MARZETTI CO — Interim / Quarterly Report 1995

Nov 9, 1995

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------- ------ Commission file number 0-4065-1 LANCASTER COLONY CORPORATION (Exact name of registrant as specified in its charter) OHIO 13-1955943 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 37 WEST BROAD STREET, COLUMBUS, OHIO 43215 (Address of principal executive offices) (Zip Code) 614-224-7141 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of September 30, 1995, there were approximately 29,584,000 shares of common stock, no par value per share, outstanding. 1 of 9 2 LANCASTER COLONY CORPORATION AND SUBSIDIARIES INDEX

2 of 9 3 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS

See Notes to Consolidated Condensed Financial Statements 3 of 9 4 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

See Notes to Consolidated Condensed Financial Statements 4 of 9 5 LANCASTER COLONY CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

See Notes to Consolidated Condensed Financial Statements 5 of 9 6 LANCASTER COLONY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 (1) The interim consolidated condensed financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim consolidated condensed financial statements are considered to be of a normal recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended June 30, 1995. (2) Net income per common share is computed based on the weighted average number of shares of common stock and common stock equivalents (stock options) outstanding during each period. 6 of 9 7 LANCASTER COLONY CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 RESULTS OF OPERATIONS For the quarter ended September 30, 1995, net sales totaled $200,902,000 compared to $189,130,000 recorded in the corresponding period of 1994. This 6% increase primarily resulted from the continuing growth of the Glassware and Candles segment. The Specialty Foods segment also reflected increased net sales as led by a greater volume of foodservice products. Total net sales of the Automotive segment declined as a result of a weakening in the markets for both original equipment and aftermarket products. On a consolidated basis, the gross margin percentage for the 1995 period of 29.5% declined from the 30.1% recorded during the comparable 1994 quarter. The overall decline reflects improved margins in the Glassware and Candles segment, offset by declining margins in the Automotive and Specialty Foods segments. The improved margins in the Glassware and Candles segment were achieved as a result of a more profitable sales mix and the contribution of volume-driven efficiencies. However, the Automotive segment experienced notably reduced margins as generally higher unit costs of production resulted from the presence of greater raw material prices and the effects of curtailed production schedules on overhead absorption. Certain of these increased raw materials costs have moderated going into the quarter ending December 31, 1995. The increasing proportion of foodservice sales within the Specialty Foods segment continues to adversely impact the gross margins of this segment. Selling, general and administrative expenses for the three months ended September 1995 totaled $33,424,000 or 16.6% of net sales compared to $31,574,000 or 16.7% of net sales for the three months ended September 1994. Growth in the Glassware and Candles segment contributed to the overall increase in these expenses. On a consolidated basis, the foregoing factors combined to generate pretax net income of $25,264,000 for the three months ended September 1995 compared to $25,136,000 in the corresponding period of 1994. With the effective tax rate remaining essentially unchanged from that of the prior year, net income for the 1995 quarter totaled $15,408,000 compared to $15,320,000 in 1994. FINANCIAL CONDITION For the three months ended September 30, 1995, net cash provided by operating activities totaled $2,825,000 compared to $3,569,000 used in operating activities during the corresponding period of 1994. During the 1995 period, cash was required to support increased levels of accounts receivable and inventory resulting primarily from the growth and certain seasonal requirements of the Glassware and Candles segment. A portion of the overall increase in accounts receivable and inventory was funded by corporate short-term bank borrowings that totaled $12,500,000 as of September 30. Other significant uses of cash during the most recent quarter included $8,952,000 for the repurchase of common stock as well as $9,474,000 for capital expenditures. The most significant of the latter expenditures related to the construction of expanded and enhanced distribution facilities at the Company's candle manufacturing facility in Leesburg, Ohio. Management anticipates that cash from future operating activities and cash available from the currently 7 of 9 8 available discretionary bank credit lines will be adequate to meet the Company's foreseeable cash requirements over the balance of fiscal 1996. Cash utilized for the payment of dividends in the most recent quarter totaled $4,437,000 compared to $3,623,000 in the corresponding 1994 quarter. This increase was the result of cash dividends per share increasing from $.12 per share to $.15 per share. PART II. OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibit 27 - Financial Data Schedule. (b) Reports on Form 8-K - There were no reports filed on Form 8-K for the three months ended September 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LANCASTER COLONY CORPORATION Date: November 9, 1995 BY:/S/John B. Gerlach ------------------------- --------------------------- JOHN B. GERLACH Chairman, Chief Executive Officer and Principal Financial Officer Date: November 9, 1995 BY:/S/John L. Boylan ------------------------- JOHN L. BOYLAN Treasurer and Assistant Secretary 8 of 9