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 | | LANCASTER COLONY REPORTS THIRD QUARTER SALES AND EARNINGS | | | Lancaster Colony Corporation | | 01/05/2007 | | | Lancaster Colony Corporation (Nasdaq: LANC) today reported higher sales, net income, income from continuing operations and net income per share for the company's third fiscal quarter ended March 31, 2007, compared with the corresponding quarter a year ago. Highlights include the following:
-- Third quarter net sales increased four percent to $287 million versus $276 million in the third quarter last year. -- Net income amounted to $13,499,000, including $1,096,000 of income from discontinued operations, which includes the gain on the sale of an automotive operation in March 2007. Third quarter net income in fiscal 2006 was $11,774,000, including income from discontinued operations of $398,000. -- Income from continuing operations totaled $12,403,000 compared with $11,376,000 for the corresponding quarter a year ago. Current 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 relate to the previously announced closing of the company's industrial glass operations. Prior year third quarter results included a noncash asset impairment charge related to the company's automotive segment totaling approximately $0.6 million before taxes (one cent per share after taxes). -- Net income reached 43 cents per diluted share, including three cents of income from discontinued operations, which includes the gain on the sale of an automotive operation, versus 35 cents in the year-ago quarter, including one cent of income from discontinued operations. Income from continuing operations was 39 cents per diluted share versus 34 cents a year ago. -- The company's balance sheet remains strong and debt-free. Nine-month net sales in the current year were $880 million compared to $863 million last year. Net income was $45,109,000, or $1.42 per diluted share, including $1,558,000, or five cents per diluted share of income from discontinued operations, which includes the gain on the sale of an automotive operation in March 2007. Net income totaled $60,050,000, or $1.78 per diluted share in the prior year including income from discontinued operations of $1,132,000, or three cents per diluted share. Income from continuing operations for the nine months was $43,551,000, or $1.37 per diluted share compared to $58,918,000, or $1.74 per diluted share earned in the first nine months a year ago.
Current year-to-date results included pretax income of $0.7 million (one cent per share after taxes) associated with a second quarter distribution under the Continued Dumping and Subsidy Offset Act (CDSOA). In the prior year, the pretax CDSOA distribution was $11.4 million (22 cents per share after taxes).
John B. Gerlach, Jr., chairman and CEO, said, "We were generally pleased with our top line performance during the quarter, particularly in the Specialty Foods segment. Operating income benefited from a fundamental improvement in Glassware and Candles earnings. During the quarter we continued to utilize our cash flow, investing $14.9 million in Specialty Foods capital projects, paying $8.5 million in cash dividends and spending $13.5 million on repurchases of Lancaster Colony common shares."
Third quarter Specialty Foods sales increased six percent to $178 million, reflecting stronger retail and foodservice sales, with a mild boost from Easter falling earlier in the fourth quarter this year. Operating income totaled $22.0 million, essentially level with the year ago amount. The quarter's higher sales volume was offset by a trend toward markedly higher commodity costs, as well as costs associated with launching additional customer programs at a new salad dressing facility.
Third quarter Glassware and Candles sales increased four percent to $50.2 million, largely driven by higher candle sales. Segment operating income totaled $1.0 million compared to an operating loss of $2.6 million in the year-ago quarter. Prior year results were adversely affected by over $3 million in unabsorbed pretax costs relating to an extended idling of the company's Oklahoma glassware facility. The current year's higher sales volume and solid operating performance also contributed to the improved results, with the quarter's plant closing charges offsetting some of those benefits.
Automotive sales declined one percent to $58.4 million in the third quarter. Improved sales of floor mats were offset by comparatively weaker sales of original equipment aluminum accessories. The segment's operating loss was $1.4 million in the current year third quarter as compared to an operating loss of $0.7 million a year ago. In addition to the lower sales, operating results were adversely affected by higher aluminum costs and approximately $1 million in costs related to a labor stoppage that was settled in mid-February. Prior year third quarter Automotive results included a noncash impairment charge of approximately $0.6 million related to idle floor mat manufacturing equipment.
Looking ahead, Mr. Gerlach said, "We are still assessing consumer acceptance of several recent Specialty Foods product introductions, including T. Marzetti hummus in grocery produce departments, New York brand croutons for the center-of-store shelves and Sister Schubert's wheat rolls in the frozen aisle. However, we expect operating results of the segment to be challenged in the foreseeable future by significantly higher food commodity costs. The fourth quarter is a seasonally slow quarter for our Glassware and Candles segment, and we anticipate incurring additional charges associated with our industrial glass plant closure, which could be in excess of $1 million."
Mr. Gerlach added, "The divestiture and plant closing that we announced in March are consistent with our intent to focus on our food businesses. While we continue the process of exploring strategic alternatives for nonfood operations, we also continue to look for good-fitting food acquisitions. We believe these pursuits offer our shareholders the greatest potential for long- term value."
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.
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, 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) (In thousands except per-share amounts) Three Months Ended Nine Months Ended March 31, March 31, 2007 2006 2007 2006 Net sales $286,896 $275,880 $880,196 $862,511 Cost of sales 241,176 235,211 736,518 711,288 Gross margin 45,720 40,669 143,678 151,223 Selling, general & administrative expenses 25,322 23,192 75,230 73,611 Restructuring and impairment charge 1,005 575 1,050 618 Operating income 19,393 16,902 67,398 76,994 Interest income and other - net 269 779 1,519 14,811 Income before income taxes 19,662 17,681 68,917 91,805 Taxes based on income 7,259 6,305 25,366 32,887 Income from continuing operations 12,403 11,376 43,551 58,918 Income from discontinued operations 357 398 819 1,132 Gain on sale of discontinued operations 739 - 739 - Total discontinued operations, net of tax 1,096 398 1,558 1,132 Net income $ 13,499 $ 11,774 $ 45,109 $ 60,050 Net income per common share:(a) Continuing operations - basic $ .39 $ .34 $ 1.37 $ 1.75 Discontinued operations - basic .03 .01 .05 .03 Total - basic $ .43 $ .35 $ 1.42 $ 1.78 Continuing operations - diluted $ .39 $ .34 $ 1.37 $ 1.74 Discontinued operations - diluted .03 .01 .05 .03 Total - diluted $ .43 $ .35 $ 1.42 $ 1.78 Cash dividends per common share $ .27 $ .26 $ .80 $ 2.77 Weighted average common shares outstanding: Basic 31,531 33,214 31,728 33,757 Diluted 31,560 33,236 31,755 33,795 (a) Based on the weighted average number of shares outstanding during each period. LANCASTER COLONY CORPORATION BUSINESS SEGMENT INFORMATION (Unaudited) (In thousands) Three Months Ended Nine Months Ended March 31, March 31, 2007 2006 2007 2006 NET SALES Specialty Foods $ 178,212 $ 168,233 $ 543,093 $ 527,272 Glassware and Candles 50,238 48,457 175,325 174,001 Automotive 58,446 59,190 161,778 161,238 $ 286,896 $ 275,880 $ 880,196 $ 862,511 OPERATING INCOME Specialty Foods $ 22,046 $ 22,102 $ 76,997 $ 79,520 Glassware and Candles 987 (2,586) 4,109 3,034 Automotive (1,400) (727) (7,976) (78) Corporate expenses (2,240) (1,887) (5,732) (5,482) $ 19,393 $ 16,902 $ 67,398 $ 76,994 LANCASTER COLONY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) March 31, June 30, 2007 2006 ASSETS Current assets: Cash, cash equivalents and short-term investments $ 7,966 $ 41,815 Receivables - net of allowance for doubtful accounts 109,326 105,177 Total inventories 151,482 157,703 Deferred income taxes and other current assets 30,290 26,032 Total current assets 299,064 330,727 Net property, plant and equipment 201,518 185,012 Other assets 102,627 101,965 Assets of discontinued operations - 10,317 Total assets $ 603,209 $ 628,021 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 48,798 $ 46,426 Accrued liabilities 51,230 55,465 Total current liabilities 100,028 101,891 Other noncurrent liabilities and deferred income taxes 28,191 30,100 Liabilities of discontinued operations - 1,609 Shareholders' equity 474,990 494,421 Total liabilities and shareholders' equity $ 603,209 $ 628,021 SOURCE Lancaster Colony Corporation | |
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