable
securities classified as available-for-sale included as a component of equity
was $965,000 and ($667,000) for the years ended December 30, 1995 and December
31, 1994, respectively.
5. FINANCING AND COMMITMENTS
At December 30, 1995 the Company had an unsecured bank line of credit of
$5,000,000 against which there have been no borrowings.
The Company and its subsidiaries lease certain facilities and equipment under
contracts classified as operating leases. Commitments under leases with terms
extending beyond one year are not material. Rental expense was $4,481,000 in
1995, $4,711,000 in 1994 and $4,608,000 in 1993.
[22]
<PAGE> 10
6. STOCKHOLDERS' EQUITY
Common stock outstanding at year-end was as follows:
<TABLE>
<CAPTION>
AMOUNT
SHARES (in thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
Common stock outstanding at December 26, 1992 31,278,758 $26,066
Exercise of stock options 19,927 17
Retirement of common stock (297,500) (248)
- -------------------------------------------------------------------------------
Common stock outstanding at December 25, 1993 31,001,185 25,835
Exercise of stock options 4,222 3
Retirement of common stock (572,000) (477)
- -------------------------------------------------------------------------------
Common stock outstanding at December 31, 1994 30,433,407 25,361
Exercise of stock options 13,858 12
Retirement of common stock (110,000) (92)
- -------------------------------------------------------------------------------
Common stock outstanding at December 30, 1995 30,337,265 $25,281
===============================================================================
</TABLE>
7. INCOME TAXES
Effective at the beginning of fiscal 1993, the Company adopted SFAS 109,
"Accounting for Income Taxes." The cumulative effect of the change in
accounting for income taxes is $3,538,000 and is reported separately in the
Company's statement of consolidated income and retained earnings for fiscal
1993.
Income tax (benefit) expense consists of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $11,024 $14,545 $16,032
State and local 2,453 3,547 2,938
- -------------------------------------------------------------------------------
Total current 13,477 18,092 18,970
- -------------------------------------------------------------------------------
Deferred:
Federal (14,644) (584) 459
State and local (1,994) (165) 102
- -------------------------------------------------------------------------------
Total deferred (16,638) (749) 561
- -------------------------------------------------------------------------------
Total income tax (benefit) expense $(3,161) $17,343 $19,531
===============================================================================
</TABLE>
A reconciliation of income taxes computed using the statutory rates to
income tax (benefit) expense follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory income tax rate 35% 35% 35%
Income taxes at statutory tax rate $(3,535) $15,515 $17,747
Increase (decrease) in taxes resulting from:
State and local income taxes,
net of federal income tax benefit 298 2,198 1,900
Tax exempt interest (339)
Miscellaneous items, net 415 (370) (116)
- -------------------------------------------------------------------------------
Income tax (benefit) expense $(3,161) $17,343 $19,531
- -------------------------------------------------------------------------------
</TABLE>
[23]
<PAGE> 11
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
30, 1995 and December 31, 1994 are presented below (in thousands):
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net current deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts $ 254 $ 256
Inventories, principally due to additional costs capitalized for tax
purposes 1,903 2,183
Compensated absences, principally due to accrual for financial
statement purposes 2,034 2,178
Other payroll costs, principally due to accrual for financial
statement purposes 116 106
Insurance, principally due to accrual for financial statement purposes 3,903 1,010
Amounts deductible when paid for tax purposes, accrued for
financial reporting purposes 379 34
Restructuring charges, deductible when paid for tax purposes,
accrued for financial statement purposes 1,880
Other 25 33
- ---------------------------------------------------------------------------------------------------------------------------
Net current deferred tax assets $ 10,494 $ 5,800
===========================================================================================================================
Net noncurrent deferred tax liabilities:
Deferred compensation, principally due to
accrual for financial statement purposes $ 1,527 $ 1,303
Accrued postretirement costs 3,466 3,165
Net state operating loss carryforwards 413 1,032
- ---------------------------------------------------------------------------------------------------------------------------
Total gross noncurrent deferred tax assets 5,406 5,500
Less valuation allowance (413) (998)
- ---------------------------------------------------------------------------------------------------------------------------
Total net noncurrent deferred tax assets 4,993 4,502
Plant and equipment, principally due to differences in depreciation,
net of impairment (12,020) (23,713)
Other (273) (32)
- ---------------------------------------------------------------------------------------------------------------------------
Net noncurrent deferred tax liabilities $ (7,300) $(19,243)
===========================================================================================================================
</TABLE>
The net change in the total valuation allowance for the year ended December 30,
1995 was a decrease of $585,000 and for the year ended December 31, 1994 was an
increase of $434,000. During 1995, the Company's overall effective state income
tax rate decreased due principally to the corporate restructuring. Accordingly,
the valuation allowance has been reduced to reflect the change in future value
of certain state net operating loss carryforwards. Based on the Company's
historical and current earnings, management believes it is more likely than
not that the Company will realize the benefit of the deferred tax assets that
are not covered by the valuation allowance.
At December 30, 1995, the Company has net operating loss carryforwards for
state income tax purposes which are available to offset future state taxable
income, if any. These net operating losses begin expiring in 2007.
[24]
<PAGE> 12
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides postretirement medical benefits for retirees and their
spouses to age 65. Retirees pay contributions toward medical coverage based on
the medical plan and coverage they select.
Effective at the beginning of fiscal 1993, the Company adopted SFAS 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." The
cumulative effect of adopting SFAS 106 as of the beginning of fiscal 1993 was
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 statement of consolidated income and retained
earnings fiscal 1993.
The effect of adopting SFAS 106 on postretirement health care costs and
on net income before the cumulative effect on prior years of changes in
accounting principles for fiscal 1993 was an increase of $805,000 and a
decrease of $495,000, respectively.
The Company's postretirement health care plan currently is not funded.
The following table presents the plan's accumulated postretirement benefit
obligation reconciled with amounts recognized in the Company's consolidated
balance sheet as of December 30, 1995 and December 31, 1994 (in thousands):
<TABLE>
<Captiion>
1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (845) $ (715)
Fully eligible active plan participants (1,538) (1,211)
Other active plan participants (7,732) (5,997)
- ---------------------------------------------------------------------------------------------------
Total (10,115) (7,923)
Net unrecognized loss (gain) from past experience
different from that assumed 1,196 (155)
Unrecognized prior service cost 111
- ---------------------------------------------------------------------------------------------------
Accrued postretirement health care costs $ (8,808) $(8,078)
Net periodic postretirement benefit cost for the years ended December 30, 1995 and December 31, 1994
consisted of the following components (in thousands):
1995 1994
- ---------------------------------------------------------------------------------------------------
Service cost - benefits attributed to service during the year $ 604 $ 543
Interest cost on accumulated postretirement benefit obligation 619 439
- ----------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $1,223 $ 982
- ----------------------------------------------------------------------------------------------------
</TABLE>
For measurement purposes, an 11.62% annual rate of increase in the per capital
cost of covered health care benefits was assumed for 1995; the rate was assumed
to decrease gradually to 5.5% at 2016 and remain at that level thereafter. The
health care cost trend rate assumption has a significant effect on the amounts
reported. Increasing the assumed health care cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of December 30, 1995 by $958,000 and the aggregate of the service
and interest cost components of postretirement expense for the year ended
December 30, 1995 by $142,000. The weighted-average discount rate used in
determining the accumulated postretirement benefit obligation was 8.00% at the
beginning of the 1995 fiscal year and 7.0% at the end of the 1995 fiscal year
and was 6.75% at the beginning of the 1994 fiscal year and 8.00% at the end of
the 1994 fiscal year.
The Company has established a Voluntary Employees' Beneficiary Association
(VEBA) trust to fund both employee and retiree medical costs in future years.
The trust is not legally restricted exclusively for retirees. The balance of
the trust, $2,156,000 and $3,885,000 in 1995 and 1994, respectively, is
included in other assets in the accompanying consolidated balance sheets.
[25]
<PAGE> 13
9. EMPLOYEE BENEFIT PLANS
The Company has retirement plans covering substantially all of its employees.
These plans are defined contribution plans providing for contributions based on
income before income taxes, as defined. Contributions to the plans are funded
as accrued.
The Company also has an employee stock purchase plan under which shares of
common stock are purchased on the open market with employee and Company
contributions. The plan provides for the Company to contribute an amount equal
to 10% of the employees' contributions. A total of 800,000 shares of common
stock has been registered under the Securities Act of 1933 for purchase under
the plan. Company contributions amounted to $122,000 in 1995, $129,000 in 1994
and $127,000 in 1993.
In addition, the Company has incentive stock option plans under which 1,466,666
shares of common stock may be issued to key employees of the Company, as
defined in the plans. The plans also authorize the grant of non-qualified stock
options and stock appreciation rights to key employees. The plans require,
among other things, that before the stock options and stock appreciation rights
may be exercised, such key employees must remain in continuous employment of
the Company not less than six months from the date of grant. Exercised stock
options are accounted for through the issuance of previously retired stock.
Options have been granted that generally become exercisable in three
installments of six, eighteen and thirty months after date of grant. The option
price, which equals the fair market value of the Company's common stock at the
date of grant, ranges from $17.25 to $24.13 per share.
Activity under the plan for each of the years in the three-year period ended
December 30, 1995 is as follows:
<TABLE>
<CAPTION>
Options Stock Options
Outstanding, Appreciation Range of Outstanding,
Beginning of Options Rights Options Options Price Options End of the
Years the Year Granted Exercised Exercised Exercised Expired Year
- ----- ----------- ------- ------------ --------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993 464,557 (29,767) $10.36 to 17.81 434,790
1994 434,790 85,900 (13,047) 10.64 to 17.81 507,643
1995 507,643 (25,086) 14.81 (8,300) 474,257
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In 1995, the Company adopted a Nonqualified Stock Option Plan for Non-Employee
Directors (the Director Plan). The Company has 100,000 shares of common stock
which may be issued to non-employee directors under this plan. The Director
Plan requires among other things that the options are not exercisable unless
the optionee remains available to serve as a director of the Company until the
first anniversary of the date of grant, except that the initial option shall be
exercisable after six months. Options granted under the Director Plan shall
expire ten years from the date of grant. There were 25,000 options granted
during the year and outstanding at December 30, 1995. The option price, which
equals the fair market value of the Company's stock at the date of grant, is
$17.50.
There were 470,957 options exercisable under all stock option plans at
December 30, 1995.
10. RESTRUCTURING
The Company announced on December 13, 1995 a restructuring of its operations
designed to improve the Company's profitability and make it more competitive in
the marketplace. The restructuring plan includes the closing of the Company's
Columbia, South Carolina manufacturing plant and the manufacturing operations
at its Greenville, Texas facility. This realignment in manufacturing capacity
will result in workforce reductions of approximately 500 employees. Termination
benefits, shut-down related items and other restructuring expenses were charged
to restructing and impairment expense and total approximately $6,496,000 for
the year ended December 30, 1995. Termination benefits accrued in accrued
compensation total approximately $5,142,000 and other shut-down related items
accrued in other payables total approximately $334,000 at December 30, 1995.
[26]
<PAGE> 14
11. UNAUDITED INTERIM FINANCIAL INFORMATION
A summary of certain interim financial information follows (in thousands,
except per share data):
<TABLE>
<CAPTION>
1995 Interim Period Ended
----------------------------------------------------------
March 25 June 17 September 9 December 30
(12 Weeks) (12 Weeks) (12 Weeks) (16 Weeks)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and other operating revenues $112,716 $114,249 $107,174 $143,329
- ---------------------------------------------------------------------------------------------------------------------------
Cost of sales 54,980 56,522 53,808 75,314
- ----------------------------------------------------------------------------------------------------------------------------
Profit (loss) from operations 8,608 7,252 5,669 (34,655)
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) 5,978 4,858 4,133 (21,908)
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share .20 .16 .14 (.72)
- ----------------------------------------------------------------------------------------------------------------------------
1994 Interim Period Ended
---------------------------------------------------------------
March 19 June 11 September 3 December 31
(12 Weeks) (12 Weeks) (12 Weeks) (17 Weeks)
- ------------------------------------------------------------------------------------------------------------------------------
Net sales and other operating revenues $108,133 $117,541 $107,643 $154,665
- -------------------------------------------------------------------------------------------------------------------------------
Cost of sales 52,438 55,704 52,746 77,239
- -------------------------------------------------------------------------------------------------------------------------------
Profit from operations 8,290 12,749 7,848 11,107
- -------------------------------------------------------------------------------------------------------------------------------
Net income 5,791 8,446 5,433 7,314
- --------------------------------------------------------------------------------------------------------------------------------
Net income per common share .19 .27 .18 .24
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[27]
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
POSITION AND RESULTS OF OPERATIONS
Over the past five years, the snack food industry has changed considerably as a
result of changing consumer demands, intense competition and over capacity.
Lance has encountered increased competition from other manufacturers, many of
which have pursued aggressive pricing and product development strategies. For
several years the Company has experienced a continuing decline in net income.
Sales have continued to be impacted by intense price competition resulting in
no general sales price increase since the summer of 1989. While net sales and
other operating revenue have increased only slightly during these years,
operating costs have increased more rapidly, thus reducing operating margins.
In December 1995 the Company took the first step in a strategic plan designed
to improve the Company's profitability and make it more competitive. This is
part of a long-term strategy focused on strengthening and growing the core
snack food business. The first step is to reduce costs through restructuring
the Company's operations and includes closing the Vista Bakery plant in
Columbia, South Carolina and eliminating manufacturing operations at the
Greenville, Texas facility. These actions were completed on February 16, 1996
with production at these facilities being moved to existing Company facilities
in Charlotte, North Carolina and Burlington, Iowa. The realignment of
manufacturing facilities resulted in a work force reduction of approximately
500 employees.
Pretax write-downs and expense provisions related to the restructuring,
impairment and other charges totaling $43 million were recorded in the fourth
quarter of 1995. The $43 million was comprised of (in millions):
- Impairment of fixed assets ($29.4)
- Other restructuring charges, principally employee severance ($6.5)
- Write-down of inventory and packaging design costs ($2.7)
- Change in accounting estimate for insurance claims ($3.0)
- Other miscellaneous costs ($1.4)
Using the criteria of Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," the Company determined that the fixed assets at the
Vista Bakery plant in Columbia and the fixed assets at the Greenville
manufacturing facility, excluding vending machines, trucks and automobiles,
were impaired. The pretax impairment losses for the year ended December 30,
1995 were $29.4 million. These losses are included as a component of
restructuring and impairment loss in the consolidated financial statements.
As part of the restructuring effort, the Company also reevaluated its
sales territories and its corporate structure to focus on more
profitable markets and to minimize overhead costs. These efforts identified
certain sales territories and certain corporate salaried positions which will
be eliminated or consolidated. With the severance costs in Columbia and
Greenville, these pretax expense provisions totaled $6.5 million and are
included as a component of restructuring and impairment loss in the
consolidated financial statements.
The Company has also reexamined product lines to focus on sales of higher
margin products, resulting in the elimination of approximately 72 products
(SKU's). Pretax write-downs of inventory and packaging design costs
totaled $2.7 million.
During the year, the Company modified its assumptions for future cost increases
in incurred but unpaid workers' compensation, auto, general and product
liability insurance claims. The result was a change in accounting estimate
which increased insurance expense by $2,958,000 and decreased net income and
net income per share by $1,923,000 and $.06 respectively in 1995.
[28]
<PAGE> 16
Pretax charges for other miscellaneous costs totaled $1.4 million. These
miscellaneous costs, the write-downs of inventory and packaging design costs
and increases in self-insurance reserves, as described above, are not shown
separately in the accompanying consolidated financial income statement, but are
included in the appropriate expense classifications.
The restructuring and other efforts described above are expected to generate
estimated annualized savings of approximately $10 million when fully
implemented. However, the Company is still faced with intense price competition
and other costs that must be reduced or eliminated. There are no immediate
fixes and there can be no assurances that the Company can improve sales or
profitability. Initially, sales and profits, when compared to 1995 periods, are
likely to be lower. In addition, sales are likely to be lower in 1996.
RESULTS OF OPERATIONS, 1995 COMPARED TO 1994
Net sales and other operating revenue for 1995 (52 weeks) decreased by
$10.5 million (2.2%) from 1994 (53 weeks) primarily as a result of 1994 having
an additional week of sales as compared to 1995, reduced promotional activities
during the fourth quarter of 1995 and decreased unit volume at Vista Bakery
offset slightly by sales price increases on Vista Bakery products. Sales
continued to be affected by intense price competition in most markets.
Cost of sales increased to $240.6 million in 1995 from $238.1 million in 1994.
As a result, gross profit as a percentage of sales decreased to 49.6% in 1995
from 51.2% in 1994. The decrease in gross profit was principally a result of
increased packaging material costs, increased insurance costs, the write-off of
inventory and packaging design costs, and the continuing shift in composition
of sales mix to lower margin products, including products purchased for resale
and products sold to supermarket chains and discount stores.
Selling and delivery expenses in 1995 were $187.8 million or 39.3% of
sales as compared to $183.2 million or 37.5% of sales in 1994. This increase in
expenses was due primarily to higher insurance costs, higher subsidies paid to
sales representatives in low volume territories, increased stales and additional
marketing expenses associated with sponsoring the Lance Busch Grand National and
Winston Cup race car. Total advertising costs were $4.2 million in 1995, an
increase of $200,000 over 1994. These increases in selling and delivery expenses
were offset somewhat by improvements in the distribution costs of Vista Bakery
products.
General and administrative expenses were $21.4 million in 1995 as compared to
$20.7 million in 1994 primarily due to higher insurance costs and higher
supplemental retirements costs. As a percentage of sales, general and
administrative expenses were 4.5% of sales in 1995 and 4.2% of sales in 1994.
Profit sharing contributions were lower in 1995 due to decreased earnings.
Net income decreased $33.9 million ($1.11 per share) due primarily to losses on
restructuring and impairment, a change in the estimate for unpaid and incurred
but not reported insurance claims and for unfavorable claims experience in
1995, write-offs of inventory and packaging design costs and a decrease in
sales volume.
RESULTS OF OPERATIONS, 1994 COMPARED TO 1993
Net sales and other operating revenue for 1994 (53 weeks) increased $15.2
million (3.2%) from 1993 (52 weeks) due primarily to increased unit volume from
the Vista Bakery plants and as a result of the additional week of sales during
1994 as compared to 1993. Sales continued to be affected by intense price
competition in most markets. To meet this competition additional marketing
activities were utilized. Also, bad weather in the first quarter of 1994 had a
detrimental impact on sales.
Cost of sales increased to $238.1 million in 1994 from $221.8 million in 1993.
As a result, gross profit as a percentage of sales decreased to 51.2% in 1994
from 53.1% in 1993. The decrease in gross profit was principally a result of
increased raw material costs, particularly peanuts and cooking oils, the shift
in composition of sales mix to lower margin products, including products
purchased for resale and products sold to supermarket chains and discount
stores, and higher production costs at the Vista Bakery plants.
[29]
<PAGE> 17
Selling and delivery expenses in 1994 were $183.2 million or 37.5% of
sales as compared to $179.3 million or 37.9% of sales in 1993. This increase in
expenses was due primarily to increased sales, increased marketing expenses in
response to intense price competition and increased delivery costs. Marketing
strategies included increased television and radio advertising as well as
sponsoring a Lance Busch Grand National and Winston Cup race car. Total
advertising costs were $4 million, an increase of $2 million over 1993. The
Company changed its accounting method for advertising costs in 1994 to comply
with the American Institute of Certified Public Accountants' (AICPA), Statement
of Position 93-7, "Reporting on Advertising Costs" which caused advertising
costs to increase by $753,000 from 1993. These increases in selling and delivery
expenses were offset somewhat by restructuring certain sales territories and by
lower insurance costs.
General and administrative expenses were $20.7 million in 1994 as compared to
$19.9 million in 1993 primarily due to the additional week in fiscal 1994. As a
percentage of sales, general and administrative expenses were 4.2% of sales in
both years. Profit sharing contributions were lower in 1994 due to decreased
earnings.
Sales of products produced at the Vista Bakery plants continued to
increase. While prices were increased at Vista Bakery during the fourth quarter
of 1994, the impact on 1994 sales and net income was not material. Consolidated
operating results of the Vista Bakery plants declined due to higher operating
expenses, especially production, selling and delivery expenses. The Burlington,
Iowa operating results were impacted by increased manufacturing costs and
increased warehousing costs. Inefficiencies, over capacity and high overhead
continued to negatively impact the Columbia, South Carolina operations. The
principal component of increased delivery expenses was that the additional sales
were primarily in the Midwestern United States and the products were
manufactured at the Columbia, South Carolina plant and shipped to Burlington,
Iowa for distribution. During 1994 and early 1995, changes were made in the
Vista Bakery operations to improve production efficiencies.
Net income decreased by $3.8 million ($.11 per share) due primarily to a shift
in sales mix to lower margin products, higher operating costs at the Vista
Bakery plants, increased raw material costs, increased marketing expenses and
lower interest income. This was offset somewhat by restructuring certain sales
territories and lower insurance costs. 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.
IMPACT OF INFLATION AND CHANGING PRICES
Over the years, the Company has had a policy of expansion, replacement
and renovation of its equipment and buildings on a continuing rather than on a
catch up basis. This policy has served to reduce the impact of inflation.
As a result of increasing costs, the Company has increased the wholesale price
of its snack foods substantially since 1978. Retail prices of most snack items
have risen from $.20 in 1978 to $.39 in 1995. However, prices in the last six
years have remained relatively flat.
The Company believes it is in position to contend with the effect of further
inflation through pricing, improved manufacturing methods and changes in
marketing strategy.
[30]
<PAGE> 18
FINANCIAL POSITION
The Company continues to maintain a strong position of liquidity and has the
financial strength to meet its regular operating needs, capital investment
program, cash dividend payments and stock repurchases through cash flow from
current operations and investments. The Company's conservative investment
strategy of investing in bank paper and government securities continues to
provide the financial stability and the ready cash needed to meet the Company's
operating, capital and other requirements. At the end of 1995, working capital
of $90.2 million included $44.5 million in cash and marketable securities,
reflecting a decrease of $4.5 million in working capital and $1.4 million in
cash and marketable securities compared to 1994. The net decrease in working
capital was primarily attributable to the decrease in inventories of $6.4
million, the increase in accrued compensation of $4.6 million, offset by the
increase in the current deferred income tax benefit of $4.7 million. The
decrease in inventories is primarily due to the decrease in raw materials,
principally peanuts, and to the write off of obsolete packaging and supplies
inventory. Deposits increased because of deposits associated with the van lease
program and deposits associated with automation of the saltine production line.
Accounts payable at the end of 1994 was high because of increased peanut
purchases. Accrued compensation increased as a result of employee severance
associated with the closing of the Greenville, Texas manufacturing operations
and the Vista Bakery facility in Columbia, South Carolina and the elimination
of certain corporate salaried positions. The accrual for unpaid and incurred
but not reported insurance claims increased as a result of the change in
estimate described above and as a result of less favorable medical claims
experience in 1995. The noncurrent deferred income tax liability decreased
because of substantial noncurrent deferred tax assets that were generated as a
result of the restructuring and fixed asset impairment charges. The established
bank line of credit of $5 million remained unused during 1995 and there are no
current plans for its use.
During 1995, the Company spent $20 million for capital improvements, paid $29.2
million in cash dividends and spent $1.8 million to repurchase 110,000 shares
of Company stock. Over the last three years total capital investments have
amounted to $60.2 million, a period in which depreciation has exceeded capital
expenditures by $13.8 million.
The Company's capital investment program is devoted to expansion and renovation
of facilities and modernization of machinery and equipment. Of the $20 million
spent for capital improvements during 1995, $3.1 million was spent for vending
machines, $10.5 million for machinery and equipment and $6.4 million for
vehicles, principally delivery vans.
At the end of fiscal 1995, commitments for capital expenditures, including
machinery and equipment and further expansion and renovation of facilities,
totaled approximately $7.4 million, with an additional $14 million in capital
expenditures planned for 1996.
[31]
<PAGE> 19
FIVE YEAR SUMMARY
Consolidated Financial Highlights
For the Five Fiscal Years Ended December 30, 1995
(In Thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
(52 WEEKS) (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULT OF OPERATIONS:
Net sales and other operating revenue $477,468 $487,982 $472,786 $461,449 $449,861
(Loss) profit from operations (13,126) 39,994 45,192 54,366 50,990
(Loss) income before income taxes (10,100) 44,327 50,707 60,162 58,673
Income taxes (benefit) (3,161) 17,343 19,531 21,018 20,961
Net (loss) income (6,939) 26,984 30,798 39,144 37,712
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 30,400 30,774 31,236 31,299 31,268
PER SHARE OF COMMON STOCK:
(Loss) profit from operations $ (.43) $ 1.30 $ 1.45 $ 1.74 $ 1.63
Net (loss) income (.23) .88 .99 1.25 1.21
Cash dividends .96 .96 .96 .92 .88
FINANCIAL STATUS AT YEAR-END:
Total assets $256,460 $296,996 $308,474 $313,446 $300,290
</TABLE>
MARKET AND DIVIDEND INFORMATION
The Company had 5,041 stockholders of record as of February 20, 1996.
The $.83 1/3 par value Common Stock of Lance Inc. is traded in the
over-the-counter market under the symbol LNCE and transactions in the Common
Stock are reported on the NASDAQ National Market System. The following table
sets forth the high and low sales prices and dividends paid during the interim
periods in fiscal years 1994 and 1995.
<TABLE>
<CAPTION>
1994 INTERIM HIGH LOW DIVIDENDS
PERIODS PRICE PRICE PAID
------- ----- ----- ---------
<S> <C> <C> <C>
First . . . . . . . . . . . . . . . . . . $22 3/4 $18 3/4 24c.
Second. . . . . . . . . . . . . . . . . . 20 1/2 16 3/4 24
Third . . . . . . . . . . . . . . . . . . 20 1/2 16 3/4 24
Fourth. . . . . . . . . . . . . . . . . . 18 7/8 16 1/4 24
1995 INTERIM HIGH LOW DIVIDENDS
PERIODS PRICE PRICE PAID
------- ----- ----- ----
First . . . . . . . . . . . . . . . . . . $18 1/2 $16 1/4 24c.
Second. . . . . . . . . . . . . . . . . . 20 16 1/2 24
Third . . . . . . . . . . . . . . . . . . 19 1/2 17 1/4 24
Fourth. . . . . . . . . . . . . . . . . . 18 1/8 15 3/4 24
</TABLE>
[32]
<PAGE> 1
EXHIBIT 21
LIST OF THE SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name of Subsidiary (1) State of Incorporation
- ------------------ ----------------------
<S> <C>
LIC, Inc. (2) Nevada
Caronuts, Inc. (3) North Carolina
Vista Bakery, Inc. (3) North Carolina
</TABLE>
- -----------------------
(1) Each subsidiary does business under only its corporate name.
(2) LIC, Inc. was merged into Lance, Inc. on December 31, 1995.
(3) A subsidiary of LIC, Inc.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Lance, Inc.:
We consent to incorporation by reference in Registration Statements No.
2-77150, No. 2-88540, No. 33-41866 and No. 33-58839 of Lance, Inc. on Form S-8
of our report dated February 20, 1996 relating to the consolidated balance
sheets of Lance, Inc. and subsidiaries as of December 30, 1995 and December 31,
1994, and the related consolidated statements of income and retained earnings
and cash flows for the three-year period ended December 30, 1995, which report
is incorporated by reference in the December 30, 1995 annual report on Form
10-K of Lance, Inc.
Our report refers to the adoption of the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards (SFAS) No. 121
"Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be
Disposed Of" during the fiscal year ended December 30, 1995. Our report also
refers to the adoption of the provisions of the American Institute of Certified
Public Accountants' Statement of Position 93-7, "Reporting on Advertising
Costs" and the provisions of the SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities," during the fiscal year ended
December 31, 1994.
KPMG PEAT MARWICK LLP
Charlotte, North Carolina
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LANCE, INC. FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 12,585
<SECURITIES> 31,905
<RECEIVABLES> 30,156
<ALLOWANCES> 727
<INVENTORY> 32,521
<CURRENT-ASSETS> 122,192
<PP&E> 311,781
<DEPRECIATION> 185,125
<TOTAL-ASSETS> 256,460
<CURRENT-LIABILITIES> 31,946
<BONDS> 0
0
0
<COMMON> 25,281
<OTHER-SE> 171,262
<TOTAL-LIABILITY-AND-EQUITY> 256,460
<SALES> 477,468
<TOTAL-REVENUES> 477,468
<CGS> 240,624
<TOTAL-COSTS> 490,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,100)
<INCOME-TAX> (3,161)
<INCOME-CONTINUING> (6,939)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,939)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
