Lance Inc. (LNCE, Financial) filed Quarterly Report for the period ended 2009-09-26.
Lance Inc. manufactures markets and distributes a variety of branded and private label snack foods and bakery products. Products include branded sandwich crackers sandwich cookies restaurant crackers and bread basket items candy chips meat snacks nuts and private label cookies and crackers. Products are packaged as individual single servings and as larger packages or multi-pack configurations and are distributed to grocery stores convenience stores vending machines food service institutions and through ``up and down the street`` outlets . Lance Inc. has a market cap of $875.6 million; its shares were traded at around $27.38 with a P/E ratio of 26.9 and P/S ratio of 1. The dividend yield of Lance Inc. stocks is 2.3%.
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 subsidiarys 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.
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.
Read the The complete ReportLNCE is in the portfolios of John Keeley of Keeley Fund Management.
Lance Inc. manufactures markets and distributes a variety of branded and private label snack foods and bakery products. Products include branded sandwich crackers sandwich cookies restaurant crackers and bread basket items candy chips meat snacks nuts and private label cookies and crackers. Products are packaged as individual single servings and as larger packages or multi-pack configurations and are distributed to grocery stores convenience stores vending machines food service institutions and through ``up and down the street`` outlets . Lance Inc. has a market cap of $875.6 million; its shares were traded at around $27.38 with a P/E ratio of 26.9 and P/S ratio of 1. The dividend yield of Lance Inc. stocks is 2.3%.
Highlight of Business Operations:
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 subsidiarys 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.
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.
Read the The complete ReportLNCE is in the portfolios of John Keeley of Keeley Fund Management.
