##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 29, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-398
 LANCE, INC.
  North Carolina
    
    56-0292920(State of Incorporation)
    
    (I.R.S. Employer Identification Number)
 14120 Ballantyne Corporate Place, Suite 350, Charlotte, North Carolina 28273
  Post Office Box 32395, Charlotte, North Carolina 28232-2395
  704) 554-1421
  Title of Each Class
    
    Name of Each Exchange on Which Registered$0.83-1/3 Par Value Common Stock
    
    The NASDAQ Stock Market LLCRights to Purchase $1 Par Value Series
A Junior Participating Preferred Stock
    
    The NASDAQ Stock Market LLC
 NONE
 Yes o No þ
 Yes o No þ
 Yes þ No o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
   Documents Incorporated by Reference




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##### 



LANCE, INC.
 FORM 10-K
TABLE OF CONTENTS
 PagePART 1Item 1
    
    Business
    
    
    1Item 1A
    
    Risk Factors
    
    
    3Item 1B
    
    Unresolved Staff Comments
    
    
    5Item 2
    
    Properties
    
    
    5Item 3
    
    Legal Proceedings
    
    
    5Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    6Separate Item
    
    Executive Officers of the Registrant
    
    
    6PART IIItem 5
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    7Item 6
    
    Selected Financial Data
    
    
    8Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 7A
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 8
    
    Financial Statements and Supplementary Data
    
    
    23Report of Independent Registered Public Accounting Firm
    
    
    49Managements Report on Internal Control Over Financial Reporting
    
    
    51Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    52Item 9A
    
    Disclosure Controls and Procedures
    
    
    52Item 9B
    
    Other Information
    
    
    52PART IIIItem 10
    
    Directors, Executive Officers and Corporate Governance
    
    
    53PART IVItem 15
    
    Exhibits and Financial Statement Schedules
    
    
    53Signatures
    
    
    58Exhibit 4.5-Third Supplement to Preferred Shares Rights AgreementExhibit 21-Subsidiaries of Lance, Inc.Exhibit 23-Consent of Independent Registered Public Accounting FirmExhibit 31.1-Section 302 Certification of the CEOExhibit 31.2-Section 302 Certification of the CFOExhibit 32-Section 906 Certification of the CEO & CFO




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##### Table of Contents



PART I
 
 Item 1. Business
 General
  Products
  ® ® ®
 Intellectual Property
   1




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Distribution
   Customers
  Raw Materials
  Competition and Industry
  Employees
  2




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Other Matters
  
 Item 1A. Risk Factors
  Price competition and industry consolidation could adversely impact our results.
  Increases in prices or availability of ingredients and other market driven costs could
negatively impact our results.
  Product price increases may negatively impact total revenue.
  3




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We are exposed to risks resulting from several large customers.
  Inability to anticipate changes in consumer preferences may result in decreased demand for
products, which could have an adverse impact on our future growth and operating results.
  Implementation of an Enterprise Resource Planning (ERP) system could cause interruption to
business operations or inability to account for business transactions.
  Future product recalls or safety concerns could adversely impact our results of operations.
  Food industry and regulatory factors could adversely affect our revenues and costs.
  Acquisitions and divestitures may result in financial results that are different than
expected.
  4




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Our ability to execute our strategic initiatives could adversely affect our financial
performance.
  We are exposed to interest rate volatility, foreign exchange rate volatility and credit
risks.
  Any business disruption due to natural disasters or catastrophic events could adversely impact
our financial performance.
   
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
    
 Item 3. Legal Proceedings
  5




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 Separate Item. Executive Officers of the Registrant
  Name
    
    Age
    
    Information About OfficerDavid V. Singer
    
    
    52
    
    
    President and Chief Executive Officer of
Lance, Inc. since 2005; Executive Vice
President and Chief Financial Officer of
Coca-Cola Bottling Co. Consolidated, a
beverage manufacturer and distributor, from
2001 to 2005.Rick D. Puckett
    
    
    54
    
    
    Executive Vice President, Chief Financial
Officer and Secretary of Lance, Inc. since
January 2006 and Treasurer of Lance, Inc.
since April 2006; Executive Vice President,
Chief Financial Officer and Treasurer of
United Natural Foods, Inc., a wholesale
distributor of natural and organic products
from 2005 to January 2006; Vice President,
Chief Financial Officer and Treasurer of
United Natural Foods, Inc. from 2003 to
2005; and various executive positions at
Suntory Water Group, Inc, a bottled water
distribution company, including Chief
Financial Officer, Chief Information
Officer, Vice President, Corporate
Controller and Vice President Business
Development and Planning from 1998 to 2002.Glenn A. Patcha
    
    
    44
    
    
    Senior Vice President  Sales and Marketing
of Lance, Inc. since January 2007; Senior
Vice President of Marketing ConAgra Grocery
Products Division, a packaged foods company,
2003 to June 2006; various executive
positions with Eastman Kodak including, VP
of Marketing for Kodaks North American
Consumer Imaging Division from 1998 to 2003.Blake W. Thompson
    
    
    52
    
    
    Senior Vice President  Supply Chain of
Lance, Inc. since February 2007; Vice
President  Supply Chain of Lance, Inc.
since 2005; Senior Vice President, Supply
Chain of Tasty Baking, a snack food
manufacturer and distributor, from 2004 to
2005; Region Vice President of Operations,
Northeast Region of Frito Lay (a division of
PepsiCo, Inc.) a snack food manufacturer and
distributor, from 2001 to 2004.Frank I. Lewis
    
    
    55
    
    
    Senior Vice President  Sales of Lance,
Inc. since February 2007; Vice President 
Sales of Lance, Inc. since 2000.Earl D. Leake
    
    
    56
    
    
    Senior Vice President  Human Resources of
Lance, Inc. since February 2007; Vice
President  Human Resources of Lance, Inc.
since 1995.Margaret E. Wicklund
    
    
    47
    
    
    Vice President, Corporate Controller,
Principal Accounting Officer and Assistant
Secretary of Lance, Inc. since 2007;
Corporate Controller, Principal Accounting
Officer and Assistant Secretary of Lance,
Inc. since 1999.
 6




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##### Table of Contents



PART II
 
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   High
    
    Low
    
    Dividend2007 Interim Periods
    
    Price
    
    Price
    
    PaidFirst quarter (13 weeks ended March 31, 2007)
    
    $
    22.06
    
    
    $
    19.12
    
    
    $
    0.16Second quarter (13 weeks ended June 30, 2007)
    
    
    25.45
    
    
    
    19.90
    
    
    
    0.16Third quarter (13 weeks ended September 29, 2007)
    
    
    27.04
    
    
    
    21.75
    
    
    
    0.16Fourth quarter (13 weeks ended December 29, 2007)
    
    
    23.99
    
    
    
    17.67
    
    
    
    0.16
 High
    
    Low
    
    Dividend2006 Interim Periods
    
    Price
    
    Price
    
    PaidFirst quarter (13 weeks ended April 1, 2006)
    
    $
    22.66
    
    
    $
    17.91
    
    
    $
    0.16Second quarter (13 weeks ended July 1, 2006)
    
    
    26.40
    
    
    
    21.22
    
    
    
    0.16Third quarter (13 weeks ended September 30, 2006)
    
    
    24.00
    
    
    
    20.50
    
    
    
    0.16Fourth quarter (13 weeks ended December 30, 2006)
    
    
    22.95
    
    
    
    18.35
    
    
    
    0.16
   7




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##### Table of Contents



Item 6. Selected Financial Data
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 2007
    
    2006
    
    2005
    
    2004
    
    2003Results of Operations (in thousands):Net sales and other operating revenue
    
    $
    762,736
    
    
    $
    730,116
    
    
    $
    651,437
    
    
    $
    564,734
    
    
    $
    516,994Income from continuing operations
before income taxes
    
    
    36,320
    
    
    
    28,187
    
    
    
    26,499
    
    
    
    33,298
    
    
    
    21,977Net income from continuing operations
    
    
    23,809
    
    
    
    18,378
    
    
    
    17,476
    
    
    
    22,627
    
    
    
    14,049Income from discontinued operations
before income taxes
    
    
    44
    
    
    
    153
    
    
    
    1,506
    
    
    
    3,276
    
    
    
    6,607Net income from discontinued operations
    
    
    29
    
    
    
    100
    
    
    
    994
    
    
    
    2,228
    
    
    
    4,229Net income
    
    $
    23,838
    
    
    $
    18,478
    
    
    $
    18,470
    
    
    $
    24,855
    
    
    $
    18,278Average Number of Common Shares
Outstanding (in thousands):Basic
    
    
    30,961
    
    
    
    30,467
    
    
    
    29,807
    
    
    
    29,419
    
    
    
    29,015Diluted
    
    
    31,373
    
    
    
    30,844
    
    
    
    30,099
    
    
    
    29,732
    
    
    
    29,207Per Share of Common Stock:Earnings per share from continuing
operations  basic
    
    $
    0.77
    
    
    $
    0.61
    
    
    $
    0.59
    
    
    $
    0.77
    
    
    $
    0.48Earnings per share from discontinued
operations  basic
    
    
    
    
    
    
    
    
    
    
    0.03
    
    
    
    0.07
    
    
    
    0.15Earnings per share from continuing
operations  diluted
    
    
    0.76
    
    
    
    0.60
    
    
    
    0.58
    
    
    
    0.77
    
    
    
    0.48Earnings per share from discontinued
operations  diluted
    
    
    
    
    
    
    
    
    
    
    0.03
    
    
    
    0.07
    
    
    
    0.15Cash dividends declared
    
    $
    0.64
    
    
    $
    0.64
    
    
    $
    0.64
    
    
    $
    0.64
    
    
    $
    0.64Financial Status at Year-end (in thousands):Total assets
    
    $
    413,003
    
    
    $
    385,452
    
    
    $
    369,079
    
    
    $
    341,740
    
    
    $
    323,647Long-term debt, net of current portion
    
    $
    50,000
    
    
    $
    50,000
    
    
    $
    10,215
    
    
    $
    
    
    
    $
    38,168Total debt
    
    $
    50,000
    
    
    $
    50,000
    
    
    $
    46,215
    
    
    $
    40,650
    
    
    $
    43,738
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  8




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Executive Summary
  
    
    Organizational development and effectiveness;
    
    Operational efficiencies in our
 
    
    DSD operations,
    
    Supply chain process, and
    
    Information technology systems;
 
    
    Focused growth in core channels and product lines.
   9




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10




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® ® ® ®
   Critical Accounting Estimates
  Revenue Recognition
   11




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Allowance for Doubtful Accounts
  Self-Insurance Reserves
  12




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th
 Impairment Analysis of Goodwill and Other Indefinite-Lived Intangible Assets
  Depreciation and Impairment of Fixed Assets
    13




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Equity Incentive Expense
  Provision for Income Taxes
  New Accounting Standards
  Results of Operations
 Favorable/2007 Compared to 2006 (in millions)
    
    2007
    
    2006
    
    (Unfavorable)Revenue
    
    $
    762.7
    
    
    
    100.0
    %
    
    $
    730.1
    
    
    
    100.0
    %
    
    $
    32.6
    
    
    
    4.5
    %Cost of sales
    
    
    444.5
    
    
    
    58.3
    %
    
    
    415.6
    
    
    
    56.9
    %
    
    
    (28.9
    )
    
    
    (7.0
    %)Gross margin
    
    
    318.2
    
    
    
    41.7
    %
    
    
    314.5
    
    
    
    43.1
    %
    
    
    3.7
    
    
    
    1.2
    %Selling, marketing and delivery expenses
    
    
    231.4
    
    
    
    30.3
    %
    
    
    240.1
    
    
    
    32.9
    %
    
    
    8.7
    
    
    
    3.6
    %General and administrative expenses
    
    
    46.0
    
    
    
    6.0
    %
    
    
    42.9
    
    
    
    5.9
    %
    
    
    (3.1
    )
    
    
    (7.2
    %)Other expense/(income), net
    
    
    2.3
    
    
    
    0.3
    %
    
    
    0.2
    
    
    
    
    
    
    
    (2.1
    )
    
    
    (1,050.0
    %)Earnings before interest and taxes
    
    
    38.5
    
    
    
    5.0
    %
    
    
    31.3
    
    
    
    4.3
    %
    
    
    7.2
    
    
    
    23.0
    %Interest expense, net
    
    
    2.2
    
    
    
    0.3
    %
    
    
    3.1
    
    
    
    0.4
    %
    
    
    0.9
    
    
    
    29.0
    %Income tax expense
    
    
    12.5
    
    
    
    1.6
    %
    
    
    9.8
    
    
    
    1.3
    %
    
    
    (2.7
    )
    
    
    (27.6
    %)Net income from continuing operations
    
    
    23.8
    
    
    
    3.1
    %
    
    
    18.4
    
    
    
    2.5
    %
    
    
    5.4
    
    
    
    29.3
    %
  14




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® ® ®
      
    
    Additional capacity gained by increased trailer capacity as well as continued loading
and delivery efficiencies,
    
    Efficiencies gained through common third-party carrier agreements across all business
locations,
    
    Reductions in DSD costs due to more efficient stops and reductions in the number of
routes,
    
    Significantly improved DSD employee retention levels, which reduced required training
and recruiting costs and
    
    The completion of the Toms integration.
  15




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Favorable/2006 Compared to 2005 (in millions)
    
    2006
    
    2005
    
    (Unfavorable)Revenue
    
    $
    730.1
    
    
    
    100.0
    %
    
    $
    651.4
    
    
    
    100.0
    %
    
    $
    78.7
    
    
    
    12.1
    %Cost of sales
    
    
    415.6
    
    
    
    56.9
    %
    
    
    369.3
    
    
    
    56.7
    %
    
    
    (46.3
    )
    
    
    (12.5
    %)Gross margin
    
    
    314.5
    
    
    
    43.1
    %
    
    
    282.1
    
    
    
    43.3
    %
    
    
    32.4
    
    
    
    11.5
    %Selling, marketing and delivery expenses
    
    
    240.1
    
    
    
    32.9
    %
    
    
    216.1
    
    
    
    33.2
    %
    
    
    (24.0
    )
    
    
    (11.1
    %)General and administrative expenses
    
    
    42.9
    
    
    
    5.9
    %
    
    
    37.6
    
    
    
    5.8
    %
    
    
    (5.3
    )
    
    
    (14.1
    %)Other expense/(income), net
    
    
    0.2
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.3
    )
    
    nmEarnings before interest and taxes
    
    
    31.3
    
    
    
    4.3
    %
    
    
    28.5
    
    
    
    4.4
    %
    
    
    2.8
    
    
    
    9.8
    %Interest expense, net
    
    
    3.1
    
    
    
    0.4
    %
    
    
    2.0
    
    
    
    0.3
    %
    
    
    (1.1
    )
    
    
    (55.0
    %)Income tax expense
    
    
    9.8
    
    
    
    1.3
    %
    
    
    9.0
    
    
    
    1.4
    %
    
    
    (0.8
    )
    
    
    (8.9
    %)Net income from continuing operations
    
    
    18.4
    
    
    
    2.5
    %
    
    
    17.5
    
    
    
    2.7
    %
    
    
    0.9
    
    
    
    5.1
    %
 
 nm = not meaningful.   ® ®
  16




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Favorable/2005 Compared to 2004 (in millions)
    
    2005
    
    2004
    
    (Unfavorable)Revenue
    
    $
    651.4
    
    
    
    100.0
    %
    
    $
    564.7
    
    
    
    100.0
    %
    
    $
    86.7
    
    
    
    15.4
    %Cost of sales
    
    
    369.3
    
    
    
    56.7
    %
    
    
    314.3
    
    
    
    55.7
    %
    
    
    (55.0
    )
    
    
    (17.5
    %)Gross margin
    
    
    282.1
    
    
    
    43.3
    %
    
    
    250.4
    
    
    
    44.3
    %
    
    
    31.7
    
    
    
    12.7
    %Selling, marketing and delivery expenses
    
    
    216.1
    
    
    
    33.2
    %
    
    
    184.4
    
    
    
    32.7
    %
    
    
    (31.7
    )
    
    
    (17.2
    %)General and administrative expenses
    
    
    37.6
    
    
    
    5.8
    %
    
    
    30.8
    
    
    
    5.5
    %
    
    
    (6.8
    )
    
    
    (22.1
    %)Other income, net
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.1
    %)
    
    
    (0.5
    )
    
    
    (83.3
    %)Earnings before interest and taxes
    
    
    28.5
    
    
    
    4.4
    %
    
    
    35.8
    
    
    
    6.3
    %
    
    
    (7.3
    )
    
    
    (20.4
    %)Interest expense, net
    
    
    2.0
    
    
    
    0.3
    %
    
    
    2.5
    
    
    
    0.4
    %
    
    
    0.5
    
    
    
    20.0
    %Income tax expense
    
    
    9.0
    
    
    
    1.4
    %
    
    
    10.7
    
    
    
    1.9
    %
    
    
    1.7
    
    
    
    15.9
    %Net income from continuing operations
    
    
    17.5
    
    
    
    2.7
    %
    
    
    22.6
    
    
    
    4.0
    %
    
    
    (5.1
    )
    
    
    (22.6
    %)
 17




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® ® ®
        18




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Liquidity and Capital Resources
 Liquidity
  Operating Cash Flows
  Investing Cash Flows
    Financing Cash Flows
   19




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Debt
   Commitments and Contingencies
   Payments Due by Period(in thousands)
    
    Total
    
    
    < 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    ThereafterPurchase commitments for inventory
    
    $
    58,856
    
    
    $
    58,856
    
    
    $
    
    
    
    $
    
    
    
    $
    Debt, including interest payable*
    
    
    59,849
    
    
    
    2,569
    
    
    
    57,280
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    4,400
    
    
    
    2,300
    
    
    
    1,884
    
    
    
    216
    
    
    
    Unrecognized tax benefits**
    
    
    1,499
    
    
    
    **
    
    
    
    **
    
    
    
    **
    
    
    
    **Benefit obligations
    
    
    1,730
    
    
    
    191
    
    
    
    298
    
    
    
    191
    
    
    
    1,050Total contractual obligations
    
    $
    126,334
    
    
    $
    63,916
    
    
    $
    59,462
    
    
    $
    407
    
    
    $
    1,050
 *
    
    Variable interest will be paid in future periods based on the outstanding balance at that time. The amounts due include the
estimated interest payable on debt instruments through October 2011.**
    
    The timing of payment, if any, for unrecognized tax benefits cannot be estimated. However, we believe that $0.4 million
related to an uncertain tax position is reasonably likely to be paid within the next 3 years.
 20




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Forward-Looking Statements
   
 Item 7A. Quantitative and Qualitative Disclosure About Market Risk
     21




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22




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Item 8. Financial Statements and Supplementary Data
 
 Consolidated Statements of Income
 LANCE, INC. AND SUBSIDIARIES
For the Fiscal Years Ended December 29, 2007, December 30, 2006, and December 31, 2005
(in thousands, except share and per share data)
 2007
    
    2006
    
    2005Net sales and other operating revenue
    
    $
    762,736
    
    
    $
    730,116
    
    
    $
    651,437Cost of sales and operating expenses/(income):Cost of sales
    
    
    444,487
    
    
    
    415,576
    
    
    
    369,331Selling, marketing and delivery
    
    
    231,358
    
    
    
    240,092
    
    
    
    216,054General and administrative
    
    
    45,959
    
    
    
    42,914
    
    
    
    37,605Other expense/(income), net
    
    
    2,390
    
    
    
    191
    
    
    
    (37
    )Total cost and expenses
    
    
    724,194
    
    
    
    698,773
    
    
    
    622,953Income from continuing operations before interest
and income taxes
    
    
    38,542
    
    
    
    31,343
    
    
    
    28,484Interest expense, net
    
    
    2,222
    
    
    
    3,156
    
    
    
    1,985Income from continuing operations before income taxes
    
    
    36,320
    
    
    
    28,187
    
    
    
    26,499Income tax expense
    
    
    12,511
    
    
    
    9,809
    
    
    
    9,023Net income from continuing operations
    
    
    23,809
    
    
    
    18,378
    
    
    
    17,476Income from discontinued operations
    
    
    44
    
    
    
    153
    
    
    
    1,506Income tax expense
    
    
    15
    
    
    
    53
    
    
    
    512Net income from discontinued operations
    
    
    29
    
    
    
    100
    
    
    
    994Net income
    
    $
    23,838
    
    
    $
    18,478
    
    
    $
    18,470Basic earnings per share:Earnings per share from continuing operations
    
    $
    0.77
    
    
    $
    0.61
    
    
    $
    0.59Earnings per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.03Basic earnings per share
    
    $
    0.77
    
    
    $
    0.61
    
    
    $
    0.62Weighted average shares outstanding  basic
    
    
    30,961,000
    
    
    
    30,467,000
    
    
    
    29,807,000Diluted earnings per share:Earnings per share from continuing operations
    
    $
    0.76
    
    
    $
    0.60
    
    
    $
    0.58Earnings per share from discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.03Diluted earnings per share
    
    $
    0.76
    
    
    $
    0.60
    
    
    $
    0.61Weighted average shares outstanding  diluted
    
    
    31,373,000
    
    
    
    30,844,000
    
    
    
    30,099,000
  23




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##### Table of Contents



Consolidated Balance Sheets
 LANCE, INC. AND SUBSIDIARIES
December 29, 2007 and December 30, 2006
(in thousands, except share data)
 2007
    
    2006AssetsCurrent assetsCash and cash equivalents
    
    $
    8,647
    
    
    $
    5,504Accounts receivable (less allowances for doubtful accounts of $506
and $994, respectively)
    
    
    64,081
    
    
    
    61,690Inventories
    
    
    38,659
    
    
    
    36,838Deferred income taxes
    
    
    9,335
    
    
    
    8,811Assets held for sale
    
    
    505
    
    
    
    6,552Prepaid expenses and other current assets
    
    
    11,862
    
    
    
    6,298Total current assets
    
    
    133,089
    
    
    
    125,693Fixed assets, net
    
    
    205,075
    
    
    
    193,009Goodwill, net
    
    
    55,956
    
    
    
    49,091Other intangible assets, net
    
    
    13,171
    
    
    
    13,209Other assets
    
    
    5,712
    
    
    
    4,450Total assets
    
    $
    413,003
    
    
    $
    385,452Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    21,169
    
    
    $
    18,194Accrued compensation
    
    
    20,564
    
    
    
    20,471Accrued profit-sharing retirement plan
    
    
    5,383
    
    
    
    5,192Accrual for casualty insurance claims
    
    
    8,163
    
    
    
    6,783Accrual for medical insurance claims
    
    
    2,826
    
    
    
    3,488Accrued selling costs
    
    
    4,511
    
    
    
    4,860Other payables and accrued liabilities
    
    
    12,021
    
    
    
    12,632Total current liabilities
    
    
    74,637
    
    
    
    71,620Long-term debt
    
    
    50,000
    
    
    
    50,000Deferred income taxes
    
    
    26,874
    
    
    
    26,562Accrual for casualty insurance claims
    
    
    7,428
    
    
    
    9,418Other long-term liabilities
    
    
    6,967
    
    
    
    5,452Total liabilities
    
    
    165,906
    
    
    
    163,052Commitments and contingenciesStockholders equityCommon stock, 31,214,743 and 30,855,891 shares outstanding,
respectively
    
    
    26,011
    
    
    
    25,714Preferred stock, no shares outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    41,430
    
    
    
    32,129Retained earnings
    
    
    163,356
    
    
    
    159,329Accumulated other comprehensive income
    
    
    16,300
    
    
    
    5,228Total stockholders equity
    
    
    247,097
    
    
    
    222,400Total liabilities and stockholders equity
    
    $
    413,003
    
    
    $
    385,452
  24




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##### Table of Contents



Consolidated Statements of Stockholders Equity and Comprehensive Income
 LANCE, INC. AND SUBSIDIARIES
For the Fiscal Years Ended December 29, 2007, December 30, 2006, and December 31, 2005
(in thousands, except share data)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, December 25, 2004
    
    
    29,747,596
    
    
    $
    24,788
    
    
    $
    10,966
    
    
    $
    160,993
    
    
    $
    1,968
    
    
    $
    198,715Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,470
    
    
    
    
    
    
    
    18,470Unrealized gain on interest rate swap, net of
$232 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394
    
    
    
    394Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,719
    
    
    
    2,719Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,583Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,056
    )
    
    
    
    
    
    
    (19,056
    )Repurchase of common stock
    
    
    (304,236
    )
    
    
    (253
    )
    
    
    (4,907
    )
    
    
    
    
    
    
    
    
    
    
    (5,160
    )Stock options exercised
    
    
    373,970
    
    
    
    311
    
    
    
    4,825
    
    
    
    
    
    
    
    
    
    
    
    5,136Cancellation, issuance and amortization of
restricted stock
    
    
    (8,625
    )
    
    
    (5
    )
    
    
    496
    
    
    
    
    
    
    
    
    
    
    
    491Balance, December 31, 2005
    
    
    29,808,705
    
    
    $
    24,841
    
    
    $
    11,380
    
    
    $
    160,407
    
    
    $
    5,081
    
    
    $
    201,709Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,478
    
    
    
    
    
    
    
    18,478Net unrealized losses on derivative instruments,
net of $106 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193
    )
    
    
    (193
    )Adoption of SFAS No. 158, net of $167 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    313Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    27Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,625Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,556
    )
    
    
    
    
    
    
    (19,556
    )Amortization of nonqualified stock options
    
    
    
    
    
    
    
    
    
    
    1,331
    
    
    
    
    
    
    
    
    
    
    
    1,331Equity-based incentive expense previously
recognized under a liability plan
    
    
    
    
    
    
    
    
    
    
    634
    
    
    
    
    
    
    
    
    
    
    
    634Stock options exercised, including $3,223 tax
benefit
    
    
    1,018,761
    
    
    
    850
    
    
    
    17,278
    
    
    
    
    
    
    
    
    
    
    
    18,128Issuance and amortization of
restricted stock, net of cancellations
    
    
    28,425
    
    
    
    23
    
    
    
    1,506
    
    
    
    
    
    
    
    
    
    
    
    1,529Balance, December 30, 2006
    
    
    30,855,891
    
    
    $
    25,714
    
    
    $
    32,129
    
    
    $
    159,329
    
    
    $
    5,228
    
    
    $
    222,400Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,838
    
    
    
    
    
    
    
    23,838Net unrealized losses on derivative instruments,
net of $179 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )
    
    
    (254
    )Actuarial gains recognized in net income, net of
$68 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (142
    )
    
    
    (142
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,468
    
    
    
    11,468Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,910Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,872
    )
    
    
    
    
    
    
    (19,872
    )Amortization of nonqualified stock options
    
    
    
    
    
    
    
    
    
    
    1,658
    
    
    
    
    
    
    
    
    
    
    
    1,658Equity-based incentive expense previously
recognized under a liability plan
    
    
    
    
    
    
    
    
    
    
    316
    
    
    
    
    
    
    
    
    
    
    
    316Stock options exercised, including $1,026 tax
benefit
    
    
    270,852
    
    
    
    224
    
    
    
    4,508
    
    
    
    
    
    
    
    
    
    
    
    4,732Cumulative adjustment from adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    61Issuance and amortization of restricted stock,
net of cancellations
    
    
    88,000
    
    
    
    73
    
    
    
    2,819
    
    
    
    
    
    
    
    
    
    
    
    2,892Balance, December 29, 2007
    
    
    31,214,743
    
    
    $
    26,011
    
    
    $
    41,430
    
    
    $
    163,356
    
    
    $
    16,300
    
    
    $
    247,097
  25




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##### Table of Contents



Consolidated Statements of Cash Flows
 LANCE, INC. AND SUBSIDIARIES
For the Fiscal Years Ended December 29, 2007, December 30, 2006, and December 31, 2005
(in thousands)
 2007
    
    2006
    
    2005Operating activities:Net income
    
    $
    23,838
    
    
    $
    18,478
    
    
    $
    18,470Adjustments to reconcile net income to cash from operating activities:Fixed asset depreciation and intangible amortization
    
    
    29,307
    
    
    
    26,897
    
    
    
    28,539Equity-based incentive expense
    
    
    3,294
    
    
    
    4,896
    
    
    
    2,159Loss on sale of fixed assets, net
    
    
    818
    
    
    
    591
    
    
    
    467Deferred income taxes
    
    
    (419
    )
    
    
    1,182
    
    
    
    (3,518
    )LIFO reserve adjustment
    
    
    1,412
    
    
    
    (1,083
    )
    
    
    635Provisions for doubtful accounts
    
    
    (166
    )
    
    
    (838
    )
    
    
    2,488Changes in assets and liabilities, excluding business acquisitions,
foreign currency adjustments and certain other non-cash transactions:Accounts receivable
    
    
    (1,551
    )
    
    
    (1,845
    )
    
    
    (3,938
    )Inventory
    
    
    (2,806
    )
    
    
    1,329
    
    
    
    (5,006
    )Other current assets
    
    
    (1,776
    )
    
    
    1,695
    
    
    
    869Accounts payable
    
    
    2,620
    
    
    
    (2,108
    )
    
    
    748Other accrued liabilities
    
    
    (2,727
    )
    
    
    (6,740
    )
    
    
    6,728Other noncurrent assets
    
    
    828
    
    
    
    (963
    )
    
    
    (436
    )Other noncurrent liabilities
    
    
    (322
    )
    
    
    (2,394
    )
    
    
    (1,088
    )Net cash flow from operating activities
    
    
    52,350
    
    
    
    39,097
    
    
    
    47,117Investing activities:Purchases of fixed assets
    
    
    (39,476
    )
    
    
    (46,965
    )
    
    
    (27,624
    )Business acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (43,797
    )Purchase of investment
    
    
    (2,090
    )
    
    
    
    
    
    
    Proceeds from sale of fixed assets
    
    
    7,277
    
    
    
    7,340
    
    
    
    1,449Net cash used in investing activities
    
    
    (34,289
    )
    
    
    (39,625
    )
    
    
    (69,972
    )Financing activities:Dividends paid
    
    
    (19,872
    )
    
    
    (19,556
    )
    
    
    (19,056
    )Issuances of common stock under employee stock plans
    
    
    4,732
    
    
    
    18,128
    
    
    
    4,353Net repayments of revolving debt
    
    
    
    
    
    
    (46,238
    )
    
    
    (48,737
    )Proceeds from long-term debt
    
    
    
    
    
    
    50,000
    
    
    
    53,715Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    (5,160
    )Net cash (used in)/from financing activities
    
    
    (15,140
    )
    
    
    2,334
    
    
    
    (14,885
    )Effect of exchange rate changes on cash
    
    
    222
    
    
    
    155
    
    
    
    (183
    )Increase (decrease) in cash and cash equivalents
    
    
    3,143
    
    
    
    1,961
    
    
    
    (37,923
    )Cash and cash equivalents at beginning of fiscal year
    
    
    5,504
    
    
    
    3,543
    
    
    
    41,466Cash and cash equivalents at end of fiscal year
    
    $
    8,647
    
    
    $
    5,504
    
    
    $
    3,543Supplemental information:Cash paid for income taxes, net of refunds of $211, $165, and
$611, respectively
    
    $
    12,594
    
    
    $
    6,679
    
    
    $
    13,581Cash paid for interest
    
    $
    2,878
    
    
    $
    3,471
    
    
    $
    2,018
  26




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##### Table of Contents



Notes to Consolidated Financial Statements
 LANCE, INC. AND SUBSIDIARIES
December 29, 2007 and December 30, 2006
 
 NOTE 1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Operations
  ® ® ®
  Principles of Consolidation
  Reclassifications
  Revenue Recognition
   27




---



##### Table of Contents



Fiscal Year
  Use of Estimates
  Allowance for Doubtful Accounts
  Fair Value of Financial Instruments
  28




---



##### Table of Contents



Cash and Cash Equivalents
  Inventories
   Fixed Assets
  Useful LifeBuildings and building improvements
    
    10-45 yearsLand improvements
    
    10-15 yearsMachinery, equipment and computer systems
    
    3-20 yearsFurniture and fixtures
    
    3-12 yearsTrucks and automobiles
    
    3-10 years
  Goodwill and Other Intangible Assets
  29




---



##### Table of Contents



Income Taxes
   Self-Insurance Reserves
  30




---



##### Table of Contents



th
 Derivative Financial Instruments
  Equity Incentive Plans
 Statement of Cash Flows
 Accounting for Stock Issued to Employees Accounting for
Stock-Based Compensation Accounting for Stock-Based Compensation 
Transition and Disclosure
 31




---



##### Table of Contents



Earnings Per Share
   Advertising and Consumer Promotion Costs
  Shipping and Handling Costs
  Concentration of Credit Risk
  32




---



##### Table of Contents



New Accounting Standards
 Accounting for Uncertainty in Income Taxes 
an Interpretation of FASB Statement 109 Accounting for Income Taxes
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans
 The Fair Value Option for Financial Assets and
Financial Liabilities: Including an amendment of FASB Statement No. 115
 Business Combinations.
 33




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##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 NOTE 2. DISCONTINUED OPERATIONS
   (in thousands)
    
    2007
    
    2006
    
    2005Revenue
    
    $
    5,224
    
    
    $
    17,833
    
    
    $
    27,820Pre-tax income
    
    $
    44
    
    
    $
    153
    
    
    $
    1,506
 NOTE 3. ACQUISITIONS & INVESTMENTS
   NOTE 4. INVENTORIES
  (in thousands)
    
    2007
    
    2006Finished goods
    
    $
    21,910
    
    
    $
    18,630Raw materials
    
    
    7,701
    
    
    
    7,968Supplies, etc.
    
    
    14,297
    
    
    
    14,077Total inventories at FIFO cost
    
    
    43,908
    
    
    
    40,675Less: adjustment to reduce FIFO cost to LIFO cost
    
    
    (5,249
    )
    
    
    (3,837
    )Total inventories
    
    $
    38,659
    
    
    $
    36,838
 34




---



##### Table of Contents



NOTE 5. FIXED ASSETS
  (in thousands)
    
    2007
    
    2006Land and land improvements
    
    $
    14,670
    
    
    $
    14,764Buildings and building improvements
    
    
    84,118
    
    
    
    83,409Machinery, equipment and computer systems
    
    
    287,821
    
    
    
    278,444Vending machines
    
    
    
    
    
    
    19,167Trucks and automobiles
    
    
    59,490
    
    
    
    58,198Furniture and fixtures
    
    
    2,304
    
    
    
    2,065Construction in progress
    
    
    10,909
    
    
    
    8,870459,312
    
    
    
    464,917Accumulated depreciation and amortization
    
    
    (253,732
    )
    
    
    (265,356
    )$
    205,580
    
    
    $
    199,561Assets held for sale
    
    
    (505
    )
    
    
    (6,552
    )Fixed assets, net
    
    $
    205,075
    
    
    $
    193,009
    NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS
  Carrying(in thousands)
    
    AmountBalance as of December 30, 2006
    
    $
    49,091Changes in foreign currency exchange rates
    
    
    6,865Balance as of December 29, 2007
    
    $
    55,956
 35




---



##### Table of Contents



Gross
    
    
    
    
    
    NetCarrying
    
    Accumulated
    
    Carrying(in thousands)
    
    Amount
    
    Amortization
    
    AmountAs of December 29, 2007:Customer relationships  amortized
    
    $
    378
    
    
    $
    (82
    )
    
    $
    296Trademarks  unamortized
    
    
    12,875
    
    
    
    
    
    
    
    12,875Total other intangible assets as of December 29, 2007
    
    $
    13,253
    
    
    $
    (82
    )
    
    $
    13,171As of December 30, 2006:Customer relationships  amortized
    
    $
    378
    
    
    $
    (44
    )
    
    $
    334Trademarks  unamortized
    
    
    12,875
    
    
    
    
    
    
    
    12,875Total other intangible assets as of December 30, 2006
    
    $
    13,253
    
    
    $
    (44
    )
    
    $
    13,209
   NOTE 7. LONG-TERM DEBT
  36




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##### Table of Contents



NOTE 8. DERIVATIVE INSTRUMENTS
    NOTE 9. INCOME TAXES
  (in thousands)
    
    2007
    
    2006
    
    2005Current:Federal
    
    $
    11,744
    
    
    $
    8,517
    
    
    $
    12,833State and other
    
    
    888
    
    
    
    671
    
    
    
    855Foreign
    
    
    (52
    )
    
    
    (523
    )
    
    
    (512
    )12,580
    
    
    
    8,665
    
    
    
    13,176Deferred:Federal
    
    
    560
    
    
    
    838
    
    
    
    (3,957
    )State and other
    
    
    240
    
    
    
    112
    
    
    
    90Foreign
    
    
    (854
    )
    
    
    247
    
    
    
    226(54
    )
    
    
    1,197
    
    
    
    (3,641
    )Total income tax expense
    
    $
    12,526
    
    
    $
    9,862
    
    
    $
    9,535
 37




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##### Table of Contents



2007
    
    2006
    
    2005Statutory income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes, net of federal income tax benefit
    
    
    1.7
    
    
    
    2.0
    
    
    
    1.2Net favorable foreign income taxes as a result of tax
adjustments
and tax rate differences
    
    
    (1.3
    )
    
    
    (2.5
    )
    
    
    (2.6
    )Changes in deferred taxes for effective state rate changes
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    1.1Miscellaneous items, net
    
    
    (1.2
    )
    
    
    0.4
    
    
    
    (0.7
    )Effective income tax rate
    
    
    34.4
    %
    
    
    34.8
    %
    
    
    34.0
    %
  (in thousands)
    
    2007
    
    2006Deferred tax assets:Reserves for employee compensation, deductible when paid for
income tax purposes, accrued for financial reporting purposes
    
    $
    5,916
    
    
    $
    5,380Reserves for insurance claims, deductible when paid for income tax
purposes, accrued for financial reporting purposes
    
    
    5,488
    
    
    
    5,885Other reserves deductible when paid for income tax purposes,
accrued for financial reporting purposes
    
    
    2,639
    
    
    
    2,810Unrealized losses deductible when realized for income tax purposes,
included in other comprehensive income
    
    
    278
    
    
    
    106Inventories, principally due to additional costs capitalized for
income tax purposes
    
    
    1,764
    
    
    
    1,400Unrealized capital loss deductible when realized for income taxes,
accrued for financial reporting purposes
    
    
    
    
    
    
    192Net state and foreign operating loss and tax credit carryforwards
    
    
    1,182
    
    
    
    1,145Total gross deferred tax assets
    
    
    17,267
    
    
    
    16,918Less valuation allowance
    
    
    (224
    )
    
    
    (417
    )Net deferred tax assets
    
    
    17,043
    
    
    
    16,501Deferred tax liabilities:Fixed assets, principally due to
differences in depreciation, net of impairment reserves
    
    
    (30,089
    )
    
    
    (29,847
    )Trademark amortization
    
    
    (2,905
    )
    
    
    (2,885
    )Unrealized gains includible when realized for income tax purposes,
included in other comprehensive income
    
    
    (98
    )
    
    
    (167
    )Prepaid expenses and other costs deductible for tax, amortized
for financial statement purposes.
    
    
    (1,490
    )
    
    
    (1,353
    )Total gross deferred tax liabilities
    
    
    (34,582
    )
    
    
    (34,252
    )Total net deferred tax liabilities
    
    $
    (17,539
    )
    
    $
    (17,751
    )
  38




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##### Table of Contents



Jurisdiction
    
    Open YearsUS federal
    
    2004 and forwardCanada federal
    
    2003 and forwardOntario provincial
    
    2001 and forwardMassachusetts
    
    2001 and forwardNorth Carolina
    
    2004 and forwardIowa
    
    2004 and forward
  (in thousands)
    
    2007Balance at December 31, 2006 (first day of fiscal 2007)
    
    $
    1,788Additions for tax positions taken during a prior period
    
    
    49Additions for tax positions taken during the current period
    
    
    67Reductions resulting from a lapse of the statute of limitations
    
    
    (405
    )Balance at December 29, 2007
    
    $
    1,499
   39




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##### Table of Contents



(in thousands)
    
    2007
    
    2006
    
    2005Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    432
    
    
    $
    1,189
    
    
    $
    2,123Service cost
    
    
    
    
    
    
    
    
    
    
    42Interest cost
    
    
    17
    
    
    
    18
    
    
    
    72Plan participants contributions
    
    
    234
    
    
    
    386
    
    
    
    400Actuarial gain
    
    
    (89
    )
    
    
    (290
    )
    
    
    (464
    )Benefits paid
    
    
    (330
    )
    
    
    (871
    )
    
    
    (984
    )Benefit obligation at end of year
    
    
    264
    
    
    
    432
    
    
    
    1,189Funded status
    
    
    (264
    )
    
    
    (432
    )
    
    
    (1,189
    )Unrecognized net actuarial gain
    
    
    
    
    
    
    
    
    
    
    (1,522
    )Net amount recognized
    
    $
    (264
    )
    
    $
    (432
    )
    
    
    (2,711
    )Unrecognized net actuarial gain included
in accumulated other comprehensive income:
    
    $
    270
    
    
    $
    480
    
    
    
    Components of net periodic benefit cost:Service cost
    
    
    
    
    
    
    
    
    
    
    42Interest cost
    
    
    17
    
    
    
    18
    
    
    
    72Recognized net gain
    
    
    (300
    )
    
    
    (1,331
    )
    
    
    (693
    )Net periodic benefit
    
    $
    (283
    )
    
    $
    (1,313
    )
    
    $
    (579
    )Weighted average discount rates used in
determining accumulated postretirement
benefit obligation:Beginning of year
    
    
    5.30
    %
    
    
    4.95
    %
    
    
    3.75
    %End of year
    
    
    4.62
    %
    
    
    5.30
    %
    
    
    4.95
    %
   40




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##### Table of Contents



Expected(in thousands)
    
    Benefit Payments2008
    
    $
    1642009
    
    $
    732010
    
    $
    392011 and thereafter
    
    $
    
  NOTE 11. EQUITY BASED INCENTIVE COMPENSATION
  Transition Election to Accounting for the Tax
Effects of Share Based Payment Awards
 41




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##### Table of Contents



Employee Stock Purchase Plan
  Employee Stock Options
  OutstandingOptions
    
    Weighted Average
    
    OptionsOutstanding
    
    Exercise Price
    
    ExercisableBalance at December 25, 2004
    
    
    2,338,287
    
    
    
    13.61
    
    
    
    1,472,298Granted
    
    
    18,800
    
    
    
    15.84Exercised
    
    
    (390,794
    )
    
    
    11.86Expired/Forfeited
    
    
    (136,001
    )
    
    
    13.78Balance at December 31, 2005
    
    
    1,830,292
    
    
    
    13.99
    
    
    
    1,396,698Granted
    
    
    108,652
    
    
    
    19.97Exercised
    
    
    (1,006,261
    )
    
    
    14.59Expired/Forfeited
    
    
    (15,199
    )
    
    
    11.59Balance at December 30, 2006
    
    
    917,484
    
    
    $
    14.08
    
    
    
    629,300Granted
    
    
    566,494
    
    
    
    19.86Exercised
    
    
    (250,852
    )
    
    
    13.34Expired/Forfeited
    
    
    (20,036
    )
    
    
    16.54Balance at December 29, 2007
    
    
    1,213,090
    
    
    $
    16.91
    
    
    
    657,024Weighted average contractual term
    
    5.6 years
    
    
    
    
    
    3.9 yearsAggregate intrinsic value
    
    $4.8 million
    
    
    
    
    
    $4.2 million
 42




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##### Table of Contents



2007
    
    2006
    
    2005Assumptions used in Black Scholes pricing model:Expected dividend yield
    
    
    3.13
    %
    
    
    3.21
    %
    
    
    3.52
    %Risk-free interest rate
    
    
    4.23
    %
    
    
    4.54
    %
    
    
    4.39
    %Weighted average expected life
    
    5.0 years
    
    6.5 years
    
    6.5 yearsExpected volatility
    
    
    29.47
    %
    
    
    31.20
    %
    
    
    31.20
    %Weighted average fair value per share of options granted
    
    $
    4.56
    
    
    $
    5.50
    
    
    $
    4.75
 Employee Restricted Stock and Restricted Stock Unit Awards
   Restricted Stock
    
    Weighted AverageAwards Outstanding
    
    Grant Date Fair ValueBalance at December 31, 2005
    
    
    184,875
    
    
    
    16.77Granted
    
    
    331,000
    
    
    
    15.18Re-designated
    
    
    150,000
    
    
    
    24.41Exercised
    
    
    (14,750
    )
    
    
    7.65Expired/Forfeited
    
    
    (575
    )
    
    
    7.65Balance at December 30, 2006
    
    
    650,550
    
    
    $
    17.69Granted
    
    
    140,650
    
    
    
    18.13Exercised
    
    
    (31,100
    )
    
    
    18.35Expired/Forfeited
    
    
    (19,300
    )
    
    
    14.29Balance at December 29, 2007
    
    
    740,800
    
    
    $
    17.83
 43




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##### Table of Contents



Non-Employee Director Stock Option Plan
  Options
    
    Weighted Average
    
    OptionsOutstanding
    
    Exercise Price
    
    ExercisableBalance at December 25, 2004
    
    
    154,500
    
    
    
    15.81
    
    
    
    154,500Granted
    
    
    
    
    
    
    Exercised
    
    
    (2,000
    )
    
    
    15.76Expired/Forfeited
    
    
    (12,500
    )
    
    
    17.50Balance at December 31, 2005
    
    
    140,000
    
    
    
    15.67
    
    
    
    140,000Granted
    
    
    
    
    
    
    Exercised
    
    
    (12,500
    )
    
    
    17.66Expired/Forfeited
    
    
    (9,000
    )
    
    
    19.35Balance at December 30, 2006
    
    
    118,500
    
    
    $
    15.18
    
    
    
    118,500Granted
    
    
    
    
    
    
    Exercised
    
    
    (20,000
    )
    
    
    18.00Expired/Forfeited
    
    
    
    
    
    
    Balance at December 29, 2007
    
    
    98,500
    
    
    $
    14.60
    
    
    
    98,500
 Non-Employee Director Restricted Stock Awards
   44




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##### Table of Contents



Long Term Incentive Plans
     NOTE 12. OTHER COMMITMENTS AND CONTINGENCIES
   45




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##### Table of Contents



(in thousands)
    
    Amount2008
    
    $
    2,3002009
    
    
    1,5982010
    
    
    1842011
    
    
    1022012
    
    
    105Thereafter
    
    
    111Total operating lease commitments
    
    $
    4,400
     NOTE 13. STOCKHOLDERS EQUITY
 Capital Stock
  Stockholder Rights Plan
  46




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##### Table of Contents



Other Comprehensive Income
  (in thousands)
    
    2007
    
    2006Foreign currency translation adjustment
    
    $
    16,576
    
    
    $
    5,108Postretirement actuarial gains recognized in net income, net of tax
    
    
    171
    
    
    
    313Net unrealized losses on derivative instruments, net of tax
    
    
    (447
    )
    
    
    (193
    )Total accumulated other comprehensive income
    
    $
    16,300
    
    
    $
    5,228
  47




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##### Table of Contents



NOTE 14. INTERIM FINANCIAL INFORMATION (UNAUDITED)
  2007 Interim Period EndedMarch 31
    

June 30
    
    September 29
    
    December 29(13 Weeks)
    
    (13 Weeks)
    
    (13 Weeks)
    
    (13 Weeks)Net sales and other operating revenues
    
    $
    182,426
    
    
    $
    197,036
    
    
    $
    198,052
    
    
    $
    185,222Cost of sales
    
    
    102,976
    
    
    
    109,435
    
    
    
    115,692
    
    
    
    116,384Selling, marketing and delivery
    
    
    56,479
    
    
    
    59,864
    
    
    
    58,985
    
    
    
    56,030General and administrative
    
    
    13,137
    
    
    
    11,603
    
    
    
    11,268
    
    
    
    9,951Other (income)/expense, net
    
    
    (90
    )
    
    
    973
    
    
    
    522
    
    
    
    985Income from continuing operations
Before interest and taxes
    
    
    9,924
    
    
    
    15,161
    
    
    
    11,585
    
    
    
    1,872Interest expense, net
    
    
    604
    
    
    
    615
    
    
    
    550
    
    
    
    454Income from continuing operations before taxes
    
    
    9,320
    
    
    
    14,546
    
    
    
    11,035
    
    
    
    1,418Income tax expense/(benefit)
    
    
    3,448
    
    
    
    5,277
    
    
    
    3,448
    
    
    
    337Net income from continuing operations
    
    
    5,872
    
    
    
    9,269
    
    
    
    7,587
    
    
    
    1,081Income/(loss) from discontinued operations
    
    
    537
    
    
    
    (346
    )
    
    
    (146
    )
    
    
    Income tax expense/(benefit)
    
    
    199
    
    
    
    (129
    )
    
    
    (54
    )
    
    
    Net income/(loss) from discontinued operations
    
    
    338
    
    
    
    (217
    )
    
    
    (92
    )
    
    
    Net income
    
    $
    6,210
    
    
    $
    9,052
    
    
    $
    7,495
    
    
    $
    1,081From continuing operations:Net income per common share  basic
    
    $
    0.19
    
    
    $
    0.30
    
    
    $
    0.24
    
    
    $
    0.03Net income per common share  diluted
    
    
    0.19
    
    
    
    0.30
    
    
    
    0.24
    
    
    
    0.03From discontinued operations:Net income/(loss) per common share  basic
    
    
    0.01
    
    
    
    (0.01
    )
    
    
    
    
    
    
    Net income/(loss) per common share  diluted
    
    
    0.01
    
    
    
    (0.01
    )
    
    
    
    
    
    
    Dividends declared per common share
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.162006 Interim Period EndedApril 1
    
    July 1
    
    September 30
    
    December 30(13 Weeks)
    
    (13 Weeks)
    
    (13 Weeks)
    
    (13 Weeks)Net sales and other operating revenues
    
    $
    180,745
    
    
    $
    188,341
    
    
    $
    188,628
    
    
    $
    172,402Cost of sales
    
    
    104,866
    
    
    
    105,660
    
    
    
    106,768
    
    
    
    98,282Selling, marketing and delivery
    
    
    65,045
    
    
    
    60,285
    
    
    
    60,571
    
    
    
    54,191General and administrative
    
    
    11,458
    
    
    
    11,771
    
    
    
    9,296
    
    
    
    10,389Other expense/(income), net
    
    
    162
    
    
    
    517
    
    
    
    (243
    )
    
    
    (245
    )(Loss)/income from continuing operations before
interest and taxes
    
    
    (786
    )
    
    
    10,108
    
    
    
    12,236
    
    
    
    9,785Interest expense, net
    
    
    669
    
    
    
    828
    
    
    
    901
    
    
    
    758(Loss)/income from continuing operations before taxes
    
    
    (1,455
    )
    
    
    9,280
    
    
    
    11,335
    
    
    
    9,027Income tax (benefit)/expense
    
    
    (531
    )
    
    
    3,386
    
    
    
    3,940
    
    
    
    3,014Net (loss)/income from continuing operations
    
    
    (924
    )
    
    
    5,894
    
    
    
    7,395
    
    
    
    6,013Income/(loss) from discontinued operations
    
    
    250
    
    
    
    418
    
    
    
    129
    
    
    
    (644
    )Income tax expense/(benefit)
    
    
    91
    
    
    
    153
    
    
    
    45
    
    
    
    (236
    )Net income/(loss) from discontinued operations
    
    
    159
    
    
    
    265
    
    
    
    84
    
    
    
    (408
    )Net (loss)/income
    
    $
    (765
    )
    
    $
    6,159
    
    
    $
    7,479
    
    
    $
    5,605From continuing operations:Net (loss)/income per common share  basic
    
    $
    (0.03
    )
    
    $
    0.19
    
    
    $
    0.24
    
    
    $
    0.19Net (loss)/income per common share  diluted
    
    
    (0.03
    )
    
    
    0.19
    
    
    
    0.24
    
    
    
    0.19From discontinued operations:Net income/(loss) per common share  basic
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    (0.01
    )Net income/(loss) per common share  diluted
    
    
    
    
    
    
    0.01
    
    
    
    
    
    
    
    (0.01
    )Dividends declared per common share
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
 48




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 , Internal Control  Integrated Framework anagements Report on Internal
Control over Financial Reporting consolidated
    49




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##### Table of Contents



Internal Control  Integrated Framework
 Accounting for Uncertainty in Income Taxes  an
Interpretation of FASB Statement 109 Share-Based Payment Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
 
 50




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##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
       51




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial
Reporting
  
 Item 9B. Other Information
  
 PART III
  52




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##### Table of Contents



Item 10. Directors, Executive Officers and Corporate Governance
 Code of Ethics
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    1. Financial Statements.
  PageConsolidated Statements of Income for the Fiscal Years Ended December 29, 2007,
December 30, 2006, and December 31, 2005
    
    
    23Consolidated Balance Sheets as of December 29, 2007 and December 30, 2006
    
    
    24Consolidated Statements of Stockholders Equity and Comprehensive Income for the
Fiscal Years Ended December 29, 2007, December 30, 2006, and December 31, 2005
    
    
    25Consolidated Statements of Cash Flows for the Fiscal Years Ended December 29, 2007,
December 30, 2006, and December 31, 2005
    
    
    26Notes to Consolidated Financial Statements
    
    
    27
 (a)
    
    2. Financial Schedules.
  (a)
    
    3. Exhibit Index.
   53




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54




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55




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56




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##### Table of Contents



*
    
    Management contract. 57




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##### Table of Contents



SIGNATURES
  LANCE, INC.Dated:  February 21, 2008
    By:
    /s/ David V. SingerDavid V. SingerPresident and Chief Executive Officer  Signature
    
    Capacity
    
    Date/s/ David V. Singer

David V. Singer
    
    President and Chief Executive
Officer (Principal Executive
Officer)
    
    February 21, 2008/s/ Rick D. Puckett 
Rick D. Puckett
    
    Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary (Principal Financial
Officer)
    
    February 21, 2008/s/ Margaret E. Wicklund 
Margaret E. Wicklund
    
    Vice President, Corporate Controller
and Assistant Secretary (Principal
Accounting Officer)
    
    February 21, 2008/s/ W. J. Prezzano 
W. J. Prezzano
    
    Chairman of the Board of Directors
    
    February 21, 2008Barbara R. Allen
    
    Director
 58




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##### Table of Contents



Signature
    
    Capacity
    
    Date/s/ Jeffrey A. Atkins

Jeffrey A. Atkins
    
    Director
    
    February 21, 2008/s/ J.P. Bolduc

J.P. Bolduc
    
    Director
    
    February 21, 2008/s/ William R. Holland

William R. Holland
    
    Director
    
    February 21, 2008/s/ Robert V. Sisk

Robert V. Sisk
    
    Director
    
    February 21, 2008/s/ Dan C. Swander

Dan C. Swander
    
    Director
    
    February 21, 2008/s/ Isaiah Tidwell 
Isaiah Tidwell
    
    Director
    
    February 21, 2008S. Lance Van Every
    
    Director
 59