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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to _____________
Commission file number 0-398
LANCE, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
NORTH CAROLINA 56-0292920
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(State of Incorporation) (I.R.S. Employer Identification Number)
8600 SOUTH BOULEVARD, CHARLOTTE, NORTH CAROLINA
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(Address of principal executive offices)
POST OFFICE BOX 32368, CHARLOTTE, NORTH CAROLINA 28232
- --------------------------------------------------------------------------------
(Mailing address of principal executive offices)
Registrant's telephone number, including area code: (704) 554-1421
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: $.83-1/3 PAR
VALUE COMMON STOCK
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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of shares of the Registrant's $.83-1/3 par value
Common Stock, its only outstanding class of voting stock, held by non-affiliates
as of February 20, 1997 was $457,228,000.
The number of shares outstanding of the Registrant's $.83-1/3 par value Common
Stock, its only outstanding class of Common Stock, as of February 20, 1997, was
29,874,904 shares.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following annual report to security holders and proxy statement
are incorporated by reference into the indicated parts of this Annual Report on
Form 10-K:
Incorporated Documents Parts into which Incorporated
---------------------- -----------------------------
Proxy Statement for Annual Meeting of Parts I and III
Stockholders to be held April 18, 1997
Annual Report to Stockholders for the Part II
fiscal year ended December 28, 1996
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PART I
ITEM 1. BUSINESS
The Registrant manufactures and sells snack foods and bakery products
directly and through its subsidiary, Vista Bakery, Inc.
In December 1995, the Registrant began the restructuring of its
operations to concentrate on its core snack food business. Under the
restructuring, the Registrant's facilities in Greenville, Texas and Columbia,
South Carolina were closed in February 1996. The Registrant's peanut buying
facility in Boykins, Virginia has been sold. To focus its efforts on the sales
of higher margin products, the Registrant has re-examined its product lines and
has eliminated over 100 stock keeping units and ten products. During 1996, the
Registrant's distribution operations were restructured as described below. As a
result of all of these restructuring efforts, the number of employees was
reduced by approximately 900.
Additional information concerning the restructuring is included in the
Registrant's consolidated financial statements, the notes thereto and
management's discussion and analysis of financial position and results of
operations contained in the Registrant's 1996 Annual Report to Stockholders
incorporated by reference in this Report.
The Registrant manufactures, distributes and sells packaged snack and
bread basket items primarily under the LANCE label. The principal snack items
are cracker sandwiches, cookie sandwiches, peanuts, potato chips, corn chips,
popcorn, cakes, cookies, candies, chewing gum, beef snacks and sausages. The
principal new snack items introduced in 1996 include Honey Peanut Butter on
CAPTAIN'S WAFERS, Cheddar Cheese on CAPTAIN'S WAFERS, Salsa and Cheese on
LANCHEE and Oatmeal and Chocolate Mini Cookies. The principal snack items
discontinued were Wheat Wafers, Gum Ball Pops, Nacho Mini Rounds, Reduced Fat
GOLD-N-CHEES and Fat Free Fig Bar. The principal bread basket items are wafers,
crackers, melba toast and bread sticks, individually packaged and sold to
restaurants and similar institutions.
The Registrant's products are sold under various trade names and
registered trademarks that it owns, including TOASTCHEE, LANCHEE, RYE CHEE,
CHOC-O-LUNCH, VAN-O-LUNCH, NEKOT, GOLD-N-CHEES, BIG TOWN and CAPTAIN'S WAFERS.
The Registrant packages several of its most popular snack and bread
basket items in convenience packs and distributes them to grocers, supermarkets
and discount stores. In addition, the Registrant distributes large bags of
potato chips and large size bags and boxes of its snack and bread basket items
to grocers and supermarkets. Various items that are purchased from others and
resold by the Registrant accounted for 24% of net sales and other operating
revenue.
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Vista Bakery, Inc. manufactures and sells cookies and crackers, through
its own sales representatives and brokers, to wholesale grocers, supermarkets
and distributors throughout the United States and portions of Canada, under
customer private labels and the VISTA label.
The following table shows the approximate percentages of the
Registrant's net sales and other operating revenue for 1996, 1995 and 1994
contributed by snack items and bread basket items:
1996 1995 1994
---- ---- ----
Snack items 89% 89% 89%
Bread basket items 9% 8% 8%
The principal raw materials and supplies used in the manufacture of
snack foods and bakery products are flour, peanuts, peanut butter, oils and
shortenings, potatoes, shelled corn and popcorn, cornmeal, pork skins, tree
nuts, starch, sugar, cheese, corn syrup, cocoa, fig paste, seasonings and
packaging materials. These raw materials and supplies are generally available in
adequate quantities in the open market either from sources in the United States
or from other countries and are generally contracted for a season in advance.
The principal supplies of energy used in the manufacture of these
products are electricity, natural and propane gas, fuel oil and diesel fuel, all
of which are currently available in adequate quantities.
The Registrant sells most of its products through its own sales
organization to convenience stores, independent and chain supermarkets, discount
stores, restaurants, military commissaries and exchanges, schools, hospitals,
caterers, industrial, recreational and commercial establishments, and similar
customers in 35 states and the District of Columbia. Under the restructuring,
the Registrant reduced its sales territories in 1996. In certain instances,
distributors or brokers have been added to cover sales territories that have
been eliminated. The Registrant's distribution operations are administered
through 22 sales districts which are divided into 271 sales branches, each under
the direction of a branch manager. During 1996, two sales districts were
consolidated, 14 sales branches were closed and 40 sales branches were
consolidated. There are 2,016 sales territories, each serviced by one sales
representative. In 1996, the Registrant continued the development of its
distributor and broker network, principally in perimeter territories.
The Registrant owns a fleet of tractors and trailers, which make weekly
deliveries of its products to the sales territories. The Registrant provides
sales representatives with stockroom space for their inventory requirements. The
sales representatives load their own trucks from these stockrooms for delivery
to their customers.
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A significant portion of the Registrant's sales is through its vending
machines at approximately 60,000 locations. These vending machines are made
available to the Registrant's customers on a rental, commission or sales basis.
The machines are not designed or manufactured specifically for the Registrant,
and their use is not limited to any particular sales area or class of customer.
All of the Registrant's products are sold in highly competitive markets
in which there are many competitors. In the case of many of its products, the
Registrant competes with manufacturers with greater total revenues and greater
resources than the Registrant. The principal methods of competition are price,
delivery, service and product quality. Generally, the Registrant believes that
it is competitive in these methods as a whole. The methods of competition and
the Registrant's competitive position varies according to the locality, the
particular products and the policies of its competitors. Although reliable
statistics are unavailable as to production and sales by others in the industry,
the Registrant believes that in its areas of distribution it is one of the
largest producers of peanut butter filled cracker sandwiches.
On December 28, 1996, the Registrant and its subsidiaries had 4,684
employees.
ITEM 2. PROPERTIES
The Registrant's principal plant and general offices are located in
Charlotte, North Carolina on a 288 acre tract owned by the Registrant. The main
facility is an air-conditioned and sprinklered plant, office building and
cafeteria of brick and steel containing approximately 670,000 square feet. The
manufacturing plant houses seven oven lines and is equipped with storage
facilities to handle many of the Registrant's raw materials in bulk. Adjacent to
the main facility is an air-conditioned and sprinklered plant of brick and steel
used for the processing of potato chips, corn chips and similar products
containing approximately 140,000 square feet. Both plants are being converted to
a continuous three-shift basis. Also adjacent to the main facility are a 70,400
square foot precast concrete building, which houses a vending machine repair and
maintenance facility, an 11,000 square foot brick and steel building, which
houses vehicle maintenance operations, 40,000 square foot and 13,000 square foot
metal warehouse buildings and a 5,500 square foot brick veneer office building.
These facilities are used to produce both snack and bread basket items.
The Registrant owns a plant located on a 105 acre tract in Greenville,
Texas. The plant is an air-conditioned and sprinklered building of brick and
steel containing approximately 290,000 square feet. The Company closed its
operations at this facility in 1996 and it is being offered for sale. The
Registrant has leased a building in Greenville, Texas containing approximately
6,150 square feet to serve as a distribution and vending maintenance center.
The Registrant leases office space and most of its stockroom space in
various towns and cities, mainly on month-to-month tenancies. The Registrant
currently owns 190
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stockroom locations with steel frame buildings, which range in size from 400 to
6,400 square feet and contain an aggregate of 998 stockroom spaces.
Vista Bakery, Inc. owns a plant located on an 18.5 acre tract in
Burlington, Iowa. The plant is of masonry and steel and contains approximately
230,000 square feet. This plant houses six oven lines and is being converted to
a continuous three-shift basis. The Company intends to add one additional oven
line at this facility during 1997. Adjacent to the plant is a steel storage
building of approximately 10,000 square feet.
Vista Bakery, Inc. also owns a 243,000 square foot plant on a 137 acre
tract in Columbia, South Carolina. The Company closed this facility in 1996 and
completed its sale in March 1997 for approximately $6.4 million.
The Registrant believes that it has sufficient production capacity to
meet foreseeable demand in 1997.
SEPARATE ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
Information as to executive officers of the Registrant who are
directors or nominees of the Registrant is incorporated herein by reference to
the section captioned Election of Directors in the Registrant's Proxy Statement
for the Annual Meeting of Stockholders to be held April 18, 1997. Information as
to each executive officer of the Registrant who is not a director or a nominee
is as follows:
Name Age Information About Officer
- ---- --- -------------------------
Peter M. Duggan 56 Senior Vice President of the Company since 1995, Vice
President 1994-1995 and a Group Vice President for the
Snacks and International Consumer Products Division of
Borden, Inc. (consumer products company) 1985-1993
G. R. Melvin 60 Senior Vice President of the Company since 1996 and Vice
President 1978 - 1996
R. Gerald Swain 60 Vice President of the Company since 1991, Assistant Vice
President 1989-1991 and District Sales Manager 1969-1989
E. D. Leake 45 Vice President of the Company since 1995 and Treasurer
and Assistant Secretary 1988-1995
B. Clyde Preslar 42 Vice President and Chief Financial Officer of the Company
since 1996; Director, Financial Services of Worldwide
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Power Tools Group (a consumer products division of The
Black and Decker Corporation) 1993-1996 and Director,
Corporate Business Planning and Analysis of The Black
and Decker Corporation, 1991-1993.
Richard G. Tucker 42 Vice President of the Company since 1996; Plant Manager
(bakery division) of RJR Nabisco Holdings Corporation
(consumer products company) 1989-1996.
James W. Helms, Jr. 50 Secretary of the Company since 1988, Treasurer since 1995
and Assistant Treasurer 1988-1995
All the Company's executive officers were appointed to their current
positions at the Annual Meeting of the Board of Directors effective April 19,
1996, except Mr. Preslar was appointed on April 29, 1996 and Mr. Tucker was
appointed June 28, 1996. All of the Registrant's executive officers' terms of
office extend until the next Annual Meeting of the Board of Directors and until
their successors shall have been duly elected and qualified.
Items 3 and 4 are inapplicable and have been omitted.
PART II
Items 5 through 8 are incorporated herein by reference to pages 13
through 31 of the Registrant's 1996 Annual Report to Stockholders.
Item 9 is inapplicable and has been omitted.
PART III
Items 10 through 13 are incorporated herein by reference to the
sections captioned Principal Stockholders and Holdings of Management, Election
of Directors, Compensation/Stock Option Committee Interlocks and Insider
Participation, Director Compensation, Executive Officer Compensation and
Compliance with Section 16(a) of the Securities Exchange Act of 1934 in the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
April 18, 1997 and to the Separate Item in Part I of this Annual Report
captioned Executive Officers of the Registrant.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. Financial Statements.
See Table of Contents to Financial Statements filed
herewith as a separate part of this Annual Report.
2. Financial Schedules.
Schedules have been omitted because of the absence of
conditions under which they are required or because
information required is included in financial statements
or the notes thereto.
3. Exhibits.
3.1 Restated Charter of Lance, Inc. incorporated herein
by reference to Exhibit 3(a) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 26, 1992.
3.2 Bylaws of Lance, Inc., as amended through April 21,
1995, incorporated herein by reference to Exhibit 3.2
to the Registrant's Quarterly Report on Form 10-Q for
the twelve weeks ended June 17, 1995.
4 See 3.1 and 3.2 above.
10.1 Lance, Inc. 1991 Stock Option Plan incorporated
herein by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8,
Registration No. 33-41866.
10.2* The Lance, Inc. Key Executive Employee Benefit Plan
incorporated herein by reference to Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1983.
- ----------
* Management contract.
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10.3* Form of Executive Employment Agreement between Lance,
Inc. and the Key Executives incorporated herein by
reference to Exhibit 10(c) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1992.
10.4 Lance, Inc. 1983 Incentive Stock Option Plan
incorporated herein by reference to Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 26, 1987.
10.5* Lance, Inc. Key Executive Employee Benefit Plan
Trust, dated December 3, 1993, between Lance, Inc.
and First Union National Bank of North Carolina
incorporated herein by reference to Exhibit 10(v) to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 25, 1993.
10.6 Lance, Inc. 1995 Nonqualified Stock Option Plan for
Non-Employee Directors incorporated herein by
reference to Exhibit 10 to the Registrant's
Registration Statement on Form S-8, Registration No.
33-58839.
10.7* Lance, Inc. Benefit Restoration Plan incorporated
herein by reference to Exhibit 10(vi) to the
Registrant's Quarterly Report on Form 10-Q for the
twelve weeks ended June 11, 1994.
10.8* 1996 Lance Annual Incentive Plan incorporated herein
by reference to Exhibit 10.8 to the Registrant's
Quarterly Report on Form 10-Q for the twelve weeks
ended June 15, 1996.
10.9* Chairman of the Board Compensation Letter dated April
19, 1996 incorporated herein by reference to Exhibit
10.9 to the Registrant's Quarterly Report on Form
10-Q for the twelve weeks ended June 15, 1996.
10.10* Salary Continuation Agreement, dated as of April 29,
1996, between the Registrant and B. Clyde Preslar.
(Page ____ of the sequentially numbered pages.)
10.11* Early Retirement Agreement, dated as of November 22,
1996, between the Registrant and Thomas B. Horack.
(Page ___ of the sequentially numbered pages.)
- ----------
* Management contract.
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13 The Registrant's 1996 Annual Report to Stockholders.
This Annual Report to Stockholders is furnished for
the information of the Commission only and, except
for the parts thereof incorporated by reference in
this Report on Form 10-K, is not to be deemed "filed"
as a part of this filing. (Page ___ of the
sequentially numbered pages.)
21 List of the Subsidiaries of the Registrant. (Page
____ of the sequentially numbered pages.)
23 Consent of KPMG Peat Marwick LLP. (Page ____ of the
sequentially numbered pages.)
27 Financial Data Schedule. (Filed in electronic format
only. Pursuant to Rule 402 of Regulation S-T, this
schedule shall not be deemed filed for purposes of
Section 11 of the Securities Act of 1933 or Section
18 of the Securities Exchange Act of 1934.)
99 Cautionary Statement for Purposes of the Safe Harbor
Provisions of the Private Securities Litigation
Reform Act of 1995.
- ----------
* Management contract.
(b) Reports on Form 8-K
There were no reports on Form 8-K required to be filed
by the Registrant during the 16 weeks ended December 28,
1996.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LANCE, INC.
Dated: March 27, 1997
By: /s/ B. Clyde Preslar
----------------------------
B. Clyde Preslar
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- --------- -------- ----
/s/ Scott C. Lea Chairman of the Board March 27, 1997
- ----------------------------- and Director
Scott C. Lea
/s/ P. A. Stroup, III President, Chief Executive March 27, 1997
- ----------------------------- Officer and Director
P. A. Stroup, III (Principal Executive Officer)
/s/ B. Clyde Preslar Vice President (Principal March 27, 1997
- ----------------------------- Financial Officer)
B. Clyde Preslar
/s/ James W. Helms, Jr. Secretary and March 27, 1997
- ----------------------------- Treasurer (Principal
James W. Helms, Jr. Accounting Officer)
/s/ Alan T. Dickson Director March 27, 1997
- -----------------------------
Alan T. Dickson
/s/ J. W. Disher Director March 27, 1997
- -----------------------------
J. W. Disher
/s/ James H. Hance, Jr. Director March 27, 1997
- -----------------------------
James H. Hance, Jr.
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/s/ William R. Holland Director March 27, 1997
- ------------------------------------
William R. Holland
/s/ Nancy Van Every McLaurin Director March 27, 1997
- ------------------------------------
Nancy Van Every McLaurin
/s/ Robert V. Sisk Director March 27, 1997
- ------------------------------------
Robert V. Sisk
/s/ Isaiah Tidwell Director March 27, 1997
- ------------------------------------
Isaiah Tidwell
/s/ S. Lance Van Every Director March 27, 1997
- ------------------------------------
S. Lance Van Every
/s/ Richard A. Zimmerman Director March 27, 1997
- ------------------------------------
Richard A. Zimmerman
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-K
FOR CORPORATIONS
ITEM 14(a) - FINANCIAL STATEMENTS
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TABLE OF CONTENTS
Annual Report
to Stockholders
Page
Data incorporated by reference from the 1996
Annual Report to Stockholders of Lance, Inc.
and Subsidiaries:
Independent Auditors' Report 13
Consolidated Balance Sheets, December 28,
1996 and December 30, 1995 14
For the Fiscal Years Ended December 28,
1996, December 30, 1995 and December 31, 1994:
Statements of Consolidated Income and
Retained Earnings 15
Statements of Consolidated Cash Flows 16
Notes to Consolidated Financial Statements 17
FINANCIAL STATEMENTS AND SCHEDULES OMITTED
The above listed financial statements are presented on only a consolidated basis
since the Company is primarily an operating company and its subsidiaries
included for the periods presented in the consolidated financial statements are
totally-held subsidiaries. Schedules have been omitted because of the absence of
conditions under which they are required or because information required is
included in financial statements or the notes thereto.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
EXHIBITS
Item 14(a)(3)
FORM 10-K
ANNUAL REPORT
For the fiscal year ended Commission File Number
December 28, 1996 0-398
LANCE, INC.
EXHIBIT INDEX
Exhibit
No. Exhibit Description
3.1 Restated Charter of Lance, Inc. incorporated herein by
reference to Exhibit 3(a) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 26, 1992.
3.2 Bylaws of Lance, Inc., as amended through April 21, 1995,
incorporated herein by reference to Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the twelve
weeks ended June 17, 1995.
4 See 3.1 and 3.2 above.
10.1 Lance, Inc. 1991 Stock Option Plan incorporated herein by
reference to Exhibit 4.1 to the Registrant's Registration
Statement on Form S-8, Registration No. 33-41866.
10.2* The Lance, Inc. Key Executive Employee Benefit Plan
incorporated herein by reference to Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1983.
- ----------
* Management contract.
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10.3* Form of Executive Employment Agreement between Lance, Inc. and
the Key Executives incorporated herein by reference to Exhibit
10(c) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 26, 1992.
10.4 Lance, Inc. 1983 Incentive Stock Option Plan incorporated
herein by reference to Exhibit 10.1 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 26,
1987.
10.5* Lance, Inc. Key Executive Employee Benefit Plan Trust, dated
December 3, 1993, between Lance, Inc. and First Union National
Bank of North Carolina incorporated herein by reference to
Exhibit 10(v) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 25, 1993.
10.6 Lance, Inc. 1995 Nonqualified Stock Option Plan for
Non-Employee Directors incorporated herein by reference to
Exhibit 10 to the Registrant's Registration Statement on Form
S-8, Registration No. 33-58839.
10.7* Lance, Inc. Benefit Restoration Plan incorporated herein by
reference to Exhibit 10(vi) to the Registrant's Quarterly
Report on Form 10-Q for the twelve weeks ended June 11, 1994.
10.8* 1996 Lance Annual Incentive Plan incorporated herein by
reference to Exhibit 10.8 to the Registrant's Quarterly Report
on Form 10-Q for the twelve weeks ended June 15, 1996.
10.9* Chairman of the Board Compensation Letter dated April 19, 1996
incorporated herein by reference to Exhibit 10.9 to the
Registrant's Quarterly Report on Form 10-Q for the twelve
weeks ended June 15, 1996.
10.10* Salary Continuation Agreement, dated as of April 29, 1996,
between the Registrant and B. Clyde Preslar. (Page ____ of the
sequentially numbered pages.)
10.11* Early Retirement Agreement, dated as of November 22, 1996,
between the Registrant and Thomas B. Horack. (Page ___ of the
sequentially numbered pages.)
- ----------
* Management contract.
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13 The Registrant's 1996 Annual Report to Stockholders. This
Annual Report to Stockholders is furnished for the information
of the Commission only and, except for the parts thereof
incorporated by reference in this Report on Form 10-K, is not
to be deemed "filed" as a part of this filing. (Page ___ of
the sequentially numbered pages.)
21 List of the Subsidiaries of the Registrant. (Page ____ of the
sequentially numbered pages.)
23 Consent of KPMG Peat Marwick LLP. (Page ____ of the
sequentially numbered pages.)
27 Financial Data Schedule. (Filed in electronic format only.
Pursuant to Rule 402 of Regulation S-T, this schedule shall
not be deemed filed for purposes of Section 11 of the
Securities Act of 1933 or Section 18 of the Securities
Exchange Act of 1934.)
99 Cautionary Statement for Purposes of the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of
1995.
- ----------
* Management contract.
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