COLUMBUS, Ohio, May 1 /PRNewswire-FirstCall/ -- Lancaster Colony Corporation today reported higher sales for the company's third fiscal quarter ended March 31, 2008, compared with the corresponding quarter a year ago. Highlights of the quarter include the following: -- Net sales increased two percent to $270 million versus $266 million in
the third quarter last year. The increase was limited by the
divestiture and closing of glass manufacturing operations over the past
year.
-- Income from continuing operations totaled $8,785,000 compared with
$13,595,000 for the corresponding quarter a year ago. Prior year third
quarter results from continuing operations included pretax
restructuring and impairment charges of approximately $2.4 million
(five cents per share after taxes), including $1.4 million recorded in
cost of sales for the write-down of inventories. These charges related
to the closing of the company's industrial glass operations.
-- Third quarter Specialty Foods sales increased 11 percent in the quarter
to $197 million, benefiting from stronger sales of both retail and
foodservice products as well as from pricing actions taken this year.
Operating income totaled $14.4 million compared to $22.0 million in the
prior year, reflecting record high costs of key commodities during the
third quarter. Compared to the prior year quarter, the adverse impact
of material costs exceeded $18 million.
-- Nonfood operations again had mixed results. Automotive sales grew six
percent to $39.5 million in the third quarter, led by improved sales to
original equipment manufacturers despite some curtailment of customer
production schedules late in the quarter. Automotive operating income
totaled $1.3 million compared to $0.4 million in the third quarter a
year ago. Third quarter Glassware and Candles sales decreased 33
percent to $33.6 million, primarily reflecting the divestiture and
closing of glass operations. Off-season candle sales were down slightly
from a year ago. Segment operating income was essentially breakeven
compared to operating income of $1.0 million in the third quarter last
year.
-- Net income amounted to $8,626,000 including a $159,000 loss from
discontinued operations. In the third quarter last year, net income was
$13,499,000, including a $96,000 loss from discontinued operations. Net
income per diluted share reached 30 cents versus 43 cents in the year-
ago quarter.
-- The company's balance sheet remained strong, with debt at March 31,
2008 representing less than 17 percent of total capitalization.
Nine-month net sales were $861 million compared to $820 million last year. Net income was $40,194,000, or $1.35 per diluted share, including a net loss from discontinued operations of $159,000 or one cent per diluted share. Net income for the nine months a year ago totaled $45,109,000, or $1.42 per diluted share, after reflecting a net loss from discontinued operations of $3,336,000, or $.11 per diluted share. Income from continuing operations for the nine months was $40,353,000, or $1.35 per diluted share, compared to $48,445,000, or $1.53 per diluted share earned in the first nine months last year. Current year-to-date income from continuing operations included pretax income of $2.5 million (five cents per share after taxes) associated with a second quarter distribution under the Continued Dumping and Subsidy Offset Act (CDSOA), a pretax loss on the November 2007 sale of consumer and floral glass operations totaling $5.9 million (13 cents per share after taxes) and a noncash pension settlement charge of $3.0 million (six cents per share after taxes). In the prior year, the pretax CDSOA distribution was $0.7 million (one cent per share after taxes). John B. Gerlach, Jr., chairman and CEO, said, "While generally pleased with our Specialty Foods sales growth and our Automotive progress, substantially higher food commodity costs were far more than our pricing initiatives could overcome. Throughout the current fiscal year, we continued to utilize our cash flow to support shareholder value, investing over $13 million in Specialty Foods capital projects, paying $24.6 million in cash dividends and spending $76.8 million on repurchases of Lancaster Colony common shares." Looking ahead, Mr. Gerlach said, "In our food group, a recently implemented second round of pricing actions should benefit our fiscal fourth quarter, and we anticipate further initiatives becoming effective just after the fiscal year ends. The fourth quarter is a seasonally slow quarter for our candle operations, and the current fiscal year's lower candle production levels will have a near-term adverse impact on operating results despite leading to better-balanced inventory levels. Our automotive operations will likely be challenged by expected production curtailments among original equipment customers." Mr. Gerlach added, "As we continue to explore strategic alternatives for our remaining nonfood operations, we also continue to look for good-fitting food acquisitions." The company's third quarter conference call is scheduled for this morning, May 1, at 10:00 a.m. ET. You may access the call through a live webcast by using the link provided on the company's Internet home page at www.lancastercolony.com. Replays of the webcast will be made available on the company website. Forward-Looking Statements We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). This news release contains various "forward-looking statements" within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words "anticipate," "estimate," "project," "believe," "intend," "plan," "expect," "hope" or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward- looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control including, without limitation: the overall strength of the economy; changes in financial markets; slower than anticipated sales growth; the extent of operational efficiencies achieved; the success of new product introductions; price and product competition; increases in energy and raw-material costs; the reaction of customers or consumers to price increases we may implement; our ability to consummate good-fitting acquisitions; and the uncertainty regarding the effect or outcome of our decision to explore strategic alternatives among our nonfood operations. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements. More detailed statements regarding significant events that could affect our financial results are included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission.
LANCASTER COLONY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (b)
(In thousands except per-share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
Net sales $ 270,276 $ 265,692 $ 861,458 $ 820,088
Cost of sales 234,045 219,991 728,467 674,811
Gross margin 36,231 45,701 132,991 145,277
Selling, general &
administrative expenses 22,615 23,463 70,635 69,324
Restructuring and
impairment charge - 1,004 182 1,004
Operating income 13,616 21,234 62,174 74,949
Interest expense (621) - (2,545) (13)
Interest income and other
- net 290 263 3,240 1,515
Income from continuing
operations before
income taxes 13,285 21,497 62,869 76,451
Taxes based on income 4,500 7,902 22,516 28,006
Income from continuing
operations 8,785 13,595 40,353 48,445
Loss from discontinued
operations - (835) - (4,075)
(Loss) gain on sale of
discontinued operations (159) 739 (159) 739
Total discontinued operations,
net of tax (159) (96) (159) (3,336)
Net income $ 8,626 $ 13,499 $ 40,194 $ 45,109
Net income (loss) per
common share:(a)
Continuing operations-
basic and diluted $ .30 $ .43 $ 1.35 $ 1.53
Discontinued operations-
basic and diluted $ (.01) $ - $ (.01) $ (.11)
Net income-
basic and diluted $ .30 $ .43 $ 1.35 $ 1.42
Cash dividends per
common share $ .28 $ .27 $ .83 $ .80
Weighted average common
shares outstanding:
Basic 29,115 31,531 29,794 31,728
Diluted 29,128 31,560 29,799 31,755
(a) Based on the weighted average number of shares outstanding during
each period.
(b) Certain automotive operations sold in the year ended June 30, 2007
have been reflected as discontinued operations.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited)(b)
(In thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
NET SALES
Specialty Foods $ 197,249 $ 178,212 $ 597,188 $ 543,093
Glassware and Candles 33,577 50,238 147,043 175,325
Automotive 39,450 37,242 117,227 101,670
$ 270,276 $ 265,692 $ 861,458 $ 820,088
OPERATING INCOME
Specialty Foods $ 14,361 $ 22,046 $ 66,444 $ 76,997
Glassware and Candles (38) 987 1,595 4,109
Automotive 1,339 441 3,896 (425)
Corporate expenses (2,046) (2,240) (9,761) (5,732)
$ 13,616 $ 21,234 $ 62,174 $ 74,949
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
March 31, June 30,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 12,252 $ 8,318
Receivables - net of allowance for
doubtful accounts 89,831 92,635
Total inventories 130,191 149,717
Deferred income taxes and other
current assets 31,255 28,241
Total current assets 263,529 278,911
Net property, plant and equipment 193,991 208,431
Other assets 109,393 111,155
Total assets $ 566,913 $ 598,497
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans $ - $ 42,500
Accounts payable 46,463 48,423
Accrued liabilities 42,312 50,867
Total current liabilities 88,775 141,790
Long-term debt 77,500 -
Other noncurrent liabilities and
deferred income taxes 16,966 12,398
Shareholders' equity 383,672 444,309
Total liabilities and
shareholders' equity $ 566,913 $ 598,497
Lancaster Colony Corporation
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