Lancaster Colony Reports Fiscal Year And Fourth Quarter Results
COLUMBUS, Ohio, Aug. 19, 2004 -- Lancaster Colony Corporation today reported that net income for the fiscal year ended June 30, 2004, totaled $80,002,000, compared to $112,546,000 earned in the preceding fiscal year. Diluted earnings per share were $2.24 compared to $3.11 a year ago. Net sales for the most recent fiscal year were $1,097 million compared to $1,107 million last year.
The most recent year's results included pretax income of $2.0 million (three cents per share after taxes) associated with a second quarter distribution under the Continued Dumping and Subsidy Offset Act (CDSOA). In the preceding year, the pretax CDSOA distribution was $39.2 million (67 cents per share after taxes). Also received in the current year's second quarter was a pretax bad-debt recovery of $1.2 million (two cents per share after taxes). Pretax income related to the liquidation of LIFO inventories carried at substantially lower prior years' costs totaled $4.2 million (seven cents per share after taxes) compared to $7.0 million (12 cents per share after taxes) in the previous year. The prior year's results also included a pretax provision of $4.9 million (eight cents per share after taxes) for the restructuring of the company's consumer glassware business.
Fourth quarter net income of $17,607,000 or 49 cents per basic and diluted share compares with net income of $21,964,000 or 61 cents per basic and diluted share for the corresponding quarter a year ago. Fourth quarter net sales increased two percent to $270 million versus net sales of $264 million in the fourth quarter last year.
Net income for the latest quarter included pretax LIFO-related income of $0.8 million (one cent per share after taxes). In the fourth quarter last year, net income included a similar LIFO pretax benefit of $1.9 million (three cents per share after taxes). Also included in the fourth quarter and 2004 fiscal year results were pretax asset impairment and related plant closing costs totaling $1.1 million (two cents per share after taxes) associated with the consolidation of two floor mat manufacturing operations.
Chairman and CEO John B. Gerlach, Jr. said, "We were pleased with our continued strong financial position despite the year's disappointing non-food operating results. Our non-food operations clearly need to demonstrate progress toward improved profitability in fiscal 2005. Our Specialty Foods sales growth was achieved in the face of a more challenging market environment. We continue to strive to reduce our sourcing and production costs whenever possible in light of higher raw material costs and markets that do not allow for much pricing flexibility."
Specialty Foods sales increased four percent in the fourth quarter to $164 million with foodservice volumes running ahead of the comparable quarter a year earlier. Operating income was down 13 percent to $27.9 million. Mr. Gerlach said, "Contributing to the segment's higher sales were frozen garlic breads, foodservice products and the incremental sales added by our December 2003 acquisition of Warren Frozen Foods. Retail volumes were affected by competitive conditions and the consumer focus on reducing carbohydrate consumption. Offsetting our overall sales growth were higher soybean oil and dairy-related costs as well as a less favorable sales mix. We estimate that commodity costs hurt our comparisons by as much as $4 million in the quarter and $11 million for the year."
Automotive sales declined five percent to $59 million in the fourth quarter. Operating income for the quarter declined to $2.5 million from $4.0 million a year ago and reflects the $1.1 million plant closing charge. Mr. Gerlach stated, "Fourth quarter and fiscal year sales were affected by the loss of an OEM aluminum accessories program that was not fully offset by other gains. Raw materials costs remained above year-ago levels, and lower production has adversely affected overhead absorption."
Glassware and Candles sales increased six percent for the fourth quarter to $47 million. Operating results for the quarter declined to a $1.7 million loss compared to income of $0.2 million a year ago, reflecting the varying amounts of LIFO-related income. Mr. Gerlach said, "For the second straight quarter, a modest increase in candle sales was particularly encouraging given the lackluster market and the prior year's benefit from a broad new candle line. Lower production levels, including downtime associated with extending the life of a glass-melting tank, and competitive pricing actions led to compressed margins. Glass manufacturing remained inefficient, leading us to restructure certain processes in July to reduce complexity and increase productivity. Moving forward, our ability to improve operational performance will influence our assessment of the need for further action."
Mr. Gerlach concluded, "Raw material costs are likely to have a continuing effect through the first half of fiscal 2005. We also see challenges associated with highly competitive OEM market conditions, uneven glassware productivity and the current popularity of lower carbohydrate diets. A number of factors leave us guardedly optimistic about fiscal 2005, including new customer-specific non-food programs, several new food products and the benefit of cost-saving programs implemented in several operations. For fiscal 2005, capital expenditures will probably increase over fiscal 2004 due to the projected start of a large capacity enhancement project for dressings and sauces. Our strong balance sheet and solid cash flows should be more than adequate to fund our capital projects, acquisition opportunities, cash dividends and share repurchases."
The company's fourth quarter conference call is scheduled for this morning, August 19, 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.
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, or limited, 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 that 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 STATEMENTS OF INCOME
(In thousands except per-share amounts)
Three Months Ended Fiscal Year Ended
June 30, June 30,
2004 2003 2004 2003
Net sales $ 269,642 $ 263,775 $ 1,096,953 $ 1,106,800
Cost of sales 216,618 205,406 873,267 862,940
Gross margin 53,024 58,369 223,686 243,860
Selling, general &
administrative expenses 24,412 23,281 97,885 99,032
Restructuring and
impairment charge 1,058 24 1,058 4,885
Operating income 27,554 35,064 124,743 139,943
Interest income and other
- net 438 451 3,721 40,858
Income before income
taxes 27,992 35,515 128,464 180,801
Taxes based on income 10,385 13,551 48,462 68,255
Net income $ 17,607 $ 21,964 $ 80,002 $ 112,546
Net income per common
share:(a)
Basic $ .49 $ .61 $ 2.24 $ 3.11
Diluted $ .49 $ .61 $ 2.24 $ 3.11
Cash dividends per
common share $ .23 $ .20 $ .89 $ .78
Weighted average common
shares outstanding:
Basic 35,613 35,808 35,708 36,184
Diluted 35,671 35,873 35,778 36,243
(a) Based on the weighted average number of shares outstanding during each
period.
LANCASTER COLONY CORPORATION
BUSINESS SEGMENT INFORMATION
(In thousands)
Three Months Ended Fiscal Year Ended
June 30, June 30,
2004 2003 2004 2003
NET SALES
Specialty Foods $ 163,773 $ 157,086 $ 639,226 $ 609,994
Glassware and
Candles 46,632 44,200 231,125 251,437
Automotive 59,237 62,489 226,602 245,369
$ 269,642 $ 263,775 $ 1,096,953 $ 1,106,800
OPERATING INCOME
Specialty Foods $ 27,897 $ 32,154 $ 109,391 $ 116,068
Glassware and Candles (1,719) 180 9,298 12,432
Automotive 2,500 3,970 11,980 17,351
Corporate expenses (1,124) (1,240) (5,926) (5,908)
$ 27,554 $ 35,064 $ 124,743 $ 139,943
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
2004 2003
ASSETS
Current assets:
Cash and equivalents $ 178,503 $ 142,847
Receivables - net of allowance
for doubtful accounts 94,623 88,583
Total inventories 155,076 159,412
Deferred income taxes and other current
assets 22,803 23,543
Total current assets 451,005 414,385
Net property, plant and equipment 159,494 161,111
Other assets 102,388 92,220
Total assets $ 712,887 $ 667,716
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 47,383 $ 41,983
Accrued liabilities 45,348 42,940
Total current liabilities 92,731 84,923
Other noncurrent liabilities and
deferred taxes 33,371 35,128
Shareholders' equity 586,785 547,665
Total liabilities and shareholders'
equity $ 712,887 $ 667,716