UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Filed Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
| For the quarterly (thirteen week) period ended | ||
| September 28, 2002 | Commission File Number 0-398 |
LANCE, INC.
(Exact name of registrant as specified in its charter)
| North Carolina | 56-0292920 | |
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
| Incorporation or organization) |
| 8600 South Boulevard | ||
| P.O. Box 32368 | ||
| Charlotte, North Carolina | 28232 | |
| (Address of principal executive offices) | (Zip Code) |
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 | ||||
|
|
The number of shares outstanding of the Registrant’s $0.83-1/3 par value Common Stock, its only outstanding class of Common Stock, as of November 1, 2002, was 29,098,584 shares.
LANCE, INC. AND SUBSIDIARIES
INDEX
| Page | ||||||
PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements |
||||||
Condensed Consolidated Balance Sheets — September 28, 2002 (Unaudited) and December 29, 2001 |
3 | |||||
Condensed Consolidated Statements of Income (Unaudited) — Thirteen and
Thirty-Nine Weeks Ended September 28, 2002 and September 29, 2001 |
4 | |||||
Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive
Income (Unaudited) — Thirty-Nine Weeks Ended September 28, 2002 and September 29, 2001 |
5 | |||||
Condensed Consolidated Statements of Cash Flows (Unaudited) — Thirty-Nine Weeks Ended
September 28, 2002 and September 29, 2001 |
6 | |||||
Notes to Condensed Consolidated Financial Statements |
7 | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | |||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
16 | |||||
Item 4. Controls and Procedures |
16 | |||||
PART II. OTHER INFORMATION |
||||||
Item 2. Changes in Securities and Use of Proceeds |
17 | |||||
Item 6. Exhibits and Reports on Form 8-K |
18 | |||||
SIGNATURES |
19 | |||||
MANAGEMENT CERTIFICATIONS |
20 | |||||
2
LANCE, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
As of September 28, 2002 (Unaudited) and December 29, 2001
(In thousands, except share data)
| September 28, | December 29, | |||||||||||
| 2002 | 2001 | |||||||||||
| ASSETS | ||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
$ | 471 | $ | 4,798 | ||||||||
Accounts receivable (less allowance for doubtful accounts) |
45,281 | 41,718 | ||||||||||
Inventories |
28,071 | 26,828 | ||||||||||
Deferred income tax benefit |
7,071 | 5,824 | ||||||||||
Prepaid expenses and other |
4,195 | 3,126 | ||||||||||
Total current assets |
85,089 | 82,294 | ||||||||||
Property, plant & equipment, net |
179,498 | 179,436 | ||||||||||
Goodwill, net |
39,749 | 39,411 | ||||||||||
Other intangible assets, net |
8,572 | 9,054 | ||||||||||
Other assets |
2,431 | 3,204 | ||||||||||
Total assets |
$ | 315,339 | $ | 313,399 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities |
||||||||||||
Current portion of long-term debt |
$ | 92 | $ | 487 | ||||||||
Accounts payable |
12,644 | 10,776 | ||||||||||
Accrued compensation |
12,752 | 15,335 | ||||||||||
Accrued liabilities |
22,692 | 19,489 | ||||||||||
Total current liabilities |
48,180 | 46,087 | ||||||||||
Other liabilities and deferred credits |
||||||||||||
Long-term debt |
42,018 | 49,344 | ||||||||||
Deferred income taxes |
26,292 | 23,063 | ||||||||||
Accrued postretirement health care costs |
7,307 | 8,852 | ||||||||||
Accrual for insurance claims |
5,033 | 4,511 | ||||||||||
Other long-term liabilities |
3,618 | 3,623 | ||||||||||
Total other liabilities and deferred credits |
84,268 | 89,393 | ||||||||||
Stockholders’ equity |
||||||||||||
Common stock, $0.83 1/3 par value (authorized: 75,000,000
shares; 29,098,744 and 28,995,172 shares outstanding at
September 28, 2002 and December 29, 2001) |
24,248 | 24,163 | ||||||||||
Preferred stock, $1.00 par value (authorized: 5,000,000 shares;
0 shares outstanding at September 28, 2002 and December 29,
2001) |
— | — | ||||||||||
Additional paid-in capital |
3,051 | 1,865 | ||||||||||
Unamortized portion of restricted stock awards |
(591 | ) | (826 | ) | ||||||||
Retained earnings |
157,502 | 154,075 | ||||||||||
Accumulated other comprehensive loss |
(1,319 | ) | (1,358 | ) | ||||||||
Total stockholders’ equity |
182,891 | 177,919 | ||||||||||
Total liabilities and stockholders’ equity |
$ | 315,339 | $ | 313,399 | ||||||||
See notes to condensed consolidated financial statements (unaudited).
3
LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Thirteen and Thirty-Nine Weeks Ended September 28, 2002 and September 29, 2001
(In thousands, except share and per share data)
| Thirteen | Thirteen | Thirty-Nine | Thirty-Nine | ||||||||||||||
| Weeks Ended | Weeks Ended | Weeks Ended | Weeks Ended | ||||||||||||||
| Sept 28, 2002 | Sept 29, 2001 | Sept 28, 2002 | Sept 29, 2001 | ||||||||||||||
Net sales and other operating
revenue |
$ | 135,753 | $ | 141,646 | $ | 414,451 | $ | 424,534 | |||||||||
Cost of sales and operating
expenses: |
|||||||||||||||||
Cost of sales |
69,818 | 72,174 | 210,647 | 217,115 | |||||||||||||
Selling, marketing and delivery |
49,070 | 48,639 | 148,209 | 147,075 | |||||||||||||
General and administrative |
5,759 | 7,655 | 20,705 | 22,823 | |||||||||||||
Provisions for employees’
retirement plans |
978 | 1,265 | 3,311 | 3,462 | |||||||||||||
Amortization of goodwill and
other intangibles |
173 | 510 | 516 | 1,549 | |||||||||||||
Other expense (income), net |
1,097 | (16 | ) | 1,175 | 341 | ||||||||||||
Total costs and expenses |
126,895 | 130,227 | 384,563 | 392,365 | |||||||||||||
Earnings before interest and
income taxes |
8,858 | 11,419 | 29,888 | 32,169 | |||||||||||||
Interest expense, net |
760 | 872 | 2,528 | 2,964 | |||||||||||||
Earnings before income taxes |
8,098 | 10,547 | 27,360 | 29,205 | |||||||||||||
Income taxes |
2,960 | 3,913 | 9,986 | 10,842 | |||||||||||||
Net income |
$ | 5,138 | $ | 6,634 | $ | 17,374 | $ | 18,363 | |||||||||
Earnings per share |
|||||||||||||||||
Basic |
$ | 0.18 | $ | 0.23 | $ | 0.60 | $ | 0.64 | |||||||||
Diluted |
$ | 0.18 | $ | 0.23 | $ | 0.59 | $ | 0.63 | |||||||||
Weighted average shares
outstanding — basic |
29,009,000 | 28,912,000 | 28,971,000 | 28,907,000 | |||||||||||||
Weighted average shares
outstanding — diluted |
29,273,000 | 29,129,000 | 29,261,000 | 29,039,000 | |||||||||||||
See notes to condensed consolidated financial statements (unaudited).
4
LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive
Income (Unaudited) For the Thirty-Nine Weeks Ended September 28, 2002 and September 29, 2001
(In thousands, except share data)
| Unamortized | |||||||||||||||||||||||||||||
| Portion of | Accumulated | ||||||||||||||||||||||||||||
| Additional | Restricted | Other | |||||||||||||||||||||||||||
| Common | Paid-in | Stock | Retained | Comprehensive | |||||||||||||||||||||||||
| Shares | Stock | Capital | Awards | Earnings | Income(Loss) | Total | |||||||||||||||||||||||
Balance, December 30, 2000 |
28,947,222 | $ | 24,123 | $ | 1,229 | $ | (437 | ) | $ | 148,859 | $ | (116 | ) | $ | 173,658 | ||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||||||||
Net income |
— | — | — | — | 18,363 | — | 18,363 | ||||||||||||||||||||||
Unrealized loss on interest rate swap,
net of tax effect of $311 |
— | — | — | — | — | (508 | ) | (508 | ) | ||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | (437 | ) | (437 | ) | ||||||||||||||||||||
Total comprehensive income |
— | — | — | — | — | — | 17,418 | ||||||||||||||||||||||
Cash dividends paid to stockholders |
— | — | — | — | (13,915 | ) | — | (13,915 | ) | ||||||||||||||||||||
Stock options exercised |
3,250 | 2 | 30 | — | — | — | 32 | ||||||||||||||||||||||
Issuance of restricted stock, net of cancellations |
34,950 | 29 | 440 | (368 | ) | — | — | 101 | |||||||||||||||||||||
Balance, September 29, 2001 (restated) |
28,985,422 | $ | 24,154 | $ | 1,699 | $ | (805 | ) | $ | 153,307 | $ | (1,061 | ) | $ | 177,294 | ||||||||||||||
Balance, December 29, 2001 |
28,995,172 | $ | 24,163 | $ | 1,865 | $ | (826 | ) | $ | 154,075 | $ | (1,358 | ) | $ | 177,919 | ||||||||||||||