Snyder's-Lance, Inc.
LANCE INC (Form: 10-Q, Received: 07/24/2009 16:33:54)
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 27, 2009
Commission File Number 0-398
(LANCE LOGO)
LANCE, INC.
(Exact name of registrant as specified in its charter)
     
North Carolina
(State or other jurisdiction of
incorporation or organization)
  56-0292920
(I.R.S. Employer Identification No.)
     
14120 Ballantyne Corporate Place    
Suite 350    
Charlotte, North Carolina   28277
(Address of principal executive offices)   (Zip Code)
704-554-1421
(Registrant’s telephone number, including area code)
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 þ      No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o      No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
    (Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o      No þ
The number of shares outstanding of the registrant’s $0.83-1/3 par value Common Stock, its only outstanding class of Common Stock as of July 20, 2009, was 31,979,536 shares.
 
 

 


 

LANCE, INC. AND SUBSIDIARIES
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  EX-31.1
  EX-31.2
  EX-32

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Quarters and Six Months Ended June 27, 2009 and June 28, 2008

(in thousands, except share and per share data)
                                 
    Quarter Ended     Six Months Ended  
    June 27,     June 28,     June 27,     June 28,  
    2009     2008     2009     2008  
Net revenue
  $ 236,355     $ 213,614     $ 452,163     $ 411,582  
Cost of sales
    139,630       133,691       271,042       257,152  
 
                       
Gross margin
    96,725       79,923       181,121       154,430  
 
                       
 
                               
Selling, general and administrative
    80,473       74,568       153,977       147,425  
Other expense, net
    547       161       608       157  
 
                       
Earnings before interest and income taxes
    15,705       5,194       26,536       6,848  
 
                               
Interest expense, net
    910       860       1,722       1,465  
 
                       
Income before income taxes
    14,795       4,334       24,814       5,383  
 
                               
Income tax expense
    5,267       1,626       8,834       2,030  
 
                       
Net income
  $ 9,528     $ 2,708     $ 15,980     $ 3,353  
 
                       
 
                               
Basic earnings per share
  $ 0.30     $ 0.09     $ 0.51     $ 0.11  
Weighted average shares outstanding – basic
    31,552,000       31,181,000       31,477,000       31,142,000  
 
                               
Diluted earnings per share
  $ 0.30     $ 0.09     $ 0.50     $ 0.11  
Weighted average shares outstanding – diluted
    32,293,000       31,807,000       32,163,000       31,701,000  
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of June 27, 2009 (Unaudited) and December 27, 2008

(in thousands, except share data)
                 
    June 27,     December 27,  
    2009     2008  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 4,008     $ 807  
Accounts receivable, net of allowances of $1,023 and $863, respectively
    84,153       74,406  
Inventories
    52,709       43,112  
Deferred income taxes
    8,282       9,778  
Prepaid expenses and other current assets
    12,178       12,933  
 
           
Total current assets
    161,330       141,036  
 
               
Other assets:
               
Fixed assets, net of accumulated depreciation of $279,600 and $267,456, respectively
    214,136       216,085  
Goodwill, net
    82,105       80,110  
Other intangible assets, net
    23,719       23,966  
Other noncurrent assets
    5,410       4,949  
 
           
Total assets
  $ 486,700     $ 466,146  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 26,711     $ 25,939  
Other payables and accrued liabilities
    55,941       58,630  
Short-term debt
          7,000  
 
           
Total current liabilities
    82,652       91,569  
 
               
Other liabilities:
               
Long-term debt
    103,000       91,000  
Deferred income taxes
    31,860       31,241  
Other noncurrent liabilities
    16,143       16,829  
 
           
Total liabilities
    233,655       230,639  
 
               
Commitments and contingencies
           
 
               
Stockholders’ equity:
               
Common stock, 31,963,448 and 31,522,953 shares outstanding, respectively
    26,635       26,268  
Preferred stock, no shares outstanding
           
Additional paid-in capital
    55,352       49,138  
Retained earnings
    166,760       160,938  
Accumulated other comprehensive income/(loss)
    4,298       (837 )
 
           
Total stockholders’ equity
    253,045       235,507  
 
           
Total liabilities and stockholders’ equity
  $ 486,700     $ 466,146  
 
           
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Unaudited)
For the Six Months Ended June 27, 2009 and June 28, 2008

(in thousands, except share data)
                                                 
                    Additional             Accumulated Other        
            Common     Paid-in     Retained     Comprehensive        
    Shares     Stock     Capital     Earnings     Income/(Loss)     Total  
     
Balance, December 29, 2007
    31,214,743     $ 26,011     $ 41,430     $ 163,356     $ 16,300     $ 247,097  
 
                                               
Comprehensive income/(loss):
                                               
Net income
                      3,353             3,353  
Foreign currency translation adjustment
                            (2,246 )     (2,246 )
Net unrealized losses on derivatives, net of $198 tax effect
                            (366 )     (366 )
Actuarial loss recognized in net income, net of $32 tax effect
                            (54 )     (54 )
 
                                             
Total comprehensive income
                                            687  
 
                                             
 
                                               
Cash dividends paid to stockholders
                      (10,044 )           (10,044 )
 
                                               
Stock options exercised, including $267 excess tax benefit
    98,638       82       1,559                   1,641  
 
                                               
Equity-based incentive expense previously recognized under a liability plan
    39,250       33       876                   909  
 
                                               
Amortization of nonqualified stock options
                542                   542  
 
                                               
Issuances and amortization of restricted stock and units, net of forfeitures
    122,031       102       1,526                   1,628  
 
                                               
     
Balance, June 28, 2008
    31,474,662     $ 26,228     $ 45,933     $ 156,665     $ 13,634     $ 242,460  
     
 
                                               
Balance, December 27, 2008
    31,522,953     $ 26,268     $ 49,138     $ 160,938     $ (837 )   $ 235,507  
 
                                               
Comprehensive income/(loss):
                                               
Net income
                      15,980             15,980  
Foreign currency translation adjustment
                            3,327       3,327  
Net unrealized gains on derivatives, net of $840 tax effect
                            1,881       1,881  
Actuarial loss recognized in net income, net of $41 tax effect
                            (73 )     (73 )
 
                                             
Total comprehensive income
                                            21,115  
 
                                             
 
                                               
Cash dividends paid to stockholders
                      (10,158 )           (10,158 )
 
                                               
Stock options exercised, including $629 excess tax benefit
    109,453       91       2,067                   2,158  
 
                                               
Equity-based incentive expense previously recognized under a liability plan
    73,356       61       1,531                   1,592  
 
                                               
Amortization of nonqualified stock options
                606                   606  
 
                                               
Issuances and amortization of restricted stock and units, net of forfeitures
    264,427       221       2,131                   2,352  
 
                                               
Repurchase of common stock
    (6,741 )     (6 )     (121 )                 (127 )
 
                                               
     
Balance, June 27, 2009
    31,963,448     $ 26,635     $ 55,352     $ 166,760     $ 4,298     $ 253,045  
     
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 27, 2009 and June 28, 2008

(in thousands)
                 
    Six Months Ended  
    June 27, 2009     June 28, 2008  
Operating activities
               
Net income
  $ 15,980     $ 3,353  
Adjustments to reconcile net income to cash from operating activities:
               
Depreciation and amortization
    17,162       16,105  
Stock-based compensation expense
    2,958       2,170  
Loss on sale of fixed assets
    189       195  
Changes in operating assets and liabilities, excluding business acquisition
    (15,981 )     (11,503 )
 
           
Net cash provided by operating activities
    20,308       10,320  
 
           
 
               
Investing activities
               
Purchases of fixed assets
    (14,592 )     (21,603 )
Proceeds from sale of fixed assets
    462       321  
Business acquisition, net of cash acquired
          (23,931 )
 
           
Net cash used in investing activities
    (14,130 )     (45,213 )
 
           
 
               
Financing activities
               
Dividends paid
    (10,158 )     (10,044 )
Issuance and repurchase of common stock
    2,031       1,641  
Net proceeds from existing credit facilities
    5,000       38,014  
Repayments of debt from business acquisition
          (2,239 )
 
           
Net cash (used in)/provided by financing activities
    (3,127 )     27,372  
 
           
 
               
Effect of exchange rate changes on cash
    150       (40 )
 
           
 
               
Increase/(decrease) in cash and cash equivalents
    3,201       (7,561 )
Cash and cash equivalents at beginning of period
    807       8,647  
 
           
Cash and cash equivalents at end of period
  $ 4,008     $ 1,086  
 
           
 
               
Supplemental information:
               
Cash paid for income taxes, net of refunds of $154 and $0, respectively
  $ 3,702     $ 1,371  
Cash paid for interest
  $ 1,818     $ 1,500  
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Lance, Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed financial statements should be read in conjunction with the audited financial statements and notes included in our Form 10-K for the year ended December 27, 2008, filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2009. In our opinion, these condensed consolidated financial statements reflect all adjustments, consisting of only normal, recurring accruals, necessary to present fairly our condensed consolidated financial statements for the interim periods presented herein. The consolidated results of operations for the quarter and six months ended June 27, 2009, are not necessarily indicative of the results to be expected for the full year.
Preparing financial statements requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Examples include customer returns and promotional activity, allowances for doubtful accounts, self-insurance reserves, impairment analysis of goodwill and other intangible assets, useful lives and impairment of fixed assets, incentive compensation, and income taxes. Actual results may differ from our estimates.
2. RECLASSIFICATIONS
Prior year amounts shown in the accompanying condensed consolidated financial statements have been reclassified for consistent presentation.
3. NEW ACCOUNTING STANDARDS
On June 16, 2009, the Financial Accounting Standards Board (“FASB”) announced the FASB Accounting Standards Codification (the “Codification”), the online research system representing the single source of authoritative non-governmental U.S. GAAP, was available to use. All previous levels of the U.S. GAAP hierarchy will be superseded and all other accounting literature not included in the Codification will become non-authoritative. This Codification is effective for Lance beginning in the third quarter of 2009.
4. EARNINGS PER SHARE
The following tables provide a reconciliation of the common shares used for basic earnings per share and diluted earnings per share:
                                 
    Quarter Ended   Six Months Ended
    June 27,   June 28,   June 27,   June 28,
(in thousands)   2009   2008   2009   2008
Weighted average number of common shares used for basic earnings per share
    31,552       31,181       31,477       31,142  
Effect of potential dilutive shares
    741       626       686       559  
 
                               
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share
    32,293       31,807       32,163       31,701  
 
                               
Anti-dilutive shares excluded from the above reconciliation
    251       95       251       867  
 
                               

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
5. EQUITY-BASED INCENTIVE
During the first quarter of 2009, we granted 73,356 restricted shares related to a long-term incentive plan for key employees that were previously accounted for as a liability. This resulted in an increase in equity and a decrease in accrued liabilities of $1.6 million during the first quarter of 2009. During the same period last year, we granted approximately 175,000 vested nonqualified stock options, 19,500 restricted shares and 19,750 shares of common stock related to a long-term incentive plan for key employees that were previously accounted for as a liability. This resulted in an increase in equity and a decrease in accrued liabilities of $0.9 million during the first quarter of 2008. There were no reclassifications from liability to equity in the second quarters of 2009 and 2008.
6. INVENTORIES
                 
    June 27,     December 27,  
(in thousands)   2009     2008  
Finished goods
  $ 27,797     $ 23,227  
Raw materials
    15,010       11,556  
Supplies, etc.
    17,050       15,293  
 
           
Total inventories at FIFO cost
    59,857       50,076  
Less adjustments to reduce FIFO cost to LIFO cost
    (7,148 )     (6,964 )
 
           
Total inventories
  $ 52,709     $ 43,112  
 
           
7. EQUITY INVESTMENT
We own a non-controlling equity interest in Late July Snacks LLC (“Late July”), an organic snack food company. Equity losses, which are not material, are included in other expense. We also manufacture products for Late July. During the first six months of 2009 and 2008, contract manufacturing revenue from Late July was approximately $2.1 million and $2.0 million, respectively. As of June 27, 2009, and December 27, 2008, accounts receivable due from Late July totaled $0.5 million and $0.4 million, respectively.
8. INCOME TAXES
We have recorded gross unrecognized tax benefits as of June 27, 2009 totaling $1.1 million and related interest and penalties of $0.3 million in other noncurrent liabilities on the condensed consolidated balance sheet. Of this amount, $1.1 million would affect the effective tax rate if subsequently recognized. We expect that certain income tax audits will be settled and various tax authorities’ statutes of limitations will expire within twelve months of our prior year end resulting in a potential $0.6 million reduction of the unrecognized tax benefit amount. We classify interest and penalties associated with income tax positions within income tax expense.
We have open years for income tax audit purposes in our major taxing jurisdictions according to statutes as follows:
     
Jurisdiction   Open years
US federal
  2005, 2007 and forward
Canada federal
  2004 and forward
Ontario provincial
  2003 and forward
Massachusetts
  2001 and forward
North Carolina
  2005 and forward
Iowa
  2005 and forward

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
9. FAIR VALUE MEASUREMENTS
We have classified assets and liabilities required to be measured at fair value into the fair value hierarchy as set forth below:
          Level 1 –   quoted prices in active markets for identical assets and liabilities.
          Level 2 –   observable inputs other than quoted prices for identical assets and liabilities.
          Level 3 –   unobservable inputs in which there is little or no market data available, which requires us to develop our own assumptions.
We measure our derivative instruments at fair value using Level 2 inputs.
The carrying amount of cash and cash equivalents, receivables and accounts payable approximates fair value due to their short-term nature. The carrying amount of debt approximates fair value since its variable interest rate is based on current market rates and interest payments are made monthly.
10. DERIVATIVE INSTRUMENTS
We are exposed to certain risks relating to our ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk and foreign exchange rate risk.
Interest Rate Swaps
Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate, Canadian Bankers’ Acceptance discount rate, Canadian prime rate and U.S. base rate interest. Interest rate swaps are entered into to manage interest rate risk associated with our variable-rate debt and maintain a desirable proportion of fixed to variable-rate debt. In February 2009, we entered into an interest rate swap agreement on an additional $15 million of debt. The notional amount of interest rate swaps increased from $50 million at December 27, 2008, to $65 million at June 27, 2009.
Foreign Currency Forwards
We are exposed to foreign exchange rate fluctuations through the operations of our Canadian subsidiary. A majority of the revenue of our Canadian operations is denominated in U.S. dollars and a substantial portion of the operations’ costs, such as raw materials and direct labor, are denominated in Canadian dollars. We have entered into a series of forward currency contracts to mitigate a portion of this foreign exchange rate exposure. The notional amount for foreign currency forwards decreased from $18.8 million at December 27, 2008, to $12.7 million at June 27, 2009.
All of our derivative instruments are accounted for as cash flow hedges.
The pre-tax income/(expense) effect of derivative instruments on the condensed consolidated statements of income is as follows:
                                 
    Quarters Ended     Six Months Ended  
    June 27,     June 28,     June 27,     June 28,  
(in thousands)   2009     2008     2009     2008  
Interest rate swaps (included in Interest expense, net)
  $ (588 )   $ (208 )   $ (1,132 )   $ (312 )
Foreign currency forwards (included in Net revenue)
    (479 )     39       (1,262 )     89  
Foreign currency forwards (included in Other expense, net)
    (30 )     6       (53 )     9  
 
                       
Total net pre-tax expense from derivative instruments
  $ (1,097 )   $ (163 )   $ (2,447 )   $ (214 )
 
                       

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
The fair value of derivative instruments in the condensed consolidated balance sheets using Level 2 inputs is as follows:
                 
    Fair Value of Asset/(Liability) at  
    June 27,     December 27,  
(in thousands)   2009     2008  
Interest rate swaps (included in Other noncurrent liabilities)
  $ (3,687 )   $ (4,272 )
Foreign currency forwards (included in Other payables and accrued liabilities)
    42       (2,094 )
 
           
Total fair value of derivative instruments
  $ (3,645 )   $ (6,366 )
 
           
The change in unrealized pre-tax gains/(losses) included in other comprehensive income due to fluctuations in interest rates and foreign exchange rates were as follows:
                                 
    Quarters Ended     Six Months Ended  
    June 27,     June 28,     June 27,     June 28,  
(in thousands)   2009     2008     2009     2008  
Interest rate swaps
  $ 623     $ 1,238     $ 585     $ (8 )
Foreign currency forwards
    1,610       35       2,136       (556 )
 
                       
Total change in unrealized pre-tax gains/(losses) from derivative instruments (effective portion)
  $ 2,233     $ 1,273     $ 2,721     $ (564 )
 
                       
The counterparty risk associated with our derivative instruments is considered minimal because the fair values of these instruments either are in a liability position or are not material at June 27, 2009.
11. COMMITMENTS AND CONTINGENCIES
Lease Obligations
We recently entered into a new operating lease agreement for a corporate office located in Charlotte, North Carolina, commencing September 1, 2009 and terminating on February 29, 2020. No payments are due under the lease in 2009. Future minimum payments are approximately $1.6 million in 2010, $2.0 million in 2011, $2.0 million in 2012, $2.1 million in 2013 and $14.8 million thereafter. The new space will allow for the consolidation of two leased administrative office locations.
Contractual Obligations
In order to fix a portion of our ingredient and packaging costs, we have entered into forward purchase agreements with certain suppliers based on market prices, forward price projections, and expected usage levels. Purchase commitments for inventory increased from $95.2 million as of December 27, 2008, to $110.7 million as of June 27, 2009, due to varying contractual obligations. We are currently contracted at least six months in advance for all major ingredients and packaging.
Customer Concentration
Sales to our largest customer, Wal-Mart Stores, Inc., were 21% of revenue for both the quarter and the six months ended June 27, 2009 and 20% of revenue for both the quarter and the six months ended June 28, 2008. Accounts receivable at June 27, 2009, and December 27, 2008, included receivables from Wal-Mart Stores, Inc. totaling $20.0 million and $18.0 million, respectively.
12. SUBSEQUENT EVENTS
On July 23, 2009, the Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on August 20, 2009, to stockholders of record on August 10, 2009.
Subsequent events have been evaluated for recognition and disclosure through the date these financial statements were filed with the SEC.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements and Risk Factors
We, from time to time, make “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our estimates, expectations, beliefs, intentions, or strategies for the future, and the assumptions underlying such statements. We use the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify our forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Factors that could cause these differences include, but are not limited to, those set forth under Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 27, 2008.
Caution should be taken not to place undue reliance on our forward-looking statements, which reflect our management’s expectations only as of the time such statements are made. Except as required by law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Results of Operations
Management’s discussion and analysis of our financial condition and results of operations are based upon the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Future events and their effects cannot be determined with absolute certainty. Therefore, management’s determination of estimates and judgments about the carrying values of assets and liabilities requires the exercise of judgment in the selection and application of assumptions based on various factors, including historical experience, current and expected economic conditions and other factors believed to be reasonable under the circumstances. We routinely evaluate our estimates, including those related to customer returns and promotional activity, provisions for bad debts, inventory valuations, useful lives of fixed assets, hedge transactions, supplemental retirement benefits, intangible asset valuations, incentive compensation, income taxes, insurance, post-retirement benefits, contingencies and legal proceedings. Actual results may differ from these estimates.
Quarter Ended June 27, 2009 Compared to Quarter Ended June 28, 2008
                                                 
                                    Favorable/
    Quarter Ended   (Unfavorable)
(dollars in thousands)   June 27, 2009   June 28, 2008   Variance
     
Revenue
  $ 236,355       100.0 %   $ 213,614       100.0 %   $ 22,741       10.6 %
Cost of sales
    139,630       59.1 %     133,691       62.6 %     (5,939 )     (4.4 %)
     
Gross margin
    96,725       40.9 %     79,923       37.4 %     16,802       21.0 %
Selling, general and administrative
    80,473       34.0 %     74,568       34.9 %     (5,905 )     (7.9 %)
Other expense, net
    547       0.2 %     161       0.1 %     (386 )     (239.8 %)
     
Earnings before interest and taxes
    15,705       6.6 %     5,194       2.4 %     10,511       202.4 %
Interest expense, net
    910       0.4 %     860       0.4 %     (50 )     (5.8 %)
Income tax expense
    5,267       2.2 %     1,626       0.8 %     (3,641 )     (223.9 %)
     
Net income
  $ 9,528       4.0 %   $ 2,708       1.3 %   $ 6,820       251.8 %
     

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Second Quarter Summary
Net income increased $6.8 million compared to the second quarter of 2008. The major factors favorably impacting results of operations were:
    higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008;
 
    the Archway acquisition that occurred in December 2008;
 
    the introduction of innovative new products in both our branded and non-branded categories;
 
    lower energy and ingredient costs;
 
    improvements in supply chain efficiencies, such as increased labor efficiencies and lower shipping costs; and
 
    improved efficiencies in our direct store delivery (“DSD”) route system, which resulted in a continuation of double-digit improvements in weekly average sales per route.
These factors were partially offset by:
    increased advertising expenses primarily as a result of the launch of our first national television campaign; and
 
    additional costs of $0.3 million associated with the relocation of the Brent & Sam’s operations from Little Rock, Arkansas to Charlotte, North Carolina.
Revenue
Total revenue increased $22.7 million or approximately 11% from the second quarter of 2008. The increase was the result of:
         
    Favorable/
    (Unfavorable)
Pricing
    4 %
Volume/Mix
    4 %
Acquisition
    3 %
 
       
Total percentage change in revenue
    11 %
 
       
As a percentage of total revenue, revenue by product category is shown below:
                 
    Quarters Ended
    June 27,   June 28,
    2009   2008
Revenue from Branded Products
    59 %     62 %
Revenue from Non-Branded Products:
               
Revenue from Private Brands
    30 %     28 %
Revenue from Contract Manufacturing
    11 %     10 %
 
               
Total Revenue from Non-Branded Products
    41 %     38 %
 
               
Total Revenue
    100 %     100 %
 
               
Compared to the second quarter of 2008, revenue from branded products increased $6.6 million or 5%. Approximately $2.7 million of the increase was due to higher net selling prices as compared to the second quarter of 2008 and $5.8 million of the increase was due to the recent acquisition of Archway. Lance ® home pack sandwich crackers experienced growth as we continued increased promotional spending to encourage consumer demand. Cape Cod ® potato chips experienced modest revenue growth this quarter despite economic pressures and increased competition in the kettle chip market. Overall sales of branded products to grocery/mass merchandisers, distributors and club stores continued to grow compared to the same quarter last year. These increases were partially offset by revenue declines in certain customers, including up-and-down the street, convenience store and food service establishments, resulting from our DSD transformation initiative and the impact of lower consumer spending at these customers.
Revenue from non-branded products, which includes private brand products and contract manufacturing, increased $16.1 million or 20% compared to the second quarter of 2008. Private brands revenue increased approximately $9.5 million or 16% compared to the second quarter of 2008, of which approximately $4.5 million of the increase related to sales price increases and the remaining increase was primarily the result of growth from new products.
Revenue from contract manufacturing increased $6.6 million or 32% compared to the second quarter of 2008. Approximately $3.3 million of the revenue increase was attributable to a short-term manufacturing contract for a new customer. The remainder of the increase was due to volume and selling price increases.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Gross Margin
Gross margin increased $16.8 million and increased from 37.4% to 40.9% as a percentage of revenue as compared to the second quarter of 2008. The increase in gross margin was mostly due to higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008, increased sales volume, improved manufacturing efficiencies, the favorable impact of foreign currency and lower ingredient and natural gas costs. These improvements were partially offset by the higher mix of non-branded product sales that generally carry a lower gross margin percentage than sales of branded products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $5.9 million, but decreased 0.9% as a percentage of revenue as compared to the second quarter of 2008. Advertising costs increased $4.0 million to support the Lance and Cape Cod brands, which includes the costs associated with our first national television campaign. Salaries, wages and benefits increased $2.7 million as a result of an increase in the number of employees and higher incentives as compared to the second quarter of 2008. Partially offsetting these increased expenses were favorable fuel rates, as well as distribution and DSD efficiencies. We plan to continue to invest in advertising and marketing throughout 2009 at levels higher than in recent years.
Income Tax Expense
Our effective income tax rate was 35.6% in the second quarter of 2009 compared to 37.5% in the second quarter of 2008. The effective income tax rate decrease was the result of increased availability and utilization of favorable permanent difference tax deductions and business incentives, and reductions in long-term tax contingencies.
Six Months Ended June 27, 2009 Compared to Six Months Ended June 28, 2008
                                                 
                                    Favorable/
    Six Months Ended   (Unfavorable)
(dollars in thousands)   June 27, 2009   June 28, 2008   Variance
     
Revenue
  $ 452,163       100.0 %   $ 411,582       100.0 %   $ 40,581       9.9 %
Cost of sales
    271,042       59.9 %     257,152       62.5 %     (13,890 )     (5.4 %)
     
Gross margin
    181,121       40.1 %     154,430       37.5 %     26,691       17.3 %
Selling, general and administrative
    153,977       34.1 %     147,425       35.8 %     (6,552 )     (4.4 %)
Other expense, net
    608       0.1 %     157       0.0 %     (451 )     (287.3 %)
     
Earnings before interest and taxes
    26,536       5.9 %     6,848       1.7 %     19,688       287.5 %
Interest expense, net
    1,722       0.4 %     1,465       0.4 %     (257 )     (17.5 %)
Income tax expense
    8,834       2.0 %     2,030       0.5 %     (6,804 )     (335.2 %)
     
Net income
  $ 15,980       3.5 %   $ 3,353       0.8 %   $ 12,627       376.6 %
     
Six Months Summary
Net income increased $12.6 million compared to the first six months of 2008. The major factors favorably impacting results of operations were:
    higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008;
 
    the introduction of innovative new products in both our branded and non-branded categories;
 
    lower energy costs, such as gasoline, diesel and natural gas;
 
    improvements in supply chain efficiencies, such as increased labor efficiencies and lower shipping costs; and
 
    improved efficiencies in our DSD route system, which resulted in a continuation of double-digit improvements in weekly average sales per route.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
These factors were partially offset by:
    increased advertising expenses primarily as a result of the launch of our first national television campaign;
 
    incremental promotional and marketing expenditures in order to reestablish the Archway brand, and to drive consumer demand for peanut butter sandwich crackers due to the recall of other manufacturers’ peanut butter products; and
 
    loss of revenue and lower net income as a result of the peanut butter recall described above that occurred during the first quarter of 2009.
Revenue
Total revenue increased $40.6 million or approximately 10% from the first six months of 2008. The increase was the result of:
         
    Favorable/
    (Unfavorable)
Pricing
    5 %
Volume/Mix
    2 %
Acquisition
    3 %
 
       
Total percentage change in revenue
    10 %
 
       
As a percentage of total revenue, revenue by product category is shown below:
                 
    Six Months Ended
    June 27,   June 28,
    2009   2008
Revenue from Branded Products
    59 %     62 %
Revenue from Non-Branded Products:
               
Revenue from Private Brands
    31 %     28 %
Revenue from Contract Manufacturing
    10 %     10 %
 
               
Total Revenue from Non-Branded Products
    41 %     38 %
 
               
Total Revenue
    100 %     100 %
 
               
Compared to the first six months of 2008, revenue from branded products increased $12.3 million or 5%. Approximately $7.2 million of this increase was due to higher selling prices as compared to the first six months of 2008 to offset higher ingredient costs and $7.2 million of the revenue increase was attributable to the Archway acquisition. Lance ® home pack sandwich crackers experienced growth during the first six months of 2009 despite the impact of the peanut butter recall that occurred during the first quarter of 2009 and the incremental promotional spending as compared to the first six months of 2008. Cape Cod ® potato chips experienced modest revenue growth even with economic pressures and increased competition in the kettle chip market. Overall sales of branded products to grocery/mass merchandisers, distributors and club stores continued to grow compared to the first six months of 2008. These increases were partially offset by revenue declines in certain customers, including up-and-down the street, convenience store and food service establishments, resulting from our DSD transformation initiative and the impact of lower consumer spending at these customers.
Revenue from non-branded products, which includes private brands and contract manufacturing, increased $28.3 million or 18% compared to the first six months of 2008. Private brands revenue increased approximately $22.3 million or 19% compared to the first six months of 2008, of which approximately $12.9 million was due to higher selling prices and $2.4 million was due to the incremental revenue as a result of the acquisition of Brent & Sam’s which occurred during the first quarter of 2008. The remainder of the growth was due to increased sales volume.
Revenue from contract manufacturing increased $6.0 million or 15% as compared to the first six months of 2008. Approximately $3.9 of the revenue increase was due to increased volume from a short-term manufacturing contract for a new customer. The remainder of the revenue increase was due to higher selling prices and volume increases.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Gross Margin
Gross margin increased $26.7 million and increased from 37.5% to 40.1% as a percentage of revenue compared to the first six months of 2008. This increase in gross margin was mostly due to higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008, increased sales volume, improved manufacturing efficiencies, lower natural gas costs and the favorable foreign currency impact of a weakening Canadian dollar on our Canadian operations. These improvements were somewhat offset by the higher mix of non-branded product sales that generally carry a lower gross margin percentage than sales of branded products as well as higher ingredient costs compared to the first six months of 2008. Overall, we expect ingredient costs to be somewhat lower and the gross margin percentage of revenue is expected to increase in the last half of 2009 compared to the first half of 2009.
Selling, General and Administrative Expenses
Selling, general and administrative costs increased $6.6 million, but decreased 1.7% as a percentage of revenue compared to the first six months of 2008. Advertising costs increased $4.4 million to support the Lance and Cape Cod brands, which includes the costs associated with our first national television campaign. In addition, we spent $1.3 million to reestablish the Archway brand in the marketplace and mitigate the negative impact of the peanut butter recall. Compensation related expenses increased $3.7 million due to increased headcount and higher incentives. Somewhat offsetting these increased expenses were favorable fuel rates, lower casualty claims and lower route truck and shipping expenses compared to the first six months of 2008.
Income Tax Expense
Compared to the first six months of 2008, the effective income tax rate decreased from 37.7% to 35.6%. The effective income tax rate decrease was the result of increased availability and utilization of favorable permanent difference tax deductions and business incentives, and reductions in long-term tax contingencies. We expect the 2009 full year income tax rate to be approximately 35% as compared to 34.6% for full year 2008.
Liquidity and Capital Resources
Liquidity
Liquidity represents our ability to generate sufficient cash flows from operating activities to meet our obligations as well as our ability to obtain appropriate financing. Therefore, liquidity cannot be considered separately from capital resources that consist primarily of current and potentially available funds for use in achieving our objectives. Currently, our liquidity needs arise primarily from working capital requirements, capital expenditures and dividends. Sufficient liquidity is expected to be available to enable us to meet these demands.
We have a universal shelf registration statement that, subject to our ability to consummate a transaction on acceptable terms, provides the flexibility to sell up to $250 million of debt or equity securities. While we have no specific plans to offer securities at this time, it could position us to expedite financing for business opportunities that support our growth strategy.
Operating Cash Flows
Net cash provided by operating activities was $20.3 million during the first six months of 2009 and $10.3 million during the first six months of 2008. Uses of cash as reflected in changes in operating assets and liabilities increased from $11.5 million during the first six months of 2008 to $16.0 million in the first six months of 2009, mostly due to the increase in inventory from the slowness in peanut butter sandwich cracker sales resulting from the peanut butter recall by other manufacturers, planned increases for new product introductions and growth in Archway product inventory.
Investing Cash Flows
Net cash used in investing activities was $14.1 million for the first six months of 2009. Capital expenditures for fixed assets, principally information systems and manufacturing equipment, totaled $14.6 million during the first six months of 2009, partially funded by proceeds from the sale of assets of $0.5 million. Capital expenditures are expected to continue at a level sufficient to support our strategic and operating needs. Capital expenditures for fiscal 2009 are projected to be between $41 million and $46 million and funded by net cash flow from operating activities, cash on hand, and our existing credit facilities.
Net cash used in investing activities during the first six months of 2008 represented capital expenditures of $21.6 million, partially offset by proceeds from the sale of fixed assets of $0.3 million. On March 14, 2008, we acquired Brent & Sam’s, Inc. for approximately $23.9 million. Capital expenditures for purchases of fixed assets were $39.1 million for the full year ended December 27, 2008.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financing Cash Flows
During both of the first six months of 2009 and 2008, we paid dividends of $0.32 per share totaling $10.2 million and $10.0 million, respectively. In addition, we received cash and related tax benefits of $2.0 million and $1.6 million during the first six months of 2009 and 2008, respectively, as a result of stock option exercises, net of stock repurchases. Proceeds from our existing credit facilities were used to fund increases in working capital during the first six months of 2009. On July 23, 2009, the Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on August 20, 2009, to stockholders of record on August 10, 2009.
During the first six months of 2008, net cash from financing activities was impacted by $24.0 million of additional borrowings under our existing credit facilities for the acquisition of Brent & Sam’s. Shortly after completing this acquisition, we repaid $2.2 million of Brent & Sam’s existing debt with cash from operations. We also made additional short-term borrowings of $14.0 million to purchase fixed assets.
Debt
Additional borrowings available under our existing U.S. and Canadian credit facilities totaled $42.3 million as of June 27, 2009. We have complied with all financial covenants contained in the credit agreement. We also maintain standby letters of credit in connection with our self-insurance reserves for casualty claims. The total amount of these letters of credit was $17.7 million as of June 27, 2009.
Contractual Obligations
In order to fix a portion of our ingredient and packaging costs, we have entered into forward purchase agreements with certain suppliers based on market prices, forward price projections and expected usage levels. Purchase commitments for inventory increased from $95.2 million as of December 27, 2008, to $110.7 million as of June 27, 2009, due to varying contractual obligations. We are currently contracted at least six months in advance for all major ingredients and packaging.
We recently entered into a new operating lease agreement for a corporate office located in Charlotte, North Carolina, commencing September 1, 2009 and terminating on February 29, 2020. No payments are due under the lease in 2009. Future minimum payments are approximately $1.6 million in 2010, $2.0 million in 2011, $2.0 million in 2012, $2.1 million in 2013 and $14.8 million thereafter. The new space will allow for the consolidation of two leased administrative office locations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or cash flows.
Market Risks
The principal market risks that may adversely impact results of operations and financial position are changes in raw material prices, energy and fuel costs, interest and foreign exchange rates and credit risks. Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate, Canadian Bankers’ Acceptance discount rate, Canadian prime rate and U.S. base rate interest. To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements to maintain a desirable proportion of fixed to variable-rate debt.
In November 2006, we entered into an interest rate swap agreement on $35 million of debt in order to fix the interest rate at 4.99%, plus applicable margin. The applicable margin on June 27, 2009, was 0.50%.
In July 2008, we entered into an interest rate swap agreement on an additional $15 million of debt in order to fix the interest rate at 3.87%, plus applicable margin. The applicable margin on this agreement on June 27, 2009, was 0.50%.
In February 2009, we entered into an interest rate swap agreement on an additional $15 million of debt in order to fix the interest rate at 1.68%, plus applicable margin. The applicable margin on this agreement on June 27, 2009, was 0.40%.
While these swaps fixed a portion of the interest rate at a predictable level, pre-tax interest expense would have been $1.1 million lower without these swaps during the first half of 2009.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
We are exposed to foreign exchange rate fluctuations through the operations of our Canadian subsidiary. A majority of the revenue of our Canadian operations is denominated in U.S. dollars and a substantial portion of the operations’ costs, such as raw materials and direct labor, are denominated in Canadian dollars. We have entered into a series of derivative forward contracts to mitigate a portion of this foreign exchange rate exposure. These contracts have maturities through June 2010. During the first six months of 2009, foreign currency fluctuations favorably impacted pre-tax earnings by $2.3 million compared to the first six months of 2008. However, this increase in pre-tax earnings was offset by the unfavorable effect of derivative forward contracts of $1.4 million during the first six months of 2009 compared to the first six months of 2008, resulting in a net favorable impact of foreign currency of $0.9 million in 2009.
Due to foreign currency fluctuations during the first six months of 2009 and 2008, we recorded gains of $3.3 million and losses of $2.2 million, respectively, in other comprehensive income because of the translation of the subsidiary’s financial statements into U.S. dollars.
We are exposed to credit risks related to our accounts receivable. We perform ongoing credit evaluations of our customers to minimize the potential exposure. For the first half of 2009, net bad debt expense was $1.0 million primarily due to increased accounts receivable, customer bankruptcies and general economic conditions. Net bad debt expense was $0.3 million for the first six months of 2008. Allowances for doubtful accounts were $1.0 million at June 27, 2009 and $0.9 million at December 27, 2008.
Item 3.   Quantitative and Qualitative Disclosures about Market Risk
The principal market risks that may adversely impact our results of operations and financial position are changes in raw material and packaging prices, energy and fuel costs, interest rates, foreign exchange rates and credit risks. Quantitative and qualitative disclosures about these market risks are included under “Market Risks” in Item 2 above, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 4.   Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities and Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective for the purpose of providing reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
There have been no changes in our internal control over financial reporting during the quarter ended June 27, 2009, that have materially affected, or that are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION
Item 1.   Legal Proceedings
We are currently subject to various routine legal proceedings and claims incidental to our business. In our opinion, such routine litigation and claims should not have a material adverse effect upon our consolidated financial statements taken as a whole.
Item 1A.   Risk Factors
There have been no material changes to the factors disclosed in Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 27, 2008.
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
Our Credit Agreement dated October 20, 2006, restricts our payment of cash dividends and repurchases of common stock if, after payment of any dividends or any repurchases of common stock, our consolidated stockholders’ equity would be less than $125.0 million. At June 27, 2009, our consolidated stockholders’ equity was $253.0 million.
In December 2008, the Board of Directors approved the repurchase of up to 100,000 shares of common stock for the purpose of acquiring shares of common stock from employees to cover withholding taxes payable by employees upon the vesting of shares of restricted stock when sales of common stock by employees are not permitted. There were no repurchases of common shares during the second quarter of 2009. The maximum number of shares that could be purchased under the plans or programs at June 27, 2009 was 93,259.
Item 4.   Submission of Matters to a Vote of Security Holders
The following proposals were submitted and approved by stockholders at the Annual Meeting of Stockholders held on April 23, 2009:
  1.   Election of nominees to the Board of Directors to serve until the Annual Meeting of Stockholders in 2012:
                 
    Votes For   Votes Withheld
Jeffrey A. Atkins
    28,611,713       193,366  
J.P. Bolduc
    28,296,762       508,317  
Isaiah Tidwell
    28,426,114       378,965  
  2.   Ratification of the selection of KPMG LLP as independent public accountants for fiscal 2009 (28,188,451 for, 563,322 against, 40,362 abstaining).

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Item 6.   Exhibits
Exhibit Index
         
No.   Description
 
  3.1    
Restated Articles of Incorporation of Lance, Inc. as amended through April 17, 1998, incorporated herein by reference to Exhibit 3 to the Registrant’s Quarterly Report on Form 10-Q for the twelve weeks ended June 13, 1998 (File No. 0-398).
       
 
  3.2    
Articles of Amendment of Lance, Inc. dated July, 14 1998 designating rights, preferences and privileges of the Registrant’s Series A Junior Participating Preferred Stock, incorporated herein by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 26, 1998 (File No. 0-398).
       
 
  3.3    
Articles of Amendment of Lance, Inc., as filed on October 30, 2008, eliminating the Registrant’s Series A Junior Participating Preferred Stock, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 31, 2008 (File No. 0-398).
       
 
  3.4    
Bylaws of Lance, Inc., as amended through November 1, 2007, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2007 (File No. 0-398).
       
 
  31.1    
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
       
 
  31.2    
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
       
 
  32    
Certification pursuant to Rule 13a-14(b), as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
*   Management contract.
Items 3 and 5 are not applicable and have been omitted.

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LANCE, INC. AND SUBSIDIARIES
Signature
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.
         
  LANCE, INC.
 
 
  By:   /s/ Rick D. Puckett    
    Rick D. Puckett   
    Executive Vice President, Chief Financial Officer,
Treasurer and Secretary 
 
 
Dated: July 24, 2009

20

EXHIBIT 31.1
LANCE, INC. AND SUBSIDIARIES
MANAGEMENT CERTIFICATION
I, David V. Singer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lance, Inc.;
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 24, 2009
     
/s/ David V. Singer
 
David V. Singer
   
President and Chief Executive Officer
   

 

EXHIBIT 31.2
LANCE, INC. AND SUBSIDIARIES
MANAGEMENT CERTIFICATION
I, Rick D. Puckett, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lance, Inc.;
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 24, 2009
     
/s/ Rick D. Puckett
 
Rick D. Puckett
   
Executive Vice President, Chief Financial Officer,
   
Treasurer and Secretary
   

 

EXHIBIT 32
LANCE, INC. AND SUBSIDIARIES
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Lance, Inc. (the “Company”) on Form 10-Q for the period ended June 27, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, David V. Singer, President and Chief Executive Officer of the Company, and Rick D. Puckett, Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
  (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
  (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to Lance, Inc. and will be retained by Lance, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
             
/s/ David V. Singer
 
David V. Singer
      /s/ Rick D. Puckett
 
Rick D. Puckett
   
President and Chief Executive Officer
      Executive Vice President, Chief Financial Officer,    
July 24, 2009
      Treasurer and Secretary    
 
      July 24, 2009