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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, 2008
 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(State or other jurisdiction of 
incorporation or organization)
    
    13-1955943(I.R.S. Employer
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
(including Series A Participating
    
    The NASDAQ Stock Market LLC
(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
 þ
  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
   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
    
    10Item 2. Properties
    
    10Item 3. Legal Proceedings
    
    11Item 4. Submission of Matters to a Vote of Security Holders
    
    11PART 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
    
    59Item 9A. Controls and Procedures
    
    59Item 9B. Other Information
    
    61PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    61Item 11. Executive Compensation
    
    61Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    61Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    61Item 14. Principal Accounting Fees and Services
    
    61PART IVItem 15. Exhibits, Financial Statement Schedules
    
    62Signatures
    
    63Index to Exhibits
    
    65EX-21EX-23EX-31.1EX-31.2EX-32
  2




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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
  2008
    
    2007
    
    2006Specialty Foods:Retail
    
    
    42
    %
    
    
    40
    %
    
    
    41
    %Foodservice
    
    
    41
    %
    
    
    37
    %
    
    
    36
    %Glassware and Candles:Consumer Table and Giftware
    
    
    15
    %
    
    
    18
    %
    
    
    18
    %
  RESEARCH AND DEVELOPMENT
  BACKLOG
  ENVIRONMENTAL MATTERS
  EMPLOYEES AND LABOR RELATIONS
  FOREIGN OPERATIONS AND EXPORT SALES
  5




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RAW MATERIALS
   
 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.
  7




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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.
  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.
  8




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We may not be able to successfully consummate proposed acquisitions or divestitures or integrate
acquired businesses.
  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.
   9




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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.
  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.
    
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  10




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Approximate
    
    Terms ofLocation
    
    Business Segment
    
    Square Feet
    
    OccupancyAltoona, IA (1)
    
    Specialty Foods
    
    
    109,000
    
    
    Owned/LeasedBedford Heights, OH (1)
    
    Specialty Foods
    
    
    98,000
    
    
    Owned/LeasedColumbus, OH (1)
    
    Specialty Foods
    
    
    392,000
    
    
    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  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  11




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  DividendsStock Prices
    
    
    PaidHigh
    
    
    Low
    
    
    Per Share2008First quarter
    
    $
    44.02
    
    
    $
    35.89
    
    
    $
    .27Second quarter
    
    
    44.10
    
    
    
    36.11
    
    
    
    .28Third quarter
    
    
    41.05
    
    
    
    32.72
    
    
    
    .28Fourth quarter
    
    
    41.62
    
    
    
    30.27
    
    
    
    .28Year
    
    
    
    
    
    
    
    
    
    $
    1.112007First quarter
    
    $
    46.00
    
    
    $
    37.28
    
    
    $
    .26Second quarter
    
    
    47.38
    
    
    
    39.31
    
    
    
    .27Third quarter
    
    
    45.96
    
    
    
    39.99
    
    
    
    .27Fourth quarter
    
    
    45.09
    
    
    
    41.23
    
    
    
    .27Year
    
    
    
    
    
    
    
    
    
    $
    1.07
   Issuer Purchases of Equity Securities
  Total NumberTotal
    
    Average
    
    of Shares
    
    Maximum NumberNumber
    
    Price
    
    Purchased as
    
    of Shares That Mayof Shares
    
    Paid Per
    
    Part of Publicly
    
    Yet be PurchasedPeriod
    
    Purchased
    
    Share
    
    Announced Plans
    
    Under the PlansApril 1-30, 2008
    
    
    95,250
    
    
    $
    39.91
    
    
    
    95,250
    
    
    
    1,275,199May 1-31, 2008
    
    
    240,260
    
    
    $
    32.55
    
    
    
    240,260
    
    
    
    1,034,939June 1-30, 2008
    
    
    30,155
    
    
    $
    31.71
    
    
    
    30,155
    
    
    
    1,004,784Total
    
    
    365,665
    
    
    $
    34.40
    
    
    
    365,665
    
    
    
    1,004,784
  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)
 6/03
    
    
    6/04
    
    
    6/05
    
    
    6/06
    
    
    6/07
    
    
    6/08Lancaster Colony Corporation
    
    
    
    100.00
    
    
    
    
    109.95
    
    
    
    
    116.01
    
    
    
    
    114.99
    
    
    
    
    125.13
    
    
    
    
    93.20S&P Midcap 400
    
    
    
    100.00
    
    
    
    
    127.98
    
    
    
    
    145.94
    
    
    
    
    164.88
    
    
    
    
    195.40
    
    
    
    
    181.07Dow Jones U.S. Food Producers
    
    
    
    100.00
    
    
    
    
    120.67
    
    
    
    
    126.81
    
    
    
    
    137.93
    
    
    
    
    161.55
    
    
    
    
    146.84
  13




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Item 6. Selected Financial Data
 LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FIVE YEAR FINANCIAL SUMMARY
 (Thousands Except
    
    Years Ended June 30Per Share Figures)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004OperationsNet Sales(1)
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    924,571
    
    
    $
    907,345
    
    
    $
    870,351Gross Margin(1)
    
    $
    157,341
    
    
    $
    181,740
    
    
    $
    189,074
    
    
    $
    191,014
    
    
    $
    188,479Percent of Sales
    
    
    16.0
    %
    
    
    19.2
    %
    
    
    20.4
    %
    
    
    21.1
    %
    
    
    21.7
    %Interest Expense
    
    $
    (3,076
    )
    
    $
    (150
    )
    
    $
    
    
    
    $
    
    
    
    $
    Percent of Sales
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Other Income  Continued Dumping
and Subsidy Offset Act
    
    $
    2,533
    
    
    $
    699
    
    
    $
    11,376
    
    
    $
    26,226
    
    
    $
    1,987Income from Continuing Operations
Before Income Taxes(1)
    
    $
    75,668
    
    
    $
    101,260
    
    
    $
    125,734
    
    
    $
    141,928
    
    
    $
    116,432Percent of Sales
    
    
    7.7
    %
    
    
    10.7
    %
    
    
    13.6
    %
    
    
    15.6
    %
    
    
    13.4
    %Taxes Based on Income(1)
    
    $
    27,229
    
    
    $
    36,981
    
    
    $
    44,494
    
    
    $
    52,550
    
    
    $
    43,559Income from Continuing Operations(1)
    
    $
    48,439
    
    
    $
    64,279
    
    
    $
    81,240
    
    
    $
    89,378
    
    
    $
    72,873Percent of Sales
    
    
    4.9
    %
    
    
    6.8
    %
    
    
    8.8
    %
    
    
    9.9
    %
    
    
    8.4
    %Income (Loss) from Discontinued
Operations, Net of Tax
    
    $
    2,633
    
    
    $
    (3,475
    )
    
    $
    1,714
    
    
    $
    3,710
    
    
    $
    7,129Loss on Sale of Discontinued Operations,
Net of Tax
    
    $
    (13,452
    )
    
    $
    (15,120
    )
    
    $
    
    
    
    $
    
    
    
    $
    Net Income
    
    $
    37,620
    
    
    $
    45,684
    
    
    $
    82,954
    
    
    $
    93,088
    
    
    $
    80,002Percent of Sales
    
    
    3.8
    %
    
    
    4.8
    %
    
    
    9.0
    %
    
    
    10.3
    %
    
    
    9.2
    %Diluted Income (Loss) per Common Share:Continuing Operations(1)
    
    $
    1.64
    
    
    $
    2.03
    
    
    $
    2.42
    
    
    $
    2.56
    
    
    $
    2.04Discontinued Operations
    
    $
    (.37
    )
    
    $
    (.59
    )
    
    $
    .05
    
    
    $
    .11
    
    
    $
    .20Net Income
    
    $
    1.28
    
    
    $
    1.45
    
    
    $
    2.48
    
    
    $
    2.67
    
    
    $
    2.24Cash Dividends per Common Share
    
    $
    1.11
    
    
    $
    1.07
    
    
    $
    3.03
    
    
    $
    .98
    
    
    $
    .89Financial PositionCash, Equivalents and
Short-Term Investments(1)
    
    $
    19,417
    
    
    $
    8,316
    
    
    $
    41,815
    
    
    $
    184,580
    
    
    $
    178,503Total Assets
    
    $
    520,178
    
    
    $
    598,497
    
    
    $
    628,021
    
    
    $
    731,278
    
    
    $
    712,885Working Capital
    
    $
    144,925
    
    
    $
    137,121
    
    
    $
    235,283
    
    
    $
    370,559
    
    
    $
    358,274Property, Plant and Equipment-Net(1)
    
    $
    179,573
    
    
    $
    194,589
    
    
    $
    162,107
    
    
    $
    131,837
    
    
    $
    134,325Long-Term Debt
    
    $
    55,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Property Additions(1)
    
    $
    16,832
    
    
    $
    53,589
    
    
    $
    51,860
    
    
    $
    18,917
    
    
    $
    13,329Depreciation and Amortization(1)
    
    $
    24,138
    
    
    $
    24,081
    
    
    $
    24,980
    
    
    $
    26,351
    
    
    $
    23,717Shareholders Equity
    
    $
    359,218
    
    
    $
    444,309
    
    
    $
    494,421
    
    
    $
    587,726
    
    
    $
    586,785Per Common Share
    
    $
    12.63
    
    
    $
    14.45
    
    
    $
    15.33
    
    
    $
    17.17
    
    
    $
    16.54Weighted Average Common Shares
OutstandingDiluted
    
    
    29,499
    
    
    
    31,603
    
    
    
    33,502
    
    
    
    34,925
    
    
    
    35,778
 
 (1)
    
    Amounts exclude the impact of certain discontinued automotive operations sold in the fiscal
years ended June 30, 2008 and 2007. 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, 2008, 2007 and 2006 and our liquidity
and capital resources as of June 30, 2008 and 2007. 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, 2008
refers to fiscal 2008, which is the period from July 1, 2007 to June 30, 2008. 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 2008 Results
      Business Divestitures
   17




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Looking Forward
      REVIEW OF CONSOLIDATED OPERATIONS
 Segment Sales Mix
  2008
    
    2007
    
    2006Segment Sales Mix:Specialty Foods
    
    
    82
    %
    
    
    77
    %
    
    
    77
    %Glassware and Candles
    
    
    18
    %
    
    
    23
    %
    
    
    23
    %
 18




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Net Sales and Gross Margin
 Year EndedJune 30
    
    
    
    
    
    
    Change(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008 vs. 2007
    
    
    2007 vs. 2006Net SalesSpecialty Foods
    
    $
    808,507
    
    
    $
    728,657
    
    
    $
    708,029
    
    
    $
    79,850
    
    
    
    11
    %
    
    $
    20,628
    
    
    
    3
    %Glassware and Candles
    
    
    172,408
    
    
    
    217,153
    
    
    
    216,542
    
    
    
    (44,745
    )
    
    
    (21
    )%
    
    
    611
    
    
    
    0
    %Total
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    924,571
    
    
    $
    35,105
    
    
    
    4
    %
    
    $
    21,239
    
    
    
    2
    %Gross Margin
    
    $
    157,341
    
    
    $
    181,740
    
    
    $
    189,074
    
    
    $
    (24,399
    )
    
    
    (13
    )%
    
    $
    (7,334
    )
    
    
    (4
    )%Gross Margin as a
Percentage of Sales
    
    
    16.0
    %
    
    
    19.2
    %
    
    
    20.4
    %
   Selling, General and Administrative Expenses
 Year EndedJune 30
    
    
    
    
    
    
    Change(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008 vs. 2007
    
    
    2007 vs. 2006Selling, General and
Administrative Expenses
    
    $
    80,751
    
    
    $
    79,704
    
    
    $
    78,592
    
    
    $
    1,047
    
    
    
    1
    %
    
    $
    1,112
    
    
    
    1
    %SG&A Expense as a
Percentage of Sales
    
    
    8.2
    %
    
    
    8.4
    %
    
    
    8.5
    %
  Restructuring and Impairment Charge
   19




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Accrual at
    
    
    
    
    
    
    2008
    
    
    Accrual atJune 30,
    
    
    2008
    
    
    Cash
    
    
    June 30,(Dollars in thousands)
    
    2007
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargeEmployee Separation Costs
    
    $
    266
    
    
    $
    173
    
    
    $
    (370
    )
    
    $
    69Other Costs
    
    
    219
    
    
    
    1,071
    
    
    
    (106
    )
    
    
    1,184Subtotal
    
    $
    485
    
    
    
    1,244
    
    
    $
    (476
    )
    
    $
    1,253Accelerated Depreciation
    
    
    
    
    
    
    9Inventory Write-Down
    
    
    
    
    
    
    17Total Restructuring and Impairment Charge
    
    
    
    
    
    $
    1,270
  Operating Income
 Year EndedJune 30
    
    
    
    
    
    
    Change(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008 vs. 2007
    
    
    2007 vs. 2006Operating IncomeSpecialty Foods
    
    $
    88,975
    
    
    $
    101,518
    
    
    $
    113,796
    
    
    $
    (12,543
    )
    
    
    (12
    )%
    
    $
    (12,278
    )
    
    
    (11
    )%Glassware and Candles
    
    
    (1,887
    )
    
    
    5,712
    
    
    
    3,614
    
    
    
    (7,599
    )
    
    
    (133
    )%
    
    
    2,098
    
    
    
    58
    %Corporate Expenses
    
    
    (11,751
    )
    
    
    (7,320
    )
    
    
    (6,928
    )
    
    
    (4,431
    )
    
    
    61
    %
    
    
    (392
    )
    
    
    6
    %Total
    
    $
    75,337
    
    
    $
    99,910
    
    
    $
    110,482
    
    
    $
    (24,573
    )
    
    
    (25
    )%
    
    $
    (10,572
    )
    
    
    (10
    )%Operating Income as
a Percentage of SalesSpecialty Foods
    
    
    11.0
    %
    
    
    13.9
    %
    
    
    16.1
    %Glassware and Candles
    
    
    (1.1
    )%
    
    
    2.6
    %
    
    
    1.7
    %Consolidated
    
    
    7.7
    %
    
    
    10.6
    %
    
    
    11.9
    %
  Interest Expense
  20




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##### Table of Contents



Other Income  Continued Dumping and Subsidy Offset Act
   Interest Income and Other  Net
  Income from Continuing Operations Before Income Taxes
  Income from Continuing Operations
  Discontinued Operations
  21




---



##### Table of Contents



Net Income
  SEGMENT REVIEW  SPECIALTY FOODS
     SEGMENT REVIEW  GLASSWARE AND CANDLES
  22




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
   23




---



##### Table of Contents



Cash Flows from Continuing Operations
 Year EndedJune 30
    
    
    
    
    
    Change(Dollars in thousands)
    
    2008
    
    2007
    
    2006
    
    2008 vs. 2007
    
    2007 vs. 2006Provided by Operating
Activities
    
    $
    70,932
    
    
    $
    82,923
    
    
    $
    103,982
    
    
    $
    (11,991
    )
    
    
    (14
    )%
    
    $
    (21,059
    )
    
    
    (20
    )%Provided by (Used in)
Investing Activities
    
    
    710
    
    
    
    (43,000
    )
    
    
    (16,007
    )
    
    
    43,710
    
    
    
    102
    %
    
    
    (26,993
    )
    
    
    (169
    )%Used in Financing Activities
    
    
    (109,372
    )
    
    
    (58,871
    )
    
    
    (178,849
    )
    
    
    (50,501
    )
    
    
    (86)
    %
    
    
    119,978
    
    
    
    67
    %
      24




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND COMMITMENTS
    Payment Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsLong-term Debt Obligations
    
    $
    55,000
    
    
    $
    
    
    
    $
    
    
    
    $
    55,000
    
    
    $
    Accrued Interest on Long-term Debt
    
    
    8
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations (1)
    
    
    10,419
    
    
    
    3,869
    
    
    
    4,886
    
    
    
    1,425
    
    
    
    239Purchase Obligations (2)
    
    
    86,202
    
    
    
    67,713
    
    
    
    18,292
    
    
    
    197
    
    
    
    Minimum Required Pension Contributions
    
    
    136
    
    
    
    104
    
    
    
    32
    
    
    
    
    
    
    
    Other Long-Term Liabilities (as reflected
on Consolidated Balance Sheet) (3)
    
    
    1,179
    
    
    
    60
    
    
    
    1,059
    
    
    
    60
    
    
    
    Total
    
    $
    152,944
    
    
    $
    71,754
    
    
    $
    24,269
    
    
    $
    56,682
    
    
    $
    239
 
 (1)
    
    Operating leases are primarily entered into for warehouse and office facilities and certain
equipment. See Note 15 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 $12.9 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 (FIN 48)
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 9, 12, 13 and 14 to the
consolidated financial statements for further information. IMPACT OF INFLATION
  25




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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Revenue Recognition
  Receivables and the Allowance for Doubtful Accounts
  Valuation of Inventory
  26




---



##### Table of Contents



Long-Lived Assets
  Goodwill and Intangible Assets
  Accrued Marketing and Distribution
  Accruals for Self-Insurance
  Accounting for Pension Plans and Other Postretirement Benefit Plans
  RECENTLY ISSUED ACCOUNTING STANDARDS
  27




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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;
 29




---



##### Table of Contents




    
    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;
    
    adverse changes in energy costs and other factors that may affect costs of producing,
distributing or transporting our products;
    
    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
  
 Item 8. Financial Statements and Supplementary Data
 30




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Accounting for Uncertainty in Income
Taxes,
 Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans,
 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)
    
    2008
    
    
    2007ASSETSCurrent Assets:Cash and equivalents
    
    $
    19,417
    
    
    $
    8,316Receivables (less allowance for doubtful accounts,
2008-$1,069; 2007-$581)
    
    
    59,409
    
    
    
    63,112Inventories:Raw materials
    
    
    34,787
    
    
    
    31,261Finished goods and work in process
    
    
    85,516
    
    
    
    93,160Total inventories
    
    
    120,303
    
    
    
    124,421Deferred income taxes and other current assets
    
    
    34,545
    
    
    
    27,757Current assets of discontinued operations
    
    
    
    
    
    
    55,305Total current assets
    
    
    233,674
    
    
    
    278,911Property, Plant and Equipment:Land, buildings and improvements
    
    
    138,771
    
    
    
    153,653Machinery and equipment
    
    
    240,490
    
    
    
    317,640Total cost
    
    
    379,261
    
    
    
    471,293Less accumulated depreciation
    
    
    199,688
    
    
    
    276,704Property, plant and equipment-net
    
    
    179,573
    
    
    
    194,589Other Assets:Goodwill
    
    
    89,840
    
    
    
    89,590Other intangible assets-net
    
    
    11,841
    
    
    
    13,111Other noncurrent assets
    
    
    5,250
    
    
    
    8,220Noncurrent assets of discontinued operations
    
    
    
    
    
    
    14,076Total
    
    $
    520,178
    
    
    $
    598,497LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term bank loans
    
    $
    
    
    
    $
    42,500Accounts payable
    
    
    45,964
    
    
    
    41,791Accrued liabilities
    
    
    42,785
    
    
    
    48,121Current liabilities of discontinued operations
    
    
    
    
    
    
    9,378Total current liabilities
    
    
    88,749
    
    
    
    141,790Long-Term Debt
    
    
    55,000
    
    
    
    Other Noncurrent Liabilities
    
    
    14,547
    
    
    
    10,683Deferred Income Taxes
    
    
    2,664
    
    
    
    1,696Noncurrent Liabilities of Discontinued Operations
    
    
    
    
    
    
    19Shareholders Equity:Preferred stock-authorized 3,050,000 shares;
outstanding-noneCommon stock-authorized 75,000,000 shares;
outstanding, 2008-28,452,237; 2007-30,748,390
    
    
    82,652
    
    
    
    81,665Retained earnings
    
    
    941,244
    
    
    
    937,376Accumulated other comprehensive loss
    
    
    (5,775
    )
    
    
    (5,167
    )Common stock in treasury, at cost
    
    
    (658,903
    )
    
    
    (569,565
    )Total shareholders equity
    
    
    359,218
    
    
    
    444,309Total
    
    $
    520,178
    
    
    $
    598,497
  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)
    
    2008
    
    
    2007
    
    
    2006Net Sales
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    924,571Cost of Sales
    
    
    823,574
    
    
    
    764,070
    
    
    
    735,497Gross Margin
    
    
    157,341
    
    
    
    181,740
    
    
    
    189,074Selling, General and Administrative Expenses
    
    
    80,751
    
    
    
    79,704
    
    
    
    78,592Restructuring and Impairment Charge
    
    
    1,253
    
    
    
    2,126
    
    
    
    Operating Income
    
    
    75,337
    
    
    
    99,910
    
    
    
    110,482Other Income (Expense):Interest expense
    
    
    (3,076
    )
    
    
    (150
    )
    
    
    Other income-Continued Dumping and Subsidy
Offset Act
    
    
    2,533
    
    
    
    699
    
    
    
    11,376Interest income and othernet
    
    
    874
    
    
    
    801
    
    
    
    3,876Income from Continuing Operations
Before Income Taxes
    
    
    75,668
    
    
    
    101,260
    
    
    
    125,734Taxes Based on Income
    
    
    27,229
    
    
    
    36,981
    
    
    
    44,494Income from Continuing Operations
    
    
    48,439
    
    
    
    64,279
    
    
    
    81,240Discontinued Operations, Net of Tax:Income (Loss) from Discontinued Operations
    
    
    2,633
    
    
    
    (3,475
    )
    
    
    1,714Loss on Sale of Discontinued Operations
    
    
    (13,452
    )
    
    
    (15,120
    )
    
    
    Total Discontinued Operations
    
    
    (10,819
    )
    
    
    (18,595
    )
    
    
    1,714Net Income
    
    $
    37,620
    
    
    $
    45,684
    
    
    $
    82,954Income Per Common Share from
Continuing Operations:Basic
    
    $
    1.64
    
    
    $
    2.04
    
    
    $
    2.43Diluted
    
    $
    1.64
    
    
    $
    2.03
    
    
    $
    2.42(Loss) Income Per Common Share from
Discontinued Operations:Basic and Diluted
    
    $
    (.37
    )
    
    $
    (.59
    )
    
    $
    .05Net Income Per Common Share:Basic and Diluted
    
    $
    1.28
    
    
    $
    1.45
    
    
    $
    2.48Weighted Average Common Shares Outstanding:Basic
    
    
    29,494
    
    
    
    31,576
    
    
    
    33,471Diluted
    
    
    29,499
    
    
    
    31,603
    
    
    
    33,502
  33




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended June 30(Amounts in thousands)
    
    2008
    
    
    2007
    
    
    2006Cash Flows From Operating Activities:Net income
    
    $
    37,620
    
    
    $
    45,684
    
    
    $
    82,954Adjustments to reconcile net income
to net cash provided by operating activities:Loss (income) from discontinued operations
    
    
    10,819
    
    
    
    18,595
    
    
    
    (1,714
    )Depreciation and amortization
    
    
    24,138
    
    
    
    24,081
    
    
    
    24,980Deferred income taxes and other noncash charges
    
    
    4,593
    
    
    
    (4,226
    )
    
    
    (1,114
    )Restructuring and impairment charge
    
    
    774
    
    
    
    3,302
    
    
    
    Gain on sale of property
    
    
    (603
    )
    
    
    (51
    )
    
    
    (334
    )Loss (gain) on sale of business
    
    
    6,414
    
    
    
    (8
    )
    
    
    178Pension plan activity
    
    
    2,035
    
    
    
    (485
    )
    
    
    (2,853
    )Changes in operating assets and liabilities:Receivables
    
    
    (5,851
    )
    
    
    1,252
    
    
    
    (583
    )Inventories
    
    
    (7,487
    )
    
    
    (5,704
    )
    
    
    8,386Other current assets
    
    
    (8,277
    )
    
    
    (3,608
    )
    
    
    (1,159
    )Accounts payable and accrued liabilities
    
    
    6,757
    
    
    
    4,091
    
    
    
    (4,759
    )Net cash provided by operating activities
from continuing operations
    
    
    70,932
    
    
    
    82,923
    
    
    
    103,982Cash Flows From Investing Activities:Cash paid for acquisitions
    
    
    (250
    )
    
    
    (23,000
    )
    
    
    Payments on property additions
    
    
    (16,832
    )
    
    
    (53,589
    )
    
    
    (51,860
    )Proceeds from sale of property
    
    
    935
    
    
    
    179
    
    
    
    524Net proceeds from sale of business
    
    
    19,108
    
    
    
    8
    
    
    
    466Purchases of short-term investments
    
    
    
    
    
    
    (5,000
    )
    
    
    (31,350
    )Proceeds from short-term investment sales,
calls and maturities
    
    
    
    
    
    
    40,765
    
    
    
    66,900Other-net
    
    
    (2,251
    )
    
    
    (2,363
    )
    
    
    (687
    )Net cash provided by (used in) investing activities
from continuing operations
    
    
    710
    
    
    
    (43,000
    )
    
    
    (16,007
    )Cash Flows From Financing Activities:Net repayment of $100 million credit facility
    
    
    (42,500
    )
    
    
    
    
    
    
    Proceeds from debt
    
    
    146,104
    
    
    
    42,500
    
    
    
    Payments on debt
    
    
    (91,104
    )
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    (89,338
    )
    
    
    (65,858
    )
    
    
    (84,343
    )Payment of dividends
    
    
    (32,578
    )
    
    
    (33,696
    )
    
    
    (101,760
    )Proceeds from the exercise of stock options
    
    
    648
    
    
    
    3,515
    
    
    
    3,835(Decrease) increase in cash overdraft balance
    
    
    (604
    )
    
    
    (5,332
    )
    
    
    3,419Net cash used in financing activities
from continuing operations
    
    
    (109,372
    )
    
    
    (58,871
    )
    
    
    (178,849
    )Cash Flows From Discontinued Operations:Net cash provided by (used in) operating activities
from discontinued operations
    
    
    22,385
    
    
    
    11,233
    
    
    
    (6,967
    )Net cash provided by (used in) investing activities
from discontinued operations
    
    
    26,444
    
    
    
    9,993
    
    
    
    (9,388
    )Net cash provided by (used in)
discontinued operations
    
    
    48,829
    
    
    
    21,226
    
    
    
    (16,355
    )Effect of exchange rate changes on cash
    
    
    2
    
    
    
    (12
    )
    
    
    14Net change in cash and equivalents
    
    
    11,101
    
    
    
    2,266
    
    
    
    (107,215
    )Cash and equivalents at beginning of year
    
    
    8,316
    
    
    
    6,050
    
    
    
    113,265Cash and equivalents at end of year
    
    $
    19,417
    
    
    $
    8,316
    
    
    $
    6,050
  34




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##### Table of Contents



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, 2005
    
    
    34,236
    
    
    $
    73,801
    
    
    $
    944,194
    
    
    $
    (10,905
    )
    
    $
    (419,364
    )
    
    $
    587,726Net income
    
    
    
    
    
    
    
    
    
    
    82,954
    
    
    
    
    
    
    
    
    
    
    
    82,954Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Minimum pension liability,
net of $3,125 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,614
    
    
    
    
    
    
    
    5,614Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,582Cash dividends  common
stock ($3.03 per share)
    
    
    
    
    
    
    
    
    
    
    (101,760
    )
    
    
    
    
    
    
    
    
    
    
    (101,760
    )Purchase of treasury stock
    
    
    (2,092
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84,343
    )
    
    
    (84,343
    )Shares issued upon exercise
of stock options including
related tax benefits
    
    
    102
    
    
    
    3,829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,829Stock compensation expense
    
    
    
    
    
    
    387
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    387Balance, 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
    )Shares issued upon exercise
of stock options including
related tax benefits
    
    
    88
    
    
    
    3,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,515Stock compensation expense
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42Adoption of SFAS 158,
net of $1,502 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,456
    )
    
    
    
    
    
    
    (2,456
    )Restricted stock issued
    
    
    3Restricted stock compensation
expense
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91Balance, 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
    )Shares issued upon exercise
of stock options including
related tax benefits
    
    
    17
    
    
    
    648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    648Stock compensation expense
    
    
    
    
    
    
    112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112Restricted stock issued
    
    
    27Cumulative effect of
FIN 48 adoption
    
    
    
    
    
    
    
    
    
    
    (1,174
    )
    
    
    
    
    
    
    
    
    
    
    (1,174
    )Restricted stock compensation
expense
    
    
    
    
    
    
    227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227Balance, June 30, 2008
    
    
    28,452
    
    
    $
    82,652
    
    
    $
    941,244
    
    
    $
    (5,775
    )
    
    $
    (658,903
    )
    
    $
    359,218
  35




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




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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)
 Long-Lived Assets
  Goodwill and Intangible Assets
  Accrued Marketing and Distribution
  Accruals for Self-Insurance
  Revenue Recognition
  Advertising Expense
  Shipping and Handling
  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)
 Stock-Based Employee Compensation Plans
  Other Income
  Per Share Information
   Comprehensive Income and Accumulated Other Comprehensive Loss
   2008
    
    
    2007
    
    
    2006Cumulative translation adjustments
    
    $
    
    
    
    $
    131
    
    
    $
    143Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    (5,420
    )Pension and postretirement benefit adjustments
    
    
    (5,775
    )
    
    
    (5,298
    )
    
    
    $
    (5,775
    )
    
    $
    (5,167
    )
    
    $
    (5,277
    )
 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)
 Revision in the Classification of Proceeds from the Sale of Discontinued Operations
  Recently Issued Accounting Standards
     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)
    Note 2  Discontinued Operations and Business Divestitures
    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)
  June 30,2007Assets of Discontinued OperationsCash
    
    $
    2Receivables
    
    
    29,523Inventories
    
    
    25,296Other current assets
    
    
    484Total current assets of discontinued operations
    
    
    55,305Property, plant and equipment, net
    
    
    13,842Other noncurrent assets
    
    
    234Total noncurrent assets of discontinued operations
    
    
    14,076Total assets of discontinued operations
    
    $
    69,381Liabilities of Discontinued OperationsAccounts payable
    
    $
    6,632Accrued liabilities
    
    
    2,746Total current liabilities of discontinued operations
    
    
    9,378Other noncurrent liabilities
    
    
    19Total liabilities of discontinued operations
    
    $
    9,397
   Note 3  Acquisition
  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 4  Inventories
  Note 5  Goodwill and Other Intangible Assets
   2008
    
    
    2007Specialty FoodsTrademarks (40-year life)Gross carrying value
    
    $
    370
    
    
    $
    370Accumulated amortization
    
    
    (158
    )
    
    
    (149
    )Net Carrying Value
    
    $
    212
    
    
    $
    221Customer Relationships (12 to 15-year life)Gross carrying value
    
    $
    13,020
    
    
    $
    13,020Accumulated amortization
    
    
    (2,182
    )
    
    
    (1,233
    )Net Carrying Value
    
    $
    10,838
    
    
    $
    11,787Non-compete Agreements (5 to 8-year life)Gross carrying value
    
    $
    1,540
    
    
    $
    1,540Accumulated amortization
    
    
    (749
    )
    
    
    (531
    )Net Carrying Value
    
    $
    791
    
    
    $
    1,009Glassware and Candles  Customer Lists(12-year life)Gross carrying value
    
    $
    
    
    
    $
    250Accumulated amortization
    
    
    
    
    
    
    (156
    )Net Carrying Value
    
    $
    
    
    
    $
    94Total Net Carrying Value
    
    $
    11,841
    
    
    $
    13,111
   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)
 Note 6  Short-Term Borrowings
  Note 7 Accrued Liabilities
  2008
    
    
    2007Accrued compensation and employee benefits
    
    $
    23,505
    
    
    $
    25,065Accrued marketing and distribution
    
    
    7,911
    
    
    
    8,070Income and other taxes
    
    
    2,276
    
    
    
    4,288Book cash overdrafts
    
    
    4,782
    
    
    
    5,386Other
    
    
    4,311
    
    
    
    5,312Total accrued liabilities
    
    $
    42,785
    
    
    $
    48,121
 Note 8  Long-Term Debt
  Note 9  Income Taxes
  2008
    
    
    2007
    
    
    2006Currently payable:Federal
    
    $
    23,221
    
    
    $
    39,300
    
    
    $
    35,998State and local
    
    
    3,130
    
    
    
    4,607
    
    
    
    6,445Total current provision
    
    
    26,351
    
    
    
    43,907
    
    
    
    42,443Deferred Federal, state and local provision (benefit)
    
    
    878
    
    
    
    (6,926
    )
    
    
    2,051Total taxes based on income
    
    $
    27,229
    
    
    $
    36,981
    
    
    $
    44,494
 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)
  2008
    
    2007
    
    2006Statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local income taxes
    
    
    3.2
    %
    
    
    2.5
    %
    
    
    2.6
    %ESOP dividend deduction
    
    
    (0.4
    )%
    
    
    (0.4
    )%
    
    
    (0.9
    )%Section 199 deduction
    
    
    (1.3
    )%
    
    
    (0.8
    )%
    
    
    (0.9
    )%Other
    
    
    (0.5
    )%
    
    
    0.2
    %
    
    
    (0.4
    )%Effective rate
    
    
    36.0
    %
    
    
    36.5
    %
    
    
    35.4
    %
  2008
    
    
    2007Deferred tax assets:Inventories
    
    $
    2,674
    
    
    $
    4,731Employee medical and other benefits
    
    
    8,425
    
    
    
    10,550Receivable and other allowances
    
    
    4,989
    
    
    
    5,341Other accrued liabilities
    
    
    4,233
    
    
    
    4,311Total deferred tax assets
    
    
    20,321
    
    
    
    24,933Total deferred tax liabilitiesproperty and other
    
    
    (7,563
    )
    
    
    (8,125
    )Net deferred tax asset
    
    $
    12,758
    
    
    $
    16,808
    Balance as of July 1, 2007
    
    $
    2,356Tax positions related to current year:Additions
    
    
    128Reductions
    
    
    (1
    )Tax positions related to prior years:Additions
    
    
    362Reductions
    
    
    (172
    )Balance as of June 30, 2008
    
    $
    2,673
 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)
     Note 10  Shareholders Equity
     Note 11  Stock-Based Compensation
   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)
  Stock Options and Stock-Settled Stock Appreciation Rights
       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)
  2008
    
    
    2007
    
    
    2006Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Average
    
    
    Number
    
    
    Average
    
    
    Number
    
    
    Averageof
    
    
    Exercise
    
    
    of
    
    
    Exercise
    
    
    of
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of period
    
    
    361,500
    
    
    $
    40.42
    
    
    
    470,982
    
    
    $
    39.92
    
    
    
    590,104
    
    
    $
    38.77Exercised
    
    
    (17,200
    )
    
    
    37.23
    
    
    
    (88,290
    )
    
    
    37.63
    
    
    
    (102,272
    )
    
    
    33.81Granted
    
    
    153,550
    
    
    
    38.31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (33,200
    )
    
    
    41.11
    
    
    
    (21,192
    )
    
    
    40.82
    
    
    
    (16,850
    )
    
    
    36.92Expired
    
    
    (72,100
    )
    
    
    37.23
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of period
    
    
    392,550
    
    
    $
    40.26
    
    
    
    361,500
    
    
    $
    40.42
    
    
    
    470,982
    
    
    $
    39.92Exercisable and vested
at end of period
    
    
    237,433
    
    
    $
    41.52
    
    
    
    353,713
    
    
    $
    40.40
    
    
    
    454,667
    
    
    $
    39.88Vested and expected to vest
at end of period
    
    
    386,408
    
    
    $
    40.30
    
    
    
    361,500
    
    
    $
    40.42
    
    
    
    470,982
    
    
    $
    39.92
   Outstanding
    
    ExercisableWeighted AverageRemainingGrant
    
    Exercise
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    Weighted AverageYears
    
    Prices
    
    Outstanding
    
    Life in Years
    
    Price
    
    Exercisable
    
    Exercise Price2008
    
    $
    38.31
    
    
    
    153,550
    
    
    
    4.67
    
    
    $
    38.31
    
    
    
    
    
    
    
    2005
    
    $
    41.52
    
    
    
    239,000
    
    
    
    1.67
    
    
    $
    41.52
    
    
    
    237,433
    
    
    $
    41.52
  Year EndedJune 30, 2008WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested at beginning of period
    
    
    7,787
    
    
    $
    8.14Granted
    
    
    153,550
    
    
    
    6.00Vested
    
    
    (6,220
    )
    
    
    8.14Forfeited
    
    
    
    
    
    
    Unvested at end of period
    
    
    155,117
    
    
    $
    6.02
  47




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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)
 Restricted Stock
    WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested restricted stock at beginning of period
    
    
    3,500
    
    
    $
    42.70Granted
    
    
    27,100
    
    
    
    38.29Vested
    
    
    (3,500
    )
    
    
    42.70Forfeited
    
    
    (500
    )
    
    
    38.14Unvested restricted stock at end of period
    
    
    26,600
    
    
    $
    38.29Vested and exercisable restricted stock at end of period
    
    
    
    
    
    $
    Vested and expected to vest restricted stock at end of period
    
    
    25,662
    
    
    $
    38.29
   Note 12  Pension Benefits
 Defined Benefit Pension Plans
  48




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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)
  2008
    
    2007Weighted-average assumption as of June 30Discount rate
    
    
    6.65
    %
    
    
    6.35
    %
  2008
    
    2007
    
    2006Discount rate
    
    
    6.35
    %
    
    
    6.45
    %
    
    
    5.25
    %Expected long-term return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
   Percentage ofNoncash Plan Assetsat June 302008
    
    2007Asset CategoryEquity securities
    
    
    61
    %
    
    
    73
    %Fixed income
    
    
    39
    %
    
    
    27
    %Total
    
    
    100
    %
    
    
    100
    %
   2008
    
    
    2007Change in benefit obligationBenefit obligation at beginning of year
    
    $
    41,965
    
    
    $
    40,796Service cost
    
    
    155
    
    
    
    510Interest cost
    
    
    2,381
    
    
    
    2,499Amendments
    
    
    
    
    
    
    431Actuarial (gain) loss
    
    
    (731
    )
    
    
    1,116Benefits paid
    
    
    (10,171
    )
    
    
    (3,387
    )Benefit obligation at end of year
    
    $
    33,599
    
    
    $
    41,965Change in plan assetsFair value of plan assets at beginning of year
    
    $
    41,535
    
    
    $
    38,445Actual return on plan assets
    
    
    (2,550
    )
    
    
    5,038Employer contributions
    
    
    858
    
    
    
    1,439Benefits paid
    
    
    (10,171
    )
    
    
    (3,387
    )Fair value of plan assets at end of year
    
    $
    29,672
    
    
    $
    41,535Reconciliation of funded statusNet accrued benefit cost
    
    $
    (3,927
    )
    
    $
    (430
    )
 49




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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)
 2008
    
    
    2007Amounts recognized in the consolidated balance sheets consist ofPrepaid benefit cost (noncurrent assets)
    
    $
    
    
    
    $
    1,490Accrued benefit liability (noncurrent liabilities)
    
    
    (3,927
    )
    
    
    (1,920
    )Net amount recognized
    
    $
    (3,927
    )
    
    $
    (430
    )Accumulated benefit obligation
    
    $
    33,599
    
    
    $
    41,965
  2008
    
    2007Benefit obligations
    
    $
    33,599
    
    
    $
    14,789Fair value of plan assets at end of year
    
    $
    29,672
    
    
    $
    12,869
  2008
    
    
    2007Net actuarial loss
    
    $
    9,235
    
    
    $
    7,674Prior service cost
    
    
    759
    
    
    
    861Net transition liability (asset)
    
    
    1
    
    
    
    (2
    )Income taxes
    
    
    (3,823
    )
    
    
    (3,236
    )Total
    
    $
    6,172
    
    
    $
    5,297
  2009Net actuarial loss
    
    $
    249Prior service cost amortization
    
    
    102Net transition obligation
    
    
    4Total
    
    $
    355
  2008
    
    
    2007
    
    
    2006Components of net periodic benefit costService cost
    
    $
    155
    
    
    $
    510
    
    
    $
    752Interest cost
    
    
    2,381
    
    
    
    2,499
    
    
    
    2,542Expected return on plan assets
    
    
    (2,904
    )
    
    
    (2,987
    )
    
    
    (2,889
    )SFAS 88 curtailment/settlement charges
    
    
    3,011
    
    
    
    2,068
    
    
    
    574Amortization of unrecognized net loss
    
    
    145
    
    
    
    276
    
    
    
    694Amortization of prior service cost
    
    
    102
    
    
    
    232
    
    
    
    245Amortization of unrecognized net
obligation existing at transition
    
    
    3
    
    
    
    2
    
    
    
    35Net periodic benefit cost
    
    $
    2,893
    
    
    $
    2,600
    
    
    $
    1,953
  50




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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
    
    $
    2,1162010
    
    $
    2,1002011
    
    $
    2,0692012
    
    $
    2,0972013
    
    $
    2,1362014  2018
    
    $
    11,603
 Note 13  Postretirement Benefits
 Postretirement Medical and Life Insurance Benefit Plans
   2008
    
    2007Weighted-average assumption as of June 30Discount rate
    
    
    6.65
    %
    
    
    6.35
    %
  2008
    
    2007
    
    2006Discount rate
    
    
    6.35
    %
    
    
    6.45
    %
    
    
    5.25
    %Health care cost trend rate
    
    
    10.00
    %
    
    
    11.00
    %
    
    
    12.00
    %
 51




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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)
  2008
    
    
    2007Change in benefit obligationBenefit obligation at beginning of year
    
    $
    3,804
    
    
    $
    6,746Service cost
    
    
    26
    
    
    
    133Interest cost
    
    
    231
    
    
    
    423Actuarial gain
    
    
    (653
    )
    
    
    (260
    )Effect of curtailment
    
    
    (25
    )
    
    
    (2,938
    )Benefits paid
    
    
    (281
    )
    
    
    (300
    )Benefit obligation at end of year
    
    $
    3,102
    
    
    $
    3,804Change in plan assetsEmployer contributions
    
    $
    281
    
    
    $
    300Benefits paid
    
    
    (281
    )
    
    
    (300
    )Fair value of plan assets at end of year
    
    $
    
    
    
    $
    Reconciliation of funded statusAccrued benefit cost
    
    $
    (3,102
    )
    
    $
    (3,804
    )Amounts recognized in the consolidated balance sheets consist ofCurrent accrued benefit liability
    
    $
    (257
    )
    
    $
    (330
    )Noncurrent accrued benefit liability
    
    $
    (2,845
    )
    
    $
    (3,474
    )Accumulated benefit obligation
    
    $
    (3,102
    )
    
    $
    (3,804
    )
  2008
    
    
    2007Net actuarial (gain) loss
    
    $
    (600
    )
    
    $
    53Prior service benefit
    
    
    (43
    )
    
    
    (50
    )Income taxes
    
    
    246
    
    
    
    (2
    )Total
    
    $
    (397
    )
    
    $
    1
  2009Prior service cost amortization
    
    $
    (5
    )Unrecognized gain amortization
    
    
    (17
    )Total
    
    $
    (22
    )
  2008
    
    
    2007
    
    
    2006Components of net periodic benefit costService cost
    
    $
    26
    
    
    $
    133
    
    
    $
    175Interest cost
    
    
    231
    
    
    
    423
    
    
    
    346Amortization of unrecognized net loss
    
    
    
    
    
    
    128
    
    
    
    143Amortization of prior service asset
    
    
    (5
    )
    
    
    (8
    )
    
    
    (6
    )SFAS 88 curtailment benefit
    
    
    (27
    )
    
    
    (691
    )
    
    
    Net periodic benefit cost (benefit)
    
    $
    225
    
    
    $
    (15
    )
    
    $
    658
 52




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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
    
    $
    2572010
    
    $
    2322011
    
    $
    2342012
    
    $
    2462013
    
    $
    2512014  2018
    
    $
    1,244
   1-Percentage-Point
    
    1-Percentage-PointIncrease
    
    DecreaseEffect on total of service and interest cost components
    
    $
    17
    
    
    $
    (15
    )Effect on postretirement benefit obligation as of June 30, 2008
    
    $
    251
    
    
    $
    (218
    )
 Note 14  Defined Contribution and Other Employee Plans
    Note 15  Commitments
  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)
   2008
    
    
    2007
    
    
    2006Operating leases:Minimum rentals
    
    $
    4,431
    
    
    $
    4,642
    
    
    $
    4,509Contingent rentals
    
    
    401
    
    
    
    435
    
    
    
    554Short-term cancelable leases
    
    
    1,609
    
    
    
    1,983
    
    
    
    1,916Total
    
    $
    6,441
    
    
    $
    7,060
    
    
    $
    6,979
 Note 16 Contingencies
     Note 17  Restructuring and Impairment Charge
   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)
    Accrual at
    
    
    
    
    
    
    2008
    
    
    Accrual atJune 30,
    
    
    2008
    
    
    Cash
    
    
    June 30,2007
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargeEmployee Separation Costs
    
    $
    266
    
    
    $
    173
    
    
    $
    (370
    )
    
    $
    69Other Costs
    
    
    219
    
    
    
    1,071
    
    
    
    (106
    )
    
    
    1,184Subtotal
    
    $
    485
    
    
    
    1,244
    
    
    $
    (476
    )
    
    $
    1,253Accelerated Depreciation
    
    
    
    
    
    
    9Inventory Write-Down
    
    
    
    
    
    
    17Total Restructuring and Impairment Charge
    
    
    
    
    
    $
    1,270
  Note 18  Business Segments Information
  Specialty Foods
 Glassware and Candles
 55




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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)
  2008
    
    
    2007
    
    
    2006Specialty FoodsRetail
    
    $
    409,913
    
    
    $
    375,987
    
    
    $
    375,255Foodservice
    
    
    398,594
    
    
    
    352,670
    
    
    
    332,774Total Specialty Foods
    
    $
    808,507
    
    
    $
    728,657
    
    
    $
    708,029Glassware and CandlesConsumer Table and Giftware
    
    $
    146,434
    
    
    $
    171,935
    
    
    $
    170,845Nonconsumer Ware and Other
    
    
    25,974
    
    
    
    45,218
    
    
    
    45,697Total Glassware and Candles
    
    $
    172,408
    
    
    $
    217,153
    
    
    $
    216,542Total
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    924,571
   2008
    
    
    2007
    
    
    2006Net Sales(1)Specialty Foods
    
    $
    808,507
    
    
    $
    728,657
    
    
    $
    708,029Glassware and Candles
    
    
    172,408
    
    
    
    217,153
    
    
    
    216,542Total
    
    $
    980,915
    
    
    $
    945,810
    
    
    $
    924,571Operating IncomeSpecialty Foods
    
    $
    88,975
    
    
    $
    101,518
    
    
    $
    113,796Glassware and Candles
    
    
    (1,887
    )
    
    
    5,712
    
    
    
    3,614Corporate Expenses
    
    
    (11,751
    )
    
    
    (7,320
    )
    
    
    (6,928
    )Total
    
    $
    75,337
    
    
    $
    99,910
    
    
    $
    110,482Identifiable Assets(1)Specialty Foods
    
    $
    364,402
    
    
    $
    348,637
    
    
    $
    274,652Glassware and Candles
    
    
    108,394
    
    
    
    147,232
    
    
    
    171,553Assets of Discontinued Operations
    
    
    
    
    
    
    67,463
    
    
    
    126,755Corporate
    
    
    47,382
    
    
    
    35,165
    
    
    
    55,061Total
    
    $
    520,178
    
    
    $
    598,497
    
    
    $
    628,021Capital ExpendituresSpecialty Foods
    
    $
    15,400
    
    
    $
    51,746
    
    
    $
    47,984Glassware and Candles
    
    
    1,389
    
    
    
    1,786
    
    
    
    3,847Corporate
    
    
    43
    
    
    
    57
    
    
    
    29Total
    
    $
    16,832
    
    
    $
    53,589
    
    
    $
    51,860
 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)
 2008
    
    
    2007
    
    
    2006Depreciation and AmortizationSpecialty Foods
    
    $
    15,307
    
    
    $
    12,433
    
    
    $
    9,767Glassware and Candles
    
    
    8,580
    
    
    
    11,333
    
    
    
    14,850Corporate
    
    
    251
    
    
    
    315
    
    
    
    363Total
    
    $
    24,138
    
    
    $
    24,081
    
    
    $
    24,980
 
 (1)
    
    Net sales and long-lived assets are predominantly domestic.   Note 19 Selected Quarterly Financial Data (Unaudited)
 First
    
    Second
    
    Third
    
    Fourth
    
    FiscalQuarter
    
    Quarter(1)
    
    Quarter(2)
    
    Quarter(3)
    
    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
 First
    
    Second
    
    Third
    
    Fourth
    
    FiscalQuarter
    
    Quarter(5)
    
    Quarter(6)
    
    Quarter(7)
    
    Year(4)2007Net Sales
    
    $
    226,793
    
    
    $
    263,175
    
    
    $
    228,450
    
    
    $
    227,392
    
    
    $
    945,810Gross Margin
    
    $
    41,403
    
    
    $
    53,655
    
    
    $
    42,316
    
    
    $
    44,366
    
    
    $
    181,740Income from
Continuing Operations
    
    $
    14,106
    
    
    $
    21,248
    
    
    $
    13,306
    
    
    $
    15,619
    
    
    $
    64,279(Loss) Income from Discontinued
Operations, Net of Tax
    
    $
    (325
    )
    
    $
    (3,419
    )
    
    $
    193
    
    
    $
    (15,044
    )
    
    $
    (18,595
    )Net Income
    
    $
    13,781
    
    
    $
    17,829
    
    
    $
    13,499
    
    
    $
    575
    
    
    $
    45,684Diluted Income (Loss) per Share:Continuing Operations
    
    $
    .44
    
    
    $
    .67
    
    
    $
    .42
    
    
    $
    .50
    
    
    $
    2.03Discontinued Operations
    
    $
    (.01
    )
    
    $
    (.11
    )
    
    $
    .01
    
    
    $
    (.48
    )
    
    $
    (.59
    )Net Income
    
    $
    .43
    
    
    $
    .56
    
    
    $
    .43
    
    
    $
    .02
    
    
    $
    1.45
 
 (1)
    
    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. 57




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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)
 
 (2)
    
    Included in the third quarter earnings is additional loss on the sale of our consumer and
floral glass operations of approximately $0.2 million, net of taxes, or approximately $.01 per
share.(3)
    
    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 general liability insurance, (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 and (C) additional loss on the sale of our
consumer and floral glass operations of approximately $0.3 million, net of taxes, or
approximately $.01 per share.(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 is income of approximately $0.4 million, net of
taxes, or approximately $.01 per share, related to funds received under CDSOA.(6)
    
    Included in the third quarter earnings is expense of approximately $1.5 million, net of
taxes, or approximately $.05 per share, related to the closing of our industrial glass
operation in Lancaster, Ohio.(7)
    
    Included in the fourth quarter earnings are (A) income of approximately $0.6 million, net of
taxes, or approximately $.02 per share, related to a bad debt recovery 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. 58




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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
  59




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

     Deloitte & Touche LLP
 
 60




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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
  61




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 Financial Statements
       Financial Statement Schedules.
   Exhibits Required by Item 601 of Regulation S-K and Item 15(b
 62




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SIGNATURES
  Lancaster Colony Corporation(Registrant)By:
    
    /s/
John B. Gerlach, Jr.

      John B. Gerlach, Jr.Chairman,
Chief Executive Officer,President and DirectorDate: August 29, 2008
  Signatures
    
    Title
    
    Date/s/
John B. Gerlach, Jr.

     John B. Gerlach, Jr.
    
    Chairman, Chief Executive Officer,
President and Director(Principal Executive Officer)
    
    August 27, 2008/s/
John L. Boylan

     John L. Boylan
    
    Treasurer, Vice President,
Assistant Secretary,Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
    
    August 29, 2008/s/
James B. Bachmann

     James B. Bachmann
    
    Director
    
    August 20, 2008/s/
Neeli Bendapudi

     Neeli Bendapudi
    
    Director
    
    August 20, 2008/s/
Robert L. Fox

     Robert L. Fox
    
    Director
    
    August 19, 2008/s/
Alan F. Harris

     Alan F. Harris
    
    Director
    
    August 19, 2008/s/
Edward H. Jennings

     Edward H. Jennings
    
    Director
    
    August 20, 2008/s/
Henry M. ONeill, Jr.

     Henry M. ONeill, Jr.
    
    Director
    
    August 20, 2008/s/
Zuheir Sofia

     Zuheir Sofia
    
    Director
    
    August 18, 2008
 63




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
For each of the three years in the period ended June 30, 2008
 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, 2006
    
    $
    1,364
    
    
    $
    (1,177
    )
    
    $
    (386
    )
    
    $
    573Year ended June 30, 2007
    
    $
    573
    
    
    $
    (899
    )
    
    $
    (907
    )
    
    $
    581Year ended June 30, 2008
    
    $
    581
    
    
    $
    1,049
    
    
    $
    561
    
    
    $
    1,069
 
 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 $1.0 million and $1.2 million for 2007 and 2006, respectively. 64




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FORM 10-K
JUNE 30, 2008
 
 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
    
    (q)3.1
    
    Articles of Incorporation of Lancaster Colony Corporation approved by
the shareholders November 18, 1991
    
    (e).2
    
    Certificate of Amendment to the Articles of Incorporation of Lancaster
Colony Corporation approved by the shareholders November 16, 1992
    
    (e).3
    
    Certificate of Amendment to the Articles of Incorporation of Lancaster
Colony Corporation approved by the shareholders November 17, 1997
    
    (e).4
    
    Regulations of Lancaster Colony Corporation as amended through
November 18, 1991
    
    (m).5
    
    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
    
    (h).2
    
    Rights Agreement dated as of April 20, 2000 by and between Lancaster
Colony Corporation and The Huntington National Bank
    
    (g).3
    
    Credit Agreement dated as of October 5, 2007 among Lancaster Colony
Corporation, The Lenders and JPMorgan Chase Bank, NA, as Agent
    
    (i)10.1*
    
    Key Employee Severance Agreement between Lancaster Colony
Corporation and John L. Boylan
    
    (c).2*
    
    Lancaster Colony Corporation 1995 Key Employee Stock Option Plan
    
    (d).3*
    
    Key Employee Severance Agreement between Lancaster Colony
Corporation and Bruce L. Rosa
    
    (f).4*
    
    Lancaster Colony Corporation Executive Employee Deferred
Compensation Plan
    
    (h).5*
    
    Description of Registrants Executive Bonus Arrangements
    
    (j).6
    
    Design/Build Agreement between Sister Schuberts Homemade Rolls, Inc.
and Shambaugh & Son, LP
    
    (n).7*
    
    2004 Amendment to the Lancaster Colony Corporation Executive
Employee Deferred Compensation Plan
    
    (k).8*
    
    Lancaster Colony Corporation 2005 Executive Employee Deferred Compensation Plan
    
    (l).9*
    
    Lancaster Colony Corporation 2005 Stock Plan
    
    (a).10*
    
    Form of Restricted Stock Award Agreement for Directors under the
Lancaster Colony Corporation 2005 Stock Plan
    
    (o).11
    
    Agreement by and among Lancaster Colony Corporation, Barington Companies
Equity Partners, L.P. and the other parties thereto, dated October 9, 2007
    
    (p).12*
    
    Form of Stock Appreciation Rights Award Agreement for employees and
consultants under the Lancaster Colony Corporation 2005 Stock Plan
    
    (r).13*
    
    Form of Restricted Stock Award Agreement for employees and consultants
under the Lancaster Colony Corporation 2005 Stock Plan
    
    (s)21
    
    Subsidiaries of Registrant
    
    Filed herewith23
    
    Consent of Deloitte & Touche LLP
    
    Filed herewith
 65




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##### Table of Contents



Exhibit
Number
    
    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 10.6 to Lancaster Colony
Corporations Annual Report on Form 10-K (000-04065) for the year ended June 30, 1991.(d)
    
    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.(e)
    
    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, 1998.(f)
    
    Indicates the exhibit is incorporated by reference to Exhibit 10.8 to the Lancaster Colony
Corporations Annual Report on Form 10-K (000-04065) for the year ended June 30, 1999.(g)
    
    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.(h)
    
    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.(i)
    
    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.(j)
    
    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.(k)
    
    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.(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 February 25, 2005.(m)
    
    Indicates the exhibit is incorporated by reference to Exhibit 3.4 to Lancaster Colony
Corporations Annual Report on Form 10-K (000-04065) for the year ended June 30, 2006.(n)
    
    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 March 16, 2007.(o)
    
    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.(p)
    
    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.(q)
    
    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.(r)
    
    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.(s)
    
    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. 66