Lancaster Colony Reports Third Quarter, Nine
Months Results
COLUMBUS, Ohio, May 1 Lancaster Colony Corporation today reported net sales for the
company's third fiscal quarter ended March 31, 2001, increased four percent to
$272 million compared to net sales of $262 million achieved in the third
quarter last year. Net income was $19,453,000, down three percent from
$20,102,000 earned in the corresponding quarter a year ago. Benefiting from
the company's share repurchases, basic and diluted earnings per share amounted
to 52 cents compared to 51 cents in 2000. The prior year's third quarter
included a pretax expense of approximately $5 million, or eight cents per
share, related to the bankruptcy of a Specialty Foods customer.
For the nine months ended March 31, 2001, net income reached $70,288,000
compared to $75,795,000 earned in the corresponding period a year ago. Basic
and diluted earnings per share were $1.86 for the nine months compared to
$1.90 a year ago. Net sales were $848 million versus $845 million for the nine
months last year. Although not affecting net income or earnings per share, the
accompanying financial information reflects the reclassification in all
periods of certain selling expenses to a reduction in net sales as is now
required by recently issued accounting standards.
John B. Gerlach, Jr., chairman and CEO of Lancaster Colony, said, "We were
pleased that our third quarter sales reached a record high despite the
unfavorable economic environment. While our operating results were
disappointing in light of the sales increase, earnings for both the quarter
and nine months were substantially impacted by record high natural gas costs."
Sales growth was again led by the Specialty Foods segment, with a
14 percent increase in third quarter net sales. Mr. Gerlach commented, "This
segment's top line growth continued in both retail and foodservice channels,
boosted by the success of our frozen bread lines. We were also pleased by the
contribution from the Sister Schubert's frozen roll operations acquired last
September. The Mamma Bella frozen bread lines acquired in late March had
little impact on the third quarter." The segment's operating income for the
quarter increased 58 percent. Excluding the effect of the prior year's bad
debt provision, operating income increased 17 percent.
Net sales of the Glassware and Candles segment achieved a four percent
increase for the quarter although segment operating income declined
34 percent. Mr. Gerlach said, "The modest sales increase was a welcome
turnaround from the declines experienced in the first two quarters of the
current fiscal year. During the third quarter, several new candle programs
were successfully launched and our glassware lines posted improved sales
volumes. Operating results were adversely affected by increased competition
and much higher energy costs incurred in producing glassware."
Affected by the general weakness in automobile and truck sales, the
company's Automotive segment experienced declines in sales and operating
income for the quarter. Mr. Gerlach noted, "While many others in the industry
saw a similar sales trend and incurred operating losses in a very difficult
quarter, our Automotive segment remained profitable. Although we do not
anticipate that our segment sales will return to year ago levels in the fourth
quarter, we are focused on driving out unnecessary costs from this business."
Mr. Gerlach concluded, "We are obviously pleased with our food operations.
Looking forward, the group should continue to benefit from the Sister
Schubert's and Mamma Bella operations. Our non-food consumer operations
continue to face a challenging retail environment, although we are encouraged
by the expectations of many experts that the second half of calendar 2001
should enjoy further economic recovery. Concerning the quarter ending June 30,
we are optimistic of again achieving increased sales and seeing earnings per
share at a level at least equal with that of a year ago. The strength of both
our balance sheet and cash flows provides us with substantial operating
flexibility to face our foreseeable challenges and opportunities."
The company's third quarter conference call is scheduled for this morning,
May 1, at 10:00 a.m. EDT. The call may be accessed through a live webcast by
using the link provided on the company's home page at http://www.lancastercolony.com.
The webcast will be archived and available through May 15 on the company's
website.
This news release contains forward-looking statements related to future
growth and earnings opportunities. Such statements are based upon certain
assumptions and assessments made by management of the company in light of its
experience and perception of historical trends, current conditions, expected
future developments and other factors it believes to be appropriate. Actual
results may differ as a result of factors over which the company has no
control including the strength of the economy, slower than anticipated sales
growth, the extent of operational efficiencies achieved, the success of new
product introductions, price and product competition, and increases in raw
materials costs. Management believes these forward-looking statements to be
reasonable; however, undue reliance should not be placed on such statements,
which are based on current expectations. The company undertakes no obligation
to publicly update such forward-looking statements. More detailed statements
regarding significant events which could affect the company's financial
results are included in the company's Forms 10-K and 10-Q filed with the
Securities and Exchange Commission.
LANCASTER COLONY CORPORATION
CONSOLIDATED SUMMARY OF SALES AND EARNINGS (UNAUDITED)
(In thousands except per-share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
2001 2000 2001 2000
Net Sales(b) $272,270 $261,833 $848,202 $ 845,024
Cost of Sales 196,166 184,241 605,836 588,913
Gross Margin 76,104 77,592 242,366 256,111
Selling, General
& Administrative
Expenses(b) 44,150 44,982 126,929 132,049
Operating Income 31,954 32,610 115,437 124,062
Other Income (Expense):
Interest Expense (116) (245) (1,029) (1,503)
Interest Income and
Other -- Net (324) 187 (396) (35)
Income Before Income
Taxes 31,514 32,552 114,012 122,524
Taxes Based on Income 12,061 12,450 43,724 46,729
Net Income $ 19,453 $ 20,102 $ 70,288 $ 75,795
Net Income Per
Common Share:(a)
Basic $ 0.52 $ 0.51 $ 1.86 $ 1.90
Diluted $ 0.52 $ 0.51 $ 1.86 $ 1.90
Cash Dividends Per
Common Share $ 0.17 $ 0.16 $ 0.50 $ 0.47
Weighted Average
Common Shares
Outstanding:
Basic 37,603 39,360 37,735 39,855
Diluted 37,620 39,410 37,746 39,926
(a) Based on the weighted average number of shares outstanding during each
period.
(b) Certain current year and prior year amounts have been reclassified
from selling expenses to a reduction in net sales in order to conform with
the recent consensus reached by the Emerging Issues Task Force("EITF") on
EITF 00-22, Issue 3.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION (UNAUDITED)
(In thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
2001 2000 2001 2000
NET SALES
Specialty Foods $133,026 $116,992 $400,196 $360,665
Glassware and
Candles 76,931 74,245 268,329 291,821
Automotive 62,313 70,596 179,677 192,538
$272,270 $261,833 $848,202 $845,024
OPERATING INCOME
Specialty Foods $ 22,716 $ 14,356 $ 77,746 $ 57,931
Glassware and
Candles 10,528 15,900 41,157 64,677
Automotive 180 3,686 1,108 5,770
Corporate Expenses (1,470) (1,332) (4,574) (4,316)
$ 31,954 $ 32,610 $ 115,437 $ 124,062
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, June 30,
2001 2000
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $ 7,171 $ 2,656
Receivables -- net of
allowance for doubtful
accounts 132,341 118,991
Total inventories 177,054 175,480
Prepaid expenses and
other current assets 21,314 18,768
Total current assets 337,880 315,895
Net property, plant and
equipment 175,840 172,384
Other assets 81,769 43,565
Total assets $595,489 $531,844
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-
term debt and short-
term bank loans $ 23,545 $ 8,785
Accounts payable 49,585 43,690
Accrued liabilities 53,257 44,000
Total current
liabilities 126,387 96,475
Long-term debt -- less
current portion 2,495 3,040
Other noncurrent liabil-
ities and deferred taxes 18,804 16,846
Shareholders' equity 447,803 415,483
Total liabilities and
shareholders' equity $595,489 $531,844
SUBJECT TO YEAR-END AUDIT.
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