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 June 26, 2004 | Commission File Number 0-398 |
LANCE, INC.
(Exact name of registrant as specified in its charter)
| North Carolina (State or other jurisdiction of incorporation or organization) |
56-0292920 (I.R.S. Employer Identification No.) |
|
| 8600 South Boulevard P.O. Box 32368 Charlotte, North Carolina (Address of principal executive offices) |
28232 (Zip Code) |
704-554-1421
(Registrant’s telephone number, including area 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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No o
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 July 20, 2004, was 29,569,478 shares.
LANCE, INC. AND SUBSIDIARIES
INDEX
| Page | ||||||
PART I. FINANCIAL INFORMATION |
||||||
Item 1. Financial Statements |
||||||
Condensed Consolidated Balance Sheets — June 26, 2004 (Unaudited)
and December 27, 2003 |
3 | |||||
Condensed Consolidated Statements of Income (Unaudited) – Thirteen and
Twenty-Six Weeks Ended June 26, 2004 and June 28, 2003 |
4 | |||||
Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive
Income (Unaudited) – Twenty-Six Weeks Ended June 26, 2004 and June 28, 2003 |
5 | |||||
Condensed Consolidated Statements of Cash Flows (Unaudited) – Twenty-Six
Weeks Ended June 26, 2004 and June 28, 2003 |
6 | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) |
7 | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
12 | |||||
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
20 | |||||
Item 4. Controls and Procedures |
20 | |||||
PART II. OTHER INFORMATION |
||||||
Item 2. Changes in Securities and Use of Proceeds |
21 | |||||
Item 4. Submission of Matters to a Vote of Security Holders |
21 | |||||
Item 5. Other Information |
21 | |||||
Item 6. Exhibits and Reports on Form 8-K |
21 | |||||
SIGNATURES |
23 | |||||
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of June 26, 2004 (Unaudited) and December 27, 2003
(In thousands, except share data)
| June 26, | December 27, | ||||||||||
| 2004 | 2003 | ||||||||||
| ASSETS | |||||||||||
Current assets |
|||||||||||
Cash and cash equivalents |
$ | 21,817 | $ | 25,479 | |||||||
Accounts receivable (less allowance for doubtful accounts) |
51,141 | 42,653 | |||||||||
Inventories |
26,771 | 24,269 | |||||||||
Prepaid income taxes |
667 | 1,907 | |||||||||
Deferred income tax benefit |
8,275 | 9,336 | |||||||||
Prepaid expenses and other |
4,508 | 3,727 | |||||||||
Total current assets |
113,179 | 107,371 | |||||||||
Other assets |
|||||||||||
Property, plant & equipment, net |
159,686 | 160,677 | |||||||||
Goodwill, net |
44,118 | 45,070 | |||||||||
Other intangible assets, net |
7,576 | 7,744 | |||||||||
Other assets |
2,915 | 2,785 | |||||||||
Total assets |
$ | 327,474 | $ | 323,647 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities |
|||||||||||
Current portion of long-term debt |
$ | — | $ | 5,570 | |||||||
Accounts payable |
15,341 | 12,059 | |||||||||
Accrued compensation |
14,275 | 15,161 | |||||||||
Accrued profit-sharing retirement plan |
1,993 | 3,904 | |||||||||
Accrual for insurance claims |
5,189 | 5,189 | |||||||||
Accrual for medical insurance claims |
2,872 | 2,882 | |||||||||
Income taxes payable |
5,253 | 2,156 | |||||||||
Other payables and accrued liabilities |
13,309 | 11,139 | |||||||||
Total current liabilities |
58,232 | 58,060 | |||||||||
Other liabilities and deferred credits |
|||||||||||
Long-term debt |
37,037 | 38,168 | |||||||||
Deferred income taxes |
25,561 | 27,455 | |||||||||
Accrued postretirement health care costs |
4,497 | 5,401 | |||||||||
Accrual for insurance claims |
8,076 | 7,296 | |||||||||
Other long-term liabilities |
4,519 | 4,667 | |||||||||
Total other liabilities and deferred credits |
79,690 | 82,987 | |||||||||
Stockholders’ equity |
|||||||||||
Common stock, $0.83 1/3 par value (authorized: 75,000,000
shares; 29,540,526 and 29,156,957 shares outstanding at
June 26, 2004 and December 27, 2003) |
24,616 | 24,296 | |||||||||
Preferred stock, $1.00 par value (authorized: 5,000,000 shares;
0 shares outstanding at June 26, 2004 and December 27, 2003) |
— | — | |||||||||
Additional paid-in capital |
8,526 | 3,690 | |||||||||
Unamortized portion of restricted stock awards |
(444 | ) | (1,116 | ) | |||||||
Retained earnings |
156,271 | 155,007 | |||||||||
Accumulated other comprehensive loss |
583 | 723 | |||||||||
Total stockholders’ equity |
189,552 | 182,600 | |||||||||
Total liabilities and stockholders’ equity |
$ | 327,474 | $ | 323,647 | |||||||
See notes to condensed consolidated financial statements (unaudited).
3
LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Thirteen and Twenty-Six Weeks Ended June 26, 2004 and June 28, 2003
(In thousands, except share and per share data)
| Thirteen | Thirteen | Twenty-Six | Twenty-Six | ||||||||||||||
| Weeks Ended | Weeks Ended | Weeks Ended | Weeks Ended | ||||||||||||||
| June 26, 2004 | June 28, 2003 | June 26, 2004 | June 28, 2003 | ||||||||||||||
Net sales and other operating
revenue |
$ | 152,064 | $ | 143,647 | $ | 296,160 | $ | 276,506 | |||||||||
Cost of sales and operating
expenses: |
|||||||||||||||||
Cost of sales |
81,176 | 73,593 | 160,298 | 144,633 | |||||||||||||
Selling, marketing and delivery |
51,254 | 49,023 | 101,272 | 99,459 | |||||||||||||
General and administrative |
7,861 | 6,666 | 15,261 | 14,437 | |||||||||||||
Provisions for employees’
retirement plans |
1,113 | 1,031 | 1,932 | 2,111 | |||||||||||||
Amortization of intangibles |
— | 192 | 167 | 370 | |||||||||||||
Loss on asset impairment |
— | — | — | 6,354 | |||||||||||||
Other (income)/expense, net |
(52 | ) | 209 | (252 | ) | 379 | |||||||||||
Total costs and expenses |
141,352 | 130,714 | 278,678 | 267,743 | |||||||||||||
Earnings before interest and
income taxes |
10,712 | 12,933 | 17,482 | 8,763 | |||||||||||||
Interest expense, net |
596 | 849 | 1,359 | 1,532 | |||||||||||||
Earnings before income taxes |
10,116 | 12,084 | 16,123 | 7,231 | |||||||||||||
Income taxes |
3,442 | 4,280 | 5,466 | 2,479 | |||||||||||||
Net income |
$ | 6,674 | $ | 7,804 | $ | 10,657 | $ | 4,752 | |||||||||
Earnings per share |
|||||||||||||||||
Basic |
$ | 0.23 | $ | 0.27 | $ | 0.36 | $ | 0.16 | |||||||||
Diluted |
$ | 0.22 | $ | 0.27 | $ | 0.36 | $ | 0.16 | |||||||||
| |
|||||||||||||||||
Weighted average shares
outstanding — basic |
29,432,000 | 29,134,000 | 29,309,000 | 29,116,000 | |||||||||||||
Weighted average shares
outstanding — diluted |
29,751,000 | 29,208,000 | 29,636,000 | 29,254,000 | |||||||||||||
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 Twenty-Six Weeks Ended June 26, 2004 and June 28, 2003
(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 28, 2002 |
29,098,582 | $ | 24,248 | $ | 3,025 | $ | (693 | ) | $ | 155,372 | $ | (1,411 | ) | $ | 180,541 | ||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||||||||
Net income |
— | — | — | — | 4,752 | — | 4,752 | ||||||||||||||||||||||
Unrealized loss on interest rate swap,
net of tax effect of $(36) |
— | — | — | — | — | (60 | ) | (60 | ) | ||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | 1,709 | 1,709 | ||||||||||||||||||||||
Total comprehensive income |
6,401 | ||||||||||||||||||||||||||||
Cash dividends paid to stockholders |
— | — | — | — | (9,316 | ) | — | (9,316 | ) | ||||||||||||||||||||
Issuance of restricted stock, net of
cancellations |
35,100 | 30 | 89 | (238 | ) | — | — | (119 | ) | ||||||||||||||||||||
Balance, June 28, 2003 |
29,133,682 | $ | 24,278 | $ | 3,114 | $ | (931 | ) | $ | 150,808 | $ | 238 | $ | 177,507 | |||||||||||||||
Balance, December 27, 2003 |
29,156,957 | $ | 24,296 | $ | 3,690 | $ | (1,116 | ) | $ | 155,007 | $ | 723 | $ | 182,600 | |||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||||||||
Net income |
— | — | — | — | 10,657 | — | 10,657 | ||||||||||||||||||||||
Unrealized gain on interest rate swap,
net of tax effect of $160 |
— | — | — | — | — | 271 | 271 | ||||||||||||||||||||||
Unrealized loss on forward exchange
contracts, net of tax effect of $(74) |
— | — | — | — | — | (133 | ) | (133 | ) | ||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | (278 | ) | (278 | ) | ||||||||||||||||||||
Total comprehensive income |
10,517 | ||||||||||||||||||||||||||||