Snyder's-Lance, Inc.
LANCE INC (Form: 10-Q, Received: 10/30/2009 16:33:19)
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 September 26, 2009
Commission File Number 0-398
(LANCE INC 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.)
     
13024 Ballantyne Corporate Place
Suite 900
Charlotte, North Carolina
(Address of principal executive offices)
  28277
(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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  þ Accelerated filer  o  
Non-accelerated filer  o
(Do not check if a smaller reporting company)
Smaller reporting company  o
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 October 26, 2009, was 32,066,113 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 Nine Months Ended September 26, 2009 and September 27, 2008
(in thousands, except share and per share data)
                                 
    Quarter Ended     Nine Months Ended  
    September 26,     September 27,     September 26,     September 27,  
    2009     2008     2009     2008  
 
                               
Net revenue
  $ 234,902     $ 225,587     $ 687,065     $ 637,169  
Cost of sales
    140,129       143,040       411,171       400,192  
 
                       
Gross margin
    94,773       82,547       275,894       236,977  
 
                       
 
                               
Selling, general and administrative
    80,019       72,337       233,996       219,762  
Other expense/(income), net
    644       (536 )     1,252       (379 )
 
                       
Earnings before interest and income taxes
    14,110       10,746       40,646       17,594  
 
                               
Interest expense, net
    796       708       2,518       2,173  
 
                       
Income before income taxes
    13,314       10,038       38,128       15,421  
 
                               
Income tax expense
    4,511       3,229       13,345       5,258  
 
                       
Net income
  $ 8,803     $ 6,809     $ 24,783     $ 10,163  
 
                       
 
                               
Basic earnings per share
  $ 0.28     $ 0.22     $ 0.79     $ 0.33  
Weighted average shares outstanding — basic
    31,622,000       31,243,000       31,526,000       31,176,000  
 
                               
Diluted earnings per share
  $ 0.27     $ 0.21     $ 0.77     $ 0.32  
Weighted average shares outstanding — diluted
    32,519,000       31,911,000       32,286,000       31,765,000  
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

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LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of September 26, 2009 (Unaudited) and December 27, 2008
(in thousands, except share data)
                 
    September 26,     December 27,  
    2009     2008  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 8,629     $ 807  
Accounts receivable, net of allowances of $1,111 and $863, respectively
    87,422       74,406  
Inventories
    53,940       43,112  
Deferred income taxes
    7,641       9,778  
Prepaid expenses and other current assets
    14,501       12,933  
 
           
Total current assets
    172,133       141,036  
 
               
Other assets:
               
Fixed assets, net of accumulated depreciation of $272,939 and $267,456, respectively
    217,618       216,085  
Goodwill, net
    83,598       80,110  
Other intangible assets, net
    23,574       23,966  
Other noncurrent assets
    5,555       4,949  
 
           
Total assets
  $ 502,478     $ 466,146  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 29,379     $ 25,939  
Other payables and accrued liabilities
    62,346       58,630  
Short-term debt
          7,000  
 
           
Total current liabilities
    91,725       91,569  
 
               
Other liabilities:
               
Long-term debt
    100,000       91,000  
Deferred income taxes
    30,500       31,241  
Other noncurrent liabilities
    16,406       16,829  
 
           
Total liabilities
    238,631       230,639  
 
               
Commitments and contingencies
           
 
               
Stockholders’ equity:
               
Common stock, 32,054,562 and 31,522,953 shares outstanding, respectively
    26,711       26,268  
Preferred stock, no shares outstanding
           
Additional paid-in capital
    58,675       49,138  
Retained earnings
    170,441       160,938  
Accumulated other comprehensive income/(loss)
    8,020       (837 )
 
           
Total stockholders’ equity
    263,847       235,507  
 
           
Total liabilities and stockholders’ equity
  $ 502,478     $ 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 Nine Months Ended September 26, 2009 and September 27, 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
                      10,163             10,163  
Foreign currency translation adjustment
                            (3,558 )     (3,558 )
Net unrealized losses on derivatives, net of $136 tax effect
                            (209 )     (209 )
Actuarial loss recognized in net income, net of $48 tax effect
                            (82 )     (82 )
 
                                               
Total comprehensive income
                                            6,314  
 
                                               
 
                                               
Cash dividends paid to stockholders
                      (15,083 )           (15,083 )
 
                                               
Stock options exercised, including $360 excess tax benefit
    135,567       113       2,179                   2,292  
 
                                               
Equity-based incentive expense previously recognized under a liability plan
    39,250       33       876                   909  
 
                                               
Amortization of nonqualified stock options
                829                   829  
 
                                               
Issuances and amortization of restricted stock and units, net of forfeitures
    120,872       101       2,418                   2,519  
 
                                               
     
Balance, September 27, 2008
    31,510,432     $ 26,258     $ 47,732     $ 158,436     $ 12,451     $ 244,877  
     
 
                                               
Balance, December 27, 2008
    31,522,953     $ 26,268     $ 49,138     $ 160,938     $ (837 )   $ 235,507  
 
                                               
Comprehensive income/(loss):
                                               
Net income
                      24,783             24,783  
Foreign currency translation adjustment
                            6,649       6,649  
Net unrealized gains on derivatives, net of $1,042 tax effect
                            2,317       2,317  
Actuarial loss recognized in net income, net of $62 tax effect
                            (109 )     (109 )
 
                                               
Total comprehensive income
                                            33,640  
 
                                               
 
                                               
Cash dividends paid to stockholders
                      (15,280 )           (15,280 )
 
                                               
Stock options exercised, including $830 excess tax benefit
    201,560       168       3,638                   3,806  
 
                                               
Equity-based incentive expense previously recognized under a liability plan
    73,356       61       1,531                   1,592  
 
                                               
Amortization of nonqualified stock options
                951                   951  
 
                                               
Issuances and amortization of restricted stock and units, net of forfeitures
    263,434       220       3,538                   3,758  
 
                                               
Repurchase of common stock
    (6,741 )     (6 )     (121 )                 (127 )
 
                                               
     
Balance, September 26, 2009
    32,054,562     $ 26,711     $ 58,675     $ 170,441     $ 8,020     $ 263,847  
     
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 Nine Months Ended September 26, 2009 and September 27, 2008

(in thousands)
                 
    Nine Months Ended  
    September 26,     September 27,  
    2009     2008  
 
               
Operating activities
               
Net income
  $ 24,783     $ 10,163  
Adjustments to reconcile net income to cash from operating activities:
               
Depreciation and amortization
    25,945       23,917  
Stock-based compensation expense
    4,709       3,348  
Loss/(gain) on sale of fixed assets
    529       (333 )
Changes in operating assets and liabilities, excluding business acquisition
    (10,871 )     (9,994 )
 
           
Net cash provided by operating activities
    45,095       27,101  
 
           
 
               
Investing activities
               
Purchases of fixed assets
    (28,667 )     (30,616 )
Proceeds from sale of fixed assets
    667       2,737  
Business acquisition, net of cash acquired
          (23,931 )
 
           
Net cash used in investing activities
    (28,000 )     (51,810 )
 
           
 
               
Financing activities
               
Dividends paid
    (15,280 )     (15,083 )
Issuance and repurchase of common stock
    3,679       2,292  
Net proceeds from existing credit facilities
    2,000       32,131  
Repayments of debt from business acquisition
          (2,239 )
 
           
Net cash (used in)/provided by financing activities
    (9,601 )     17,101  
 
           
 
               
Effect of exchange rate changes on cash
    328       (58 )
 
           
 
               
Increase/(decrease) in cash and cash equivalents
    7,822       (7,666 )
Cash and cash equivalents at beginning of period
    807       8,647  
 
           
Cash and cash equivalents at end of period
  $ 8,629     $ 981  
 
           
 
               
Supplemental information:
               
Cash paid for income taxes, net of refunds of $154 and $58, respectively
  $ 9,911     $ 1,982  
Cash paid for interest
  $ 2,699     $ 2,307  
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 nine months ended September 26, 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.
Prior year amounts shown in the accompanying condensed consolidated financial statements have been reclassified for consistent presentation.
2. 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 are superseded and all other accounting literature not included in the Codification is non-authoritative. This Codification was effective for Lance beginning in the third quarter of 2009.
3. 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   Nine Months Ended
    September 26,   September 27,   September 26,   September 27,
(in thousands)   2009   2008   2009   2008
Weighted average number of common shares used for basic earnings per share
    31,622       31,243       31,526       31,176  
Effect of potential dilutive shares
    897       668       760       589  
 
                               
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share
    32,519       31,911       32,286       31,765  
 
                               
Anti-dilutive shares excluded from the above reconciliation
    25       100       30       367  
 
                               
4. 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 and third quarters of 2009 and 2008.

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
5. INVENTORIES
                 
    September 26,     December 27,  
(in thousands)   2009     2008  
 
               
Finished goods
  $ 32,646     $ 23,227  
Raw materials
    10,697       11,556  
Supplies, etc.
    17,753       15,293  
 
           
Total inventories at FIFO cost
    61,096       50,076  
Less adjustments to reduce FIFO cost to LIFO cost
    (7,156 )     (6,964 )
 
           
Total inventories
  $ 53,940     $ 43,112  
 
           
6. ACQUISITIONS
On December 8, 2008, we acquired substantially all of the assets of Archway Cookies, LLC. In the third quarter of 2009, we completed the purchase price allocation of the assets acquired, which resulted in an increase in Inventories and a decrease in Goodwill of $0.5 million.
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. Contract manufacturing revenue from Late July was approximately $3.3 million for both the first nine months ending 2009 and 2008. As of September 26, 2009, and December 27, 2008, accounts receivable due from Late July totaled $0.7 million and $0.4 million, respectively.
8. INCOME TAXES
We have recorded gross unrecognized tax benefits as of September 26, 2009 totaling $0.9 million and related interest and penalties of $0.3 million in other noncurrent liabilities on the condensed consolidated balance sheet. Of this amount, $0.9 million would affect the effective tax rate if subsequently recognized. Various taxing authorities’ statutes of limitations related to the computation of our unrecognized tax benefits have expired since the beginning of 2009 and reduced the unrecognized tax benefit amount by $0.3 million. We expect that certain income tax audits will be settled, and additional statutes of limitations will likely expire before the end of 2009 and may result in a potential $0.4 million reduction in 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
  2007 and forward
Canada federal
  2005 and forward
Ontario provincial
  2003 and forward
Massachusetts
  2001 and forward
North Carolina
  2005 and forward
Iowa
  2005 and forward
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.

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
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. We use derivative instruments to manage interest rate and foreign exchange rate risks.
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 to 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 September 26, 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 $6.7 million at September 26, 2009.
All of our derivative instruments are accounted for as cash flow hedges. The effective portion of the change in fair value is included in Accumulated other comprehensive income/(loss), net of related tax effects, with the corresponding asset or liability recorded in the Condensed Consolidated Balance Sheets.
The pre-tax income/(expense) effect of derivative instruments on the Condensed Consolidated Statements of Income is as follows:
                                 
    Quarter Ended     Nine Months Ended  
(in thousands)   September 26, 2009     September 27, 2008     September 26, 2009     September 27, 2008  
 
                               
Interest rate swaps (included in Interest expense, net)
  $ (605 )   $ (241 )   $ (1,737 )   $ (553 )
Foreign currency forwards (included in Net revenue)
    93       (96 )     (1,169 )     (7 )
Foreign currency forwards (included in Other expense, net)
    1       29       (52 )     38  
 
                       
Total net pre-tax expense from derivative instruments
  $ (511 )   $ (308 )   $ (2,958 )   $ (522 )
 
                       
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  
    September 26,     December 27,  
(in thousands)   2009     2008  
 
               
Interest rate swaps (included in Other noncurrent liabilities)
  $ (3,645 )   $ (4,272 )
Foreign currency forwards (included in Other payables and accrued liabilities)
          (2,094 )
Foreign currency forwards (included in Prepaid expenses and other current assets)
    638        
 
           
Total fair value of derivative instruments
  $ (3,007 )   $ (6,366 )
 
           

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LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
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:
                                 
    Quarter Ended     Nine Months Ended  
(in thousands)   September 26, 2009     September 27, 2008     September 26, 2009     September 27, 2008  
 
                               
Interest rate swaps
  $ 42     $ (162 )   $ 627     $ (170 )
Foreign currency forwards
    596       381       2,732       (175 )
 
                       
Total change in unrealized pre-tax gains/(losses) from derivative instruments (effective portion)
  $ 638     $ 219     $ 3,359     $ (345 )
 
                       
The counter party 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 September 26, 2009.
11. COMMITMENTS AND CONTINGENCIES
Lease Obligations
In the third quarter of 2009, we entered into a 10-year operating lease agreement for a corporate office located in Charlotte, North Carolina. 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 in years thereafter. The new space allows for the consolidation of two leased administrative office locations.
Contractual Obligations
In order to mitigate the risks of volatility in commodity markets to which we are exposed, 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 decreased from $95.2 million as of December 27, 2008, to $85.6 million as of September 26, 2009, due to varying contractual obligations. Our practice is to contract at least six months in advance for all major ingredients and packaging.
Customer Concentration
Sales to our largest customer, Wal-Mart Stores, Inc., were 22% and 21% of revenue for the quarter and nine months ended September 26, 2009, respectively, and 20% of revenue for both the quarter and the nine months ended September 27, 2008. Accounts receivable at September 26, 2009 and December 27, 2008, included receivables from Wal-Mart Stores, Inc. totaling $24.9 million and $18.0 million, respectively.
12. SUBSEQUENT EVENTS
Subsequent events have been evaluated for recognition and disclosure through the date these financial statements were filed with the SEC.
On October 13, 2009, we completed the purchase of the Stella D’oro ® brand and certain manufacturing equipment from Stella D’oro Biscuit Co., Inc. for approximately $21 million. Stella D’oro ® is a leading brand in the specialty cookie market. Stella D’oro ® products include shelf stable cookies, breakfast treats, breadsticks and biscotti that are sold in grocery stores and mass merchants throughout the United States, with a high concentration in the Northeast and Southeast regions of the country. The Stella D’oro ® brand will enhance our portfolio of niche snack food offerings to our customers. We will manufacture the majority of the products in our Ashland, Ohio facility. The initial purchase price allocation and valuation of the assets acquired is in process.

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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 September 26, 2009 Compared to Quarter Ended September 27, 2008
                                                 
                                    Favorable/
    Quarter Ended   (Unfavorable)
(dollars in thousands)   September 26, 2009   September 27, 2008   Variance
     
 
                                               
Revenue
  $ 234,902       100.0 %   $ 225,587       100.0 %   $ 9,315       4.1 %
Cost of sales
    140,129       59.7 %     143,040       63.4 %     2,911       2.0 %
     
Gross margin
    94,773       40.3 %     82,547       36.6 %     12,226       14.8 %
Selling, general and administrative
    80,019       34.1 %     72,337       32.1 %     (7,682 )     -10.6 %
Other expense/(income), net
    644       0.3 %     (536 )     -0.2 %     (1,180 )     -220.1 %
     
Earnings before interest and taxes
    14,110       6.0 %     10,746       4.8 %     3,364       31.3 %
Interest expense, net
    796       0.3 %     708       0.3 %     (88 )     -12.4 %
Income tax expense
    4,511       1.9 %     3,229       1.4 %     (1,282 )     -39.7 %
     
Net income
  $ 8,803       3.7 %   $ 6,809       3.0 %   $ 1,994       29.3 %
     

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Third Quarter Summary
Net income increased $2.0 million, or approximately 29%, compared to the third quarter of 2008. The major factors that favorably influenced results of operations were:
    lower energy, ingredient and packaging costs;
 
    higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008;
 
    net income generated by Archway products acquired in December 2008;
 
    introductions of innovative new products in both our private brand and branded categories;
 
    improvements in supply chain efficiencies, such as lower shipping costs; and
 
    improved efficiencies in our direct store delivery (“DSD”) route system, which resulted in improvements in weekly average sales per route and lower route costs.
These factors were partially offset by:
    increased advertising expenses primarily as a result of the launch of our first national television campaign;
 
    increased employee-related costs, such as compensation, incentives, and insurance-related expenses, due to recent acquisitions, strong operational performance, and additional employees to support company objectives;
 
    lower sales in the convenience store and food service channels, due to the economic downturn and impact of our DSD transformation initiative;
 
    the closure of our Brent & Sam’s Little Rock, Arkansas facility and the subsequent relocation of the manufacturing equipment and production to Charlotte, North Carolina;
 
    transaction costs related to the purchase of the Stella D’oro ® brand and certain related machinery and equipment; and
 
    costs related to the implementation of our ERP application system.
Revenue
Total revenue increased $9.3 million, or approximately 4%, from the third quarter of 2008 and was affected by the following factors:
         
    Favorable/
    (Unfavorable)
 
       
Acquisition
              3 %
Pricing, net of allowances
    2 %
Volume/Mix, net
    -1 %
 
       
Total percentage change in revenue
    4 %
 
       
As a percentage of total revenue, revenue by product category is as follows:
                 
    Quarter Ended
    September 26, 2009   September 27, 2008
 
               
Branded Products
    58 %     60 %
Private Brand Products
    32 %     30 %
Contract Manufacturing
    10 %     10 %
 
               
Total Revenue
              100 %               100 %
 
               
Compared to the third quarter of 2008, revenue from branded products increased $0.7 million or 1%. Sales of branded products to grocery stores, distributors and discount stores generated significant revenue growth compared to the same quarter last year due to acquisitions, new products offerings and increased selling prices. These increases were significantly offset by double-digit revenue declines from certain customers, including up-and-down the street, convenience store and food service establishments resulting from the impact of lower consumer spending in these channels and our planned DSD transformation initiative. In addition, branded product revenue from mass merchandisers was down slightly due to changes in store formats, which reduced the number of opportunities for promotional displays compared to the third quarter of 2008.
Private brand revenue increased approximately $7.7 million or 11% compared to the third quarter of 2008, primarily related to growth from new products and increased selling prices. Growth in this category is also being driven by increased demand from consumers for store brands, which is believed to be the result of the economic downturn.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Revenue from contract manufacturing increased $0.9 million or 4% compared to the third quarter of 2008 due to volume and selling price increases.
Gross Margin
Gross margin increased $12.2 million, or 3.7% as a percentage of revenue, compared to the third quarter of 2008. The increase in gross margin was mostly due to lower ingredient, natural gas and packaging costs, as well as the favorable impact of higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008. Partially offsetting these improvements was a higher mix of private brand product sales that have a lower gross margin percentage than sales of branded products.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses increased $7.7 million, or 2.0% as a percentage of revenue, as compared to the third quarter of 2008. Advertising and marketing costs increased $2.6 million and $0.7 million, respectively, to support the Lance and Cape Cod brands, which includes the costs associated with our first national television campaign that was completed during the third quarter of 2009. Compensation related expenses increased $2.5 million due to additional employees and higher incentive expense, as well as higher medical and casualty costs, which increased $1.1 million compared to the third quarter of 2008. Merchandising costs increased $0.7 million due to a higher number of format changes at our customers’ locations. In addition, there were incremental expenses related to our ERP application system implementation. Partially offsetting these increased expenses were favorable fuel rates, as well as distribution and DSD efficiencies.
Other Expense, Net
Other expense, net increased $1.2 million due to losses on the sale of fixed assets during the third quarter of 2009 compared to gains in the third quarter of 2008. In addition, we incurred higher foreign currency transaction losses during the third quarter of 2009.
Income Tax Expense
Our effective income tax rate was 33.9% in the third quarter of 2009 compared to 32.2% in the third quarter of 2008. The effective income tax rate increase was the result of higher pre-tax net income, which reduced the utilization of favorable permanent difference tax deductions, and reductions in long-term tax contingencies.
Nine Months Ended September 26, 2009 Compared to Nine Months Ended September 27, 2008
                                                 
                                    Favorable/
    Nine Months Ended   (Unfavorable)
(dollars in thousands)   September 26, 2009   September 27, 2008   Variance
     
 
                                               
Revenue
  $ 687,065       100.0 %   $ 637,169       100.0 %   $ 49,896       7.8 %
Cost of sales
    411,171       59.8 %     400,192       62.8 %     (10,979 )     -2.7 %
     
Gross margin
    275,894       40.2 %     236,977       37.2 %     38,917       16.4 %
Selling, general and administrative
    233,996       34.1 %     219,762       34.5 %     (14,234 )     -6.5 %
Other expense/(income), net
    1,252       0.2 %     (379 )     -0.1 %     (1,631 )     -430.3 %
     
Earnings before interest and taxes
    40,646       5.9 %     17,594       2.8 %     23,052       131.0 %
Interest expense, net
    2,518       0.4 %     2,173       0.3 %     (345 )     -15.9 %
Income tax expense
    13,345       1.9 %     5,258       0.8 %     (8,087 )     -153.8 %
     
Net income
  $ 24,783       3.6 %   $ 10,163       1.6 %   $ 14,620       143.9 %
     
Nine Months Summary
Net income increased $14.6 million, or approximately 144%, compared to the first nine months of 2008. The major factors that favorably influenced results of operations were:
    higher selling prices aimed at offsetting the escalation in ingredient costs that occurred throughout 2008;
 
    lower energy, ingredient and packaging costs;
 
    introductions of innovative new products in both our private brand and branded categories;
 
    net income generated by Archway products acquired in December 2008 and Brent and Sam’s products acquired in March 2008;

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
    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 improvements in weekly average sales per route and lower route costs.
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;
 
    the closure of our Brent & Sam’s Little Rock, Arkansas facility and the subsequent relocation of the manufacturing equipment and production to Charlotte, North Carolina;
 
    acquisition costs related to the purchase of the Stella D’oro ® brand and certain related machinery and equipment; and
 
    costs related to the implementation of our ERP application system.
Revenue
Total revenue increased $49.9 million, or approximately 8%, from the first nine months of 2008. The increase in revenue was the result of:
         
    Favorable/
    (Unfavorable)
 
       
Pricing, net of allowances
    4 %
Acquisitions
    3 %
Volume/Mix, net
    1 %
 
       
Total percentage change in revenue
              8 %
 
       
As a percentage of total revenue, revenue by product category is shown below:
                 
    Nine Months Ended
    September 26, 2009   September 27, 2008
 
               
Branded Products
    59 %     61 %
Private Brand Products
    31 %     29 %
Contract Manufacturing
    10 %     10 %
 
               
Total Revenue
              100 %               100 %
 
               
Compared to the first nine months of 2008, revenue from branded products increased $13.0 million or 3%. This increase was significantly impacted by the acquisition of Archway as well as price increases to offset higher ingredient costs that occurred in 2008. Lance ® home pack sandwich crackers experienced growth during the first nine 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 nine months of 2008. Cape Cod ® potato chips experienced modest revenue growth despite economic pressures and increased competition in the kettle chip market. Overall sales of branded products to grocery stores, distributors, discount stores, and club stores continued to grow compared to the first nine months of 2008. These increases were partially offset by revenue declines for 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.
Private brand revenue increased approximately $30.0 million or 16% compared to the first nine months of 2008. The major drivers for the increase in revenue were new product offerings, selling price increases and incremental revenue as a result of the acquisition of Brent & Sam’s that occurred during the first quarter of 2008. Growth in this category is also being driven by increased demand from consumers for store brands, which is believed to be the result of the economic downturn.
Revenue from contract manufacturing increased $6.9 million or 11% as compared to the first nine months of 2008. Approximately $5.5 million 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 $38.9 million, or 3.0% as a percentage of revenue, compared to the first nine 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, lower ingredient and packaging costs, 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 private brand product sales that generally carry a lower gross margin percentage than sales of branded products. Overall, we expect ingredient costs to be slightly lower in the last quarter of 2009 compared to the first nine months of 2009, and the overall gross margin percentage is expected to increase in the fourth quarter of 2009.
Selling, General and Administrative Expenses
Selling, general, and administrative costs increased $14.2 million, but decreased 0.4% as a percentage of revenue, compared to the first nine months of 2008. Advertising and marketing costs increased $8.8 million to support the Lance and Cape Cod brands, which includes the costs associated with our first national television campaign. While we do not anticipate advertising costs to be significant in the fourth quarter of 2009, we plan to continue to invest in advertising in 2010. 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 $6.4 million due to additional employees and higher incentive expense. Information technology expenditures also increased due to the continuation of our ERP application system implementation. Somewhat offsetting these increased expenses were favorable fuel rates, lower shipping expenses and lower route costs, because of the DSD transformation initiatives compared to the first nine months of 2008.
Other Expense, Net
Other expense, net increased $1.6 million compared to the first nine months of 2008 due to losses on the sale of fixed assets, as well as foreign currency transaction losses during the first nine months of 2009 compared to gains during the first nine months of 2008.
Income Tax Expense
Compared to the first nine months of 2008, the effective income tax rate increased from 34.1% to 35.0%. The effective income tax rate increase was the result of lower utilization of favorable permanent difference tax deductions partially offset by increased business incentives and a lesser reduction in long-term tax contingencies compared to the same period in the prior year. 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 $45.1 million during the first nine months of 2009 and $27.1 million during the first nine months of 2008. Uses of cash as reflected in changes in operating assets and liabilities increased from $10.0 million during the first nine months of 2008 to $10.9 million in the first nine months of 2009, due primarily to higher inventory levels as a result of acquisitions and introductions of new products.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investing Cash Flows
Net cash used in investing activities was $28.0 million for the first nine months of 2009. Capital expenditures for fixed assets, principally information systems and manufacturing equipment, totaled $28.7 million during the first nine months of 2009, partially funded by proceeds from the sale of assets of $0.7 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 $43 million and $45 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 nine months of 2008 represented capital expenditures of $30.6 million, partially offset by proceeds from the sale of fixed assets of $2.7 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.
On October 13, 2009, we completed the purchase of the Stella D’oro ® brand as well as certain manufacturing equipment from Stella D’oro Biscuit Co., Inc. for a purchase price of approximately $21 million. Available cash on hand and funds available under our existing credit facilities were used to fund this acquisition.
Financing Cash Flows
During both of the first nine months of 2009 and 2008, we paid dividends of $0.48 per share totaling $15.3 million and $15.1 million, respectively. In addition, we received cash and related tax benefits of $3.7 million and $2.3 million during the first nine 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 partially fund purchases of fixed assets during the first nine months of 2009. On October 29, 2009, the Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on November 20, 2009, to stockholders of record on November 10, 2009.
During the first nine 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 net short-term borrowings of $8.1 million during the first nine months of 2008 to fund increases in working capital.
Debt
Additional borrowings available under our existing U.S. and Canadian credit facilities totaled $48.0 million as of September 26, 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 $15.7 million as of September 26, 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 decreased from $95.2 million as of December 27, 2008, to $85.6 million as of September 26, 2009, due to varying contractual obligations. We are currently contracted at least six months in advance for all major ingredients and packaging.
During the third quarter of 2009, we entered into a 10-year 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 in years thereafter. The new space allows for the consolidation of two leased administrative office locations and will allow for greater efficiency within functional areas as well as across functional departments.
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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 September 26, 2009, was 0.40%. 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 September 26, 2009, was 0.40%. 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 September 26, 2009, was 0.32%. While these swaps fixed a portion of the interest rate at a predictable level, pre-tax interest expense would have been $0.6 million and $1.7 million lower without these swaps during the third quarter and the first nine months of 2009, respectively.
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 nine months of 2009, foreign currency fluctuations favorably impacted pre-tax earnings by $2.4 million compared to the first nine months of 2008. However, this increase in pre-tax earnings was offset by the unfavorable effect of derivative forward contracts of $1.2 million during the first nine months of 2009 compared to the first nine months of 2008, resulting in a net favorable impact of foreign currency of $1.2 million in 2009.
Due to foreign currency fluctuations during the first nine months of 2009 and 2008, we recorded gains of $6.6 million and losses of $3.6 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 nine months 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 $0.4 million for the first nine months of 2008. Allowances for doubtful accounts were $1.1 million at September 26, 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 September 26, 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 September 26, 2009, our consolidated stockholders’ equity was $263.8 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 third quarter of 2009. The maximum number of shares that could be purchased under the plans or programs at September 26, 2009 was 93,259.
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.
Items 3, 4 and 5 are not applicable and have been omitted.

18


Table of Contents

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: October 30, 2009

19

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: October 30, 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: October 30, 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 September 26, 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
      /s/ Rick D. Puckett
 
       
David V. Singer
President and Chief Executive Officer
October 30, 2009
      Rick D. Puckett
Executive Vice President, Chief Financial Officer,
Treasurer and Secretary
October 30, 2009