##### 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 June 27, 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.)14120 Ballantyne Corporate PlaceSuite 350Charlotte, North Carolina
    
    28277(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
  þ o
  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)
  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 Six Months Ended June
27, 2009 and June 28, 2008
    
    
    3Condensed Consolidated Balance Sheets  As of June 27, 2009 (Unaudited) and December 27, 2008
    
    
    4Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income
(Unaudited)  Six Months Ended June 27, 2009 and June 28, 2008
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited)  Six Months Ended June 27, 2009
and June 28, 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 4. Submission of Matters to a Vote of Security Holders
    
    
    18Item 6. Exhibits
    
    
    19SIGNATURE
    
    
    20EX-31.1EX-31.2EX-32
  2




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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 Six Months Ended June 27, 2009 and June 28, 2008
 Quarter Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenue
    
    $
    236,355
    
    
    $
    213,614
    
    
    $
    452,163
    
    
    $
    411,582Cost of sales
    
    
    139,630
    
    
    
    133,691
    
    
    
    271,042
    
    
    
    257,152Gross margin
    
    
    96,725
    
    
    
    79,923
    
    
    
    181,121
    
    
    
    154,430Selling, general and administrative
    
    
    80,473
    
    
    
    74,568
    
    
    
    153,977
    
    
    
    147,425Other expense, net
    
    
    547
    
    
    
    161
    
    
    
    608
    
    
    
    157Earnings before interest and income taxes
    
    
    15,705
    
    
    
    5,194
    
    
    
    26,536
    
    
    
    6,848Interest expense, net
    
    
    910
    
    
    
    860
    
    
    
    1,722
    
    
    
    1,465Income before income taxes
    
    
    14,795
    
    
    
    4,334
    
    
    
    24,814
    
    
    
    5,383Income tax expense
    
    
    5,267
    
    
    
    1,626
    
    
    
    8,834
    
    
    
    2,030Net income
    
    $
    9,528
    
    
    $
    2,708
    
    
    $
    15,980
    
    
    $
    3,353Basic earnings per share
    
    $
    0.30
    
    
    $
    0.09
    
    
    $
    0.51
    
    
    $
    0.11Weighted average shares outstanding  basic
    
    
    31,552,000
    
    
    
    31,181,000
    
    
    
    31,477,000
    
    
    
    31,142,000Diluted earnings per share
    
    $
    0.30
    
    
    $
    0.09
    
    
    $
    0.50
    
    
    $
    0.11Weighted average shares outstanding  diluted
    
    
    32,293,000
    
    
    
    31,807,000
    
    
    
    32,163,000
    
    
    
    31,701,000
  3




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LANCE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
As of June 27, 2009 (Unaudited) and December 27, 2008
 June 27,
    
    
    December 27,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,008
    
    
    $
    807Accounts receivable, net of allowances of $1,023 and $863, respectively
    
    
    84,153
    
    
    
    74,406Inventories
    
    
    52,709
    
    
    
    43,112Deferred income taxes
    
    
    8,282
    
    
    
    9,778Prepaid expenses and other current assets
    
    
    12,178
    
    
    
    12,933Total current assets
    
    
    161,330
    
    
    
    141,036Other assets:Fixed assets, net of accumulated depreciation of $279,600 and $267,456,
respectively
    
    
    214,136
    
    
    
    216,085Goodwill, net
    
    
    82,105
    
    
    
    80,110Other intangible assets, net
    
    
    23,719
    
    
    
    23,966Other noncurrent assets
    
    
    5,410
    
    
    
    4,949Total assets
    
    $
    486,700
    
    
    $
    466,146LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    26,711
    
    
    $
    25,939Other payables and accrued liabilities
    
    
    55,941
    
    
    
    58,630Short-term debt
    
    
    
    
    
    
    7,000Total current liabilities
    
    
    82,652
    
    
    
    91,569Other liabilities:Long-term debt
    
    
    103,000
    
    
    
    91,000Deferred income taxes
    
    
    31,860
    
    
    
    31,241Other noncurrent liabilities
    
    
    16,143
    
    
    
    16,829Total liabilities
    
    
    233,655
    
    
    
    230,639Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, 31,963,448 and 31,522,953 shares outstanding, respectively
    
    
    26,635
    
    
    
    26,268Preferred stock, no shares outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    55,352
    
    
    
    49,138Retained earnings
    
    
    166,760
    
    
    
    160,938Accumulated other comprehensive income/(loss)
    
    
    4,298
    
    
    
    (837
    )Total stockholders equity
    
    
    253,045
    
    
    
    235,507Total liabilities and stockholders equity
    
    $
    486,700
    
    
    $
    466,146
  4




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LANCE, INC. AND SUBSIDIARIES
 
 Condensed
Consolidated Statements  of Stockholders Equity and Comprehensive Income (Unaudited)
 
For the Six Months Ended June 27, 2009 and June 28, 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,353
    
    
    
    
    
    
    
    3,353Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,246
    )
    
    
    (2,246
    )Net unrealized losses on derivatives, net of $198
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (366
    )
    
    
    (366
    )Actuarial loss recognized in net income, net of $32
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    (54
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    687Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,044
    )
    
    
    
    
    
    
    (10,044
    )Stock options exercised, including $267 excess tax
benefit
    
    
    98,638
    
    
    
    82
    
    
    
    1,559
    
    
    
    
    
    
    
    
    
    
    
    1,641Equity-based incentive expense previously recognized
under a liability plan
    
    
    39,250
    
    
    
    33
    
    
    
    876
    
    
    
    
    
    
    
    
    
    
    
    909Amortization of nonqualified stock options
    
    
    
    
    
    
    
    
    
    
    542
    
    
    
    
    
    
    
    
    
    
    
    542Issuances and amortization of restricted stock and units,
net of forfeitures
    
    
    122,031
    
    
    
    102
    
    
    
    1,526
    
    
    
    
    
    
    
    
    
    
    
    1,628Balance, June 28, 2008
    
    
    31,474,662
    
    
    $
    26,228
    
    
    $
    45,933
    
    
    $
    156,665
    
    
    $
    13,634
    
    
    $
    242,460Balance, December 27, 2008
    
    
    31,522,953
    
    
    $
    26,268
    
    
    $
    49,138
    
    
    $
    160,938
    
    
    $
    (837
    )
    
    $
    235,507Comprehensive income/(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,980
    
    
    
    
    
    
    
    15,980Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,327
    
    
    
    3,327Net unrealized gains on derivatives, net of $840
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,881
    
    
    
    1,881Actuarial loss recognized in net income, net of $41
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    (73
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,115Cash dividends paid to stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,158
    )
    
    
    
    
    
    
    (10,158
    )Stock options exercised, including $629 excess tax
benefit
    
    
    109,453
    
    
    
    91
    
    
    
    2,067
    
    
    
    
    
    
    
    
    
    
    
    2,158Equity-based incentive expense previously recognized
under a liability plan
    
    
    73,356
    
    
    
    61
    
    
    
    1,531
    
    
    
    
    
    
    
    
    
    
    
    1,592Amortization of nonqualified stock options
    
    
    
    
    
    
    
    
    
    
    606
    
    
    
    
    
    
    
    
    
    
    
    606Issuances and amortization of restricted stock and units,
net of forfeitures
    
    
    264,427
    
    
    
    221
    
    
    
    2,131
    
    
    
    
    
    
    
    
    
    
    
    2,352Repurchase of common stock
    
    
    (6,741
    )
    
    
    (6
    )
    
    
    (121
    )
    
    
    
    
    
    
    
    
    
    
    (127
    )Balance, June 27, 2009
    
    
    31,963,448
    
    
    $
    26,635
    
    
    $
    55,352
    
    
    $
    166,760
    
    
    $
    4,298
    
    
    $
    253,045
  5




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)For the Six Months Ended June 27, 2009 and June 28, 2008
 Six Months EndedJune 27, 2009
    
    
    June 28, 2008Operating activitiesNet income
    
    $
    15,980
    
    
    $
    3,353Adjustments to reconcile net income to cash from operating activities:Depreciation and amortization
    
    
    17,162
    
    
    
    16,105Stock-based compensation expense
    
    
    2,958
    
    
    
    2,170Loss on sale of fixed assets
    
    
    189
    
    
    
    195Changes in operating assets and liabilities, excluding business acquisition
    
    
    (15,981
    )
    
    
    (11,503
    )Net cash provided by operating activities
    
    
    20,308
    
    
    
    10,320Investing activitiesPurchases of fixed assets
    
    
    (14,592
    )
    
    
    (21,603
    )Proceeds from sale of fixed assets
    
    
    462
    
    
    
    321Business acquisition, net of cash acquired
    
    
    
    
    
    
    (23,931
    )Net cash used in investing activities
    
    
    (14,130
    )
    
    
    (45,213
    )Financing activitiesDividends paid
    
    
    (10,158
    )
    
    
    (10,044
    )Issuance and repurchase of common stock
    
    
    2,031
    
    
    
    1,641Net proceeds from existing credit facilities
    
    
    5,000
    
    
    
    38,014Repayments of debt from business acquisition
    
    
    
    
    
    
    (2,239
    )Net cash (used in)/provided by financing activities
    
    
    (3,127
    )
    
    
    27,372Effect of exchange rate changes on cash
    
    
    150
    
    
    
    (40
    )Increase/(decrease) in cash and cash equivalents
    
    
    3,201
    
    
    
    (7,561
    )Cash and cash equivalents at beginning of period
    
    
    807
    
    
    
    8,647Cash and cash equivalents at end of period
    
    $
    4,008
    
    
    $
    1,086Supplemental information:Cash paid for income taxes, net of refunds of $154 and $0, respectively
    
    $
    3,702
    
    
    $
    1,371Cash paid for interest
    
    $
    1,818
    
    
    $
    1,500
  6




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 1. BASIS OF PRESENTATION
   2. RECLASSIFICATIONS
  3. NEW ACCOUNTING STANDARDS
  4. EARNINGS PER SHARE
  Quarter Ended
    
    Six Months EndedJune 27,
    
    June 28,
    
    June 27,
    
    June 28,(in thousands)
    
    2009
    
    2008
    
    2009
    
    2008Weighted average number of common
shares used for basic earnings per share
    
    
    31,552
    
    
    
    31,181
    
    
    
    31,477
    
    
    
    31,142Effect of potential dilutive shares
    
    
    741
    
    
    
    626
    
    
    
    686
    
    
    
    559Weighted average number of common
shares and potential dilutive shares used
for diluted earnings per share
    
    
    32,293
    
    
    
    31,807
    
    
    
    32,163
    
    
    
    31,701Anti-dilutive shares excluded from the
above reconciliation
    
    
    251
    
    
    
    95
    
    
    
    251
    
    
    
    867
 7




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 5. EQUITY-BASED INCENTIVE
  6. INVENTORIES
 June 27,
    
    
    December 27,(in thousands)
    
    2009
    
    
    2008Finished goods
    
    $
    27,797
    
    
    $
    23,227Raw materials
    
    
    15,010
    
    
    
    11,556Supplies, etc.
    
    
    17,050
    
    
    
    15,293Total inventories at FIFO cost
    
    
    59,857
    
    
    
    50,076Less adjustments to reduce FIFO cost to LIFO cost
    
    
    (7,148
    )
    
    
    (6,964
    )Total inventories
    
    $
    52,709
    
    
    $
    43,112
 7. EQUITY INVESTMENT
  8. INCOME TAXES
   Jurisdiction
    
    Open yearsUS federal
    
    2005, 2007 and forwardCanada federal
    
    2004 and forwardOntario provincial
    
    2003 and forwardMassachusetts
    
    2001 and forwardNorth Carolina
    
    2005 and forwardIowa
    
    2005 and forward
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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
 9. FAIR VALUE MEASUREMENTS
  Level 1 
    
    quoted prices in active markets for identical assets and liabilities.
 Level 2 
    
    observable inputs other than quoted prices for identical assets and liabilities.
 Level 3 
    
    unobservable inputs in which there is little or no market data available, which requires us to develop our own assumptions.
   10. DERIVATIVE INSTRUMENTS
  Interest Rate Swaps
  Foreign Currency Forwards
    Quarters Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest rate swaps (included in Interest expense, net)
    
    $
    (588
    )
    
    $
    (208
    )
    
    $
    (1,132
    )
    
    $
    (312
    )Foreign currency forwards (included in Net revenue)
    
    
    (479
    )
    
    
    39
    
    
    
    (1,262
    )
    
    
    89Foreign currency forwards (included in Other expense,
net)
    
    
    (30
    )
    
    
    6
    
    
    
    (53
    )
    
    
    9Total net pre-tax expense from derivative instruments
    
    $
    (1,097
    )
    
    $
    (163
    )
    
    $
    (2,447
    )
    
    $
    (214
    )
 9




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 Notes to the Condensed Consolidated Financial Statements (Unaudited)
  Fair Value of Asset/(Liability) atJune 27,
    
    
    December 27,(in thousands)
    
    2009
    
    
    2008Interest rate swaps (included in Other noncurrent liabilities)
    
    $
    (3,687
    )
    
    $
    (4,272
    )Foreign currency forwards (included in Other payables and accrued liabilities)
    
    
    42
    
    
    
    (2,094
    )Total fair value of derivative instruments
    
    $
    (3,645
    )
    
    $
    (6,366
    )
  Quarters Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest rate swaps
    
    $
    623
    
    
    $
    1,238
    
    
    $
    585
    
    
    $
    (8
    )Foreign currency forwards
    
    
    1,610
    
    
    
    35
    
    
    
    2,136
    
    
    
    (556
    )Total change in unrealized pre-tax gains/(losses)
from derivative instruments (effective portion)
    
    $
    2,233
    
    
    $
    1,273
    
    
    $
    2,721
    
    
    $
    (564
    )
  11. COMMITMENTS AND CONTINGENCIES
 Lease Obligations
  Contractual Obligations
  Customer Concentration
  12. SUBSEQUENT EVENTS
   10




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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
   Results of Operations
  Quarter Ended June 27, 2009 Compared to Quarter Ended June 28, 2008
 Favorable/Quarter Ended
    
    (Unfavorable)(dollars in thousands)
    
    June 27, 2009
    
    June 28, 2008
    
    VarianceRevenue
    
    $
    236,355
    
    
    
    100.0
    %
    
    $
    213,614
    
    
    
    100.0
    %
    
    $
    22,741
    
    
    
    10.6
    %Cost of sales
    
    
    139,630
    
    
    
    59.1
    %
    
    
    133,691
    
    
    
    62.6
    %
    
    
    (5,939
    )
    
    
    (4.4
    %)Gross margin
    
    
    96,725
    
    
    
    40.9
    %
    
    
    79,923
    
    
    
    37.4
    %
    
    
    16,802
    
    
    
    21.0
    %Selling, general and administrative
    
    
    80,473
    
    
    
    34.0
    %
    
    
    74,568
    
    
    
    34.9
    %
    
    
    (5,905
    )
    
    
    (7.9
    %)Other expense, net
    
    
    547
    
    
    
    0.2
    %
    
    
    161
    
    
    
    0.1
    %
    
    
    (386
    )
    
    
    (239.8
    %)Earnings before interest and taxes
    
    
    15,705
    
    
    
    6.6
    %
    
    
    5,194
    
    
    
    2.4
    %
    
    
    10,511
    
    
    
    202.4
    %Interest expense, net
    
    
    910
    
    
    
    0.4
    %
    
    
    860
    
    
    
    0.4
    %
    
    
    (50
    )
    
    
    (5.8
    %)Income tax expense
    
    
    5,267
    
    
    
    2.2
    %
    
    
    1,626
    
    
    
    0.8
    %
    
    
    (3,641
    )
    
    
    (223.9
    %)Net income
    
    $
    9,528
    
    
    
    4.0
    %
    
    $
    2,708
    
    
    
    1.3
    %
    
    $
    6,820
    
    
    
    251.8
    %
 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
 Second Quarter Summary
  
    
    higher selling prices aimed at offsetting the escalation in ingredient costs that
occurred throughout 2008;
    
    the Archway acquisition that occurred in December 2008;
    
    the introduction of innovative new products in both our branded and non-branded
categories;
    
    lower energy and ingredient costs;
    
    improvements in supply chain efficiencies, such as increased labor efficiencies and
lower shipping costs; and
    
    improved efficiencies in our direct store delivery (DSD) route system, which resulted
in a continuation of double-digit improvements in weekly average sales per route.
  
    
    increased advertising expenses primarily as a result of the launch of our first national
television campaign; and
    
    additional costs of $0.3 million associated with the relocation of the Brent & Sams
operations from Little Rock, Arkansas to Charlotte, North Carolina.
 Revenue
  Favorable/(Unfavorable)Pricing
    
    
    4
    %Volume/Mix
    
    
    4
    %Acquisition
    
    
    3
    %Total percentage change in revenue
    
    
    11
    %
  Quarters EndedJune 27,
    
    June 28,2009
    
    2008Revenue from Branded Products
    
    
    59
    %
    
    
    62
    %Revenue from Non-Branded Products:Revenue from Private Brands
    
    
    30
    %
    
    
    28
    %Revenue from Contract Manufacturing
    
    
    11
    %
    
    
    10
    %Total Revenue from Non-Branded Products
    
    
    41
    %
    
    
    38
    %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
  Income Tax Expense
  Six Months Ended June 27, 2009 Compared to Six Months Ended June 28, 2008
 Favorable/Six Months Ended
    
    (Unfavorable)(dollars in thousands)
    
    June 27, 2009
    
    June 28, 2008
    
    VarianceRevenue
    
    $
    452,163
    
    
    
    100.0
    %
    
    $
    411,582
    
    
    
    100.0
    %
    
    $
    40,581
    
    
    
    9.9
    %Cost of sales
    
    
    271,042
    
    
    
    59.9
    %
    
    
    257,152
    
    
    
    62.5
    %
    
    
    (13,890
    )
    
    
    (5.4
    %)Gross margin
    
    
    181,121
    
    
    
    40.1
    %
    
    
    154,430
    
    
    
    37.5
    %
    
    
    26,691
    
    
    
    17.3
    %Selling, general and administrative
    
    
    153,977
    
    
    
    34.1
    %
    
    
    147,425
    
    
    
    35.8
    %
    
    
    (6,552
    )
    
    
    (4.4
    %)Other expense, net
    
    
    608
    
    
    
    0.1
    %
    
    
    157
    
    
    
    0.0
    %
    
    
    (451
    )
    
    
    (287.3
    %)Earnings before interest and taxes
    
    
    26,536
    
    
    
    5.9
    %
    
    
    6,848
    
    
    
    1.7
    %
    
    
    19,688
    
    
    
    287.5
    %Interest expense, net
    
    
    1,722
    
    
    
    0.4
    %
    
    
    1,465
    
    
    
    0.4
    %
    
    
    (257
    )
    
    
    (17.5
    %)Income tax expense
    
    
    8,834
    
    
    
    2.0
    %
    
    
    2,030
    
    
    
    0.5
    %
    
    
    (6,804
    )
    
    
    (335.2
    %)Net income
    
    $
    15,980
    
    
    
    3.5
    %
    
    $
    3,353
    
    
    
    0.8
    %
    
    $
    12,627
    
    
    
    376.6
    %
 Six Months Summary
  
    
    higher selling prices aimed at offsetting the escalation in ingredient costs that
occurred throughout 2008;
    
    the introduction of innovative new products in both our branded and non-branded
categories;
    
    lower energy costs, such as gasoline, diesel and natural gas;
    
    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 a continuation of
double-digit improvements in weekly average sales per route.
 13




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LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    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; and
    
    loss of revenue and lower net income as a result of the peanut butter recall described
above that occurred during the first quarter of 2009.
 Revenue
  Favorable/(Unfavorable)Pricing
    
    
    5
    %Volume/Mix
    
    
    2
    %Acquisition
    
    
    3
    %Total percentage change in revenue
    
    
    10
    %
  Six Months EndedJune 27,
    
    June 28,2009
    
    2008Revenue from Branded Products
    
    
    59
    %
    
    
    62
    %Revenue from Non-Branded Products:Revenue from Private Brands
    
    
    31
    %
    
    
    28
    %Revenue from Contract Manufacturing
    
    
    10
    %
    
    
    10
    %Total Revenue from Non-Branded Products
    
    
    41
    %
    
    
    38
    %Total Revenue
    
    
    100
    %
    
    
    100
    %
 ® ®
   14




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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
  Income Tax Expense
  Liquidity and Capital Resources
 Liquidity
   Operating Cash Flows
  Investing 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
 Financing Cash Flows
   Debt
  Contractual Obligations
   Off-Balance Sheet Arrangements
  Market Risks
      16




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LANCE, INC. AND SUBSIDIARIES
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
 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 4.
    
    Submission of Matters to a Vote of Security Holders
  1.
    
    Election of nominees to the Board of Directors to serve until the Annual Meeting of
Stockholders in 2012:
 Votes For
    
    Votes WithheldJeffrey A. Atkins
    
    
    28,611,713
    
    
    
    193,366J.P. Bolduc
    
    
    28,296,762
    
    
    
    508,317Isaiah Tidwell
    
    
    28,426,114
    
    
    
    378,965
 2.
    
    Ratification of the selection of KPMG LLP as independent public accountants for fiscal
2009 (28,188,451 for, 563,322 against, 40,362 abstaining).
 18




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##### Table of Contents



LANCE, INC. AND SUBSIDIARIES
 
 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.
 
 *
    
    Management contract.  19




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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  20