COLUMBUS, Ohio, Jan. 31 /PRNewswire/ -- Lancaster Colony Corporation today reported higher sales for the company's second fiscal quarter ended December 31, 2007 compared with the corresponding quarter a year ago. Highlights of the quarter include the following:
-- Net sales increased five percent to $306 million versus $292 million
in the second quarter last year.
-- Income from continuing operations totaled $15,998,000 compared with
$20,360,000 for the corresponding quarter a year ago. Current year
second quarter results from continuing operations included pretax
income of approximately $2.5 million (five cents per share after
taxes) associated with a distribution received under the Continued
Dumping and Subsidy Offset Act (CDSOA), a pretax loss on the
previously announced sale of consumer and floral glass operations
totaling $5.7 million (12 cents per share after taxes) and a noncash
pension settlement charge of $3.0 million (six cents per share after
taxes) recorded in the corporate segment. The CDSOA remittance in the
prior year's quarter totaled approximately $0.7 million pretax (one
cent per share after taxes).
-- Specialty Foods sales increased 12 percent in the quarter to $215.2
million, reflecting both stronger retail and foodservice sales.
Contributing to this growth were increased pricing and the June 2007
acquisition of Marshall's biscuits. The prior year second quarter
retail sales volume was indirectly, but adversely, affected by
consumer food-safety concerns about fresh produce. Operating income
totaled $28.3 million, off eight percent from the year-ago level.
Higher sales and improved pricing were more thanoffset by markedly
higher commodity costs. These costs had an estimated impact on
comparative quarterly results exceeding $10 million.
-- Nonfood operations had mixed results in the quarter. Glassware and
Candles sales declined by 23 percent to $54.3 million as impacted by
softer demand for candles and the mid-November divestiture of certain
glassware operations. The segment's operating loss was $0.8 million,
which included the $5.7 million loss on the divestitures, compared to
operating income of $3.9 million in the year-ago quarter. Automotive
accessory sales improved 24 percent to $36.2 million, reflecting
greater sales to original equipment manufacturers. Higher sales and
pricing brought Automotive operating income to $1.1 million versus the
year ago operating loss of $1.4 million.
-- Net income for the quarter amounted to $15,998,000, compared with
second quarter net income last year of $17,829,000, which included a
loss from discontinued automotive operations of $2,531,000.
-- Net income was 54 cents per diluted share versus 56 cents in the year-
ago quarter, which included a loss from discontinued operations of
eight cents per share. Income from continuing operations was 54 cents
per diluted share versus 64 cents a year ago.
-- The company's balance sheet remained strong, with debt at December 31,
2007 representing approximately 10 percent of total capitalization.
For the six months ended December 31, 2007, net sales were $591 million compared to $554 million for the first six months last year. Net income was $31,568,000, or $1.05 per diluted share. In the prior year net income totaled $31,610,000, or $.99 per diluted share, including a loss from discontinued operations of $3,240,000, or $.10 per diluted share. Income from continuing operations for the six months was also $31,568,000, or $1.05 per diluted share, compared to $34,850,000, or $1.09 per diluted share, earned in the first six months a year ago.
John B. Gerlach, Jr., chairman and CEO, said, "We again had solid consolidated top line growth with both our Specialty Foods and Automotive segments achieving strong sales increases. Operating income benefited from the higher sales, but was adversely affected by higher food ingredient costs as well as the two charges previously mentioned. During the quarter we continued to utilize our cash flows, paying $8.3 million in cash dividends and spending $26.6 million on repurchases of Lancaster Colony common shares."
Looking ahead, Mr. Gerlach said, "Domestic food processors are experiencing raw material costs persisting at unprecedented high levels following sharp increases over the last 12 months. While we are actively pursuing further retail pricing relief, the extent of these raw material increases may contribute to the Specialty Food segment's year-over-year third quarter performance comparing less favorably than in the second quarter. Additional efforts to improve our margins include investments in our ongoing product development process and the operating efficiencies derived from our new Kentucky manufacturing plants."
Mr. Gerlach added, "Automotive results should remain fairly consistent absent further reductions in original equipment production levels. The Glassware and Candles segment will continue to reflect the loss of closed and divested glass operations, lower candle production and a seasonal drop-off in candle sales. Our strategic alternative review of these remaining nonfood operations continues, while at the same time we remain active in identifying potentially good-fitting food acquisitions. We believe these pursuits offer our shareholders the potential to further optimize their long-term value."
The company's second quarter conference call is scheduled for this morning, January 31, 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 the 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, and increases in energy and raw-material costs. Management believes these forward-looking statements to be reasonable; however, undue reliance should not be placed on such statements that are based on current expectations. We undertake no obligation to update such forward- looking statements. Specific influences relating to forward-looking statements are numerous, including the uncertainty regarding the effect or outcome of our decision to explore strategic alternatives among our nonfood operations. More detailed statements regarding significant events that could affect our financial results are included in our annual report on Form 10-K 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 Six Months Ended
December 31, December 31,
2007 2006 2007 2006
Net sales $ 305,612 $ 292,332 $ 591,182 $ 554,396
Cost of sales 258,023 237,405 494,422 454,820
Gross margin 47,589 54,927 96,760 99,576
Selling, general &
administrative expenses 24,080 23,658 48,020 45,861
Restructuring and impairment
charge 46 - 182 -
Operating income 23,463 31,269 48,558 53,715
Interest expense (966) (13) (1,924) (13)
Interest income and other - net 2,788 890 2,950 1,252
Income from continuing
operations before income
taxes 25,285 32,146 49,584 54,954
Taxes based on income 9,287 11,786 18,016 20,104
Income from continuing
operations 15,998 20,360 31,568 34,850
Loss from discontinued
operations, net of tax - (2,531) - (3,240)
Net income $ 15,998 $ 17,829 $ 31,568 $ 31,610
Net income (loss) per
common share:(a)
Continuing operations-
basic and diluted $ .54 $ .64 $ 1.05 $ 1.09
Discontinuing operations-
basic and diluted $ - $ (.08) $ - $ (.10)
Net income-
basic and diluted $ .54 $ .56 $ 1.05 $ .99
Cash dividends per common
share $ .28 $ .27 $ .55 $ .53
Weighted average common
shares outstanding:
Basic 29,855 31,735 30,133 31,827
Diluted 29,860 31,770 30,140 31,853
(a) Based on the weighted average number of shares outstanding during each
period.
(b) Certain automotive operations sold in the yearended June 30, 2007
have been reflected as discontinued operations.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (Unaudited)(b)
(In thousands)
Three Months Ended Six Months Ended
December 31, December 31,
2007 2006 2007 2006
NET SALES
Specialty Foods $ 215,150 $ 192,594 $ 399,939 $ 364,881
Glassware and Candles 54,297 70,581 113,466 125,087
Automotive 36,165 29,157 77,777 64,428
$ 305,612 $ 292,332 $ 591,182 $ 554,396
OPERATING INCOME
Specialty Foods $ 28,309 $ 30,769 $ 52,083 $ 54,951
Glassware and Candles (780) 3,923 1,633 3,122
Automotive 1,116 (1,429) 2,557 (866)
Corporate expenses (5,182) (1,994) (7,715) (3,492)
$ 23,463 $ 31,269 $ 48,558 $ 53,715
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
December 31, June 30,
2007 2007
ASSETS
Current assets:
Cash and cash equivalents $ 4,464 $ 8,318
Receivables - net of allowance for
doubtful accounts 93,805 92,635
Total inventories 128,126 149,717
Deferred income taxes and other
current assets 27,830 28,241
Total current assets 254,225 278,911
Net property, plant and equipment 198,418 208,431
Other assets 109,977 111,155
Total assets $ 562,620 $ 598,497
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans $ - $ 42,500
Accounts payable 43,809 48,423
Accrued liabilities 44,113 50,867
Total current liabilities 87,922 141,790
Long-term debt 47,600 -
Other noncurrent liabilities and
deferred income taxes 17,433 12,398
Shareholders' equity 409,665 444,309
Total liabilities and
shareholders' equity $ 562,620 $ 598,497
Lancaster Colony Corporation