Lancaster Colony Corporation 2009 ANNUAL REPORT

Transcription

1 Lancaster Colony Corporation 2009 ANNUAL REPORT

2 Financial Highlights Company Profile Lancaster Colony Corporation is a manufacturer and marketer of consumer products with a focus on specialty foods for the retail and foodservice markets. Lancaster Colony Corporation also manufactures and markets candles for the food, drug and mass markets. (In Thousands, Except Per Share Figures) Years Ended June Net Sales Gross Margin Income From Continuing Operations Before Income Taxes Taxes Based on Income Income From Continuing Operations Total Assets Shareholders Equity Per Common Share: Income From Continuing Operations Diluted Cash Dividends Shareholders Equity Weighted Average Common Shares Outstanding Diluted $ 1,051,491 $ 215,492 $ 137,006 $ 47,920 $ 89,086 $ 498,481 $ 402,556 $ 3.18 $ $ ,051 $ 980,915 $ 157,341 $ 75,668 $ 27,229 $ 48,439 $ 520,178 $ 359,218 $ 1.64 $ 1.11 $ ,499 Specialty Foods Net Sales (Fiscal Year Ended June 30, 2009) (In Thousands) Net Sales $909,897 $808,507 13% Operating Income $145,848 $ 88,975 Glassware & Candles 87% (In Thousands) Net Sales $141,594 $172,408 Specialty Foods Operating Loss $ (5,671) $ (1,887) Glassware & Candles

3 To Our Shareholders Led by a strong performance from our Specialty Foods business, we are pleased to report a much improved fiscal 2009 with sales reaching $1.05 billion, a seven percent increase from the prior year, and net income of $89 million or $3.18 per share. Our Specialty Foods operations reported sales and operating income increases of 12.5 percent and 64 percent, respectively. Fiscal 2008 and early 2009 pricing actions, commodity cost moderations later in fiscal 2009 and solid sales growth contributed to the Specialty Foods segment s achievement. In addition, we reaped the benefits of strong utilization of our recent Marzetti and Sister Schubert s plant additions, which delivered improved efficiencies and capacity for growth. Throughout the year, we continued to focus on our key brands: Marzetti, New York BRAND and Sister Schubert s. For the Sister Schubert s brand, we launched a public relations campaign around our spokesperson, Sister Schubert, who continues to be a dynamic force in the business. New digital marketing tools such as contest micro-sites, social media and banner ads, along with traditional coupon advertising, supported this effort. Based upon positive consumer response, we have placed additional emphasis on creative uses of digital media for our other brands as well. In our continued efforts to build our sales and brands, we are also concentrating on product innovation. In 2009, our New York BRAND Pizzeria Dip N Sticks and Ciabatta Rolls with Recently introduced Texas Toast Tortilla Strips aren t just for salads. Like their sister product, Texas Toast Croutons, these tangy toppers are a flavorful addition to soups, wraps and other recipes. They make a tasty snack, too!

4 Capital Expenditures (In Millions of Dollars) $ 75 $ 50 $ 25 $ FISCAL YEAR ENDED JUNE 30 Share Repurchases (In Millions of Dollars) $ 75 $ 50 Dividends Per Share $ 1.20 $ 1.10 $ 1.00 $ 0.90 $ * FISCAL YEAR ENDED JUNE 30 * Excludes special cash dividend of $2.00 per share Net Cash Provided by Operating Activities (In Millions of Dollars) $ 125 $ 100 Cheese were notable contributors to our sales gains, as was our Texas Toast TM brand of croutons. New products making their market debut include Texas Toast TM Tortilla Strips, New York BRAND Ciabatta Loaf, and Sister Schubert s Mini Pan Yeast Rolls and bagged Clover Leaf Dinner Rolls. Packaging was also updated on several product lines. In spite of our relatively low debt levels at the beginning of the year, the weak economy and uncertain credit markets encouraged us to take a more conservative view of our balance sheet. We repurchased only 496,000 shares of treasury stock during the year and held $ 25 $ 75 $ FISCAL YEAR ENDED JUNE 30 $ FISCAL YEAR ENDED JUNE 30 As consumers and restaurants trend toward less-ismore when it comes to food portions, mini slider sandwiches are gaining ground in households and restaurants nationwide. Newly repackaged Sister Schubert s yeast rolls are perfectly sized and positioned to benefit from this growing trend. 2

5 capital expenditures to $11 million. These actions, coupled with our improved earnings, allowed us to finish the year with no debt and $38 million of cash on hand. Our strong balance sheet provides us with greater flexibility to face unanticipated challenges and accommodate future acquisition opportunities. We start the year with a favorable tailwind of lower ingredient costs, but expect to see that benefit fade as the year progresses. Our biggest challenge will likely be sales growth as the weak economy dampens demand in our foodservice channel. While our retail sales could benefit from more at-home dining, consumers are being careful in their spending habits. Thanks to a capable team throughout the organization, leading retail brands and product lines, and strong foodservice channel expertise, we are positioned for growth over the longer term. Thank you for your continued support. John B. Gerlach, Jr. Chairman & Chief Executive Officer September 22, 2009 Consumers are discovering there is more to Marzetti dips than just dipping. In response to their craving for tasty and creative uses for these popular products, the chefs in the Marzetti kitchens have been cooking up a robust selection of recipes. Find them online at Marzetti.com. 3

6 Five Year Financial Summary Lancaster Colony Corporation and Subsidiaries (In Thousands, Except Per Share Figures) Years Ended June 30 Operations Net Sales $ 1,051,491 $ 980,915 $ 945,810 $ 924,571 $ 907,345 Gross Margin $ 215,492 $ 157,341 $ 181,740 $ 189,074 $ 191,014 Percent of Sales 20.5% 16.0% 19.2% 20.4% 21.1% Interest Expense $ (1,217) $ (3,076) $ (150) $ $ Percent of Sales 0.1% 0.3% 0.0% 0.0% 0.0% Other Income Continued Dumping and Subsidy Offset Act $ 8,696 $ 2,533 $ 699 $ 11,376 $ 26,226 Income from Continuing Operations Before Income Taxes $ 137,006 $ 75,668 $ 101,260 $ 125,734 $ 141,928 Percent of Sales 13.0% 7.7% 10.7% 13.6% 15.6% Taxes Based on Income $ 47,920 $ 27,229 $ 36,981 $ 44,494 $ 52,550 Income from Continuing Operations $ 89,086 $ 48,439 $ 64,279 $ 81,240 $ 89,378 Percent of Sales 8.5% 4.9% 6.8% 8.8% 9.9% Continuing Operations Diluted Income per Common Share $ 3.18 $ 1.64 $ 2.03 $ 2.42 $ 2.56 Cash Dividends per Common Share $ $ 1.11 $ 1.07 $ 3.03 $.98 Financial Position Cash, Cash Equivalents and Short-Term Investments $ 38,484 $ 19,417 $ 8,316 $ 41,815 $ 184,580 Total Assets $ 498,481 $ 520,178 $ 598,497 $ 628,021 $ 731,278 Working Capital $ 148,233 $ 144,925 $ 137,121 $ 235,283 $ 370,559 Property, Plant and Equipment Net $ 170,900 $ 179,573 $ 194,589 $ 162,107 $ 131,837 Long-Term Debt $ $ 55,000 $ $ $ Property Additions $ 11,336 $ 16,832 $ 53,589 $ 51,860 $ 18,917 Depreciation and Amortization $ 21,870 $ 24,138 $ 24,081 $ 24,980 $ 26,351 Shareholders Equity $ 402,556 $ 359,218 $ 444,309 $ 494,421 $ 587,726 Per Common Share $ $ $ $ $ Weighted Average Common Shares Outstanding Diluted 28,051 29,499 31,603 33,502 34,925 4

7 Corporate Information Officers and s JOHN B. GERLACH, JR.* Chairman, Chief Executive Officer, President and JOHN L. BOYLAN* Vice President, Treasurer, Chief Financial Officer and BRUCE L. ROSA* Vice President - Development MATTHEW R. SHURTE* Corporate Secretary DAVID M. SEGAL* Assistant Secretary JAMES B. BACHMANN Lead Retired Columbus Managing Partner, Ernst & Young LLP NEELI BENDAPUDI Professor of Marketing, The Ohio State University ROBERT L. FOX Financial Advisor, Wells Fargo Advisors ALAN F. HARRIS Retired Executive Vice President, Chief Marketing and Customer Officer, Kellogg Company EDWARD H. JENNINGS President Emeritus, The Ohio State University HENRY M. O NEILL, JR. Chairman and Chief Executive Officer, IRTH Solutions, Inc. ZUHEIR SOFIA Chairman, Sofia & Company, Inc. *Principal employment is by Lancaster Colony Corporation. Investor Information Form 10-K Stock Trading Common Stock is traded on The NASDAQ Global Select Market under the symbol LANC. Corporate Offices 37 West Broad Street Columbus, Ohio Auditors Deloitte & Touche LLP Columbus, Ohio Transfer Agent and Registrar American Stock Transfer and Trust Company 59 Maiden Lane New York, NY The Company files annually with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K, which is included herein and is also available without charge upon request to the Corporate Secretary, Lancaster Colony Corporation, 37 West Broad Street, Columbus, Ohio Additional financial data, including recent SEC filings for Lancaster Colony Corporation, are available at the Company s web site All brand references throughout this annual report represent trademarks of Lancaster Colony Corporation or its wholly owned subsidiaries. Lancaster Colony

8 37 West Broad Street Columbus, Ohio