Snyder's-Lance, Inc.
Feb 18, 2011

Snyder's-Lance, Inc. Reports Results for Full Year 2010

CHARLOTTE, N.C., Feb. 18, 2011 /PRNewswire/ -- Snyder's-Lance, Inc. (Nasdaq: LNCE) today reported results of its fiscal year 2010.  Financial results include the consolidation of Snyder's of Hanover, Inc. from the date of the merger, December 6, 2010.  Results for the quarter and full year 2010 reflect consolidated financials from that date and include a significant amount of special items related to the merger. The consolidation of Snyder's of Hanover, Inc. contributed approximately $49 million in net revenue for the period, but did not impact EPS as incremental shares issued as a result of the merger offset the increase in net income.

Net revenues for the consolidated company for the year ended January 1, 2011, were $979.8 million, an increase of 7% over prior year net revenues of $918.2 million.  The Company realized full year net income of $37.3 million excluding special items and the extra week, or $1.09 per diluted share, as compared to full year 2009 net income of $35.7 million, excluding special items, or $1.10 per diluted share. Net income including special items was $2.5 million for the full year 2010 compared to $35.0 million for 2009.  Special items for 2010 included after tax expenses of $1.9 million associated with unsuccessful acquisition costs in the first quarter, $2.0 million related to a workforce reduction in the second quarter, $28.2 million associated with the merger with Snyder's of Hanover, Inc., $1.5 million related to an insurance settlement, and $1.3 million related to the negative impact of the extra week in 2010.  Special items for 2009 after tax expenses of $0.7 million related primarily to the Stella D'oro acquisition.

Consolidated fourth quarter 2010 net revenues were $285.1 million, an increase of 23% (18% excluding the extra week) compared to prior year fourth quarter net revenues of $231.1 million. Excluding the impact of the net sales of Snyder's, net revenue was down 3% vs. last year.  Fourth quarter 2010 net income was $9.4 million excluding special items as compared to $10.7 million, excluding special items, for the prior year. Net loss including special items was $19.4 million for the fourth quarter 2010 compared to fourth quarter 2009 net income including special items of $10.1 million.

Comments from Management

"We are extremely excited about the merger which has created Snyder's-Lance, Inc., the most important development in the history of both companies," commented David V. Singer, Chief Executive Officer.  "We have largely completed our integration plan, including the transition of company owned routes to independent operators announced earlier this week, and execution is underway.  We have excellent, dedicated people across all facets of our company and the experience and sense of urgency for our merger integration is remarkable.  We expect to have announced all major organization and integration decisions by the end of February, at which point we can focus all our attention on executing the integration, and serving our customers.  Although we are excited about the merger, we are disappointed in our financial results in the fourth quarter. Net Sales were well below our expectations, which drove lower than anticipated earnings.  Now that our organizational announcements are behind us we are seeing better execution and sales performance. We plan to complete the vast majority of our integration by mid-2012. This will be a demanding year, but I am confident in our team to execute the integration and our day to day business so that Snyder's-Lance will deliver the benefits that result from the synergies of the combined businesses."

Insights for 2011 and 2012

We anticipate delivering a portion of our anticipated cost and revenue synergies in the back half of 2011 but most of our integration plan will not be completed until mid-2012.  When synergies are fully realized, the benefits from integration and sales growth are expected to deliver 2.5% to 3.0% improvements in operating profit margins compared to 2010 proforma levels of approximately 6.0%.  Through 2012, top line growth is anticipated to be in excess of 5% annualized, before the impact of conversion to an independent operator model and expected sku rationalization, on a consolidated proforma 2010 base of $1.58 billion.  The growth will be driven by continued investment in our brands through innovation and advertising as well as expansion of distribution through our new national DSD network.

Overall 2011 performance is difficult to predict with accuracy as there will be many disruptive changes which will drive various costs and benefits as we transition to a combined business model.  In addition, with escalating commodity prices, we are faced with significant cost increases that will require pricing actions beyond those already in place. As a result, the Company will not be providing specific revenue or EPS guidance for 2011.  

Conference Call

Snyder's-Lance, Inc. has scheduled a conference call and presentation with investors at 9:00 am eastern time on Friday, February 18, 2011 to discuss financial results.  To participate in the conference call, the dial-in number is (866) 814-7293 for U.S. callers or (702) 696-4943 for international callers.  A continuous telephone replay of the call will be available between 1:00 pm on February 18th and midnight on February 25th.  The replay telephone number is (800) 642-1687 for U.S. callers or (706) 645-9291 for international callers.  The replay access code is 39931973.  Investors may also access a web-based replay of the conference call at Snyder's-Lance's web site, www.lanceinc.com.

The conference call and accompanying slide presentation will be webcast live through the Investor Relations section of Snyder's-Lance, Inc.'s website www.lanceinc.com. In addition, the slide presentation will be available to download and print approximately 30 minutes before the webcast at Snyder's-Lance's Investor Relations home page.

About Snyder's-Lance, Inc.

Snyder's-Lance, Inc., headquartered in Charlotte, North Carolina, manufactures, markets and distributes snack foods throughout the United States and internationally. The company's products include pretzels, sandwich crackers, potato chips, cookies, tortilla chips, restaurant style crackers, nuts and other snacks. Snyder's-Lance has manufacturing facilities in North Carolina, Pennsylvania, Iowa, Indiana, Georgia, Arizona, Massachusetts, Texas, Florida, Ohio, and Ontario, Canada. Products are sold under the Snyder's of Hanover, Lance, Krunchers!, Cape Cod, Jays, Grande, Tom's, Archway, O-Ke-Doke, and Stella D'oro brand names along with a number of private label and third party brands. Products are distributed widely through grocery and mass merchandisers, convenience stores, club stores, food service outlets and other channels.

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 include risks and business disruption from merger integration and the conversion of our distribution to independent operators, general economic conditions, increases in cost or availability of ingredients, packaging, energy and employees, price competition and industry consolidation, risks from large customers, ability to execute strategic initiatives, product recalls or safety concerns, disruptions of our supply chain or information technology systems, changes in consumer preferences,  food industry and regulatory factors, and interest rate and foreign exchange rate risks, as well as those that have been discussed in our most recent Form 10-K and subsequent Forms 10-Q and other reports filed with the Securities and Exchange Commission including the form S-4.

SNYDER'S-LANCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per-share amounts)

(unaudited)


 

Quarter Ended


Fiscal Year Ended

 

January 1, 2011


December 26, 2009*


January 1, 2011


December 26, 2009*

 








 

Net revenue

$  285,118


$   231,097


$  979,835


$  918,163

 

Cost of sales

182,229


138,139


601,015


549,119

 

Gross margin

102,889


92,958


378,820


369,044

 








 

Selling, general and administrative

123,111


76,592


359,629


310,588

 

Other expense, net

3,103


521


7,108


1,774

 

(Loss)/earnings before interest and income taxes

(23,325)


15,845


12,083


56,682

 








 

Interest expense, net

1,358


834


3,921


3,351

 

(Loss)/income before income taxes

(24,683)


15,011


8,162


53,331

 








 

Income tax (benefit)/expense

(5,309)


4,890


5,631


18,303

 

Net (loss)/income

(19,374)


$   10,121


$  2,531


$  35,028

 








 

Net income attributable to non-controlling interests

19


-


19


-

 

Net (loss)/income attributable to Snyder's-Lance, Inc.

$  (19,393)


$   10,121


$  2,512


$  35,028

 








 

Basic (loss)/earnings per share

$   (0.48)


$   0.32


$  0.07


$  1.11

 

Weighted average shares outstanding — basic

40,164,000


31,683,000


34,128,000


31,565,000

 








 

Diluted (loss)/earnings per share

$   (0.48)


$   0.31


$  0.07


$  1.08

 

Weighted average shares outstanding — diluted

40,164,000


32,655,000


34,348,000


32,384,000

 








 

Cash dividends declared per share, including special dividend of $3.75 per share in 2010

$  3.91


$   0.16


$  4.39


$  0.64

 

 

* 2009 cost of sales and income tax amounts have been revised to reflect the change in accounting for certain inventories previously on the LIFO method to the FIFO method.


 
               


SNYDER'S-LANCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


 

January 1, 2011


December 26, 2009 *

 

ASSETS




 




 

Assets:




 

 Cash and cash equivalents

$  27,877


$  5,418

 

 Accounts receivable, net of allowances

128,556


87,172

 

 Inventories

96,936


63,873

 

 Other current assets

70,398


26,242

 

Total current assets

323,767


182,705

 

 Fixed assets, net of accumulated depreciation

336,673


225,981

 

 Goodwill and other intangibles, net

783,860


126,063

 

 Other noncurrent assets

18,056


5,365

 

   Total assets

$  1,462,356


$  540,114

 




 

LIABILITIES AND STOCKHOLDERS' EQUITY




 




 

Liabilities and Equity:




 

 Accounts payable

$  39,938


$  29,777

 

 Other payables and accrued liabilities

95,564


66,589

 

 Current portion of long-term debt

57,767


-

 

Total current liabilities

193,269


96,366

 

 Long-term debt

227,462


113,000

 

 Other noncurrent liabilities

205,010


52,238

 

 Stockholders' equity

836,615


278,510

 

   Total liabilities and stockholders' equity

$  1,462,356


$  540,114

 

 

* 2009 inventories, other current assets and stockholders' equity amounts have been revised to reflect the change in accounting for certain inventories previously on the LIFO method to the FIFO method.


 
       


SNYDER'S-LANCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(in thousands)

(unaudited)


 

Fiscal Year Ended

 

January 1, 2011


December 26,
2009

 




 

Operating activities




 

Net income

$    2,531


$    35,028

 

 Adjustments to reconcile net income to cash provided by operating activities:




 

   Depreciation and amortization

40,100


35,211

 

   Stock-based compensation expense

19,524


7,472

 

   Provision for doubtful accounts

2,649


936

 

   Loss on sale of fixed assets

682


702

 

   Impairment of long-lived assets

584


-

 

   Deferred Income Taxes

18,228


2,828

 

   Changes in operating assets and liabilities

(39,854)


(12,900)

 

 Net cash provided by operating activities

44,444


69,277

 




 

Investing activities




 

 Purchases of fixed assets

(33,347)


(40,737)

 

 Proceeds from sale of fixed and intangible assets, and assets held for sale

2,731


765

 

 Business combinations, net of cash acquired

96,336


(23,911)

 

Net cash used in investing activities

65,720


(63,883)

 




 

Financing activities




 

 Dividends paid

(142,458)


(20,410)

 

 Issuances of common stock

13,102


4,240

 

 Repurchases of common stock and net-settlement of restricted stock units

(6,519)


(127)

 

 Proceeds from new credit facilities

69,000


-

 

 Net (repayments)/proceeds on existing credit facilities

(21,238)


15,000

 

Net cash used in financing activities

(88,113)


(1,297)

 




 

Effect of exchange rate changes on cash

408


514

 




 

Increase in cash and cash equivalents

22,459


4,611

 

Cash and cash equivalents at beginning of period

5,418


807

 

Cash and cash equivalents at end of period

$  27,877


$     5,418

 




 

Non-cash investing and financing activities:




 

Common stock and options issued for business acquisitions

$  676,211


$                 -

 




 

Supplemental information:




 

Cash paid for income taxes, net of refunds of $23 and $159, respectively

$  12,208


$   13,763

 

Cash paid for interest

$  6,391


$   3,515

 

 

* 2009 net income, deferred income taxes and changes in operating assets and liabilities have been revised to reflect the change in accounting for certain inventories previously on the LIFO method to the FIFO method.


 
       


SNYDER'S-LANCE, INC.

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per-share amounts)

(unaudited)


 

Quarter Ended January 1, 2011

 

Net of Tax


Per Diluted Share

 




 

Net loss attributable to Snyder's-Lance, Inc.

$    (19,393)


$  (0.48)

 




 

 Costs related to merger

25,995


0.65

 

 Costs related to insurance settlement

1,466


0.03

 

 Impact of 53rd week

1,337


0.03

 




 

Net income, excluding special items *

$    9,405


$  0.23

 




 

* Quarter includes $10,079 adjustment for income taxes




 

 
         



 

Fiscal Year Ended January 1, 2011




 


Net of Tax


Per Diluted Share

 




 

Net income attributable to Snyder's-Lance, Inc.

$    2,512


$  0.07

 




 

 Costs related to merger

28,162


0.83

 

 Costs related to insurance settlement

1,466


0.04

 

 Impact of 53rd week

1,337


0.04

 

 Employee termination costs from workforce reduction

1,958


0.06

 

 Unsuccessful bid for targeted acquisition

1,930


0.05

 




 

Net income, excluding special items **

$    37,365


$  1.09

 




 

** Fiscal year includes $13,076 adjustment for income taxes




 

 
       


SNYDER'S-LANCE, INC.

RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except per-share amounts)

(unaudited)


 

Quarter Ended December 26, 2009

 

Net of Tax


Per Diluted Share

 




 

Net income attributable to Snyder's-Lance, Inc. *

$    10,121


$  0.31

 




 

 Stella D'oro integration related charges

599


0.02

 




 

Net income, excluding special items

$    10,720


$  0.33

 




 

 
         



 

Fiscal Year Ended December 26, 2009




 


Net of Tax


Per Diluted Share

 




 

Net income attributable to Snyder's-Lance, Inc. *

$    35,028


$  1.08

 




 

 Stella D'oro integration related charges

747


0.02

 




 

Net income, excluding special items

$    35,775


$  1.10

 




 




 

* 2009 net income has been revised to reflect the change in accounting for inventory for certain inventories previously on the LIFO method to the FIFO method.

 

 
       


SOURCE Snyder's-Lance, Inc.

 

 

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