EX-99.1 2 g05485exv99w1.htm EX-99.1 PRESS RELEASE EX-99.1 Press Release
 

Exhibit 99.1
     
 
  CONTACTS:
 
  Russell G. Allen, Director – Planning & IR (704) 557-8219
 
  Joseph Calabrese, Financial Relations Board (212) 827-3772
IMMEDIATE RELEASE
February 12, 2007
LANCE, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2006
  •   Reports annual net revenue of $748.0 million, an increase of 10% from 2005 net revenue of $679.3 million, and earnings per diluted share were $0.60, including special items, and $0.66 per diluted share excluding special items.
 
  •   Announces plans to exit Company owned and operated vending business
 
  •   Provides estimates for the full year 2007
 
  •   Declares regular quarterly cash dividend of $0.16 per share
Charlotte, NC, — February 12, 2007 — Lance, Inc. (Nasdaq-GS: LNCE) today reported 2006 full year net sales of $748.0 million, including discontinued operations, an increase of 10% over its prior year net sales of $679.3 million, including discontinued operations. Excluding the impact of an extra selling week in 2005, the sales increase in 2006 was approximately 11% over the prior year, with branded product sales increasing 14% and non-branded product sales up 7%. Net revenue from continuing operations was $730.1 million for 2006 compared to $651.4 million for 2005, an increase of 12.1%, or 13.5% excluding the extra selling week in 2005. The growth in branded product sales was driven largely by incremental Tom’s business and continued strength in sales of Lance® crackers and Cape Cod® potato chips. The growth in non-branded product sales was driven by additional contract manufacturing business, the Tom’s acquisition and modest growth in private label product sales.
Net Income for full year 2006 was $18.5 million, or $0.60 per diluted share, compared to the prior year net income of $18.5 million, or $0.61 per diluted share. Net income for 2006 excluding special items was $20.3 million, or $0.66 per diluted share, compared with the prior year’s net income of $22.4 million, or $0.74 per diluted share, excluding special items. Special items recorded in 2006 included employee retention payments and other charges related to the Tom’s integration. Special items recorded in 2005 included employee retention payments and asset impairment charges related to the Tom’s integration and CEO severance costs.
David V. Singer, President and Chief Executive Officer, commented “I am extremely pleased with the ground work that was accomplished during 2006 towards positioning our Company for improved operating results in the future. Lance implemented a significant number of initiatives during 2006 focused on improving our operational efficiency and developing a solid foundation for profitable growth. During the year we strengthened our management team, integrated the Tom’s acquisition into our manufacturing, distribution and administrative infrastructure, identified and began

 

 

implementing enhancements to our supply chain and began the design and implementation of a new enterprise-resource-planning (ERP) solution. We also achieved record sales for the Company in 2006, reflecting the incremental impact of the Tom’s acquisition along with continued growth in our core Lance® and Cape Cod® branded products. While the impact of our efforts to date is not fully demonstrated in our current financial results, we continue to make progress on operational initiatives that we are confident will support significant improvements in our growth and profitability over the next several years.”
Fourth Quarter Results
Net sales were $175.8 million for the 2006 fourth quarter including discontinued operations, a decline of 9% over the prior year’s fourth quarter net sales of $193.8 including discontinued operations. Excluding the impact of the extra selling week in the 2005 fourth quarter, the total sales decline was approximately 5%. Net income for the fourth quarter of 2006 was $5.6 million or $0.18 per diluted share, compared to net income in the prior year’s fourth quarter of $1.5 million, or $0.05 per diluted share. Fourth quarter 2005 net income, excluding special items related to the Tom’s acquisition was $3.8 million or $0.13 per diluted share.
Discontinuation of Company-Owned and Operated Vending Business
The Company also announced its decision to exit the Company-owned and operated vending business, and is now reporting the net impact of this business as a discontinued operation. The decision to exit the business is consistent with strategic plans to improve overall operational efficiency and profitability, allowing the Company to reallocate resources to channels of business with stronger growth and profit potential. In 2006, the Company-owned and operated vending business represented approximately 2% of the Company’s total sales and reduced earnings by $0.01 per share. The Company expects that the impact of this discontinued operation will be neutral to slightly dilutive to earnings per share during 2007.
The Company believes that there will not be material impairment charges as we disposition the assets related to this business. A reconciliation of reported results, including and excluding special items and reflecting discontinued operations follows.

 

 

                                 
    Year Ended     Year Ended  
    December 30, 2006     December 31, 2005  
            Earnings             Earnings  
            Per Diluted             Per Diluted  
    Sales     Share     Sales     Share  
Reported Results
                                
Results from Continuing Operations
   $ 730.1     $ 0.61     $ 651.4     $ 0.58  
Impact of Discontinued Operations
     17.9       (0.01 )     27.9       0.03  
 
                        
Results Including Discontinued Operations
   $ 748.0     $ 0.60     $ 679.3     $ 0.61  
 
                                
Results Excluding Special Items
                                
Results from Continuing Operations
   $ 730.1     $ 0.67     $ 651.4     $ 0.71  
Impact of Discontinued Operations
     17.9       (0.01 )     27.9       0.03  
 
                        
Results Including Discontinued Operations
   $ 748.0     $ 0.66     $ 679.3     $ 0.74  
                                 
    Quarter Ended     Quarter Ended  
    December 30, 2006     December 31, 2005  
            Earnings             Earnings  
            Per Diluted             Per Diluted  
    Sales     Share     Sales     Share  
Reported Results
                                
Results from Continuing Operations
   $ 172.4     $ 0.20     $ 186.8     $ 0.06  
Impact of Discontinued Operations
     3.4       (0.02 )     7.0       (0.01 )
 
                        
Results Including Discontinued Operations
   $ 175.8     $ 0.18     $ 193.8     $ 0.05  
 
                                
Results Excluding Special Items
                                
Results from Continuing Operations
   $ 172.4     $ 0.20     $ 186.8     $ 0.14  
Impact of Discontinued Operations
     3.4       (0.02 )     7.0       (0.01 )
 
                        
Results Including Discontinued Operations
   $ 175.8     $ 0.18     $ 193.8     $ 0.13  
Company Estimates Provided for 2007
The Company believes that its net sales from continuing operations for the full year 2007 will be approximately $760 to $785 million and that earnings per diluted share from continuing operations will be approximately $0.80 to $0.86. The impact of discontinued operations is expected to be neutral to slightly dilutive to earnings per share. Capital expenditures are expected to be approximately $48 million for the year as the Company continues to invest in its supply chain, direct store delivery (DSD) system and information system initiatives.
Mr. Singer concluded, “We understand that 2007 will be another year of significant transition for Lance as we continue to focus on fundamental improvements to our operations. During the year, the key areas of focus will be driving profitable sales growth through product and channel development, executing strategies to improve supply chain and DSD efficiency, exiting the DSD portion of our vending business in a controlled and efficient manner and continuing the implementation of our ERP initiative. We are excited about our future and believe that we will be able to achieve the expectations that we have provided. We also believe that we are positioning ourselves for expanded margins and more sales growth in the future.”

 

 

Dividend Declared
The Company announced the declaration of a regular quarterly cash dividend of $0.16 per share on the Company’s common stock. The dividend is payable on February 28, 2007 to stockholders of record at the close of business on February 20, 2007.
Conference Call
Lance, Inc. has scheduled a conference call with investors at 9:00 a.m. eastern time on Monday, February 12, 2007 to discuss fourth quarter and full year 2006 financial results. To participate in the call, the dial-in numbers are (800) 789-3681 for U.S. callers and (706) 634-1425 for international callers. The access code is “LANCE.” A continuous replay of the call will be available beginning at 12:00 noon on February 12th and running through midnight February 19th. The replay telephone number is (800) 642-1687. The international number is (706) 645-9291. The replay access code is 6834346. A web-based replay of the conference call will also be available in the investor relations section of Lance’s web site, www.lance.com.
About Lance, Inc.
Lance, Inc. manufactures and markets snack foods throughout most of the United States and Canada.
This news release contains statements which may be forward looking within the meaning of applicable securities laws. The statements may include projections regarding future earnings and results which are based upon the Company’s current expectations and assumptions, which are subject to a number of risks and uncertainties. Factors that could cause actual results to differ, including price competition, industry consolidation, raw material costs, food industry factors, effectiveness of sales and marketing activities, interest rate, foreign exchange rate, and credit risks and acquisition integration and divestitures are discussed in the Company’s most recent Form 10-K filed with the Securities and Exchange Commission.
This press release presents measures not derived in accordance with generally accepted accounting principles (“GAAP”). Such measures should not be considered substitutes for any measures derived in accordance with GAAP and may also be inconsistent with similar measures presented by other companies. Reconciliation of these non-GAAP measures to the most nearly comparable GAAP measures, if applicable, is presented in the attached pages.

 

 

LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
                 
    For the Quarter Ended
    December 30, 2006   December 31, 2005
    (13 Weeks)   (14 Weeks)
Net sales and other operating revenue
   $ 172,402     $ 186,840  
Cost of sales
     98,282       109,359  
 
Gross margin
     74,120       77,481  
 
                
Selling, marketing and delivery
     53,844       63,813  
General and administrative
     10,389       10,681  
Other expense/(income), net
     (245 )     129  
 
Income from continuing operations before interest and taxes
     10,132       2,858  
 
                
Interest expense, net
     758       534  
 
Income from continuing operations before taxes
     9,374       2,324  
Income taxes
     3,130       608  
 
Net income from continuing operations
   $ 6,244     $ 1,716  
 
 
                
Loss from discontinued operations before taxes
     (991 )     (294 )
Income tax benefit
     (352 )     (118 )
 
Loss from discontinued operations
     (639 )     (176 )
 
Net Income
   $ 5,605     $ 1,540  
 
 
                
Basic Earnings per share:
                
Earnings per share from continuing operations
   $ 0.20     $ 0.06  
Loss per share from discontinued operations
     (0.02 )     (0.01 )
     
Earnings per share
   $ 0.18     $ 0.05  
Weighted average shares outstanding
     30,756,000       29,807,000  
Diluted Earnings per share:
                
Earnings per share from continuing operations
   $ 0.20     $ 0.06  
Loss per share from discontinued operations
     (0.02 )     (0.01 )
     
Earnings per share
   $ 0.18     $ 0.05  
Weighted average shares outstanding
     31,033,000       30,099,000  

 

 

LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
(unaudited)
                 
    For the Year Ended
    December 30, 2006   December 31, 2005
    (52 Weeks)   (53 Weeks)
Net sales and other operating revenue
   $ 730,116     $ 651,437  
Cost of sales
     415,576       369,331  
 
Gross margin
     314,540       282,106  
 
                
Selling, marketing and delivery
     239,222       215,887  
General and administrative
     42,914       37,605  
Other expense/(income), net
     191       (37 )
 
Income from continuing operations before interest and taxes
     32,213       28,651  
 
                
Interest expense, net
     3,156       1,985  
 
Income from continuing operations before taxes
     29,057       26,666  
Income taxes
     10,111       9,080  
 
Net income from continuing operations
   $ 18,946     $ 17,586  
 
 
                
Income/(loss) from discontinued operations before taxes
     (717 )     1,339  
Income tax expense/(benefit)
     (249 )     455  
 
Income/(loss) from discontinued operations
     (468 )     884  
 
Net Income
   $ 18,478     $ 18,470  
 
 
                
Basic Earnings per share:
                
Earnings per share from continuing operations
   $ 0.62     $ 0.59  
Earnings/(loss) per share from discontinued operations
     (0.01 )     0.03  
 
Earnings per share
   $ 0.61     $ 0.62  
Weighted average shares outstanding
     30,467,000       29,807,000  
Diluted Earnings per share:
                
Earnings per share from continuing operations
   $ 0.61     $ 0.58  
Earnings/(loss) per share from discontinued operations
     (0.01 )     0.03  
 
Earnings per share
   $ 0.60     $ 0.61  
Weighted average shares outstanding
     30,844,000       30,099,000  

 

 

LANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                 
    December 30, 2006     December 31, 2005  
Assets:
                
Cash and cash equivalents
   $ 5,504     $ 3,543  
Accounts receivable
     61,690       59,088  
Inventories
     36,838       36,409  
Deferred income tax benefit
     8,811       10,160  
Assets held for sale
     6,552       3,020  
Prepaid expenses and other
     6,298       7,405  
 
            
Total Current Assets
     125,693       119,625  
Property plant and equipment, net
     193,009       186,093  
Goodwill and other intangibles, net
     62,300       59,873  
Other assets
     4,450       3,488  
 
            
Total Assets
   $ 385,452     $ 369,079  
 
            
 
                
Liabilities and Equity:
                
Current portion of long-term debt
   $ —     $ 36,000  
Accounts payable
     18,194       20,378  
Other current liabilities
     55,254       59,672  
 
            
Total Current Liabilities
     73,448       116,050  
 
                
Long-term debt
     50,000       10,215  
Other liabilities
     39,604       41,105  
Stockholders’ equity
     222,400       201,709  
 
            
Total Liabilities and Stockholders’ Equity
   $ 385,452     $ 369,079  
 
            

 

 

LANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
                 
    For the Year Ended  
    December 30, 2006     December 31, 2005  
Operating Activities:
                
Net income
   $ 18,478     $ 18,470  
Depreciation and amortization
     26,897       28,539  
Stock based compensation expense
     1,331       —  
Gain on sale of property, net
     591       467  
Deferred income taxes
     1,182       (3,518 )
Changes in operating assets and liabilities
     (6,025 )     4,683  
Other, net
     (3,357 )     (1,524 )
 
            
Net cash flow provided by operating activities
     39,097       47,117  
 
                
Investing Activities:
                
Purchases of property and equipment
     (46,965 )     (27,624 )
Acquisition of businesses, net of cash acquired
     —       (43,797 )
Proceeds from sale of property
     7,340       1,449  
 
            
Net cash used in investing activities
     (39,625 )     (69,972 )
 
                
Financing Activities:
                
Dividends paid
     (19,556 )     (19,056 )
Issuance of common stock, net
     18,128       4,353  
Repayments of debt
     —       (41,237 )
Net Repayments under revolving credit facilities
     (46,238 )     (7,500 )
Proceeds from debt
     50,000       53,715  
Repurchase of common stock
     —       (5,160 )
 
            
Net cash from (used in) financing activities
     2,334       (14,885 )
 
                
Effect of exchange rate changes on cash
     155       (183 )
 
                
Increase/(decrease) in cash and cash equivalents
     1,961       (37,923 )
Cash and cash equivalents at beginning of period
     3,543       41,466  
 
            
Cash and cash equivalents at end of period
   $ 5,504     $ 3,543  
 
            

 

 

LANCE, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per-share amounts)
(unaudited)
Year Ended December 30, 2006
                 
    Net of     Per diluted  
    Tax     share  
Net Income from continuing operations
   $ 18,946     $ 0.61  
 
                
Tom’s integration related charges
     1,795       0.06  
 
                
 
            
Net Income from continuing operations, excluding special charges
   $ 20,741     $ 0.67  
Year Ended December 31, 2005
                 
    Net of     Per diluted  
    Tax     share  
Net Income from continuing operations
   $ 17,586     $ 0.58  
 
                
CEO severance related charges
     1,634       0.05  
 
                
Tom’s integration related charges
     2,257       0.08  
 
                
 
            
Net Income from continuing operations, excluding special charges
   $ 21,477     $ 0.71  
Quarter Ended December 31, 2005
                 
    Net of     Per diluted  
    Tax     share  
Net Income from continuing operations
   $ 1,716     $ 0.06  
 
                
Tom’s integration related charges
     2,257       0.08  
 
                
 
            
Net Income from continuing operations, excluding special charges
   $ 3,973     $ 0.14  

 

 

LANCE, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per-share amounts)
(unaudited)
Year Ended December 30, 2006
                 
    Net of     Per diluted  
    Tax     share  
Net Income
   $ 18,478     $ 0.60  
 
                
Tom’s integration related charges
     1,795       0.06  
 
                
 
            
Net Income, excluding special charges
   $ 20,273     $ 0.66  
Year Ended December 31, 2005
                 
    Net of     Per diluted  
    Tax     share  
Net Income
   $ 18,470     $ 0.61  
 
                
CEO severance related charges
     1,634       0.05  
 
                
Tom’s integration related charges
     2,257       0.08  
 
                
 
            
Net Income, excluding special charges
   $ 22,361     $ 0.74  
Quarter Ended December 31, 2005
                 
    Net of     Per diluted  
    Tax     share  
Net Income
   $ 1,540     $ 0.05  
 
                
Tom’s integration related charges
     2,257       0.08  
 
                
 
            
Net Income, excluding special charges
   $ 3,797     $ 0.13