##### 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.
 (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)
 (Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o  o þ




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##### 



LANCE, INC. AND SUBSIDIARIES
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Statements of Income (Unaudited)  Quarters and Nine Months Ended
September 26, 2009 and September 27, 2008
    
    
    3Condensed Consolidated Balance Sheets  As of September 26, 2009 (Unaudited) and December
27, 2008
    
    
    4Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income
(Unaudited)  Nine Months Ended September 26, 2009 and September 27, 2008
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited)  Nine Months Ended September
26, 2009 and September 27, 2008
    
    
    6Notes to the Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 6. Exhibits
    
    
    18SIGNATURE
    
    
    19EX-31.1EX-31.2EX-32
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##### Table of Contents



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
  Quarter Ended
    
    
    Nine Months EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenue
    
    $
    234,902
    
    
    $
    225,587
    
    
    $
    687,065
    
    
    $
    637,169Cost of sales
    
    
    140,129
    
    
    
    143,040
    
    
    
    411,171
    
    
    
    400,192Gross margin
    
    
    94,773
    
    
    
    82,547
    
    
    
    275,894
    
    
    
    236,977Selling, general and administrative
    
    
    80,019
    
    
    
    72,337
    
    
    
    233,996
    
    
    
    219,762Other expense/(income), net
    
    
    644
    
    
    
    (536
    )
    
    
    1,252
    
    
    
    (379
    )Earnings before interest and income taxes
    
    
    14,110
    
    
    
    10,746
    
    
    
    40,646
    
    
    
    17,594Interest expense, net
    
    
    796
    
    
    
    708
    
    
    
    2,518
    
    
    
    2,173Income before income taxes
    
    
    13,314
    
    
    
    10,038
    
    
    
    38,128
    
    
    
    15,421Income tax expense
    
    
    4,511
    
    
    
    3,229
    
    
    
    13,345
    
    
    
    5,258Net income
    
    $
    8,803
    
    
    $
    6,809
    
    
    $
    24,783
    
    
    $
    10,163Basic earnings per share
    
    $
    0.28
    
    
    $
    0.22
    
    
    $
    0.79
    
    
    $
    0.33Weighted average shares outstanding  basic
    
    
    31,622,000
    
    
    
    31,243,000
    
    
    
    31,526,000
    
    
    
    31,176,000Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.77
    
    
    $
    0.32Weighted average shares outstanding  diluted
    
    
    32,519,000
    
    
    
    31,911,000
    
    
    
    32,286,000
    
    
    
    31,765,000
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LANCE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
 As of September 26, 2009 (Unaudited) and December 27, 2008
  September 26,
    
    
    December 27,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,629
    
    
    $
    807Accounts receivable, net of allowances of $1,111 and $863, respectively
    
    
    87,422
    
    
    
    74,406Inventories
    
    
    53,940
    
    
    
    43,112Deferred income taxes
    
    
    7,641
    
    
    
    9,778Prepaid expenses and other current assets
    
    
    14,501
    
    
    
    12,933Total current assets
    
    
    172,133
    
    
    
    141,036Other assets:Fixed assets, net of accumulated depreciation of $272,939 and $267,456,
respectively
    
    
    217,618
    
    
    
    216,085Goodwill, net
    
    
    83,598
    
    
    
    80,110Other intangible assets, net
    
    
    23,574
    
    
    
    23,966Other noncurrent assets
    
    
    5,555
    
    
    
    4,949Total assets
    
    $
    502,478
    
    
    $
    466,146LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    29,379
    
    
    $
    25,939Other payables and accrued liabilities
    
    
    62,346
    
    
    
    58,630Short-term debt
    
    
    
    
    
    
    7,000Total current liabilities
    
    
    91,725
    
    
    
    91,569Other liabilities:Long-term debt
    
    
    100,000
    
    
    
    91,000Deferred income taxes
    
    
    30,500
    
    
    
    31,241Other noncurrent liabilities
    
    
    16,406
    
    
    
    16,829Total liabilities
    
    
    238,631
    
    
    
    230,639Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, 32,054,562 and 31,522,953 shares outstanding, respectively
    
    
    26,711
    
    
    
    26,268Preferred stock, no shares outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    58,675
    
    
    
    49,138Retained earnings
    
    
    170,441
    
    
    
    160,938Accumulated other comprehensive income/(loss)
    
    
    8,020
    
    
    
    (837
    )Total stockholders equity
    
    
    263,847
    
    
    
    235,507Total liabilities and stockholders equity
    
    $
    502,478
    
    
    $
    466,146
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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
 Additional
    
    
    
    
    
    Accumulated OtherCommon
    
    Paid-in
    
    Retained
    
    ComprehensiveShares
    
    Stock
    
    Capital
    
    Earnings
    
    Income/(Loss)
    
    TotalBalance, December 29, 2007
    
    
    31,214,743
    
    
    $
    26,011
    
    
    $
    41,430
    
    
    $
    163,356
    
    
    $
    16,300
    
    
    $
    247,097Comprehensive income/(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,163
    
    
    
    
    
    
    
    10,163Foreign 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,314Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,083
    )
    
    
    
    
    
    
    (15,083
    )Stock options exercised, including $360 excess tax
benefit
    
    
    135,567
    
    
    
    113
    
    
    
    2,179
    
    
    
    
    
    
    
    
    
    
    
    2,292Equity-based incentive expense previously recognized
under a liability plan
    
    
    39,250
    
    
    
    33
    
    
    
    876
    
    
    
    
    
    
    
    
    
    
    
    909Amortization of nonqualified stock options
    
    
    
    
    
    
    
    
    
    
    829
    
    
    
    
    
    
    
    
    
    
    
    829Issuances and amortization of restricted stock and units,
net of forfeitures
    
    
    120,872
    
    
    
    101
    
    
    
    2,418
    
    
    
    
    
    
    
    
    
    
    
    2,519Balance, September 27, 2008
    
    
    31,510,432
    
    
    $
    26,258
    
    
    $
    47,732
    
    
    $
    158,436
    
    
    $
    12,451
    
    
    $
    244,877Balance, December 27, 2008
    
    
    31,522,953
    
    
    $
    26,268
    
    
    $
    49,138
    
    
    $
    160,938
    
    
    $
    (837
    )
    
    $
    235,507Comprehensive income/(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,783
    
    
    
    
    
    
    
    24,783Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,649
    
    
    
    6,649Net unrealized gains on derivatives, net of $1,042
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,317
    
    
    
    2,317Actuarial loss recognized in net income, net of $62
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    (109
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,640Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,280
    )
    
    
    
    
    
    
    (15,280
    )Stock options exercised, including $830 excess tax
benefit
    
    
    201,560
    
    
    
    168
    
    
    
    3,638
    
    
    
    
    
    
    
    
    
    
    
    3,806Equity-based incentive expense previously recognized
under a liability plan
    
    
    73,356
    
    
    
    61
    
    
    
    1,531
    
    
    
    
    
    
    
    
    
    
    
    1,592Amortization of nonqualified stock options
    
    
    
    
    
    
    
    
    
    
    951
    
    
    
    
    
    
    
    
    
    
    
    951Issuances and amortization of restricted stock and units,
net of forfeitures
    
    
    263,434
    
    
    
    220
    
    
    
    3,538
    
    
    
    
    
    
    
    
    
    
    
    3,758Repurchase 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
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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
 Nine Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Operating activitiesNet income
    
    $
    24,783
    
    
    $
    10,163Adjustments to reconcile net income to cash from operating activities:Depreciation and amortization
    
    
    25,945
    
    
    
    23,917Stock-based compensation expense
    
    
    4,709
    
    
    
    3,348Loss/(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
    
    
    
    27,101Investing activitiesPurchases of fixed assets
    
    
    (28,667
    )
    
    
    (30,616
    )Proceeds from sale of fixed assets
    
    
    667
    
    
    
    2,737Business acquisition, net of cash acquired
    
    
    
    
    
    
    (23,931
    )Net cash used in investing activities
    
    
    (28,000
    )
    
    
    (51,810
    )Financing activitiesDividends paid
    
    
    (15,280
    )
    
    
    (15,083
    )Issuance and repurchase of common stock
    
    
    3,679
    
    
    
    2,292Net proceeds from existing credit facilities
    
    
    2,000
    
    
    
    32,131Repayments of debt from business acquisition
    
    
    
    
    
    
    (2,239
    )Net cash (used in)/provided by financing activities
    
    
    (9,601
    )
    
    
    17,101Effect 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
    
    
    
    8,647Cash and cash equivalents at end of period
    
    $
    8,629
    
    
    $
    981Supplemental information:Cash paid for income taxes, net of refunds of $154 and $58, respectively
    
    $
    9,911
    
    
    $
    1,982Cash paid for interest
    
    $
    2,699
    
    
    $
    2,307
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LANCE, INC. AND SUBSIDIARIES
 
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 1. BASIS OF PRESENTATION
    2. NEW ACCOUNTING STANDARDS
  3. EARNINGS PER SHARE
  Quarter Ended
    
    Nine Months EndedSeptember 26,
    
    September 27,
    
    September 26,
    
    September 27,(in thousands)
    
    2009
    
    2008
    
    2009
    
    2008Weighted average number of common
shares used for basic earnings per share
    
    
    31,622
    
    
    
    31,243
    
    
    
    31,526
    
    
    
    31,176Effect of potential dilutive shares
    
    
    897
    
    
    
    668
    
    
    
    760
    
    
    
    589Weighted average number of common
shares and potential dilutive shares used
for diluted earnings per share
    
    
    32,519
    
    
    
    31,911
    
    
    
    32,286
    
    
    
    31,765Anti-dilutive shares excluded from the
above reconciliation
    
    
    25
    
    
    
    100
    
    
    
    30
    
    
    
    367
 4. EQUITY-BASED INCENTIVE
  7




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 5. INVENTORIES
 September 26,
    
    
    December 27,(in thousands)
    
    2009
    
    
    2008Finished goods
    
    $
    32,646
    
    
    $
    23,227Raw materials
    
    
    10,697
    
    
    
    11,556Supplies, etc.
    
    
    17,753
    
    
    
    15,293Total inventories at FIFO cost
    
    
    61,096
    
    
    
    50,076Less adjustments to reduce FIFO cost to LIFO cost
    
    
    (7,156
    )
    
    
    (6,964
    )Total inventories
    
    $
    53,940
    
    
    $
    43,112
 6. ACQUISITIONS
  7. EQUITY INVESTMENT
  8. INCOME TAXES
   Jurisdiction
    
    Open yearsUS federal
    
    2007 and forwardCanada federal
    
    2005 and forwardOntario provincial
    
    2003 and forwardMassachusetts
    
    2001 and forwardNorth Carolina
    
    2005 and forwardIowa
    
    2005 and forward
 9. FAIR VALUE MEASUREMENTS
      8




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LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
  10. DERIVATIVE INSTRUMENTS
  Interest Rate Swaps
  Foreign Currency Forwards
    Quarter Ended
    
    
    Nine Months Ended(in thousands)
    
    September 26, 2009
    
    
    September 27, 2008
    
    
    September 26, 2009
    
    
    September 27, 2008Interest 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
    )
    
    
    38Total net pre-tax expense from
derivative instruments
    
    $
    (511
    )
    
    $
    (308
    )
    
    $
    (2,958
    )
    
    $
    (522
    )
  Fair Value of Asset/(Liability) atSeptember 26,
    
    
    December 27,(in thousands)
    
    2009
    
    
    2008Interest 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
    )
 9




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LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
  Quarter Ended
    
    
    Nine Months Ended(in thousands)
    
    September 26, 2009
    
    
    September 27, 2008
    
    
    September 26, 2009
    
    
    September 27, 2008Interest 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
    )
  11. COMMITMENTS AND CONTINGENCIES
 Lease Obligations
  Contractual Obligations
  Customer Concentration
  12. SUBSEQUENT EVENTS
  ® ® ® ®
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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements and Risk Factors
   Results of Operations
  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
    
    VarianceRevenue
    
    $
    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
    %
 11




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Third Quarter Summary
  
    
    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.
  
    
    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
  Favorable/(Unfavorable)Acquisition
    
    
    3
    %Pricing, net of allowances
    
    
    2
    %Volume/Mix, net
    
    
    -1
    %Total percentage change in revenue
    
    
    4
    %
  Quarter EndedSeptember 26, 2009
    
    September 27, 2008Branded Products
    
    
    58
    %
    
    
    60
    %Private Brand Products
    
    
    32
    %
    
    
    30
    %Contract Manufacturing
    
    
    10
    %
    
    
    10
    %Total Revenue
    
    
    100
    %
    
    
    100
    %
   12




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LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Gross Margin
  Selling, General and Administrative Expenses
  Other Expense, Net
  Income Tax Expense
  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
    
    VarianceRevenue
    
    $
    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
  
    
    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;
 13




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 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.
  
    
    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
  Favorable/(Unfavorable)Pricing, net of allowances
    
    
    4
    %Acquisitions
    
    
    3
    %Volume/Mix, net
    
    
    1
    %Total percentage change in revenue
    
    
    8
    %
  Nine Months EndedSeptember 26, 2009
    
    September 27, 2008Branded Products
    
    
    59
    %
    
    
    61
    %Private Brand Products
    
    
    31
    %
    
    
    29
    %Contract Manufacturing
    
    
    10
    %
    
    
    10
    %Total Revenue
    
    
    100
    %
    
    
    100
    %
 ® ®
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LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Gross Margin
  Selling, General and Administrative Expenses
 ®
 Other Expense, Net
  Income Tax Expense
  Liquidity and Capital Resources
 Liquidity
   Operating Cash Flows
  15




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LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Investing Cash Flows
   ®
 Financing Cash Flows
   Debt
  Contractual Obligations
   Off-Balance Sheet Arrangements
  16




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Market Risks
      
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   17




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LANCE, INC. AND SUBSIDIARIES
 
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 6. Exhibits
 Exhibit Index
 No.
    
    Description3.1
    
    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.
  18




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LANCE, INC. AND SUBSIDIARIES
 
 Signature
  LANCE, INC.By:
    /s/ Rick D. PuckettRick D. PuckettExecutive Vice President, Chief Financial Officer,
Treasurer and Secretary  19