Lancaster Colony Reports Higher Sales and Net Income
COLUMBUS, Ohio, Aug. 18, 2005 -- Lancaster Colony Corporation today reported net income for the fiscal year ended June 30, 2005 of $93,088,000, compared to $80,002,000 earned in the preceding fiscal year. Basic and diluted earnings per share were $2.67 compared to $2.24 a year ago. Net sales for the fiscal year were $1,131 million compared to $1,097 million last year.
Fiscal 2005 results included a $26.2 million pretax distribution (47 cents per share after taxes) under the Continued Dumping and Subsidy Offset Act (CDSOA). In the preceding year, the pretax CDSOA distribution was $2.0 million (three cents per share after taxes). Pretax income related to the liquidation of LIFO inventories carried at substantially lower prior years' costs totaled $1.3 million (two cents per share after taxes) compared to $4.2 million (seven cents per share after taxes) in the previous year. In fiscal 2005, non-cash impairment charges affecting non-food assets totaled $1.6 million before taxes (three cents per share after taxes). Results for the fourth quarter of fiscal 2004 include a pretax charge for asset impairment and related automotive plant closing costs of $1.1 million (two cents per share after taxes).
Fourth quarter net income of $20,479,000, or 60 cents per basic and diluted share, compares with net income of $17,607,000, or 49 cents per basic and diluted share, for the corresponding quarter a year ago. Fourth quarter net sales increased two percent to $276 million versus $270 million in the fourth quarter last year. Pretax LIFO income was $0.4 million (one cent per share after taxes) in the 2005 fourth quarter and $0.8 million (one cent per share after taxes) in the prior year fourth quarter.
Chairman and CEO John B. Gerlach, Jr. said, "We ended the year with solid improvements in fourth quarter sales and operating results. Our Specialty Foods group led the sales growth in the quarter, and our Glassware and Candles segment had better operating results on improved glassware manufacturing efficiencies. We enjoyed lower food commodity costs during the most recent quarter, and our effective tax rate benefited from a change in Ohio tax laws. However, we also experienced higher non-food material costs and faced noticeably higher costs associated with freight and energy."
Specialty Foods sales increased five percent in the fourth quarter to $172.4 million, driven by internally-generated increases in both retail and foodservice sales. Operating income grew three percent to $28.6 million. The strongest retail growth was in produce dressings and dips and in frozen breads and rolls. Several frozen products contributed to the foodservice sales increase. Offsetting much of the quarter's benefits from lower material costs were higher levels of freight and promotional costs. Lower food commodity costs helped the comparisons with the year-ago quarter by about $2 million.
Automotive sales declined three percent to $57.2 million in the fourth quarter. Operating income for the quarter of $2.5 million was level with a year ago, as the prior year fourth-quarter results reflected the $1.1 million plant closing charge. Improved sales of aluminum accessories were offset by lower sales of automotive floor mats. Raw materials costs continued to adversely affect year-over-year comparisons.
Glassware and Candles sales declined one percent for the fourth quarter to $46.2 million. Reflecting the varying amounts of LIFO-related income discussed above, operating income for the quarter was $0.9 million compared to a $1.7 million loss a year ago. This segment's operating results rebounded from unsatisfactory levels a year ago, primarily due to manufacturing improvements in the Oklahoma glassware operation.
Mr. Gerlach said, "We enter fiscal 2006 with a continued focus on new product and packaging development. We believe our recent Specialty Foods marketing success, a reformulated and repackaged line of refrigerated salad dressings, will continue to grow in the new year. Some relatively large new Automotive programs for aluminum accessories and floor mats are beginning to ramp up. Initially in fiscal 2006, food commodities costs should compare favorably to fiscal 2005 levels, although non-food materials comparisons are expected to be unfavorable. Capital expenditures are expected to increase in fiscal 2006 to support the ongoing construction of our new salad dressing facility in Kentucky. We believe that our strong balance sheet and solid cash flows will be adequate to fund our foreseeable capital projects, cash dividends, share repurchases and acquisitions."
The company's fourth quarter conference call is scheduled for this morning, August 18, 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 http://www.lancastercolony.com/ . Replays of the webcast will be made available on the company website.
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," "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, 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 that are based on current expectations. We undertake no obligation to publicly 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 for the year ended June 30, 2004 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,
2005 2004 2005 2004
Net sales $ 275,811 $ 269,642 $1,131,466 $1,096,953
Cost of sales 221,024 216,618 912,003 873,267
Gross margin 54,787 53,024 219,463 223,686
Selling, general &
administrative expenses 24,034 24,412 99,421 97,885
Restructuring and
impairment charge 21 1,058 2,129 1,058
Operating income 30,732 27,554 117,913 124,743
Interest income and other
- net 1,317 438 30,108 3,721
Income before income taxes 32,049 27,992 148,021 128,464
Taxes based on income 11,570 10,385 54,933 48,462
Net income $ 20,479 $ 17,607 $ 93,088 $ 80,002
Net income per common
share:(a)
Basic and diluted $ .60 $ .49 $ 2.67 $ 2.24
Cash dividends per common
share $ .25 $ .23 $ .98 $ .89
Weighted average common
shares outstanding:
Basic 34,291 35,613 34,868 35,708
Diluted 34,348 35,671 34,925 35,778
(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,
2005 2004 2005 2004
NET SALES
Specialty Foods $ 172,447 $ 163,773 $ 673,840 $ 639,226
Glassware and Candles 46,157 46,632 233,505 231,125
Automotive 57,207 59,237 224,121 226,602
$ 275,811 $ 269,642 $1,131,466 $1,096,953
OPERATING INCOME
Specialty Foods $ 28,606 $ 27,897 $ 111,392 $ 109,391
Glassware and Candles 929 (1,719) 7,247 9,298
Automotive 2,496 2,500 6,082 11,980
Corporate expenses (1,299) (1,124) (6,808) (5,926)
$ 30,732 $ 27,554 $ 117,913 $ 124,743
LANCASTER COLONY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
2005 2004
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 184,580 $ 178,503
Receivables - net of allowance for doubtful
accounts 100,351 94,623
Total inventories 164,365 155,076
Deferred income taxes and other current assets 25,109 22,801
Total current assets 474,405 451,003
Net property, plant and equipment 154,147 159,494
Other assets 102,726 102,388
Total assets $ 731,278 $ 712,885
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51,014 $ 47,235
Accrued liabilities 52,832 45,494
Total current liabilities 103,846 92,729
Other noncurrent liabilities and deferred income
taxes 39,706 33,371
Shareholders' equity 587,726 586,785
Total liabilities and shareholders' equity $ 731,278 $ 712,885