##### 



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 (13 weeks) ended March 31, 2007
 Commission File Number 0-398
 LANCE, INC.
 (Exact name of registrant as specified in its charter)
 North Carolina
    
    56-0292920(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)8600 South Boulevard
P.O. Box 32368
Charlotte, North Carolina
    
    28232(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
  þ o
  o þ o
  o þ




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##### 



LANCE, INC. AND SUBSIDIARIES
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed
Consolidated Statements of Income/(Loss) (Unaudited)  Quarters Ended March 31,
2007 and April 1, 2006
    
    
    3Condensed Consolidated Balance Sheets  March 31, 2007 (Unaudited) and December 30, 2006
    
    
    4Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income
(Unaudited)  Quarters Ended March 31, 2007 and April 1, 2006
    
    
    5Condensed
Consolidated Statements of Cash Flows (Unaudited)  Quarters Ended March 31, 2007
and April 1, 2006
    
    
    6Notes to the Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    13Item 4. Controls and Procedures
    
    
    13PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    13Item 1A. Risk Factors
    
    
    13Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    14Item 6. Exhibits
    
    
    14SIGNATURE
    
    
    15
 2




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##### 



PART I. FINANCIAL INFORMATION  Item 1. Financial Statements
 LANCE, INC. AND SUBSIDIARIES
 Condensed Consolidated Statements of Income/(Loss) (Unaudited)
For the Quarters Ended March 31, 2007 and April 1, 2006
 Quarter EndedMarch 31,
    
    
    April 1,2007
    
    
    2006Net sales and other operating revenue
    
    $
    182,426
    
    
    $
    180,745Cost of sales and operating expenses/(income):Cost of sales
    
    
    102,976
    
    
    
    104,866Selling, marketing and delivery
    
    
    56,479
    
    
    
    65,045General and administrative
    
    
    13,137
    
    
    
    11,458Other (income)/expense, net
    
    
    (90
    )
    
    
    162Total costs and expenses
    
    
    172,502
    
    
    
    181,531Income/(loss) from continuing operations before interest
    
    
    9,924
    
    
    
    (786
    )Interest expense, net
    
    
    (604
    )
    
    
    (669
    )Income/(loss) from continuing operations before income taxes
    
    
    9,320
    
    
    
    (1,455
    )Income tax (expense)/benefit
    
    
    (3,448
    )
    
    
    531Net income/(loss) from continuing operations
    
    
    5,872
    
    
    
    (924
    )Income from discontinued operations
    
    
    537
    
    
    
    250Income tax expense
    
    
    (199
    )
    
    
    (91
    )Net income from discontinued operations
    
    
    338
    
    
    
    159Net income/(loss)
    
    $
    6,210
    
    
    $
    (765
    )Basic earnings/(loss) per share:From continuing operations
    
    $
    0.19
    
    
    $
    (0.03
    )From discontinued operations
    
    $
    0.01
    
    
    $
    Basic earnings/(loss) per share
    
    $
    0.20
    
    
    $
    (0.03
    )Weighted average shares outstanding  basic
    
    
    30,805,000
    
    
    
    29,933,000Diluted earnings/(loss) per share:From continuing operations
    
    $
    0.19
    
    
    $
    (0.03
    )From discontinued operations
    
    $
    0.01
    
    
    $
    Diluted earnings/(loss) per share
    
    $
    0.20
    
    
    $
    (0.03
    )Weighted average shares outstanding  diluted
    
    
    31,131,000
    
    
    
    30,362,000
  3




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##### 



LANCE, INC. AND SUBSIDIARIES
 Condensed Consolidated Balance Sheets
As of March 31, 2007 (Unaudited) and December 30, 2006
 March 31,
    
    
    December 30,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    3,246
    
    
    $
    5,504Accounts receivable, net
    
    
    65,235
    
    
    
    61,690Inventories
    
    
    37,329
    
    
    
    36,838Deferred income tax asset
    
    
    8,748
    
    
    
    8,811Assets held for sale
    
    
    5,259
    
    
    
    6,552Prepaid expenses and other current assets
    
    
    7,641
    
    
    
    6,298Total current assets
    
    
    127,458
    
    
    
    125,693Other assetsProperty, plant & equipment, net
    
    
    193,661
    
    
    
    193,009Goodwill
    
    
    49,417
    
    
    
    49,091Other intangible assets, net
    
    
    13,200
    
    
    
    13,209Other assets
    
    
    4,663
    
    
    
    4,450Total assets
    
    $
    388,399
    
    
    $
    385,452LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    19,644
    
    
    $
    18,194Accrued compensation
    
    
    18,768
    
    
    
    22,299Accrued retirement plans
    
    
    1,370
    
    
    
    5,192Accrual for casualty insurance claims
    
    
    6,726
    
    
    
    6,783Accrual for medical insurance claims
    
    
    4,117
    
    
    
    3,488Accrued selling costs
    
    
    5,169
    
    
    
    4,860Other payables and accrued liabilities
    
    
    14,278
    
    
    
    12,632Total current liabilities
    
    
    70,072
    
    
    
    73,448Other liabilitiesLong-term debt
    
    
    50,000
    
    
    
    50,000Deferred income taxes
    
    
    25,962
    
    
    
    26,562Accrual for casualty insurance claims
    
    
    9,074
    
    
    
    9,418Other long-term liabilities
    
    
    6,035
    
    
    
    3,624Total liabilities
    
    
    161,143
    
    
    
    163,052Commitments and contingenciesStockholders equityCommon stock, 30,980,285 and 30,855,891 shares outstanding, respectively
    
    
    25,817
    
    
    
    25,714Preferred stock, no shares outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    34,998
    
    
    
    32,129Retained earnings
    
    
    160,665
    
    
    
    159,329Accumulated other comprehensive income
    
    
    5,776
    
    
    
    5,228Total stockholders equity
    
    
    227,256
    
    
    
    222,400Total liabilities and stockholders equity
    
    $
    388,399
    
    
    $
    385,452
  4




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##### 



LANCE, INC. AND SUBSIDIARIES
 Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income/(Loss) (Unaudited)
For the Quarters Ended March 31, 2007 and April 1, 2006
 Unamortized
    
    
    
    
    
    
    AccumulatedAdditional
    
    
    Portion of
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Restricted Stock
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Capital
    
    
    Awards
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, December 31, 2005
    
    
    29,808,705
    
    
    $
    24,841
    
    
    $
    13,870
    
    
    $
    (2,490
    )
    
    $
    160,407
    
    
    $
    5,081
    
    
    $
    201,709Comprehensive income/(loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (765
    )
    
    
    
    
    
    
    (765
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (163
    )
    
    
    (163
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (928
    )Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,789
    )
    
    
    
    
    
    
    (4,789
    )Stock options exercised, including
excess tax benefit of $1,037
    
    
    417,645
    
    
    
    348
    
    
    
    6,777
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,125Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (2,367
    )
    
    
    2,490
    
    
    
    
    
    
    
    
    
    
    
    123Cancellation, issuance and
amortization of restricted stock, net
    
    
    19,425
    
    
    
    16
    
    
    
    195
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Balance, April 1, 2006
    
    
    30,245,775
    
    
    $
    25,205
    
    
    $
    18,475
    
    
    $
    
    
    
    $
    154,853
    
    
    $
    4,918
    
    
    $
    203,451Balance, December 30, 2006
    
    
    30,855,891
    
    
    $
    25,714
    
    
    $
    32,129
    
    
    $
    
    
    
    $
    159,329
    
    
    $
    5,228
    
    
    $
    222,400Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,210
    
    
    
    
    
    
    
    6,210Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    640
    
    
    
    640Net unrealized losses on derivative
instruments, net of tax effect of $24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34
    )
    
    
    (34
    )Amortization of gains from post-
retirement medical plan, net of tax
effect of $17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    (58
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,758Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,935
    )
    
    
    
    
    
    
    (4,935
    )Stock options exercised, including
excess tax benefit of $110
    
    
    50,394
    
    
    
    42
    
    
    
    787
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    829Cumulative adjustment from adoption
of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    61Stock-based compensation previously
recognized under a liability plan
    
    
    
    
    
    
    
    
    
    
    316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    401
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    401Cancellation, issuance and
amortization of restricted stock, net
    
    
    74,000
    
    
    
    61
    
    
    
    1,365
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,426Balance, March 31, 2007
    
    
    30,980,285
    
    
    $
    25,817
    
    
    $
    34,998
    
    
    $
    
    
    
    $
    160,665
    
    
    $
    5,776
    
    
    $
    227,256
  5




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##### 



LANCE, INC. AND SUBSIDIARIES
 Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Quarters Ended March 31, 2007 and April 1, 2006
 Quarters EndedMarch 31,
    
    
    April 1,2007
    
    
    2006Operating activitiesNet income/(loss)
    
    $
    6,210
    
    
    $
    (765
    )Adjustments to reconcile net income/(loss) to cash provided by operating activities:Depreciation and amortization
    
    
    6,981
    
    
    
    6,650Stock-based compensation expense
    
    
    876
    
    
    
    660(Gain)/loss on sale of property, net
    
    
    (140
    )
    
    
    110Changes in operating assets and liabilities
    
    
    (5,916
    )
    
    
    (10,724
    )Net cash from/(used in) operating activities
    
    
    8,011
    
    
    
    (4,069
    )Investing activitiesPurchases of property and equipment
    
    
    (7,073
    )
    
    
    (9,855
    )Proceeds from sale of property
    
    
    802
    
    
    
    1,383Net cash used in investing activities
    
    
    (6,271
    )
    
    
    (8,472
    )Financing activitiesDividends paid
    
    
    (4,935
    )
    
    
    (4,789
    )Issuance of common stock
    
    
    829
    
    
    
    7,125Net proceeds from revolving credit facilities
    
    
    
    
    
    
    9,506Net cash flow (used in)/from financing activities
    
    
    (4,106
    )
    
    
    11,842Effect of exchange rate changes on cash
    
    
    108
    
    
    
    83Decrease in cash and cash equivalents
    
    
    (2,258
    )
    
    
    (616
    )Cash and cash equivalents at beginning of period
    
    
    5,504
    
    
    
    3,543Cash and cash equivalents at end of period
    
    $
    3,246
    
    
    $
    2,927Supplemental information:Cash paid for income taxes, net of refunds of $0 and $2, respectively
    
    $
    32
    
    
    $
    383Cash paid for interest
    
    $
    718
    
    
    $
    827
  6




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##### 



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 1.
    
    The accompanying unaudited condensed consolidated financial statements of Lance, Inc. have
been prepared in accordance with generally accepted accounting principles in the United States
of America for interim financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements. These condensed
financial statements should be read in conjunction with the audited financial statements and
notes included in our Form 10-K for the year ended December 30, 2006 filed with the Securities
and Exchange Commission (the SEC) on March 13, 2007. In our opinion, these condensed
consolidated financial statements reflect all adjustments (consisting of only normal, recurring
accruals) necessary to present fairly our condensed consolidated financial position as of March
31, 2007 and December 30, 2006 and the condensed consolidated statements of income/(loss) for
the quarters ended March 31, 2007 and April 1, 2006 and the condensed consolidated statements of
stockholders equity and comprehensive income/(loss) and cash flows for quarters ended March 31,
2007 and April 1, 2006. Prior year amounts shown in the accompanying condensed consolidated
financial statements have been reclassified for consistent presentation.
 2.
    
    The consolidated results of operations for the quarter ended March 31, 2007 are not
necessarily indicative of the results to be expected for the year ending December 29, 2007.
 3.
    
    Preparing financial statements requires management to make estimates and judgments about
future events that affect the reported amounts of assets, liabilities, revenues and expenses
and the related disclosure of contingent assets and liabilities. Examples include customer
returns and promotions, provisions for bad debts, inventory valuations, useful lives of fixed
assets, hedge transactions, supplemental retirement benefits, intangible asset valuations,
incentive compensation, income taxes, insurance, post-retirement benefits, contingencies and
legal proceedings. Actual results may differ from these estimates under different assumptions
or conditions.
 4.
    
    The principal raw materials used in the manufacture of our snack food products are flour,
vegetable oil, sugar, potatoes, peanuts, nuts, cheese, and seasonings. The principal supplies
used are flexible film, cartons, trays, boxes, and bags. These raw materials and supplies are
generally available in adequate quantities in the open market either from sources in the
United States or from other countries. These raw materials are generally contracted up to a
year in advance.
 5.
    
    We utilize the dollar value last-in, first-out (LIFO) method of determining the cost of
approximately 41% of our inventories. Because inventory valuations under the LIFO method are
based on annual determinations, the interim LIFO valuations require management to estimate
year-end costs and levels of inventories. The variation between estimated year-end costs and
levels of LIFO inventories compared to the actual year-end amounts may materially affect the
results of operations for the full year.Inventories consist of:
 March 31,
    
    
    December 30,(in thousands)
    
    2007
    
    
    2006Finished goods
    
    $
    19,136
    
    
    $
    18,630Raw materials
    
    
    7,899
    
    
    
    7,968Supplies, etc.
    
    
    14,288
    
    
    
    14,077Total inventories at FIFO cost
    
    
    41,323
    
    
    
    40,675Less adjustments to reduce FIFO cost to LIFO cost
    
    
    (3,994
    )
    
    
    (3,837
    )Total inventories
    
    $
    37,329
    
    
    $
    36,838
 7




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##### 



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 6.
    
    The following tables provide a reconciliation of the common shares used for basic earnings per
share and diluted earnings per share:
 Quarters EndedMarch 31,
    
    
    April 1,(in thousands)
    
    2007
    
    
    2006Weighted average number of common shares used for basic earnings per share
    
    
    30,805
    
    
    
    29,933Effect of potential dilutive shares
    
    
    326
    
    
    
    429Weighted average number of common shares and potential dilutive shares
used for diluted earnings per share
    
    
    31,131
    
    
    
    30,362Anti-dilutive shares excluded from the above reconciliation
    
    
    108
    
    
    
    203
 7.
    
    Sales to our largest customer, Wal-Mart Stores, Inc., were 20% and 18% of revenue for the
quarters ended March 31, 2007 and April 1, 2006, respectively. Accounts receivable at March
31, 2007 and December 30, 2006 included receivables from Wal-Mart Stores, Inc. totaling $15.2
million and $13.6 million, respectively.
 8.
    
    For the quarter ended March 31, 2007 and April 1, 2006, net bad debt benefit was $0.1 million
and $0.2 million, respectively. Net bad debt benefit is included in selling, marketing and
delivery in the accompanying condensed consolidated statements of income/(loss).
 9.
    
    During the quarter ended March 31, 2007, we granted 114,000 vested nonqualified stock options
that were previously accounted for as a liability. This resulted in an increase in additional
paid-in capital and a decrease in accrued compensation of $0.3 million on the March 31, 2007
condensed consolidated balance sheet.
 10.
    
    Net periodic benefit income for our post-retirement medical benefit plan consists of the
following:
 Quarters EndedMarch 31,
    
    
    April 1,(in thousands)
    
    2007
    
    
    2006Components of net periodic postretirement benefit cost (income):Service cost
    
    $
    
    
    
    $
    1Interest cost
    
    
    4
    
    
    
    12Gain amortization
    
    
    (75
    )
    
    
    (181
    )Net periodic postretirement benefit income
    
    $
    (71
    )
    
    $
    (168
    )
 For the quarter ended March 31, 2007, we paid less than $0.1 million in retiree benefit claims
and received $0.1 million in plan participant contributions. For the quarter ended April 1,
2006, we paid $0.2 million in retiree benefit claims and received $0.1 million in plan
participant contributions.11.
    
    At March 31, 2007 and December 30, 2006, we had $5.3 million and $6.6 million, respectively,
of assets held for sale. The assets at March 31, 2007 are primarily related to the
discontinued vending operations and two locations acquired from Toms Foods Inc. and
subsequently closed. These assets are expected to be sold during 2007.12.
    
    In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement 109 (FIN
48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial
statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This
Interpretation prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. FIN 48 was adopted at the beginning of 2007. The $0.1 million cumulative effect of
applying FIN 48 was reported as an increase to the opening balance of retained earnings.
Additionally, we reclassified a $1.9 million net liability for uncertain tax positions from
other payables and accrued liabilities to other long-term liabilities of $2.2 million and $0.3
million of deferred tax assets on the condensed consolidated balance sheet as of March 31,
2007.
 8




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##### 



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 We have recorded gross unrecognized tax benefits totaling $2.2 million as of March 31, 2007. Of
this amount, $1.9 million would impact the effective tax rate if subsequently recognized.
Various taxing authorities statutes of limitations related to the computation of our
unrecognized tax benefits will expire within twelve months of the adoption of FIN 48 resulting
in a potential $0.5 million reduction of the unrecognized tax benefit amount. We classify
interest and penalties associated with income tax positions within income tax expense. The
interest and penalty component of the unrecognized tax benefits as of March 31, 2007 was $0.4
million.We have open years for income tax audit purposes in our major taxing jurisdictions according to
statutes as follows:
 Jurisdiction
    
    Open yearsUS federal 
Canada federal 
Ontario provincial 
Massachusetts 
North Carolina 
Iowa
    
    2003 and forward 
2002 and forward 
2001 and forward 
2001 and forward 
2003 and forward 
2003 and forward
 The FASB also issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans, in September 2006. SFAS No. 158 requires employers to recognize the
overfunded or underfunded status of a single-employer defined benefit post-retirement plan as an
asset or liability in its balance sheet and to recognize changes in that funded status in the
year in which the changes occur through comprehensive income. SFAS No. 158 also requires an
employer to measure the funded status of a plan as of the date of its year-end balance sheet,
with limited exceptions. We adopted SFAS No. 158 at the end of 2006, which resulted in a
reclassification of the unrealized gain component of the accrued post-retirement healthcare
costs liability to accumulated other comprehensive income, net of tax, at December 30, 2006.
There will be no impact from the adoption of the remaining provisions of SFAS No. 158 since we
already measure the funded status of our post-retirement medical plan at the year-end balance
sheet date.
 9




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##### 



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Results of Operations
 Quarter Ended March 31, 2007 Compared to Quarter Ended April 1, 2006
 Favorable/Quarter Ended
    
    
    (Unfavorable)($ In thousands)
    
    March 31, 2007
    
    
    April 1, 2006
    
    
    VarianceRevenue
    
    $
    182,426
    
    
    
    100.0
    %
    
    $
    180,745
    
    
    
    100.0
    %
    
    $
    1,681
    
    
    
    0.9
    %Cost of sales
    
    
    102,976
    
    
    
    56.4
    %
    
    
    104,866
    
    
    
    58.0
    %
    
    
    1,890
    
    
    
    1.8
    %Gross margin
    
    
    79,450
    
    
    
    43.6
    %
    
    
    75,879
    
    
    
    42.0
    %
    
    
    3,571
    
    
    
    4.7
    %Selling, marketing and delivery
    
    
    56,479
    
    
    
    31.0
    %
    
    
    65,045
    
    
    
    36.0
    %
    
    
    8,566
    
    
    
    13.2
    %General and administrative
    
    
    13,137
    
    
    
    7.2
    %
    
    
    11,458
    
    
    
    6.3
    %
    
    
    (1,679
    )
    
    
    (14.7
    %)Other (income)/expense, net
    
    
    (90
    )
    
    
    
    
    
    
    162
    
    
    
    0.1
    %
    
    
    252
    
    
    
    155.6
    %Earnings/(losses) before interest
and taxes
    
    
    9,924
    
    
    
    5.4
    %
    
    
    (786
    )
    
    
    (0.4
    %)
    
    
    10,710
    
    
    
    1362.6
    %Interest expense, net
    
    
    (604
    )
    
    
    (0.3
    %)
    
    
    (669
    )
    
    
    (0.4
    %)
    
    
    65
    
    
    
    9.7
    %Income tax (expense)/benefit
    
    
    (3,448
    )
    
    
    (1.9
    %)
    
    
    531
    
    
    
    0.3
    %
    
    
    (3,979
    )
    
    
    (749.3
    %)Income/(loss) from continuing
operations
    
    
    5,872
    
    
    
    3.2
    %
    
    
    (924
    )
    
    
    (0.5
    %)
    
    
    6,796
    
    
    
    735.5
    %Income from discontinued operations
    
    
    537
    
    
    
    0.3
    %
    
    
    250
    
    
    
    0.1
    %
    
    
    287
    
    
    
    114.8
    %Income tax expense
    
    
    (199
    )
    
    
    (0.1
    %)
    
    
    (91
    )
    
    
    
    
    
    
    (108
    )
    
    
    (118.7
    %)Net income from discontinued
operations
    
    
    338
    
    
    
    0.2
    %
    
    
    159
    
    
    
    0.1
    %
    
    
    179
    
    
    
    112.6
    %Net income/(loss)
    
    $
    6,210
    
    
    
    3.4
    %
    
    $
    (765
    )
    
    
    (0.4
    %)
    
    $
    6,975
    
    
    
    911.8
    %
  ® ®
 .
 10




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##### 



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
       Liquidity and Capital Resources
 Liquidity
 Cash Flow
   Dividends
 11




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##### 



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Investing Activities
  Commitments and Contingencies
  Market Risks
      
 12




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##### 



LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements and Risk Factors
   Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Item 4. Controls and Procedures
   PART II. OTHER INFORMATION
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  13




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##### 



LANCE, INC. AND SUBSIDIARIES
 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
    
    Bylaws of Lance, Inc., as amended through April 25, 2002, incorporated herein by reference to Exhibit 3.3
to the Registrants Quarterly Report on Form 10-Q for the thirteen weeks ended June 29, 2002 (File No.
0-398).10.1*
    
    Lance, Inc. 1997 Incentive Equity Plan, as amended, filed herewith.10.2*
    
    Lance, Inc. 2003 Key Employee Stock Plan, as amended, filed herewith.10.3*
    
    Lance, Inc. 2007 Three-Year Performance Incentive Plan for Officers, filed herewith.10.4*
    
    Lance, Inc. 2007 Annual Performance Incentive Plan for Officers, filed herewith.10.5*
    
    Lance, Inc. 2007 Stock Option Plan for Officers and Key Managers, incorporated herein by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on March 14, 2007 (File No. 0-398).10.6*
    
    Agreement, effective as of February 14, 2007, between the Registrant and L. Rudy Gragnani, Jr., filed
herewith.10.7*
    
    Offer Letter, effective as of January 8, 2007, between the Registrant and Glenn A. Patcha, filed herewith.10.8*
    
    Form of Executive Severance Agreement between the Registrant and each of Frank I. Lewis, Glenn A. Patcha,
Rick D. Puckett, Blake W. Thompson and Margaret E. Wicklund, incorporated herein by reference to Exhibit
10.17 to the Registrants Annual Report on Form 10-K for the fiscal year ended December 27, 1997 (File
No. 0-398).10.9*
    
    Retirement Agreement, effective March 26, 2007, between the Registrant and H. Dean Fields, filed herewith.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.
   14




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##### 



LANCE, INC. AND SUBSIDIARIES
 Signature
  LANCE, INC.By:
    
    /s/ Rick D. PuckettRick D. Puckett
Executive Vice President,
Chief Financial Officer,
Treasurer and SecretaryDated: April 27, 2007
 15