##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission file number 000-04065
 Lancaster Colony Corporation
 (Exact name of registrant as specified in its charter)
 Ohio
    
    13-1955943(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)37 West Broad Street
    
    43215Columbus, Ohio
    
    (Zip Code)(Address of principal executive offices)
 614-224-7141  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, without par value
    
    The NASDAQ Stock Market LLC(including Series A Participating
    
    (NASDAQ Global Select Market)Preferred Share Purchase Rights)
 Securities registered pursuant to Section 12(g) of the Act:
None
 þ o
 o þ
 þ o
 o o
 þ
  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
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    6Item 1B. Unresolved Staff Comments
    
    
    11Item 2. Properties
    
    
    11Item 3. Legal Proceedings
    
    
    12Item 4. Submission of Matters to a Vote of Security Holders
    
    
    12PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    12Item 6. Selected Financial Data
    
    
    14Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 8. Financial Statements and Supplementary Data
    
    
    30Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    58Item 9A. Controls and Procedures
    
    
    58Item 9B. Other Information
    
    
    60PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    60Item 11. Executive Compensation
    
    
    60Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    60Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    60Item 14. Principal Accounting Fees and Services
    
    
    60PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    61Signatures
    
    
    62Index to Exhibits
    
    
    64EX-21EX-23EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I
  Item 1. Business
 GENERAL
 
  Available Information
 http://www.lancastercolony.com
 DESCRIPTION OF AND FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
  
 Specialty Foods
   3




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Glassware and Candles
    4




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NET SALES BY CLASS OF PRODUCTS
  2009
    
    2008
    
    2007Specialty Foods:Non-frozen
    
    
    54
    %
    
    
    53
    %
    
    
    51
    %Frozen
    
    
    33
    %
    
    
    29
    %
    
    
    26
    %Glassware and Candles:Consumer table and giftware
    
    
    13
    %
    
    
    15
    %
    
    
    18
    %
  RESEARCH AND DEVELOPMENT
  BACKLOG
  ENVIRONMENTAL MATTERS
  EMPLOYEES AND LABOR RELATIONS
  FOREIGN OPERATIONS AND EXPORT SALES
  RAW MATERIALS
  5




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Item 1A. Risk Factors
   Competitive conditions within our markets could impact our sales volumes and operating margins.
   Wal-Mart is our largest customer, and the loss of its business could cause our sales and net
income to decrease.
  Increases in the costs or limitations to the availability of raw materials we use to produce our
products could adversely affect our business by increasing our costs to produce goods.
   6




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A disruption of production at certain of our manufacturing facilities could result in an
inability to provide adequate levels of customer service.
  We may be subject to product recalls or product liability claims for misbranded, adulterated,
contaminated or spoiled food products or defective consumer products.
     Increases in energy-related costs could negatively affect our business by increasing our costs to
produce goods.
  The availability and cost of transportation for our products is vital to our success, and the
loss of availability or increase in the cost of transportation could have an unfavorable impact
on our business and results of operations.
  7




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Our inability to successfully renegotiate union contracts and any prolonged work stoppages or
other business disruptions could have an adverse effect on our business and results of
operations.
   There is no certainty regarding the amount of future CDSOA distributions.
     Restructuring and impairment charges could have a material adverse effect on our financial
results.
  We may not be able to successfully consummate proposed acquisitions or divestitures or integrate
acquired businesses.
  8




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Potential indemnification costs relating to business divestitures could have a material adverse
effect on our business and results of operations.
  A future increase in our indebtedness could adversely affect our profitability and operational
flexibility.
  We are subject to Federal, state and local government regulations that could adversely affect our
business and results of operations.
   We rely on the value of our brands, and the costs of maintaining and enhancing the awareness of
our brands are increasing, which could have an adverse impact on our revenues and profitability.
  9




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Inherent risks associated with our idle real property, such as our inability to sell it in a
reasonable time period, could have an adverse effect on our business and results of operations.
    Mr. Gerlach, our Chief Executive Officer and Chairman of our board of directors, has a
significant ownership interest in our Company.
   Anti-takeover provisions could make it more difficult for a third party to acquire us.
  10




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##### Table of Contents



Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   Approximate
    
    Terms ofLocation
    
    Business Segment
    
    Square Feet
    
    OccupancyAltoona, IA (1)
    
    Specialty Foods
    
    
    109,000
    
    
    Owned/LeasedBedford Heights, OH (3)
    
    Specialty Foods
    
    
    98,000
    
    
    Owned/LeasedColumbus, OH (4)
    
    Specialty Foods
    
    
    393,000
    
    
    Owned/LeasedGrove City, OH
    
    Specialty Foods
    
    
    195,000
    
    
    OwnedHorse Cave, KY
    
    Specialty Foods
    
    
    333,000
    
    
    OwnedLuverne, AL
    
    Specialty Foods
    
    
    91,000
    
    
    OwnedMilpitas, CA (2)
    
    Specialty Foods
    
    
    130,000
    
    
    Owned/LeasedWilson, NY
    
    Specialty Foods
    
    
    80,000
    
    
    OwnedLeesburg, OH
    
    Glassware and Candles
    
    
    860,000
    
    
    OwnedJackson, OH
    
    Glassware and Candles
    
    
    122,000
    
    
    Owned
 
 (1)
    
    Part leased for term expiring in calendar year 2009(2)
    
    Part leased for term expiring in calendar year 2010(3)
    
    Part leased for term expiring in calendar year 2012(4)
    
    Part leased for term expiring in calendar year 2014  11




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Item 3. Legal Proceedings
   Item 4. Submission of Matters to a Vote of Security Holders
   PART II
  Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  DividendsStock Prices
    
    
    PaidHigh
    
    
    Low
    
    
    Per Share2009First quarter
    
    $
    39.24
    
    
    $
    29.57
    
    
    $
    .280Second quarter
    
    
    38.37
    
    
    
    26.01
    
    
    
    .285Third quarter
    
    
    43.46
    
    
    
    31.90
    
    
    
    .285Fourth quarter
    
    
    48.92
    
    
    
    40.42
    
    
    
    .285Year
    
    
    
    
    
    
    
    
    
    $
    1.1352008First quarter
    
    $
    44.02
    
    
    $
    35.89
    
    
    $
    .27Second quarter
    
    
    44.10
    
    
    
    36.11
    
    
    
    .28Third quarter
    
    
    41.05
    
    
    
    32.72
    
    
    
    .28Fourth quarter
    
    
    41.62
    
    
    
    30.27
    
    
    
    .28Year
    
    
    
    
    
    
    
    
    
    $
    1.11
   Issuer Purchases of Equity Securities
  12




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PERFORMANCE GRAPH
 COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
OF LANCASTER COLONY CORPORATION, THE S&P MIDCAP 400 INDEX
AND THE DOW JONES U.S. FOOD PRODUCERS INDEX
  
 Cumulative Total Return (Dollars)
 6/04
    
    
    6/05
    
    
    6/06
    
    
    6/07
    
    
    6/08
    
    
    6/09Lancaster Colony Corporation
    
    
    
    100.00
    
    
    
    
    105.51
    
    
    
    
    104.59
    
    
    
    
    113.81
    
    
    
    
    84.77
    
    
    
    
    127.16S&P Midcap 400
    
    
    
    100.00
    
    
    
    
    114.03
    
    
    
    
    128.83
    
    
    
    
    152.67
    
    
    
    
    141.47
    
    
    
    
    101.83Dow Jones U.S. Food Producers
    
    
    
    100.00
    
    
    
    
    105.09
    
    
    
    
    114.30
    
    
    
    
    133.88
    
    
    
    
    121.69
    
    
    
    
    102.46
  13




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##### Table of Contents



Item 6. Selected Financial Data
 LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FIVE YEAR FINANCIAL SUMMARY
 (Thousands Except
    
    Years Ended June 30Per Share Figures)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005OperationsNet Sales
    
    $
    1,051,491
    
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    924,571
    
    
    $
    907,345Gross Margin
    
    $
    215,492
    
    
    $
    157,341
    
    
    $
    181,740
    
    
    $
    189,074
    
    
    $
    191,014Percent of Sales
    
    
    20.5
    %
    
    
    16.0
    %
    
    
    19.2
    %
    
    
    20.4
    %
    
    
    21.1
    %Interest Expense
    
    $
    (1,217
    )
    
    $
    (3,076
    )
    
    $
    (150
    )
    
    $
    
    
    
    $
    Percent of Sales
    
    
    0.1
    %
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Other Income  Continued Dumping
and Subsidy Offset Act
    
    $
    8,696
    
    
    $
    2,533
    
    
    $
    699
    
    
    $
    11,376
    
    
    $
    26,226Income from Continuing OperationsBefore Income Taxes
    
    $
    137,006
    
    
    $
    75,668
    
    
    $
    101,260
    
    
    $
    125,734
    
    
    $
    141,928Percent of Sales
    
    
    13.0
    %
    
    
    7.7
    %
    
    
    10.7
    %
    
    
    13.6
    %
    
    
    15.6
    %Taxes Based on Income
    
    $
    47,920
    
    
    $
    27,229
    
    
    $
    36,981
    
    
    $
    44,494
    
    
    $
    52,550Income from Continuing Operations
    
    $
    89,086
    
    
    $
    48,439
    
    
    $
    64,279
    
    
    $
    81,240
    
    
    $
    89,378Percent of Sales
    
    
    8.5
    %
    
    
    4.9
    %
    
    
    6.8
    %
    
    
    8.8
    %
    
    
    9.9
    %Continuing Operations Diluted Income
per Common Share
    
    $
    3.18
    
    
    $
    1.64
    
    
    $
    2.03
    
    
    $
    2.42
    
    
    $
    2.56Cash Dividends per Common Share
    
    $
    1.135
    
    
    $
    1.11
    
    
    $
    1.07
    
    
    $
    3.03
    
    
    $
    .98Financial PositionCash, Equivalents and
Short-Term Investments
    
    $
    38,484
    
    
    $
    19,417
    
    
    $
    8,316
    
    
    $
    41,815
    
    
    $
    184,580Total Assets
    
    $
    498,481
    
    
    $
    520,178
    
    
    $
    598,497
    
    
    $
    628,021
    
    
    $
    731,278Working Capital
    
    $
    148,233
    
    
    $
    144,925
    
    
    $
    137,121
    
    
    $
    235,283
    
    
    $
    370,559Property, Plant and EquipmentNet
    
    $
    170,900
    
    
    $
    179,573
    
    
    $
    194,589
    
    
    $
    162,107
    
    
    $
    131,837Long-Term Debt
    
    $
    
    
    
    $
    55,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Property Additions
    
    $
    11,336
    
    
    $
    16,832
    
    
    $
    53,589
    
    
    $
    51,860
    
    
    $
    18,917Depreciation and Amortization
    
    $
    21,870
    
    
    $
    24,138
    
    
    $
    24,081
    
    
    $
    24,980
    
    
    $
    26,351Shareholders Equity
    
    $
    402,556
    
    
    $
    359,218
    
    
    $
    444,309
    
    
    $
    494,421
    
    
    $
    587,726Per Common Share
    
    $
    14.32
    
    
    $
    12.63
    
    
    $
    14.45
    
    
    $
    15.33
    
    
    $
    17.17Weighted Average Common Shares
OutstandingDiluted
    
    
    28,051
    
    
    
    29,499
    
    
    
    31,603
    
    
    
    33,502
    
    
    
    34,925
 14




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
 This Managements Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) describes the matters that we consider to be important in understanding the results of our
operations for the three years in the periods ended June 30, 2009, 2008 and 2007 and our liquidity
and capital resources as of June 30, 2009 and 2008. Our fiscal year begins on July 1 and ends on
June 30. Unless otherwise noted, references to year pertain to our fiscal year; for example, 2009
refers to fiscal 2009, which is the period from July 1, 2008 to June 30, 2009. In the discussion
that follows, we analyze the results of our operations for the last three years, including the
trends in our overall business, followed by a discussion of our cash flows and liquidity and
contractual obligations. We then provide a review of the critical accounting policies and estimates
that we believe are most important to an understanding of our MD&A and our consolidated financial
statements. We conclude our MD&A with information on recently issued accounting pronouncements.
 The following discussion should be read in conjunction with the Selected Financial Data and
our consolidated financial statements and the notes thereto, all included elsewhere in this Annual
Report on Form 10-K . The forward-looking statements in this section and other parts of this report
involve risks and uncertainties including statements regarding our plans, objectives, goals,
strategies, and financial performance. Our actual results could differ materially from the results
anticipated in these forward-looking statements as a result of factors set forth under the caption
Forward-Looking Statements.
 EXECUTIVE SUMMARY
 Business Overview
   
    
    June 2008  Sale of the remaining automotive operations, ending the previously
reported Automotive segment;
    
    November 2007  Sale of substantially all of the operating assets of our consumer
and floral glass operations;
    
    September 2007  Substantial completion and operational start-up of new frozen
yeast roll facility in Horse Cave, Kentucky. This facility adjoins the dressing
facility noted below and allows us to take advantage of various synergies;
    
    June 2007  Sale of our automotive accessory operations based in Coshocton, Ohio
and LaGrange, Georgia;
 15




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
    
    June 2007  Acquisition of Marshall Biscuit Company, Inc. (Marshall Biscuit);
    
    March 2007  Sale of automotive accessory operations in Wapakoneta, Ohio;
    
    March 2007  Initiated closure of our industrial glass operations located in
Lancaster, Ohio; and
    
    Fall 2006  Operational start-up of new dressing facility in Horse Cave, Kentucky.
    
    
    leading retail market positions in several branded products with a high-quality perception;
    
    a broad customer base in both retail and foodservice accounts;
    
    well-regarded culinary expertise among foodservice accounts;
    
    recognized leadership in foodservice product development;
    
    demonstrated experience in integrating complementary business acquisitions; and
    
    historically strong cash flow generation that supports growth opportunities.
  
    
    leveraging the strength of our retail brands to increase current product sales and
introduce new products;
    
    continuing to grow our foodservice sales through the strength of our reputation in
product development and quality; and
    
    pursuing acquisitions that meet our strategic criteria.
    16




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Summary of 2009 Results
      Looking Forward
   17




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REVIEW OF CONSOLIDATED OPERATIONS
 Segment Sales Mix
  2009
    
    2008
    
    2007Segment Sales Mix:Specialty Foods
    
    
    87
    %
    
    
    82
    %
    
    
    77
    %Glassware and Candles
    
    
    13
    %
    
    
    18
    %
    
    
    23
    %
 Net Sales and Gross Margin
 Year EndedJune 30
    
    
    
    
    
    
    Change(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009 vs. 2008
    
    
    2008 vs. 2007Net SalesSpecialty Foods
    
    $
    909,897
    
    
    $
    808,507
    
    
    $
    728,657
    
    
    $
    101,390
    
    
    
    13
    %
    
    $
    79,850
    
    
    
    11
    %Glassware and Candles
    
    
    141,594
    
    
    
    172,408
    
    
    
    217,153
    
    
    
    (30,814
    )
    
    
    (18
    )%
    
    
    (44,745
    )
    
    
    (21
    )%Total
    
    $
    1,051,491
    
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    70,576
    
    
    
    7
    %
    
    $
    35,105
    
    
    
    4
    %Gross Margin
    
    $
    215,492
    
    
    $
    157,341
    
    
    $
    181,740
    
    
    $
    58,151
    
    
    
    37
    %
    
    $
    (24,399
    )
    
    
    (13
    )%Gross Margin as a
Percentage of Sales
    
    
    20.5
    %
    
    
    16.0
    %
    
    
    19.2
    %
  18




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Selling, General and Administrative Expenses
 Year EndedJune 30
    
    
    
    
    
    
    Change(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009 vs. 2008
    
    
    2008 vs. 2007Selling, General and
Administrative Expenses
    
    $
    84,238
    
    
    $
    80,751
    
    
    $
    79,704
    
    
    $
    3,487
    
    
    
    4
    %
    
    $
    1,047
    
    
    
    1
    %SG&A Expense as a
Percentage of Sales
    
    
    8.0
    %
    
    
    8.2
    %
    
    
    8.4
    %
  Restructuring and Impairment Charge
 Specialty Foods Segment
  19




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Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    June 30,2008
    
    
    Charge
    
    
    Outlays
    
    
    2009Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    
    
    
    $
    555
    
    
    $
    (555
    )
    
    $
    Other Costs
    
    
    
    
    
    
    162
    
    
    
    (162
    )
    
    
    Subtotal
    
    $
    
    
    
    
    717
    
    
    $
    (717
    )
    
    $
    Fixed Asset Impairment
    
    
    
    
    
    
    47Total
    
    
    
    
    
    $
    764
 Other Segments
     Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    June 30,2008
    
    
    Charge
    
    
    Outlays
    
    
    2009Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    69
    
    
    $
    
    
    
    $
    (69
    )
    
    $
    Other Costs
    
    
    1,184
    
    
    
    842
    
    
    
    (2,026
    )
    
    
    Total
    
    $
    1,253
    
    
    $
    842
    
    
    $
    (2,095
    )
    
    $
    
  20




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##### Table of Contents



Operating Income
 Year EndedJune 30
    
    
    
    
    
    
    Change(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009 vs. 2008
    
    
    2008 vs. 2007Operating IncomeSpecialty Foods
    
    $
    145,848
    
    
    $
    88,975
    
    
    $
    101,518
    
    
    $
    56,873
    
    
    
    64
    %
    
    $
    (12,543
    )
    
    
    (12
    )%Glassware and Candles
    
    
    (5,671
    )
    
    
    (1,887
    )
    
    
    5,712
    
    
    
    (3,784
    )
    
    
    (201
    )%
    
    
    (7,599
    )
    
    
    (133
    )%Corporate Expenses
    
    
    (10,529
    )
    
    
    (11,751
    )
    
    
    (7,320
    )
    
    
    1,222
    
    
    
    (10
    )%
    
    
    (4,431
    )
    
    
    61
    %Total
    
    $
    129,648
    
    
    $
    75,337
    
    
    $
    99,910
    
    
    $
    54,311
    
    
    
    72
    %
    
    $
    (24,573
    )
    
    
    (25
    )%Operating Income as
a Percentage of SalesSpecialty Foods
    
    
    16.0
    %
    
    
    11.0
    %
    
    
    13.9
    %Glassware and Candles
    
    
    (4.0
    )%
    
    
    (1.1
    )%
    
    
    2.6
    %Consolidated
    
    
    12.3
    %
    
    
    7.7
    %
    
    
    10.6
    %
  Interest Expense
  Other
Income  Continued Dumping and Subsidy Offset Act
     21




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##### Table of Contents



Interest Income and Other  Net
  Income from Continuing Operations Before Income Taxes
  Income from Continuing Operations
  Discontinued Operations
  Net Income
  SEGMENT REVIEW  SPECIALTY FOODS
   22




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SEGMENT REVIEW  GLASSWARE AND CANDLES
    CORPORATE EXPENSES
  23




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FINANCIAL CONDITION
 Liquidity and Capital Resources
       Cash Flows from Continuing Operations
 Year EndedJune 30
    
    
    
    
    
    Change(Dollars in thousands)
    
    2009
    
    2008
    
    2007
    
    2009 vs. 2008
    
    2008 vs. 2007Provided by Operating
Activities
    
    $
    133,164
    
    
    $
    70,932
    
    
    $
    82,923
    
    
    $
    62,232
    
    
    
    88
    %
    
    $
    (11,991
    )
    
    
    (14
    )%(Used in) Provided by
Investing Activities
    
    
    (10,974
    )
    
    
    710
    
    
    
    (43,000
    )
    
    
    (11,684
    )
    
    
    N/M
    
    
    
    43,710
    
    
    
    102
    %Used in Financing Activities
    
    
    (103,123
    )
    
    
    (109,372
    )
    
    
    (58,871
    )
    
    
    6,249
    
    
    
    6
    %
    
    
    (50,501
    )
    
    
    (86)
    %
  24




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND COMMITMENTS
   25




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##### Table of Contents



Payment Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsOperating Lease Obligations (1)
    
    $
    11,539
    
    
    $
    3,713
    
    
    $
    4,912
    
    
    $
    2,379
    
    
    $
    535Purchase Obligations (2)
    
    
    74,048
    
    
    
    68,416
    
    
    
    5,392
    
    
    
    240
    
    
    
    Minimum Required Pension Contributions
    
    
    32
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    Other Long-Term Liabilities (as reflected
on Consolidated Balance Sheet) (3)
    
    
    1,088
    
    
    
    62
    
    
    
    1,026
    
    
    
    
    
    
    
    Total
    
    $
    86,707
    
    
    $
    72,223
    
    
    $
    11,330
    
    
    $
    2,619
    
    
    $
    535
 
 (1)
    
    Operating leases are primarily entered into for warehouse and office facilities and certain
equipment. See Note 12 to the consolidated financial statements for further information.(2)
    
    Purchase obligations represent purchase orders and longer-term purchase arrangements related
to the procurement of supplies, raw materials, and property, plant and equipment. These
obligations include a purchase commitment arising out of the sale of our consumer and floral
glass operating assets for which we are not obligated, but would be subject to a penalty if
the commitment were not met.(3)
    
    This amount does not include approximately $15.3 million of other noncurrent liabilities
recorded on the balance sheet, which consist of the underfunded pension liability, other post
employment benefit obligations, tax liabilities recorded under Financial Accounting Standards
Board (FASB) Interpretation No. 48 Accounting for Uncertainty in Income Taxes and deferred
compensation and interest on deferred compensation. These items are excluded, as it is not
certain when these liabilities will become due. See Notes 6, 9, 10 and 11 to the consolidated
financial statements for further information. IMPACT OF INFLATION
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  26




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##### Table of Contents



Revenue Recognition
  Receivables and the Allowance for Doubtful Accounts
  Valuation of Inventory
  Long-Lived Assets
  Goodwill and Intangible Assets
  Accrued Marketing and Distribution
  27




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##### Table of Contents



Accruals for Self-Insurance
  Accounting for Pension Plans and Other Postretirement Benefit Plans
  RECENTLY ISSUED ACCOUNTING STANDARDS
    28




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##### Table of Contents



RECENTLY ADOPTED ACCOUNTING STANDARDS
  Forward-Looking Statements
   
    
    the potential for loss of larger programs or key customer relationships;
    
    the effect of consolidation of customers within key market channels;
    
    the continued solvency of key customers;
    
    the success and cost of new product development efforts;
    
    the lack of market acceptance of new products;
    
    the reaction of customers or consumers to the effect of price increases we may implement;
    
    changes in demand for our products, which may result from loss of brand reputation or
customer goodwill;
    
    changes in market trends;
    
    the extent to which future business acquisitions are completed and acceptably integrated;
    
    the possible occurrence of product recalls;
    
    efficiencies in plant operations, including the ability to optimize overhead
utilization in candle operations;
    
    the overall strength of the economy;
    
    changes in financial markets;
    
    slower than anticipated sales growth;
    
    the extent of operational efficiencies achieved;
    
    price and product competition;
    
    the uncertainty regarding the effect or outcome of any decision to explore further
strategic alternatives among our nonfood operations;
    
    fluctuations in the cost and availability of raw materials;
 29




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##### Table of Contents




    
    adverse changes in energy costs and other factors that may affect costs of producing,
distributing or transporting our products;
    
    the impact of fluctuations in our pension plan asset values on funding levels,
contributions required and benefit costs;
    
    maintenance of competitive position with respect to other manufacturers, including
import sources of production;
    
    dependence on key personnel;
    
    stability of labor relations;
    
    fluctuations in energy costs;
    
    dependence on contract copackers;
    
    effect of governmental regulations, including environmental matters;
    
    legislation and litigation affecting the future administration of CDSOA;
    
    access to any required financing;
    
    changes in income tax laws;
    
    unexpected costs relating to the holding or disposition of idle real estate;
    
    changes in estimates in critical accounting judgments; and
    
    innumerable other factors.
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  INTEREST RATE RISK
  COMMODITY PRICE RISK
  
 Item 8. Financial Statements and Supplementary Data
 30




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Accounting for Uncertainty in Income Taxes
 Employers
Accounting for Defined Benefit Pension and Other Postretirement Plan
 Internal Control  Integrated Framework
 /s/ Deloitte & Touche LLP

     Deloitte & Touche LLP
 
 31




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 June 30(Amounts in thousands, except share data)
    
    2009
    
    
    2008ASSETSCurrent Assets:Cash and equivalents
    
    $
    38,484
    
    
    $
    19,417Receivables (less allowance for doubtful accounts,
2009$942; 2008$1,069)
    
    
    61,152
    
    
    
    59,409Inventories:Raw materials
    
    
    33,067
    
    
    
    34,787Finished goods and work in process
    
    
    69,456
    
    
    
    85,516Total inventories
    
    
    102,523
    
    
    
    120,303Deferred income taxes and other current assets
    
    
    20,653
    
    
    
    34,545Total current assets
    
    
    222,812
    
    
    
    233,674Property, Plant and Equipment:Land, buildings and improvements
    
    
    130,683
    
    
    
    138,771Machinery and equipment
    
    
    239,380
    
    
    
    240,490Total cost
    
    
    370,063
    
    
    
    379,261Less accumulated depreciation
    
    
    199,163
    
    
    
    199,688Property, plant and equipmentnet
    
    
    170,900
    
    
    
    179,573Other Assets:Goodwill
    
    
    89,840
    
    
    
    89,840Other intangible assetsnet
    
    
    10,678
    
    
    
    11,841Other noncurrent assets
    
    
    4,251
    
    
    
    5,250Total
    
    $
    498,481
    
    
    $
    520,178LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    41,180
    
    
    $
    45,964Accrued liabilities
    
    
    33,399
    
    
    
    42,785Total current liabilities
    
    
    74,579
    
    
    
    88,749Long-Term Debt
    
    
    
    
    
    
    55,000Other Noncurrent Liabilities
    
    
    16,719
    
    
    
    14,547Deferred Income Taxes
    
    
    4,627
    
    
    
    2,664Shareholders Equity:Preferred stockauthorized 3,050,000 shares;
outstandingnoneCommon stockauthorized 75,000,000 shares;
outstanding, 200928,101,885 shares;
200828,452,237 shares
    
    
    88,962
    
    
    
    82,652Retained earnings
    
    
    998,476
    
    
    
    941,244Accumulated other comprehensive loss
    
    
    (9,085
    )
    
    
    (5,775
    )Common stock in treasury, at cost
    
    
    (675,797
    )
    
    
    (658,903
    )Total shareholders equity
    
    
    402,556
    
    
    
    359,218Total
    
    $
    498,481
    
    
    $
    520,178
  32




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 Years Ended June 30(Amounts in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007Net Sales
    
    $
    1,051,491
    
    
    $
    980,915
    
    
    $
    945,810Cost of Sales
    
    
    835,999
    
    
    
    823,574
    
    
    
    764,070Gross Margin
    
    
    215,492
    
    
    
    157,341
    
    
    
    181,740Selling, General and Administrative Expenses
    
    
    84,238
    
    
    
    80,751
    
    
    
    79,704Restructuring and Impairment Charges
    
    
    1,606
    
    
    
    1,253
    
    
    
    2,126Operating Income
    
    
    129,648
    
    
    
    75,337
    
    
    
    99,910Other (Expense) Income:Interest expense
    
    
    (1,217
    )
    
    
    (3,076
    )
    
    
    (150
    )Other incomeContinued Dumping and Subsidy
Offset Act
    
    
    8,696
    
    
    
    2,533
    
    
    
    699Interest income and othernet
    
    
    (121
    )
    
    
    874
    
    
    
    801Income from Continuing Operations
Before Income Taxes
    
    
    137,006
    
    
    
    75,668
    
    
    
    101,260Taxes Based on Income
    
    
    47,920
    
    
    
    27,229
    
    
    
    36,981Income from Continuing Operations
    
    
    89,086
    
    
    
    48,439
    
    
    
    64,279Discontinued Operations, Net of Tax:Income (Loss) from Discontinued Operations
    
    
    
    
    
    
    2,633
    
    
    
    (3,475
    )Loss on Sale of Discontinued Operations
    
    
    
    
    
    
    (13,452
    )
    
    
    (15,120
    )Total Discontinued Operations
    
    
    
    
    
    
    (10,819
    )
    
    
    (18,595
    )Net Income
    
    $
    89,086
    
    
    $
    37,620
    
    
    $
    45,684Income Per Common Share from
Continuing Operations:Basic
    
    $
    3.18
    
    
    $
    1.64
    
    
    $
    2.04Diluted
    
    $
    3.18
    
    
    $
    1.64
    
    
    $
    2.03Loss Per Common Share from
Discontinued Operations:Basic and Diluted
    
    $
    
    
    
    $
    (.37
    )
    
    $
    (.59
    )Net Income Per Common Share:Basic and Diluted
    
    $
    3.18
    
    
    $
    1.28
    
    
    $
    1.45Weighted Average Common Shares Outstanding:Basic
    
    
    28,033
    
    
    
    29,494
    
    
    
    31,576Diluted
    
    
    28,051
    
    
    
    29,499
    
    
    
    31,603
  33




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended June 30(Amounts in thousands)
    
    2009
    
    
    2008
    
    
    2007Cash Flows From Operating Activities:Net income
    
    $
    89,086
    
    
    $
    37,620
    
    
    $
    45,684Adjustments to reconcile net income
to net cash provided by operating activities:Loss from discontinued operations
    
    
    
    
    
    
    10,819
    
    
    
    18,595Depreciation and amortization
    
    
    21,870
    
    
    
    24,138
    
    
    
    24,081Deferred income taxes and other noncash changes
    
    
    3,767
    
    
    
    4,593
    
    
    
    (4,226
    )Restructuring and impairment charges
    
    
    (1,221
    )
    
    
    774
    
    
    
    3,302Gain on sale of property
    
    
    (861
    )
    
    
    (603
    )
    
    
    (51
    )Loss (gain) on divestitures
    
    
    
    
    
    
    6,414
    
    
    
    (8
    )Pension plan activity
    
    
    (2,316
    )
    
    
    2,035
    
    
    
    (485
    )Changes in operating assets and liabilities:Receivables
    
    
    (2,287
    )
    
    
    (5,851
    )
    
    
    1,252Inventories
    
    
    17,780
    
    
    
    (7,487
    )
    
    
    (5,704
    )Other current assets
    
    
    13,868
    
    
    
    (8,277
    )
    
    
    (3,608
    )Accounts payable and accrued liabilities
    
    
    (6,522
    )
    
    
    6,757
    
    
    
    4,091Net cash provided by operating activities
from continuing operations
    
    
    133,164
    
    
    
    70,932
    
    
    
    82,923Cash Flows From Investing Activities:Cash paid for acquisitions
    
    
    
    
    
    
    (250
    )
    
    
    (23,000
    )Payments on property additions
    
    
    (11,336
    )
    
    
    (16,832
    )
    
    
    (53,589
    )Proceeds from sale of property
    
    
    2,000
    
    
    
    935
    
    
    
    179Net proceeds from divestitures
    
    
    
    
    
    
    19,108
    
    
    
    8Purchases of short-term investments
    
    
    
    
    
    
    
    
    
    
    (5,000
    )Proceeds from short-term investment sales,
calls and maturities
    
    
    
    
    
    
    
    
    
    
    40,765Othernet
    
    
    (1,638
    )
    
    
    (2,251
    )
    
    
    (2,363
    )Net cash (used in) provided by investing activities
from continuing operations
    
    
    (10,974
    )
    
    
    710
    
    
    
    (43,000
    )Cash Flows From Financing Activities:Net repayment of $100 million credit facility
    
    
    
    
    
    
    (42,500
    )
    
    
    Proceeds from debt
    
    
    25,000
    
    
    
    146,104
    
    
    
    42,500Payments on debt
    
    
    (80,000
    )
    
    
    (91,104
    )
    
    
    Purchase of treasury stock
    
    
    (16,894
    )
    
    
    (89,338
    )
    
    
    (65,858
    )Payment of dividends
    
    
    (31,854
    )
    
    
    (32,578
    )
    
    
    (33,696
    )Proceeds from the exercise of stock options
    
    
    5,407
    
    
    
    648
    
    
    
    3,515Decrease in cash overdraft balance
    
    
    (4,782
    )
    
    
    (604
    )
    
    
    (5,332
    )Net cash used in financing activities
from continuing operations
    
    
    (103,123
    )
    
    
    (109,372
    )
    
    
    (58,871
    )Cash Flows From Discontinued Operations:Net cash provided by operating activities
from discontinued operations
    
    
    
    
    
    
    22,385
    
    
    
    11,233Net cash provided by investing activities
from discontinued operations
    
    
    
    
    
    
    26,444
    
    
    
    9,993Net cash provided by discontinued operations
    
    
    
    
    
    
    48,829
    
    
    
    21,226Effect of exchange rate changes on cash
    
    
    
    
    
    
    2
    
    
    
    (12
    )Net change in cash and equivalents
    
    
    19,067
    
    
    
    11,101
    
    
    
    2,266Cash and equivalents at beginning of year
    
    
    19,417
    
    
    
    8,316
    
    
    
    6,050Cash and equivalents at end of year
    
    $
    38,484
    
    
    $
    19,417
    
    
    $
    8,316
  34




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY
 AccumulatedCommon Stock
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Total(Amounts in thousands,
    
    Outstanding
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Shareholdersexcept per share data)
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    EquityBalance, June 30, 2006
    
    
    32,246
    
    
    $
    78,017
    
    
    $
    925,388
    
    
    $
    (5,277
    )
    
    $
    (503,707
    )
    
    $
    494,421Net income
    
    
    
    
    
    
    
    
    
    
    45,684
    
    
    
    
    
    
    
    
    
    
    
    45,684Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )Minimum pension liability,
net of $1,427 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,578
    
    
    
    
    
    
    
    2,578Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,250Cash dividends common
stock ($1.07 per share)
    
    
    
    
    
    
    
    
    
    
    (33,696
    )
    
    
    
    
    
    
    
    
    
    
    (33,696
    )Purchase of treasury stock
    
    
    (1,589
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,858
    )
    
    
    (65,858
    )Stock-based plans
    
    
    91
    
    
    
    3,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,515Stock-based compensation expense
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133Adoption of SFAS 158,
net of $1,502 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,456
    )
    
    
    
    
    
    
    (2,456
    )Balance, June 30, 2007
    
    
    30,748
    
    
    
    81,665
    
    
    
    937,376
    
    
    
    (5,167
    )
    
    
    (569,565
    )
    
    
    444,309Net income
    
    
    
    
    
    
    
    
    
    
    37,620
    
    
    
    
    
    
    
    
    
    
    
    37,620Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (131
    )
    
    
    
    
    
    
    (131
    )Net pension and postretirement
benefit losses, net of $339
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (477
    )
    
    
    
    
    
    
    (477
    )Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,012Cash dividends  common
stock ($1.11 per share)
    
    
    
    
    
    
    
    
    
    
    (32,578
    )
    
    
    
    
    
    
    
    
    
    
    (32,578
    )Purchase of treasury stock
    
    
    (2,340
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89,338
    )
    
    
    (89,338
    )Stock-based plans
    
    
    44
    
    
    
    648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    648Stock-based compensation expense
    
    
    
    
    
    
    339
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339Cumulative effect of
FIN 48 adoption
    
    
    
    
    
    
    
    
    
    
    (1,174
    )
    
    
    
    
    
    
    
    
    
    
    (1,174
    )Balance, June 30, 2008
    
    
    28,452
    
    
    
    82,652
    
    
    
    941,244
    
    
    
    (5,775
    )
    
    
    (658,903
    )
    
    
    359,218Net income
    
    
    
    
    
    
    
    
    
    
    89,086
    
    
    
    
    
    
    
    
    
    
    
    89,086Net pension and postretirement
benefit losses, net of $1,897
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,310
    )
    
    
    
    
    
    
    (3,310
    )Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,776Cash dividends  common
stock ($1.135 per share)
    
    
    
    
    
    
    
    
    
    
    (31,854
    )
    
    
    
    
    
    
    
    
    
    
    (31,854
    )Purchase of treasury stock
    
    
    (496
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,894
    )
    
    
    (16,894
    )Stock-based plans
    
    
    146
    
    
    
    5,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,347Stock-based compensation expense
    
    
    
    
    
    
    963
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963Balance, June 30, 2009
    
    
    28,102
    
    
    $
    88,962
    
    
    $
    998,476
    
    
    $
    (9,085
    )
    
    $
    (675,797
    )
    
    $
    402,556
  35




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LANCASTER COLONY CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except share and per share data)
 Note 1  Summary of Significant Accounting Policies
 Principles of Consolidation
  Subsequent Events
  Use of Estimates
  Cash and Equivalents
  Receivables and the Allowance for Doubtful Accounts
  Credit Risk
  Inventories
  36




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 Property, Plant and Equipment
  Long-Lived Assets
  Goodwill and Intangible Assets
  Accrued Marketing and Distribution
  Accruals for Self-Insurance
  Revenue Recognition
  37




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 Advertising Expense
  Shipping and Handling
  Stock-Based Employee Compensation Plans
  Other Income
  Per Share Information
   Comprehensive Income and Accumulated Other Comprehensive Loss
  38




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  2009
    
    
    2008
    
    
    2007Cumulative translation adjustments
    
    $
    
    
    
    $
    
    
    
    $
    131Pension and postretirement benefit adjustments
    
    
    (9,085
    )
    
    
    (5,775
    )
    
    
    (5,298
    )$
    (9,085
    )
    
    $
    (5,775
    )
    
    $
    (5,167
    )
 Recently Issued Accounting Standards
    Note 2 Acquisitions, Discontinued Operations and Divestitures
 Acquisitions
  39




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  Discontinued Operations
    Divestitures
  Note 3  Goodwill and Other Intangible Assets
  40




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  2009
    
    
    2008Specialty FoodsTrademarks (40-year life)Gross carrying value
    
    $
    370
    
    
    $
    370Accumulated amortization
    
    
    (167
    )
    
    
    (158
    )Net Carrying Value
    
    $
    203
    
    
    $
    212Customer Relationships (12 to 15-year life)Gross carrying value
    
    $
    13,020
    
    
    $
    13,020Accumulated amortization
    
    
    (3,118
    )
    
    
    (2,182
    )Net Carrying Value
    
    $
    9,902
    
    
    $
    10,838Non-compete Agreements (5 to 8-year life)Gross carrying value
    
    $
    1,540
    
    
    $
    1,540Accumulated amortization
    
    
    (967
    )
    
    
    (749
    )Net Carrying Value
    
    $
    573
    
    
    $
    791Total Net Carrying Value
    
    $
    10,678
    
    
    $
    11,841
  Note 4 Accrued Liabilities
  2009
    
    
    2008Accrued compensation and employee benefits
    
    $
    22,863
    
    
    $
    23,505Accrued marketing and distribution
    
    
    5,768
    
    
    
    7,911Income and other taxes
    
    
    1,307
    
    
    
    2,276Book cash overdrafts
    
    
    
    
    
    
    4,782Other
    
    
    3,461
    
    
    
    4,311Total accrued liabilities
    
    $
    33,399
    
    
    $
    42,785
 Note 5  Long-Term Debt
    41




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  Note 6  Income Taxes
  2009
    
    
    2008
    
    
    2007Currently payable:Federal
    
    $
    40,019
    
    
    $
    23,221
    
    
    $
    39,300State and local
    
    
    3,858
    
    
    
    3,130
    
    
    
    4,607Total current provision
    
    
    43,877
    
    
    
    26,351
    
    
    
    43,907Deferred Federal, state and local provision (benefit)
    
    
    4,043
    
    
    
    878
    
    
    
    (6,926
    )Total taxes based on income
    
    $
    47,920
    
    
    $
    27,229
    
    
    $
    36,981
  2009
    
    2008
    
    2007Statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes
    
    
    2.1
    %
    
    
    3.2
    %
    
    
    2.5
    %ESOP dividend deduction
    
    
    (0.2
    )%
    
    
    (0.4
    )%
    
    
    (0.4
    )%Domestic manufacturing deduction
    
    
    (1.8
    )%
    
    
    (1.3
    )%
    
    
    (0.8
    )%Other
    
    
    (0.1
    )%
    
    
    (0.5
    )%
    
    
    0.2
    %Effective rate
    
    
    35.0
    %
    
    
    36.0
    %
    
    
    36.5
    %
  2009
    
    
    2008Deferred tax assets:Inventories
    
    $
    2,929
    
    
    $
    2,674Employee medical and other benefits
    
    
    9,214
    
    
    
    8,425Receivable and other allowances
    
    
    5,100
    
    
    
    4,989Other accrued liabilities
    
    
    3,817
    
    
    
    4,233Total deferred tax assets
    
    
    21,060
    
    
    
    20,321Total deferred tax liabilitiesproperty and other
    
    
    (10,448
    )
    
    
    (7,563
    )Net deferred tax asset
    
    $
    10,612
    
    
    $
    12,758
  
 42




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
   2009
    
    
    2008Balance, beginning of year
    
    $
    2,673
    
    
    $
    2,356Tax positions related to current year:Additions
    
    
    336
    
    
    
    128Reductions
    
    
    
    
    
    
    (1
    )Tax positions related to prior years:Additions
    
    
    243
    
    
    
    362Reductions
    
    
    (220
    )
    
    
    (172
    )Decreases due to settlements with taxing authorities
    
    
    (100
    )
    
    
    Balance, end of year
    
    $
    2,932
    
    
    $
    2,673
      Note 7  Shareholders Equity
   43




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
   Note 8  Stock-Based Compensation
   Stock Options
     44




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding at June 30, 2006
    
    
    470,982
    
    
    $
    39.92Exercised
    
    
    (88,290
    )
    
    
    37.63Forfeited
    
    
    (21,192
    )
    
    
    40.82Outstanding at June 30, 2007
    
    
    361,500
    
    
    $
    40.42
    
    
    
    2.18
    
    
    $
    531Exercised
    
    
    (17,200
    )
    
    
    37.23Forfeited
    
    
    (33,200
    )
    
    
    41.11Expired
    
    
    (72,100
    )
    
    
    37.23Outstanding at June 30, 2008
    
    
    239,000
    
    
    $
    41.52
    
    
    
    1.67
    
    
    $
    0Exercised
    
    
    (124,900
    )
    
    
    41.52Forfeited
    
    
    (17,750
    )
    
    
    41.52Outstanding at June 30, 2009
    
    
    96,350
    
    
    $
    41.52
    
    
    
    .67
    
    
    $
    246Exercisable and vested at June 30, 2007
    
    
    353,713
    
    
    $
    40.40
    
    
    
    2.17
    
    
    $
    528Vested and expected to vest at June 30, 2007
    
    
    361,500
    
    
    $
    40.42
    
    
    
    2.18
    
    
    $
    531Exercisable and vested at June 30, 2008
    
    
    237,433
    
    
    $
    41.52
    
    
    
    1.67
    
    
    $
    0Vested and expected to vest at June 30, 2008
    
    
    239,000
    
    
    $
    41.52
    
    
    
    1.67
    
    
    $
    0Exercisable and vested at June 30, 2009
    
    
    96,350
    
    
    $
    41.52
    
    
    
    .67
    
    
    $
    246Vested and expected to vest at June 30, 2009
    
    
    96,350
    
    
    $
    41.52
    
    
    
    .67
    
    
    $
    246
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested at beginning of period
    
    
    1,567
    
    
    $
    8.14Granted
    
    
    
    
    
    
    Vested
    
    
    (791
    )
    
    
    8.14Forfeited
    
    
    (776
    )
    
    
    8.14Unvested at end of period
    
    
    
    
    
    $
    
  Stock-Settled Stock Appreciation Rights
   45




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
    WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicRights
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding at June 30, 2007
    
    
    
    
    
    $
    Granted
    
    
    153,550
    
    
    
    38.31Outstanding at June 30, 2008
    
    
    153,550
    
    
    $
    38.31
    
    
    
    4.67
    
    
    $
    0Exercised
    
    
    (8,010
    )
    
    
    38.31Granted
    
    
    77,700
    
    
    
    39.86Forfeited
    
    
    (1,000
    )
    
    
    38.31Outstanding at June 30, 2009
    
    
    222,240
    
    
    $
    38.85
    
    
    
    4.02
    
    
    $
    1,160Exercisable and vested at June 30, 2008
    
    
    
    
    
    
    Vested and expected to vest at June 30, 2008
    
    
    147,408
    
    
    $
    38.31
    
    
    
    4.67
    
    
    $
    0Exercisable and vested at June 30, 2009
    
    
    43,006
    
    
    $
    38.31
    
    
    
    3.67
    
    
    $
    248Vested and expected to vest at June 30, 2009
    
    
    213,990
    
    
    $
    38.85
    
    
    
    4.02
    
    
    $
    1,117
  Outstanding
    
    ExercisableWeighted AverageRemainingGrant
    
    Exercise
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    Weighted AverageYears
    
    Price
    
    Outstanding
    
    Life in Years
    
    Price
    
    Exercisable
    
    Exercise Price2009
    
    $
    39.86
    
    
    
    77,700
    
    
    
    4.66
    
    
    $
    39.86
    
    
    
    
    
    
    
    2008
    
    $
    38.31
    
    
    
    144,540
    
    
    
    3.67
    
    
    $
    38.31
    
    
    
    43,006
    
    
    $
    38.31
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateRights
    
    
    Fair ValueUnvested at beginning of period
    
    
    153,550
    
    
    $
    6.00Granted
    
    
    77,700
    
    
    
    6.89Vested
    
    
    (51,016
    )
    
    
    6.00Forfeited
    
    
    (1,000
    )
    
    
    6.00Unvested at end of period
    
    
    179,234
    
    
    $
    6.39
 46




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  Restricted Stock
    WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested restricted stock at beginning of period
    
    
    26,600
    
    
    $
    38.29Granted
    
    
    19,800
    
    
    
    32.45Vested
    
    
    (3,000
    )
    
    
    38.14Forfeited
    
    
    (450
    )
    
    
    38.31Unvested restricted stock at end of period
    
    
    42,950
    
    
    $
    35.61Expected to vest restricted stock at end of period
    
    
    42,230
    
    
    $
    35.55
   Note 9  Pension Benefits
 Defined Benefit Pension Plans
  47




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  2009
    
    2008Weighted-average assumption as of June 30Discount rate
    
    
    6.34
    %
    
    
    6.65
    %
  2009
    
    2008
    
    2007Discount rate
    
    
    6.65
    %
    
    
    6.35
    %
    
    
    6.45
    %Expected long-term return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
   Percentage ofNoncash Plan Assetsat June 30Asset Category
    
    2009
    
    2008Equity securities
    
    
    60
    %
    
    
    61
    %Fixed income
    
    
    40
    %
    
    
    39
    %Total
    
    
    100
    %
    
    
    100
    %
   2009
    
    
    2008Change in benefit obligationBenefit obligation at beginning of year
    
    $
    33,599
    
    
    $
    41,965Service cost
    
    
    117
    
    
    
    155Interest cost
    
    
    2,170
    
    
    
    2,381Actuarial loss (gain)
    
    
    986
    
    
    
    (731
    )Benefits paid
    
    
    (2,388
    )
    
    
    (10,171
    )Benefit obligation at end of year
    
    $
    34,484
    
    
    $
    33,599Change in plan assetsFair value of plan assets at beginning of year
    
    $
    29,672
    
    
    $
    41,535Actual return on plan assets
    
    
    (2,621
    )
    
    
    (2,550
    )Employer contributions
    
    
    3,075
    
    
    
    858Benefits paid
    
    
    (2,388
    )
    
    
    (10,171
    )Fair value of plan assets at end of year
    
    $
    27,738
    
    
    $
    29,672Reconciliation of funded statusNet accrued benefit cost
    
    $
    (6,746
    )
    
    $
    (3,927
    )
 48




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 2009
    
    
    2008Amounts recognized in the consolidated balance sheets consist ofAccrued benefit liability (noncurrent liabilities)
    
    $
    (6,746
    )
    
    $
    (3,927
    )Net amount recognized
    
    $
    (6,746
    )
    
    $
    (3,927
    )Accumulated benefit obligation
    
    $
    34,484
    
    
    $
    33,599
   2009
    
    
    2008Net actuarial loss
    
    $
    14,780
    
    
    $
    9,235Prior service cost
    
    
    354
    
    
    
    759Net transition (asset) liability
    
    
    (3
    )
    
    
    1Income taxes
    
    
    (5,689
    )
    
    
    (3,823
    )Total
    
    $
    9,442
    
    
    $
    6,172
  2010Net actuarial loss
    
    $
    496Prior service cost amortization
    
    
    21Total
    
    $
    517
  2009
    
    
    2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    117
    
    
    $
    155
    
    
    $
    510Interest cost
    
    
    2,170
    
    
    
    2,381
    
    
    
    2,499Expected return on plan assets
    
    
    (2,263
    )
    
    
    (2,904
    )
    
    
    (2,987
    )SFAS 88 curtailment/settlement charges
    
    
    331
    
    
    
    3,011
    
    
    
    2,068Amortization of unrecognized net loss
    
    
    327
    
    
    
    145
    
    
    
    276Amortization of prior service cost
    
    
    75
    
    
    
    102
    
    
    
    232Amortization of unrecognized net
obligation existing at transition
    
    
    2
    
    
    
    3
    
    
    
    2Net periodic benefit cost
    
    $
    759
    
    
    $
    2,893
    
    
    $
    2,600
    49




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LANCASTER COLONY CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)(Tabular amounts in thousands, except share and per share data)
     2010
    
    $
    2,1702011
    
    $
    2,1312012
    
    $
    2,1342013
    
    $
    2,1522014
    
    $
    2,1652015  2019
    
    $
    11,714
 Note 10  Postretirement Benefits
 Postretirement Medical and Life Insurance Benefit Plans
   2009
    
    2008Weighted-average assumption as of June 30Discount rate
    
    
    6.34
    %
    
    
    6.65
    %
  2009
    
    2008
    
    2007Discount rate
    
    
    6.65
    %
    
    
    6.35
    %
    
    
    6.45
    %Health care cost trend rate
    
    
    10.00
    %
    
    
    10.00
    %
    
    
    11.00
    %
  2009
    
    
    2008Change in benefit obligationBenefit obligation at beginning of year
    
    $
    3,102
    
    
    $
    3,804Service cost
    
    
    17
    
    
    
    26Interest cost
    
    
    198
    
    
    
    231Actuarial loss (gain)
    
    
    48
    
    
    
    (653
    )Effect of curtailment
    
    
    
    
    
    
    (25
    )Benefits paid
    
    
    (212
    )
    
    
    (281
    )Benefit obligation at end of year
    
    $
    3,153
    
    
    $
    3,102
 50




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)(Tabular amounts in thousands, except share and per share data)
 2009
    
    
    2008Change in plan assetsEmployer contributions
    
    $
    212
    
    
    $
    281Benefits paid
    
    
    (212
    )
    
    
    (281
    )Fair value of plan assets at end of year
    
    $
    
    
    
    $
    Reconciliation of funded statusAccrued benefit cost
    
    $
    (3,153
    )
    
    $
    (3,102
    )Amounts recognized in the consolidated balance sheets consist ofCurrent accrued benefit liability
    
    $
    (225
    )
    
    $
    (257
    )Noncurrent accrued benefit liability
    
    $
    (2,928
    )
    
    $
    (2,845
    )Accumulated benefit obligation
    
    $
    (3,153
    )
    
    $
    (3,102
    )
  2009
    
    
    2008Net actuarial gain
    
    $
    (534
    )
    
    $
    (600
    )Prior service benefit
    
    
    (38
    )
    
    
    (43
    )Income taxes
    
    
    215
    
    
    
    246Total
    
    $
    (357
    )
    
    $
    (397
    )
  2010Prior service cost amortization
    
    $
    (5
    )Unrecognized gain amortization
    
    
    (14
    )Total
    
    $
    (19
    )
  2009
    
    
    2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    17
    
    
    $
    26
    
    
    $
    133Interest cost
    
    
    198
    
    
    
    231
    
    
    
    423Amortization of unrecognized net (gain) loss
    
    
    (17
    )
    
    
    
    
    
    
    128Amortization of prior service asset
    
    
    (5
    )
    
    
    (5
    )
    
    
    (8
    )SFAS 88 curtailment benefit
    
    
    
    
    
    
    (27
    )
    
    
    (691
    )Net periodic benefit cost (benefit)
    
    $
    193
    
    
    $
    225
    
    
    $
    (15
    )
   51




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
   2010
    
    $
    2252011
    
    $
    2302012
    
    $
    2412013
    
    $
    2442014
    
    $
    2442015  2019
    
    $
    1,236
   1-Percentage-Point
    
    1-Percentage-PointIncrease
    
    DecreaseEffect on total of service and interest cost components
    
    $
    16
    
    
    $
    (14
    )Effect on postretirement benefit obligation as of June 30, 2009
    
    $
    245
    
    
    $
    (214
    )
 Note 11  Defined Contribution and Other Employee Plans
    Note 12  Commitments
  52




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LANCASTER COLONY CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)(Tabular amounts in thousands, except share and per share data)
  2009
    
    
    2008
    
    
    2007Operating leases:Minimum rentals
    
    $
    4,388
    
    
    $
    4,431
    
    
    $
    4,642Contingent rentals
    
    
    355
    
    
    
    401
    
    
    
    435Short-term cancelable leases
    
    
    1,458
    
    
    
    1,609
    
    
    
    1,983Total
    
    $
    6,201
    
    
    $
    6,441
    
    
    $
    7,060
 Note 13  Contingencies
       Note 14  Restructuring and Impairment Charges
 Specialty Foods Segment
  53




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
   Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    June 30,2008
    
    
    Charge
    
    
    Outlays
    
    
    2009Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    
    
    
    $
    555
    
    
    $
    (555
    )
    
    $
    Other Costs
    
    
    
    
    
    
    162
    
    
    
    (162
    )
    
    
    Subtotal
    
    $
    
    
    
    
    717
    
    
    $
    (717
    )
    
    $
    Fixed Asset Impairment
    
    
    
    
    
    
    47Total
    
    
    
    
    
    $
    764
 Other Segments
     Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    June 30,2008
    
    
    Charge
    
    
    Outlays
    
    
    2009Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    69
    
    
    $
    
    
    
    $
    (69
    )
    
    $
    Other Costs
    
    
    1,184
    
    
    
    842
    
    
    
    (2,026
    )
    
    
    Total
    
    $
    1,253
    
    
    $
    842
    
    
    $
    (2,095
    )
    
    $
    
 54




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 
 Note 15  Business Segments Information
  Specialty Foods
 Glassware and Candles
  2009
    
    
    2008
    
    
    2007Specialty FoodsNon-frozen
    
    $
    569,053
    
    
    $
    526,142
    
    
    $
    479,618Frozen
    
    
    340,844
    
    
    
    282,365
    
    
    
    249,039Total Specialty Foods
    
    $
    909,897
    
    
    $
    808,507
    
    
    $
    728,657Glassware and CandlesConsumer table and giftware
    
    $
    134,991
    
    
    $
    146,434
    
    
    $
    171,935Nonconsumer ware and other
    
    
    6,603
    
    
    
    25,974
    
    
    
    45,218Total Glassware and Candles
    
    $
    141,594
    
    
    $
    172,408
    
    
    $
    217,153Total
    
    $
    1,051,491
    
    
    $
    980,915
    
    
    $
    945,810
 Corporate Expenses
 55




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  2009
    
    
    2008
    
    
    2007Net Sales(1)Specialty Foods
    
    $
    909,897
    
    
    $
    808,507
    
    
    $
    728,657Glassware and Candles
    
    
    141,594
    
    
    
    172,408
    
    
    
    217,153Total
    
    $
    1,051,491
    
    
    $
    980,915
    
    
    $
    945,810Operating Income (Loss)(2)Specialty Foods
    
    $
    145,848
    
    
    $
    88,975
    
    
    $
    101,518Glassware and Candles
    
    
    (5,671
    )
    
    
    (1,887
    )
    
    
    5,712Corporate Expenses
    
    
    (10,529
    )
    
    
    (11,751
    )
    
    
    (7,320
    )Total
    
    $
    129,648
    
    
    $
    75,337
    
    
    $
    99,910Identifiable Assets(1)(3)Specialty Foods
    
    $
    349,401
    
    
    $
    364,402
    
    
    $
    348,637Glassware and Candles
    
    
    93,813
    
    
    
    108,394
    
    
    
    147,232Assets of Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    67,463Corporate
    
    
    55,267
    
    
    
    47,382
    
    
    
    35,165Total
    
    $
    498,481
    
    
    $
    520,178
    
    
    $
    598,497Capital ExpendituresSpecialty Foods
    
    $
    10,680
    
    
    $
    15,400
    
    
    $
    51,746Glassware and Candles
    
    
    492
    
    
    
    1,389
    
    
    
    1,786Corporate
    
    
    164
    
    
    
    43
    
    
    
    57Total
    
    $
    11,336
    
    
    $
    16,832
    
    
    $
    53,589Depreciation and AmortizationSpecialty Foods
    
    $
    15,409
    
    
    $
    15,307
    
    
    $
    12,433Glassware and Candles
    
    
    6,303
    
    
    
    8,580
    
    
    
    11,333Corporate
    
    
    158
    
    
    
    251
    
    
    
    315Total
    
    $
    21,870
    
    
    $
    24,138
    
    
    $
    24,081
 
 (1)
    
    Net sales and long-lived assets are predominantly domestic.(2)
    
    Operating income represents net sales less operating expenses related to the business
segments. All intercompany transactions have been eliminated, and intersegment revenues are
not significant.(3)
    
    Identifiable assets for each segment include those assets used in its operations and
intangible assets allocated to purchased businesses. Corporate assets consist principally of
cash and equivalents, deferred income taxes and certain real property that is held for sale.   56




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 Note
16  Selected Quarterly Financial Data (Unaudited)
 First
    
    Second
    
    Third
    
    Fourth
    
    FiscalQuarter(1)
    
    Quarter(2)
    
    Quarter(3)
    
    Quarter
    
    Year(4)2009Net Sales
    
    $
    263,837
    
    
    $
    288,242
    
    
    $
    246,027
    
    
    $
    253,385
    
    
    $
    1,051,491Gross Margin
    
    $
    39,669
    
    
    $
    58,163
    
    
    $
    52,642
    
    
    $
    65,018
    
    
    $
    215,492Net Income
    
    $
    11,020
    
    
    $
    28,452
    
    
    $
    21,213
    
    
    $
    28,401
    
    
    $
    89,086Diluted Net Income per Share
    
    $
    .39
    
    
    $
    1.02
    
    
    $
    .76
    
    
    $
    1.01
    
    
    $
    3.18
 First
    
    Second
    
    Third
    
    Fourth
    
    FiscalQuarter
    
    Quarter(5)
    
    Quarter
    
    Quarter(6)
    
    Year(4)2008Net Sales
    
    $
    243,958
    
    
    $
    269,447
    
    
    $
    230,826
    
    
    $
    236,684
    
    
    $
    980,915Gross Margin
    
    $
    44,832
    
    
    $
    43,610
    
    
    $
    31,674
    
    
    $
    37,225
    
    
    $
    157,341Income from
Continuing Operations
    
    $
    14,647
    
    
    $
    15,274
    
    
    $
    8,002
    
    
    $
    10,516
    
    
    $
    48,439Income (Loss) from Discontinued
Operations, Net of Tax
    
    $
    923
    
    
    $
    724
    
    
    $
    624
    
    
    $
    (13,090
    )
    
    $
    (10,819
    )Net Income (Loss)
    
    $
    15,570
    
    
    $
    15,998
    
    
    $
    8,626
    
    
    $
    (2,574
    )
    
    $
    37,620Diluted Income (Loss) per Share:Continuing Operations
    
    $
    .48
    
    
    $
    .51
    
    
    $
    .27
    
    
    $
    .37
    
    
    $
    1.64Discontinued Operations
    
    $
    .03
    
    
    $
    .02
    
    
    $
    .02
    
    
    $
    (.46
    )
    
    $
    (.37
    )Net Income (Loss)
    
    $
    .51
    
    
    $
    .54
    
    
    $
    .30
    
    
    $
    (.09
    )
    
    $
    1.28
 
 (1)
    
    Included in the first quarter earnings are (A) expense of approximately $0.5 million, net
of taxes, or approximately $.02 per share, related to the closing of our industrial glass
operation in Lancaster, Ohio and (B) expense of approximately $0.5 million, net of taxes, or
approximately $.02 per share, related to the consolidation of our Atlanta, Georgia dressing
operation into other existing facilities.(2)
    
    Included in the second quarter earnings is income of approximately $5.6 million, net of
taxes, or approximately $.20 per share, related to funds received under CDSOA.(3)
    
    Included in the third quarter earnings is income of approximately $0.5 million, net of taxes,
or approximately $.02 per share, related to a favorable adjustment of prior-year self-insured
deductibles under our general liability insurance.(4)
    
    Basic and diluted earnings per share are calculated independently for each of the quarters
presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree with
the fiscal year.(5)
    
    Included in the second quarter earnings are (A) income of approximately $1.6 million, net of
taxes, or approximately $.05 per share, related to funds received under CDSOA, (B) a loss on
the sale of our
consumer and floral glass operations of approximately $3.6 million, net of taxes, or
approximately $.12 per share, and (C) a noncash pension settlement charge of approximately
$1.9 million, net of taxes, or approximately $.06 per share.(6)
    
    Included in the fourth quarter earnings are (A) income of approximately $1.1 million, net of
taxes, or approximately $.04 per share, to reflect a favorable adjustment of prior-year
self-insured deductibles under our general liability insurance and (B) expense of
approximately $0.7 million, net of taxes, or approximately $.02 per share, related to the
closing of our industrial glass operation in Lancaster, Ohio. 57




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##### Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
   REPORT OF MANAGEMENT
  1.
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets;2.
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with
authorizations of management and our directors; and3.
    
    Provide reasonable assurance regarding prevention or timely detection of an
unauthorized acquisition, use or disposition of our assets that could have a material
effect on the financial statements.
  Internal
Control  Integrated Framework
  58




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
Control  Integrated Framework
    Internal Control
 Integrated Framework
  /s/ Deloitte & Touche LLP

     Deloitte & Touche LLP
 
 59




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##### Table of Contents



Item 9B. Other Information
   PART III
  Item 10. Directors, Executive Officers and Corporate Governance
      Item 11. Executive Compensation
   
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  60




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##### Table of Contents



PART IV
  Item 15. Exhibits, Financial Statement Schedules
 Financial Statements
 Report of Independent Registered Public Accounting Firm
  
  
  31Consolidated
Balance Sheets as of June 30, 2009 and 2008
  
  
  32Consolidated
Statements of Income for the years ended June 30, 2009, 2008 and 2007
  
  
  33Consolidated
Statements of Cash Flows for the years ended June 30, 2009, 2008 and 2007
  
  
  34Consolidated Statements of Shareholders Equity for the years ended June 30, 2009, 2008 and
2007
  
  
  35Notes to Consolidated Financial Statements
  
  
  36 Financial Statement Schedules.
 Schedule II  Valuation and Qualifying Accounts
  
  
  63  Exhibits Required by Item 601 of Regulation S-K and Item 15(b
 61




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##### Table of Contents



SIGNATURES
  Lancaster Colony Corporation
                         (Registrant)By:
    /s/ John B. Gerlach, Jr.John B. Gerlach, Jr.Chairman, Chief Executive Officer,     President and Director Date: August 26, 2009  Signatures
    
    Title
    
    Date/s/ John B. Gerlach, Jr.

     John B. Gerlach, Jr.
    
    Chairman,
Chief Executive Officer,
President and Director
(Principal Executive Officer)
    
    August 26, 2009/s/ John L. Boylan

     John L. Boylan
    
    Treasurer, Vice President,
Assistant Secretary,
Chief Financial Officer
and Director
(Principal Financial and
Accounting Officer)
    
    August 26, 2009/s/ James B. Bachmann

     James B. Bachmann
    
    Director
    
    August 15, 2009/s/ Neeli Bendapudi

     Neeli Bendapudi
    
    Director
    
    August 18, 2009/s/ Robert L. Fox

     Robert L. Fox
    
    Director
    
    August 17, 2009/s/ Alan F. Harris

     Alan F. Harris
    
    Director
    
    August 18, 2009/s/ Edward H. Jennings

     Edward H. Jennings
    
    Director
    
    August 18, 2009/s/ Henry M. ONeill, Jr.

     Henry M. ONeill, Jr.
    
    Director
    
    August 24, 2009/s/ Zuheir Sofia

     Zuheir Sofia
    
    Director
    
    August 17, 2009
 62




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS 
For each of the three years in the period ended June 30, 2009
 Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    Charged to
    
    
    
    
    
    
    BalanceBeginning
    
    
    Costs and
    
    
    
    
    
    
    at EndDescription
    
    of Year
    
    
    Expenses(B)
    
    
    Deductions(A)(B)
    
    
    of YearReserves deducted from asset to which they
apply  Allowance for doubtful accounts
(amounts in thousands):Year ended June 30, 2007
    
    $
    573
    
    
    $
    (899
    )
    
    $
    (907
    )
    
    $
    581Year ended June 30, 2008
    
    $
    581
    
    
    $
    1,049
    
    
    $
    561
    
    
    $
    1,069Year ended June 30, 2009
    
    $
    1,069
    
    
    $
    (218
    )
    
    $
    (91
    )
    
    $
    942
 Notes:
 (A)
    
    Represents uncollectible accounts written-off net of recoveries.(B)
    
    Includes recovery of previously written-off bad debt related to the 2002 bankruptcy of Kmart
Corporation of approximately $0.7 million and $1.0 million for 2009 and 2007, respectively.
 63




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FORM 10-KJUNE 30, 2009
  INDEX TO EXHIBITS
 ExhibitNumber
    
    Description
    
    Located at2.1
    
    Asset Purchase Agreement, dated as of June 10, 2008, By and Among
MBR, Inc., RBM, LLC, Dee Zee, Inc. and Lancaster Colony Corporation
    
    (m)3.1
    
    Amended and Restated Articles of Incorporation of Lancaster Colony
Corporation approved by the shareholders November 17, 2008
    
    (d).2
    
    Amended and Restated Regulations of Lancaster Colony Corporation
approved by the shareholders November 17, 2008
    
    (d).3
    
    Certificate of Designation, Rights and Preferences of the Series A
Participating Preferred Stock of Lancaster Colony Corporation
    
    (b)4.1
    
    Specimen Certificate of Common Stock
    
    (f).2
    
    Rights Agreement dated as of April 20, 2000 by and between Lancaster
Colony Corporation and The Huntington National Bank
    
    (e).3
    
    Credit Agreement dated as of October 5, 2007 among Lancaster Colony
Corporation, The Lenders and JPMorgan Chase Bank, NA, as Agent
    
    (g)10.1*
    
    Amended and Restated Key Employee Severance Agreement between
Lancaster Colony Corporation and John L. Boylan
    
    (d).2*
    
    Lancaster Colony Corporation 1995 Key Employee Stock Option Plan
    
    (c).3*
    
    Amended and Restated Key Employee Severance Agreement between
Lancaster Colony Corporation and Bruce L. Rosa
    
    (d).4*
    
    Lancaster Colony Corporation Executive Employee Deferred
Compensation Plan
    
    (f).5*
    
    Description of Registrants Executive Bonus Arrangements
    
    (h).6*
    
    2004 Amendment to the Lancaster Colony Corporation Executive
Employee Deferred Compensation Plan
    
    (i).7*
    
    Lancaster Colony Corporation 2005 Executive Employee Deferred
Compensation Plan
    
    (j).8*
    
    Lancaster Colony Corporation 2005 Stock Plan
    
    (a).9*
    
    Form of Restricted Stock Award Agreement for Directors under the
Lancaster Colony Corporation 2005 Stock Plan
    
    (k).10
    
    Agreement by and among Lancaster Colony Corporation, Barington Companies
Equity Partners, L.P. and the other parties thereto, dated October 9, 2007
    
    (l).11*
    
    Form of Stock Appreciation Rights Award Agreement for employees and
consultants under the Lancaster Colony Corporation 2005 Stock Plan
    
    (n).12*
    
    Form of Restricted Stock Award Agreement for employees and consultants
under the Lancaster Colony Corporation 2005 Stock Plan
    
    (o)21
    
    Subsidiaries of Registrant
    
    Filed herewith23
    
    Consent of Deloitte & Touche LLP
    
    Filed herewith
 64




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Located at31.1
    
    Certification of CEO Pursuant to Rule 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934
    
    Filed herewith31.2
    
    Certification of CFO Pursuant to Rule 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934
    
    Filed herewith32
    
    Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
 
 *
    
    Indicates a management contract or compensatory plan, contract or arrangement in which any
Director or any Executive Officer participates.(a)
    
    Indicates the exhibit is incorporated by reference to Appendix C to the Proxy Statement on
Schedule 14A (000-04065) of Lancaster Colony Corporation for the Annual Meeting of
Shareholders held November 21, 2005.(b)
    
    Indicates the exhibit is incorporated by reference from filing as an exhibit to Lancaster
Colony Corporations Quarterly Report on
Form 10-Q (000-04065) for the quarter ended March 31,
1990.(c)
    
    Indicates the exhibit is incorporated by reference to Exhibit A to the Proxy Statement of
Lancaster Colony Corporation (000-04065) for the Annual Meeting of Shareholders held November
20, 1995.(d)
    
    Indicates the exhibit is incorporated by reference from filing as an exhibit to Lancaster
Colony Corporations Quarterly Report on Form 10-Q (000-04065) for the quarter ended December
31, 2008.(e)
    
    Indicates the exhibit is incorporated by reference to Exhibit 1 to Lancaster Colony
Corporations report on Form 8-A (000-04065) filed April 20, 2000.(f)
    
    Indicates the exhibit is incorporated by reference from filing as an exhibit to Lancaster
Colony Corporations Annual Report on
Form 10-K (000-04065) for the year ended June 30, 2000.(g)
    
    Indicates the exhibit is incorporated by reference to Exhibit 4.1 to Lancaster Colony
Corporations Current Report on Form 8-K
(000-04065) filed October 11, 2007.(h)
    
    Indicates the exhibit is incorporated by reference to Exhibit 10.9 to Lancaster Colony
Corporations Annual Report on Form 10-K
(000-04065) for the year ended June 30, 2004.(i)
    
    Indicates the exhibit is incorporated by reference to Exhibit 10.1 to Lancaster Colony
Corporations Current Report on Form 8-K
(000-04065) filed January 3, 2005.(j)
    
    Indicates the exhibit is incorporated by reference to Exhibit 99.2 to Lancaster Colony
Corporations Current Report on Form 8-K
(000-04065) filed February 25, 2005.(k)
    
    Indicates the exhibit is incorporated by reference to Exhibit 10.10 to Lancaster Colony
Corporations Annual Report on Form 10-K
(000-04065) for the year ended June 30, 2007.(l)
    
    Indicates the exhibit is incorporated by reference to Exhibit 99.2 to Lancaster Colony
Corporations Current Report on Form 8-K
(000-04065) filed October 11, 2007.(m)
    
    Indicates the exhibit is incorporated by reference to Exhibit 2.1 to Lancaster Colony
Corporations Current Report on Form 8-K
(000-04065) filed June 17, 2008.(n)
    
    Indicates the exhibit is incorporated by reference to Exhibit 10.2 to Lancaster Colony
Corporations Quarterly Report on Form 10-Q/A
(000-04065) for the quarter ended March 31,
2008.(o)
    
    Indicates the exhibit is incorporated by reference to Exhibit 10.1 to Lancaster Colony
Corporations Quarterly Report on Form 10-Q/A
(000-04065) for the quarter ended March 31,
2008. 65