<PAGE>   1
                                                                      EXHIBIT 13


MANAGEMENT'S DISCUSSION AND ANALYSIS
Of Results of Operations and Financial Condition
------------------------------------------------

REVIEW OF CONSOLIDATED OPERATIONS
Fiscal 2000 marked the Company's ninth consecutive year that a record level of
consolidated net sales has been established. Such sales totaled $1,104,258,000,
a 6% increase over the fiscal 1999 total of $1,045,702,000. This growth was
internally generated and resulted primarily from increased sales levels of
specialty food products to both retail and foodservice customers as well as from
greater sales of automotive floor mats and aluminum light truck accessories to
original equipment manufacturers ("OEMs"). These same factors generally
contributed to 1999 sales increasing 4% over fiscal 1998 sales of
$1,008,752,000.

The relative proportion of sales and operating income contributed by each of the
Company's business segments can impact a year-to-year comparison of the
consolidated statements of income. The following table summarizes the sales mix
and related operating income percentages achieved by the business segments over
each of the last three years:

Segment Sales Mix:(1)                              2000        1999        1998
--------------------------------------------------------------------------------
Specialty Foods                                     44%         42%         41%
Glassware and Candles                               33%         35%         36%
Automotive                                          23%         23%         23%

Segment Operating Income %:(2)
--------------------------------------------------------------------------------
Specialty Foods                                     17%         16%         15%
Glassware and Candles                               21%         22%         22%
Automotive                                           3%          5%          8%

(1) Expressed as a percentage of consolidated net sales
(2) Expressed as a percentage of the related segment's net sales

The Company's gross margin as a percentage of net sales was 30.4% in 2000
compared with 30.8% in 1999 and 32.2% in 1998. The decline in the current year's
percentage reflects operational inefficiencies and a less favorable sales mix
affecting certain automotive floor mat and glassware operations. Margins on
specialty food products actually improved as a result of such factors as
generally lower food commodity costs and a more favorable sales mix. The decline
in the 1999 percentage compared to that of 1998 is primarily attributable to
higher food ingredient costs present in the first half of fiscal 1999, although
certain glassware and automotive operations also experienced lower efficiencies
during 1999. The increasing proportion of sales contributed by specialty food
products over the last two years has positively influenced gross margin
percentages during this period as such products typically carry higher average
gross margins than many of the Company's other products.

Selling, general and administrative expenses for 2000 totaled $173,449,000 and
increased 4% over the 1999 total of $166,228,000. Such expenses in 2000 include
a bad debt provision of approximately $5 million relating to the January 2000
bankruptcy of a large national foodservice distributor. The 1999 level of
selling, general and administrative costs declined 1% from the 1998 total of
$168,526,000. This decrease was influenced by cost reductions attained within
the Glassware and Candles segment.

In the aggregate, improved Specialty Foods results were partially offset by a
decline in performance of the Automotive and, to a lesser extent, the Glassware
and Candles segments such that consolidated operating income for 2000 totaled
$161,949,000, a 4% improvement from the 1999 total of $155,688,000. In 1999,
improved results of the Specialty Foods segment were largely offset by a decline
in Automotive segment performance resulting in 1999 operating income being
essentially unchanged from the $155,871,000 recorded in 1998.

The effective tax rate in 2000 remained constant at 38.0% compared to 1999. The
effective rate for 1998 was 38.1%.

Net income per common share totaled a record $2.51 on a fully-diluted basis for
fiscal 2000, an increase of 10% over the comparable 1999 total of $2.28 per
share. Fully diluted earnings per share in 1999 increased 3% over the 1998 total
of $2.22 per share. Earnings per share have been beneficially affected by the
Company's share repurchases which totaled $179 million over the three-year
period ended June 30, 2000.

SEGMENT REVIEW - SPECIALTY FOODS
Record levels of net sales and earnings were again achieved by the Specialty
Foods segment during fiscal 2000. This segment's net sales during 2000 increased
by 11% to total $489,962,000 compared to $441,470,000 in fiscal 1999. Relative
to the fiscal 1998 total of $411,373,000, fiscal 1999 net sales increased 7%. In
each of the last three fiscal years, the percentage of retail sales to total
sales was essentially unchanged at 56%, with the remaining 44% of segment sales
being made to foodservice accounts.


<PAGE>   2

MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------

The growth in retail sales over the last two years has been influenced by both
the strength of the recently-introduced Texas Toast garlic bread product line
and a continued increase in produce department offerings such as vegetable dips
and produce dressings. Foodservice sales during this period benefited from new
business with several large national restaurant chains as well as from greater
sales of Marzetti-branded products to foodservice distributors.


Operating income of the Specialty Foods segment in fiscal 2000 totaled
$83,372,000, a 22% increase from the 1999 total of $68,550,000. Compared to
operating income of $62,141,000 reported in fiscal 1998, the 1999 total
increased 10%. Among the factors contributing to these increases were the
greater sales volumes, better capacity utilization and a favorable sales mix.
Raw material costs in fiscal 2000 were also substantially lower than in fiscal
1999, especially for soybean oil and cream. Costs for these materials were
particularly high during the first half of fiscal 1999. Adversely affecting 2000
results was a bad debt provision of approximately $5,000,000 relating to the
bankruptcy of a large foodservice distributor that primarily serviced restaurant
chains. This bankruptcy also impaired 2000 cash flows, but did not materially
impact the segment's net sales.


SEGMENT REVIEW - GLASSWARE AND CANDLES
Net sales of the Glassware and Candles segment during fiscal 2000 totaled
$357,525,000, a 2% decline from the $363,617,000 achieved in 1999. Most of this
decline was attributable to a decline in candle sales to mass merchants that
occurred during the second half of fiscal 2000. This decline is not specifically
attributable to any one factor but appears to have been influenced by increased
retail sales in advance of the year 2000 millennium, a growth in competitive
import alternatives and less promotional activity conducted by certain
customers. Sales of private-label candle products and consumer glassware to mass
merchants increased in 2000. Compared to 1998 sales of $363,835,000, 1999 sales
remained essentially even as affected by a reduction in the sales of
private-label wax-filled products and the closing of the segment's glassware
direct selling organization in October 1998.


This segment's operating income in 2000 totaled $76,756,000, a 3% decline from
the 1999 total of $79,235,000. Similarly, operating income in 1999 declined 1%
from the 1998 operating income level of $80,350,000. Adversely affecting fiscal
2000 results were the reduced sales volume of candles and, within the consumer
glassware operations, a less favorable sales mix and substantial production
inefficiencies at the Sapulpa, Oklahoma glass production facility. Compared to
1998, lower production volumes in 1999 at a second glass production facility
also adversely impacted results due to lower overhead absorption.


SEGMENT REVIEW - AUTOMOTIVE
A record level of net sales was achieved by this segment during fiscal 2000 with
total net sales of $256,771,000 exceeding the 1999 total of $240,615,000.
Compared to 1998 net sales of $233,544,000, a 3% increase in net sales occurred
in 1999. Contributing to the volume increase was internal growth associated with
the addition of several new aluminum accessory and floor mat programs placed
with OEMs, as well as the volume associated with a new aftermarket customer.
Sales of light truck bedliners were adversely impacted throughout this period as
a result of factors such as significant industry over-capacity and intense
competitive pricing conditions.


Operating income of the Automotive segment during 2000 totaled $7,452,000, a 42%
decline from the comparable 1999 total of $12,861,000. This decline is
attributable to lower contribution from the sales of floor mats as affected by
operating inefficiencies, a less favorable sales mix, certain raw material cost
increases, reduced pricing to OEMs and more competitive aftermarket conditions.
Freight and overtime costs were also unusually high in the first half of fiscal
2000 due to capacity constraints. The extent of the decline was mitigated by
improved contribution from aluminum truck accessory operations. The operating
income of the Automotive segment for 1999 declined 31% from the $18,700,000
recorded in 1998. In addition to the presence of the general conditions noted
above, operating efficiencies in the first half of fiscal 1999 were also
adversely affected by the disruptive effects of unrelated work stoppages at both
a major customer and at the Company's Wapakoneta, Ohio facility.


This segment's sales to OEMs are made both directly to the OEMs and indirectly
through third party, "Tier 1" suppliers. Such sales are sensitive to the overall
rate of new vehicle sales, the availability of competitive alternatives and the

<PAGE>   3

MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------

Tier 1 supplier's ongoing ability to maintain its relationship with the OEMs.
Additionally, the extent of pricing flexibility associated with these sales
continues to be particularly limited with certain products subject to annual
price reductions. During 2000, sales to OEMs comprised 58% of this segment's
sales compared to 50% and 49% in 1999 and 1998, respectively.


LIQUIDITY AND CAPITAL RESOURCES
In general, the Company's noteworthy balance sheet strength at June 30, 2000 is
substantially similar in composition to that of June 30, 1999. This was
reflected in short and long-term debt comprising less than 10% of total
capitalization at both dates. Management believes that this relatively low level
of leverage provides the Company with considerable flexibility to acquire
businesses complementary in function to that of the Company's existing
operations. It is anticipated that adequate funds will continue to be made
available under bank lines of credit to meet any short-term cash requirements
not otherwise met by cash generated from operations. Short-term bank loans
utilized at June 30, 2000 increased $8,250,000.


Over the last three years, the Company's financial position has benefited from
net cash provided by operating activities totaling $128,445,000, $126,484,000
and $120,045,000 for 2000, 1999 and 1998, respectively. The primary influence on
these amounts has been the Company's favorable levels of net income and working
capital. This cash flow generated from operations remains the primary source of
financing the Company's internal growth.


The principal use of cash flows used in investing activities over the last three
years has been for investments in property, plant and equipment. The fiscal 2000
total of $24,564,000 declined from the $33,804,000 expended in fiscal 1999 due
to 1999 including large expenditures for the completion of a food distribution
facility. No similarly-sized projects were undertaken in 2000. Fiscal 1998
included the acquisition of all the outstanding stock of Chatham Village Foods,
Inc., a manufacturer and marketer of croutons and related products. The total of
cash paid and debt assumed by the Company in consummating this acquisition
exceeded $20,000,000. Subsequent to June 30, 2000, the Company utilized cash of
approximately $33,000,000 to acquire the outstanding stock of Sister Schubert's
Homemade Rolls, Inc., a manufacturer and marketer of frozen, partially baked
yeast rolls and related products. The selling shareholders may ultimately
receive additional cash payments from the Company contingent upon the future
annual level of Sister Schubert's earnings, as defined, that will be attained
through calendar 2004.


Financing activities of the Company used net cash totaling $115,915,000,
$91,355,000 and $58,738,000 in fiscals 2000, 1999 and 1998, respectively. The
largest such financing activity conducted by the Company in each of the last
three years involved the purchase of the Company's common stock. Cash utilized
for these purchases totaled $75,101,000, $66,792,000 and $37,083,000 in 2000,
1999 and 1998, respectively. In May 2000, the Company's Board of Directors
approved a share repurchase authorization of 3,000,000 shares which, when
combined with the amount of shares remaining subject to repurchase under a
previous authorization, provided a total of 3,412,000 shares authorized for
future purchase as of June 30, 2000.


An additional significant financing activity conducted in each of the last three
years has been the payment of dividends. Total dividend payments for 2000 were
$24,747,000 which was approximately 1% greater than the 1999 total of
$24,573,000. This increase reflects the higher dividend payout rate of $.63
present during 2000 as compared to $.59 during 1999. Fiscal 2000 marks the 37th
consecutive year in which the Company's dividend rate was increased. The future
levels of share purchases and declared dividends are subject to the periodic
review of the Company's Board of Directors and are generally determined after an
assessment is made of such factors as anticipated earnings levels, cash flow
requirements and general business conditions.


Compared to June 30, 1999, the current portion of long-term debt decreased
approximately $25 million by June 30, 2000 as a result of the maturity of a $25
million note which was paid in February 2000. This payment was effectively
funded by cash from operations.


The Company's ongoing business activities continue to be subject to compliance
with various laws, rules and regulations as may be issued and enforced by
various Federal, state and local agencies. With respect to environmental
matters, costs are incurred pertaining to regulatory compliance and, upon
occasion, remediation. Such costs have not been, and are not anticipated to
become, material.

<PAGE>   4

MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------


IMPACT OF INFLATION
The most significant change in costs during fiscal 2000 related to declines in
soybean oil and cream costs which benefited the results of the Specialty Foods
segment. Certain cost increases in the second half of fiscal 2000, including
those for freight, natural gas and corrugated, trended above the general
inflation rate and may adversely affect fiscal 2001 results if not abated. Raw
material costs in fiscal 1999, with the exception of certain food commodity
costs, did not significantly vary from the levels encountered in fiscal 1998.
Soybean oil and cream costs rose markedly during the first half of fiscal 1999
but returned to more comparable levels by June 30.


The Company generally attempts to adjust its selling prices to offset the
effects of increased raw material costs. However, these adjustments have
historically been difficult to implement on a timely basis relative to the
increase in costs incurred. Reducing the exposure to such increased costs is the
Company's diversity of operations and its ongoing efforts to achieve greater
manufacturing and distribution efficiencies through the improvement of work
processes.


YEAR 2000
As of the date of this report, the Company has not experienced any significant
Year 2000 related issues. Mainframe applications, personal computers,
telecommunications equipment and programmable logic controllers associated with
certain manufacturing equipment are operating effectively. In addition, the
Company is not aware of any third-party vendors or principal suppliers that are
not Year 2000 compliant. Management will continue to monitor its critical
systems and will utilize contingency plans, if the need arises. The costs and
business implications which might be associated with the adoption of such
contingency plans is not estimable, but could be significant.


SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995:
All statements made by the Company in both this annual report and in other
contexts, other than statements of historical fact, that address activities,
events or developments that the Company or management intends, expects,
projects, believes or anticipates will or may occur in the future, are
forward-looking statements. Such statements are based upon certain assumptions
and assessments made by management of the Company in light of its experience and
its perception of historical trends, current conditions, expected future
developments and other factors it believes to be appropriate. The
forward-looking statements included in this report are also subject to a number
of risks and uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, customers, products, services and prices. Specific influences relating
to these forward-looking statements include fluctuations in material costs, the
continued solvency of key customers, efficiencies in plant operations and
innumerable other factors. Such forward-looking statements are not guarantees of
future performance, and the actual results, developments and business decisions
may differ from those contemplated by such forward-looking statements. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise.

<PAGE>   5


FIVE YEAR FINANCIAL SUMMARY
Lancaster Colony Corporation and Subsidiaries
---------------------------------------------

<TABLE>
<CAPTION>
(Thousands Except Per Share Figures)         2000          1999          1998           1997          1996
-------------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>           <C>           <C>           <C>
OPERATIONS
Net Sales                                 $1,104,258    $1,045,702    $1,008,752    $  922,813    $  855,912
Gross Margin                              $  335,398    $  321,916    $  324,397    $  290,762    $  263,952
  Percent of Sales                              30.4%         30.8%         32.2%         31.5%         30.8%
Interest Expense                          $    1,588    $    2,718    $    2,626    $    2,596    $    2,875
  Percent of Sales                               0.1%          0.3%          0.3%          0.3%          0.3%
Income Before Income Taxes                $  160,189    $  153,462    $  155,373    $  142,459    $  123,221
  Percent of Sales                              14.5%         14.7%         15.4%         15.4%         14.4%
Taxes Based on Income                     $   60,925    $   58,333    $   59,243    $   53,753    $   47,086
Net Income                                $   99,264    $   95,129    $   96,130    $   88,706    $   76,135
  Percent of Sales                               9.0%          9.1%          9.5%          9.6%          8.9%
Per Common Share:(1)
  Net Income- Basic and Diluted           $     2.51    $     2.28    $     2.22    $     2.01    $     1.71
  Cash Dividends                          $     0.63    $     0.59    $     0.54    $     0.48    $     0.44
-------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total Assets                              $  531,844    $  550,014    $  529,367    $  484,394    $  435,359
Working Capital                           $  219,420    $  212,162    $  235,031    $  235,079    $  203,988
Property, Plant and Equipment--Net        $  172,384    $  175,617    $  170,766    $  151,309    $  139,095
Long-Term Debt                            $    3,040    $    3,575    $   29,095    $   30,685    $   31,230
Property Additions                        $   24,564    $   33,804    $   44,935    $   37,528    $   50,229
Depreciation and Amortization             $   34,340    $   35,569    $   32,571    $   26,981    $   24,399
Shareholders' Equity                      $  415,483    $  414,855    $  410,563    $  368,000    $  323,563
  Per Common Share(1)                     $    10.94    $    10.23    $     9.60    $     8.45    $     7.29

Weighted Average
  Common Shares Outstanding- Diluted(1)       39,554        41,799        43,364        44,108        44,624
-------------------------------------------------------------------------------------------------------------
STATISTICS
Price-Earnings Ratio at Year End                 7.8          15.1          17.1          16.0          14.6

Current Ratio                                    3.3           2.8           4.1           4.2           3.9

Long-Term Debt as
  a Percent of Shareholders' Equity              0.7%          0.9%          7.1%          8.3%          9.7%

Dividends Paid as a Percent
  of Net Income                                 24.9%         25.8%         24.3%         23.8%         25.7%

Return on Average Equity                        23.9%         23.0%         24.7%         25.7%         25.3%
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Adjusted for 3-for-2 stock split paid January 1998.


<PAGE>   6

BUSINESS SEGMENTS
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2000, 1999 and 1998
------------------------------------------------


In 1999, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 131, "Disclosures about Segments of an Enterprise and Related
Information." Management has evaluated its operations in accordance with SFAS
No. 131 and has determined that the business is separated into three distinct
operating and reportable product categories: "Specialty Foods," "Glassware and
Candles" and "Automotive." The 1998 business segment presentation has been
restated to conform with the 2000 and 1999 presentations.


SPECIALTY FOODS-includes the production and marketing of a family of pourable
and refrigerated produce salad dressings; croutons; sauces; refrigerated produce
vegetable and fruit dips; chip dips; dairy snacks and desserts; dry and frozen
egg noodles; caviar; frozen ready-to-bake pies; and frozen hearth-baked breads.
The salad dressings, sauces and frozen bread products are sold to both retail
and foodservice markets. The remaining products of this business segment are
primarily directed to retail markets.


GLASSWARE AND CANDLES-includes the production and marketing of table and
giftware consisting of domestic glassware, both machine pressed and machine
blown; imported glassware; candles in all popular sizes, shapes and scents;
potpourri and related scented products; industrial glass and lighting
components; and glass floral containers. This segment's products are sold
primarily to retail markets such as mass merchandisers and department stores.


AUTOMOTIVE-includes the production and marketing of rubber, vinyl and
carpet-on-rubber car mats for original equipment manufacturers, importers and
for the auto aftermarket; truck and trailer splash guards; pickup truck bed mats
and liners; aluminum running boards for pickup trucks and vans; and a broad line
of auto accessories.


Operating income represents net sales less operating expenses related to the
business segments. Expenses of a general corporate nature have not been
allocated to the business segments. All intercompany transactions have been
eliminated, and intersegment revenues are not significant. 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, cash equivalents and deferred income taxes.


The 2000 and 1999 capital expenditures of the segments include property relating
to business acquisitions as follows:

Segment                                         2000                    1999
--------------------------------------------------------------------------------
Glassware & Candles                          $150,000
Automotive                                                            $990,000
--------------------------------------------------------------------------------

<PAGE>   7

BUSINESS SEGMENTS
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2000, 1999 and 1998
------------------------------------------------


The following sets forth certain financial information attributable to the
Company's business segments for the three years ended June 30, 2000, 1999 and
1998:

<TABLE>
<CAPTION>
(Dollars In Thousands)                   2000             1999             1998
-------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>
NET SALES
   Specialty Foods                $   489,962      $   441,470      $   411,373
   Glassware and Candles              357,525          363,617          363,835
   Automotive                         256,771          240,615          233,544
-------------------------------------------------------------------------------
     Total                        $ 1,104,258      $ 1,045,702      $ 1,008,752
===============================================================================
OPERATING INCOME
   Specialty Foods                $    83,372      $    68,550      $    62,141
   Glassware and Candles               76,756           79,235           80,350
   Automotive                           7,452           12,861           18,700
   Corporate Expenses                  (5,631)          (4,958)          (5,320)
-------------------------------------------------------------------------------
     Total                        $   161,949      $   155,688      $   155,871
===============================================================================
IDENTIFIABLE ASSETS
   Specialty Foods                $   131,657      $   133,100      $   121,659
   Glassware and Candles              253,659          260,359          264,569
   Automotive                         126,819          122,373          108,238
   Corporate                           19,709           34,182           34,901
-------------------------------------------------------------------------------
     Total                        $   531,844      $   550,014      $   529,367
===============================================================================
CAPITAL EXPENDITURES
   Specialty Foods                $     5,753      $    13,721      $     9,347
   Glassware and Candles               11,301           10,998           29,847
   Automotive                           7,544            9,804            9,372
   Corporate                              116              271               59
-------------------------------------------------------------------------------
     Total                        $    24,714      $    34,794      $    48,625
===============================================================================
DEPRECIATION AND AMORTIZATION
   Specialty Foods                $     7,927      $     7,601      $     7,425
   Glassware and Candles               16,939           18,601           16,367
   Automotive                           9,327            9,242            8,684
   Corporate                              147              125               95
-------------------------------------------------------------------------------
     Total                        $    34,340      $    35,569      $    32,571
===============================================================================
</TABLE>


Substantially all net sales and all long-lived assets are domestic.

Combined net sales from each of the three segments to one customer totaled
approximately $112,000,000 and $109,000,000 or 10% of consolidated fiscal 2000
and 1999 net sales, respectively.

<PAGE>   8

CONSOLIDATED STATEMENTS OF INCOME
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2000, 1999 and 1998
------------------------------------------------

<TABLE>
<CAPTION>
                                                                             Years Ended June 30
                                                             2000                  1999               1998
-------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                  <C>                  <C>
NET SALES                                              $ 1,104,258,000      $ 1,045,702,000      $ 1,008,752,000
COST OF SALES                                              768,860,000          723,786,000          684,355,000
----------------------------------------------------------------------------------------------------------------
GROSS MARGIN                                               335,398,000          321,916,000          324,397,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES               173,449,000          166,228,000          168,526,000
----------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                           161,949,000          155,688,000          155,871,000
OTHER INCOME (EXPENSE):
  Interest expense                                          (1,588,000)          (2,718,000)          (2,626,000)
  Interest income and other--net                              (172,000)             492,000            2,128,000
----------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                                 160,189,000          153,462,000          155,373,000
TAXES BASED ON INCOME                                       60,925,000           58,333,000           59,243,000
----------------------------------------------------------------------------------------------------------------
NET INCOME                                             $    99,264,000      $    95,129,000      $    96,130,000
================================================================================================================
NET INCOME PER COMMON SHARE:
  Basic                                                $          2.51      $          2.28      $          2.22
  Diluted                                              $          2.51      $          2.28      $          2.22
================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
  Basic                                                     39,498,000           41,759,000           43,271,000
  Diluted                                                   39,554,000           41,799,000           43,364,000
================================================================================================================
</TABLE>


See Notes to Consolidated Financial Statements

<PAGE>   9


CONSOLIDATED BALANCE SHEETS
Lancaster Colony Corporation and Subsidiaries
As of June 30, 2000 and 1999
---------------------------------------------

<TABLE>
<CAPTION>

                                                                         June 30
 ASSETS                                                           2000              1999
-------------------------------------------------------------------------------------------
<S>                                                           <C>              <C>
CURRENT ASSETS:
  Cash and equivalents                                        $  2,656,000     $ 18,860,000
  Receivables (less allowance for doubtful accounts,
    2000--$2,395,000; 1999--$3,300,000)                        118,991,000      123,268,000
  Inventories:
    Raw materials and supplies                                  43,882,000       41,741,000
    Finished goods and work in process                         131,598,000      127,680,000
-------------------------------------------------------------------------------------------
    Total inventories                                          175,480,000      169,421,000
  Prepaid expenses and other current assets                     18,768,000       16,830,000
-------------------------------------------------------------------------------------------
      Total current assets                                     315,895,000      328,379,000
PROPERTY, PLANT AND EQUIPMENT:
  Land, buildings and improvements                             113,959,000      112,351,000
  Machinery and equipment                                      299,224,000      281,710,000
-------------------------------------------------------------------------------------------
    Total cost                                                 413,183,000      394,061,000
  Less accumulated depreciation                                240,799,000      218,444,000
-------------------------------------------------------------------------------------------
      Property, plant and equipment--net                       172,384,000      175,617,000
OTHER ASSETS:
  Goodwill (net of accumulated amortization,
    2000--$10,354,000; 1999--$8,884,000)                        34,553,000       35,768,000
  Other assets                                                   9,012,000       10,250,000
-------------------------------------------------------------------------------------------
        TOTAL                                                 $531,844,000     $550,014,000
===========================================================================================


LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------------------------

CURRENT LIABILITIES:
  Short-term bank loans                                       $  8,250,000
  Current portion of long-term debt                                535,000     $ 25,520,000
  Accounts payable                                              43,690,000       45,742,000
  Accrued liabilities                                           44,000,000       44,955,000
      Total current liabilities                                 96,475,000      116,217,000
LONG-TERM DEBT--less current portion                             3,040,000        3,575,000
OTHER NONCURRENT LIABILITIES                                     6,800,000        7,081,000
DEFERRED INCOME TAXES                                           10,046,000        8,286,000
SHAREHOLDERS' EQUITY:
  Preferred stock--authorized 3,050,000 shares;
   Outstanding--none
  Common stock--authorized 75,000,000 shares;
   Outstanding, 2000--37,962,417; 1999--40,547,796              52,115,000       50,912,000
  Retained earnings                                            622,660,000      548,143,000
  Accumulated other comprehensive income                           115,000          106,000
-------------------------------------------------------------------------------------------
    Total                                                      674,890,000      599,161,000
  Less common stock in treasury, at cost                       259,407,000      184,306,000
-------------------------------------------------------------------------------------------
  Total shareholders' equity                                   415,483,000      414,855,000
-------------------------------------------------------------------------------------------
        TOTAL                                                 $531,844,000     $550,014,000
===========================================================================================
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE>   10


CONSOLIDATED STATEMENTS OF CASH FLOWS
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2000, 1999 and 1998
------------------------------------------------

<TABLE>
<CAPTION>
                                                                                     Years Ended June 30
                                                                         2000               1999               1998
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                        $  99,264,000      $  95,129,000      $  96,130,000

  Adjustments to reconcile net income
      to net cash provided by operating activities:
   Depreciation and amortization                                       34,340,000         35,569,000         32,571,000
   Provision for losses on accounts receivable                          5,081,000          1,789,000          1,691,000
   Deferred income taxes and other noncash charges                       (121,000)        (1,225,000)           887,000
   Loss (gain) on sale of property                                         89,000           (229,000)        (1,965,000)
   Changes in operating assets and liabilities:
    Receivables                                                          (804,000)       (25,252,000)         2,661,000
    Inventories                                                        (6,059,000)         6,426,000        (12,635,000)
    Prepaid expenses and other current assets                            (338,000)          (173,000)            81,000
    Accounts payable and accrued liabilities                           (3,007,000)        14,450,000            624,000
-------------------------------------------------------------------------------------------------------------------------
      Net cash provided by operating activities                       128,445,000        126,484,000        120,045,000
-------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Payments on property additions                                      (24,564,000)       (33,804,000)       (44,935,000)
  Acquisitions net of cash acquired                                      (400,000)        (2,075,000)       (19,749,000)
  Proceeds from sale of property                                           78,000            647,000          3,634,000
  Other--net                                                           (3,857,000)        (4,269,000)        (9,165,000)
-------------------------------------------------------------------------------------------------------------------------
      Net cash used in investing activities                           (28,743,000)       (39,501,000)       (70,215,000)
-------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net change in short-term bank loans                                   8,250,000
  Payment of dividends                                                (24,747,000)       (24,573,000)       (23,326,000)
  Purchase of treasury stock                                          (75,101,000)       (66,792,000)       (37,083,000)
  Payments on long-term debt, including acquisition debt payoff       (25,520,000)          (510,000)        (5,148,000)
  Common stock issued, including stock issued upon
    exercise of stock options and related tax benefit                   1,203,000            520,000          6,819,000
-------------------------------------------------------------------------------------------------------------------------
      Net cash used in financing activities                          (115,915,000)       (91,355,000)       (58,738,000)
-------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                     9,000              8,000             23,000
-------------------------------------------------------------------------------------------------------------------------
Net change in cash and equivalents                                    (16,204,000)        (4,364,000)        (8,885,000)
Cash and equivalents at beginning of year                              18,860,000         23,224,000         32,109,000
-------------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year                                 $   2,656,000      $  18,860,000      $  23,224,000
=========================================================================================================================
</TABLE>


See Notes to Consolidated Financial Statements

<PAGE>   11


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2000, 1999 and 1998
---------------------------------------------------

<TABLE>
<CAPTION>

                                                                                              Accumulated
                                                Common Stock                                     Other
                                                 Outstanding               Retained           Comprehensive        Treasury
                                           Shares          Amount          Earnings              Income              Stock
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>               <C>                  <C>              <C>
BALANCE, JUNE 30, 1997                  29,016,836      $ 43,573,000      $ 404,783,000        $  75,000        $  80,431,000
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended June 30, 1998:
  Net income                                                                 96,130,000
  Cash dividends-common stock
    ($.54 per share)                                                        (23,326,000)
  Purchase of treasury shares             (987,150)                                                                37,083,000
  Shares issued upon exercise of
    stock options including
    related tax benefits                   215,659         6,819,000
  Shares issued in connection with
    three-for-two stock split           14,508,143
  Translation adjustment                                                                          23,000
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1998                  42,753,488        50,392,000        477,587,000           98,000          117,514,000
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended June 30, 1999:
  Net income                                                                 95,129,000
  Cash dividends-common stock
    ($.59 per share)                                                        (24,573,000)
  Purchase of treasury shares           (2,226,800)                                                                66,792,000
  Shares issued upon exercise of
    stock options including
    related tax benefits                    21,108           520,000
  Translation adjustment                                                                           8,000
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1999                  40,547,796        50,912,000        548,143,000          106,000          184,306,000
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended June 30, 2000:
  Net income                                                                  99,264,000
  Cash dividends-common stock
    ($.63 per share)                                                         (24,747,000)
  Purchase of treasury shares           (2,631,032)                                                                75,101,000
  Shares issued upon exercise of
    stock options including
    related tax benefits                    45,653         1,203,000
  Translation adjustment                                                                           9,000
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2000                  37,962,417       $52,115,000        $622,660,000        $115,000         $259,407,000
===================================================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE>   12


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Lancaster Colony Corporation and Subsidiaries
---------------------------------------------


            1. SUMMARY OF  Principles of Consolidation
              SIGNIFICANT  The accompanying consolidated financial statements
               ACCOUNTING  include the accounts of Lancaster Colony
                 POLICIES  Corporation and its wholly-owned subsidiaries,
                           collectively referred to as the "Company." All
                           significant intercompany transactions have been
                           eliminated.


                           Use of Estimates
                           The preparation of the consolidated financial
                           statements of the Company in conformity with
                           generally accepted accounting principles requires
                           management to make estimates and assumptions that
                           affect the reported amounts of assets and liabilities
                           at the date of the financial statements, as well as
                           their related disclosures. Such estimates and
                           assumptions also affect the reported amounts of
                           revenues and expenses during the reporting period.
                           Actual results could differ from those estimates.


                           Cash Equivalents
                           The Company considers all highly liquid investments
                           purchased with maturities of three months or less to
                           be cash equivalents.


                           Property, Plant and Equipment
                           The Company uses the straight-line method of
                           computing depreciation for financial reporting
                           purposes based on the estimated useful lives of the
                           corresponding assets. Estimated useful lives for
                           buildings and improvements range from ten to forty
                           years while machinery and equipment range from three
                           to ten years. For tax purposes, the Company generally
                           computes depreciation using accelerated methods.


                           Goodwill
                           For financial reporting purposes goodwill is being
                           amortized on a straight-line basis over ten to forty
                           years, with the exception of $2,243,000 which relates
                           to a company acquired prior to November 1, 1970. Such
                           amount is not being amortized as, in the opinion of
                           management, there has been no dimunition in value.
                           Management periodically evaluates the future economic
                           benefit of its recorded goodwill and other long-term
                           assets when events or circumstances indicate
                           potential recoverability concerns. This evaluation is
                           based on consideration of expected future
                           undiscounted cash flows and other operating factors.
                           Carrying amounts are adjusted appropriately when
                           determined to have been impaired.


                           Revenue Recognition
                           Net sales and related cost of sales are recognized
                           upon shipment of products. Net sales are recorded net
                           of estimated sales discounts and returns.


                           Per Share Information
                           Net income per common share is computed based on the
                           weighted average number of shares of common stock and
                           common stock equivalents (stock options) outstanding
                           during each period.

                           Basic earnings per share excludes dilution and is
                           computed by dividing income available to common
                           shareholders by the weighted average number of common
                           shares outstanding during the period. Diluted
                           earnings per share is computed by dividing income
                           available to common shareholders by the diluted
                           weighted average number of common shares outstanding
                           during the period, which includes the dilutive
                           potential common shares associated with outstanding
                           stock options. There are no adjustments to net income
                           necessary in the calculation of basic and diluted
                           earnings per share.

<PAGE>   13


                           On January 27, 1998, a three-for-two stock split was
                           effected whereby one additional common share was
                           issued for each two shares outstanding to
                           shareholders of record on January 6, 1998.
                           Accordingly, per share data and weighted average
                           common shares outstanding for all periods presented
                           in the accompanying consolidated financial statements
                           have been retroactively adjusted for this split.

                           Credit Risk
                           Financial instruments which potentially subject the
                           Company to concentrations of credit risk consist
                           primarily of cash equivalents and trade accounts
                           receivable. The Company places its cash equivalents
                           with high-quality institutions and, by policy, limits
                           the amount of credit exposure to any one institution.
                           Concentration of credit risk with respect to trade
                           accounts receivable is limited by the Company having
                           a large and diverse customer base.

                           Business Segments
                           The business segments information for 2000, 1999 and
                           1998 included on pages 14 and 15 of this Annual
                           Report is an integral part of these financial
                           statements.

                           Comprehensive Income
                           The only component of other comprehensive income for
                           the Company is foreign currency translation
                           adjustments for which there is no related income tax
                           effect. The difference from net income is immaterial
                           in relation to the Company's financial statements for
                           the fiscal years ended June 30, 2000, 1999 and 1998.

                           Derivative Instruments, Computer Software Costs,
                           Start-Up Costs and Revenue Recognition
                           In June 1998, the Financial Accounting Standards
                           Board ("FASB") issued SFAS No. 133, "Accounting for
                           Derivative Instruments and Hedging Activities." This
                           Statement establishes accounting and reporting
                           standards requiring that every derivative instrument
                           be recorded on the balance sheet as either an asset
                           or liability measured at its fair value. This
                           Statement also requires that changes in the
                           derivative's fair value be recognized currently in
                           earnings unless specific hedge accounting criteria
                           are met.

                           In June 1999, the Financial Accounting Standards
                           Board issued SFAS No. 137, "Accounting for Derivative
                           Instruments and Hedging Activities-Deferral of the
                           Effective Date of FASB Statement No. 133-an amendment
                           of FASB Statement No. 133," which deferred the
                           effective date of SFAS No. 133 to all fiscal quarters
                           of all fiscal years beginning after June 15, 2000
                           (i.e., the first quarter of the Company's fiscal
                           2001). In June 2000, the Financial Accounting
                           Standards Board issued SFAS No. 138, "Accounting for
                           Certain Derivative Instruments and Certain Hedging
                           Activities-an amendment of FASB Statement No. 133,"
                           which, among other changes, permitted contracts for
                           the purchase and sale of an item other than a
                           financial instrument or a derivative which contained
                           normal terms and where physical delivery was probable
                           to be excluded from the scope of SFAS No. 133.
                           Management has completed its analysis relating to the
                           adoption of these Statements and has concluded that
                           the Company did not have any freestanding or embedded
                           derivatives as defined by the Statement at July 1,
                           2000.

                           In July 1999, the Company adopted Statement of
                           Position ("SOP") No. 98-1, "Accounting for the Costs
                           of Computer Software Developed or Obtained for
                           Internal Use," which revised the accounting for
                           software development costs and SOP No. 98-5,
                           "Reporting on the Costs of Start-up Activities,"
                           which requires costs of start-up activities to be
                           expensed as incurred. Adoption of these SOPs had no
                           significant impact on the Company's financial
                           statements.

<PAGE>   14
                             In December 1999, the Securities and Exchange
                             Commission ("SEC") issued Staff Accounting Bulletin
                             ("SAB") No. 101, "Revenue Recognition in Financial
                             Statements," which effectively summarizes certain
                             of the staff's views in applying generally accepted
                             accounting principles to revenue recognition in
                             financial statements. In March 2000, the SEC issued
                             SAB No. 101A to provide additional time for
                             implementation of SAB No. 101 and in June 2000, the
                             SEC issued SAB No. 101B, which defers the
                             implementation of SAB No. 101 until the fourth
                             quarter of fiscal years beginning after December
                             15, 1999 (the fourth quarter of the Company's
                             fiscal 2001). Management has not yet completed its
                             analysis of this SAB as to its impact on the
                             Company's consolidated financial statements and
                             disclosures.


           2. ACQUISITIONS   During January 2000, the Company acquired certain
                             assets of a glass container distributor for cash of
                             approximately $400,000. During October 1998, the
                             Company acquired certain assets of an automobile
                             floor mat manufacturer, for cash of approximately
                             $2,075,000. During July 1997, the Company acquired
                             all of the common stock of Chatham Village Foods,
                             Inc., an upscale salad crouton business, for cash
                             of approximately $19,749,000. This amount was
                             financed through the use of internally generated
                             funds. The related liabilities assumed totaled
                             approximately $5,747,000. These acquisitions were
                             accounted for under the purchase method of
                             accounting and the non-cash aspects have been
                             excluded from the accompanying Consolidated
                             Statements of Cash Flows. The results of operations
                             of these entities have been included in the
                             consolidated financial statements from the dates of
                             acquisition and are immaterial in relation to the
                             consolidated totals.

                             Subsequent to June 30, 2000, the Company utilized
                             cash of approximately $33,000,000 to acquire the
                             outstanding stock of Sister Schubert's Homemade
                             Rolls, Inc., a manufacturer and marketer of frozen,
                             partially baked yeast rolls and related products.
                             The selling shareholders may ultimately receive
                             additional cash payments from the Company
                             contingent upon the future annual level of Sister
                             Schubert's earnings, as defined, that will be
                             attained through calendar 2004.

            3. INVENTORIES   Inventories are valued at the lower of cost or
                             market. Inventories which comprise approximately
                             22% of total inventories at June 30, 2000 and 1999,
                             are costed on a last-in, first-out (LIFO) basis.
                             Inventories which are costed by various other
                             methods approximate actual cost on a first-in,
                             first-out (FIFO) basis. If the FIFO method (which
                             approximates current cost) of inventory accounting
                             had been used for inventories costed on a LIFO
                             basis, these inventories would have been
                             $17,315,000 and $16,744,000 higher than reported at
                             June 30, 2000 and 1999, respectively.

                             It is not practicable to segregate work in process
                             from finished goods inventories. Management
                             estimates, however, that work in progress
                             inventories amount to approximately 10% of the
                             combined total of finished goods and work in
                             process inventories at June 30, 2000 and 1999.

  4. SHORT-TERM BORROWINGS   During fiscal 2000, the Company entered into a
                             short-term revolving credit agreement in which a
                             credit line of $20,000,000 was established. This
                             agreement permits the Company to borrow funds on a
                             variety of interest rate terms and, as has been
                             subsequently extended, will terminate on December
                             31, 2000. The Company must remain in compliance
                             with certain convenants included in the agreement.
                             As of June 30, 2000, the Company had outstanding
                             borrowings totaling $8,250,000 against the line
                             provided by this agreement. The weighted average
                             interest rate on these borrowings was 6.8% at June
                             30, 2000.

                             As of June 30, 2000, 1999 and 1998, the Company had
                             unused lines of credit for short-term borrowings
                             from various banks of $70,000,000, $95,000,000 and
                             $85,000,000, respectively. The lines of credit are
                             granted at the discretion of the lending banks and
                             are generally subject to periodic review. As of
                             June 30, 2000 and 1999, the Company had no
                             short-term borrowings under these lines of credit
                             arrangements.

    5. ACCRUED LIABILITIES   Accrued liabilities at June 30, 2000 and 1999 are
                             composed of:

<TABLE>
<CAPTION>
                             (Dollars In Thousands)                                          2000                 1999
                             -------------------------------------------------------------------------------------------
<S>                          <C>                                                            <C>                 <C>
                             Accrued compensation and employee benefits                     $29,569             $29,911
                             Accrued marketing and distribution                               7,208               5,808
                             Income and other taxes                                           1,019               4,131
                             Other                                                            6,204               5,105
                             -------------------------------------------------------------------------------------------
                             Total accrued liabilities                                      $44,000             $44,955
                             ==========================================================================================
</TABLE>

<PAGE>   15



        6. LONG-TERM DEBT   Long-term debt (including current portion) at June
                            30, 2000 and 1999 consists of:

<TABLE>
<CAPTION>
                            (Dollars In Thousands)                                             2000             1999
                            --------------------------------------------------------------------------------------------
<S>                         <C>                                                               <C>               <C>
                            Notes payable (8.9%, paid in February 2000)                                         $25,000
                            Obligations with various industrial development
                                authorities - collateralized by real estate and
                                equipment - floating rate due in installments
                                to 2005                                                       $3,575              4,095
                            --------------------------------------------------------------------------------------------
                            Total                                                              3,575             29,095
                            Less current portion                                                 535             25,520
                            --------------------------------------------------------------------------------------------
                            Long-term debt                                                    $3,040            $ 3,575
                            ===========================================================================================
</TABLE>

                            No material debt was assumed for the purchase of
                            property additions in 2000, 1999 and 1998. Cash
                            payments for interest (including interest paid on
                            short-term borrowings) were $2,511,000, $2,722,000
                            and $2,646,000 for 2000, 1999 and 1998,
                            respectively. At June 30, 2000, the Company met or
                            exceeded various covenant requirements related to
                            the outstanding debt.

<TABLE>
<CAPTION>
                            Long-term debt matures as follows:                                   (Dollars In Thousands)
                            --------------------------------------------------------------------------------------------
<S>                         <C>                                                                                 <C>
                            Year ending June 30:
                             2001                                                                               $   535
                             2002                                                                                   545
                             2003                                                                                   555
                             2004                                                                                   565
                             2005                                                                                   680
                             After 2005                                                                             695
                            --------------------------------------------------------------------------------------------
                              Total                                                                             $ 3,575
                            ===========================================================================================
</TABLE>



          7. INCOME TAXES   The Company and its domestic subsidiaries file a
                            consolidated Federal income tax return. Taxes based
                            on income for the years ended June 30, 2000, 1999
                            and 1998, have been provided as follows:

<TABLE>
<CAPTION>
                           (Dollars In Thousands)                                   2000          1999          1998
                           --------------------------------------------------------------------------------------------
<S>                        <C>                                                     <C>           <C>           <C>
                            Currently payable:
                             Federal                                               $53,623       $53,245       $49,798
                             State and local                                         7,142         6,420         7,612
                           --------------------------------------------------------------------------------------------
                            Total current provision                                 60,765        59,665        57,410
                            Deferred Federal, state and local provision (credit)       160        (1,332)        1,833
                           --------------------------------------------------------------------------------------------
                            Total taxes based on income                            $60,925       $58,333       $59,243
                           ===========================================================================================
</TABLE>

                            Tax expense resulting from allocating certain tax
                            benefits directly to common stock and retained
                            earnings totaled $85,000, $22,000 and $647,000 for
                            2000, 1999 and 1998, respectively. The Company's
                            effective tax rate varies from the statutory Federal
                            income tax rate as a result of the following
                            factors:

<TABLE>
<CAPTION>
                                                                                      2000          1999          1998
                           --------------------------------------------------------------------------------------------
<S>                        <C>                                                        <C>           <C>          <C>
                            Statutory rate                                            35.0%         35.0%        35.0%
                            State and local income taxes                               2.9           2.9          3.1
                            Other                                                      0.1           0.1          0.0
                           --------------------------------------------------------------------------------------------
                            Effective rate                                            38.0%         38.0%        38.1%
                           ============================================================================================
</TABLE>

<PAGE>   16

                            Deferred income taxes recorded in the consolidated
                            balance sheets at June 30, 2000 and 1999 consist of
                            the following:

<TABLE>
<CAPTION>
                           (Dollars In Thousands)                                               2000             1999
                           --------------------------------------------------------------------------------------------
<S>                        <C>                                                                 <C>              <C>
                            Deferred tax assets (liabilities):
                              Inventories                                                      $ 6,389         $ 7,013
                              Employee medical and other benefits                                7,336           5,033
                              Receivable and other valuation allowances                          3,468           3,976
                              Other accrued liabilities                                          3,606           3,631
                           --------------------------------------------------------------------------------------------
                            Total deferred tax assets                                           20,799          19,653
                           --------------------------------------------------------------------------------------------
                            Total deferred tax liabilities - property and other                (14,845)        (13,538)
                           --------------------------------------------------------------------------------------------
                            Net deferred tax asset                                             $ 5,954         $ 6,115
                           ============================================================================================
</TABLE>

                            Net current deferred tax assets totaled $16,000,000
                            and $14,400,000 for 2000 and 1999, respectively, and
                            were included in prepaid expenses and other current
                            assets. Cash payments for income taxes were
                            $63,862,000, $51,119,000 and $63,633,000 for 2000,
                            1999 and 1998, respectively.

   8. SHAREHOLDERS' EQUITY  The Company is authorized to issue 3,050,000 shares
                            of preferred stock consisting of 750,000 shares of
                            Class A Participating Preferred Stock with $1.00 par
                            value, 1,150,000 shares of Class B Voting Preferred
                            Stock without par value and 1,150,000 shares of
                            Class C Nonvoting Preferred Stock without par value.

                            As authorized by the Company's Board of Directors in
                            February 2000, each share of the Company's
                            outstanding common stock includes a nondetachable
                            stock purchase right that provides, upon becoming
                            exercisable, for the purchase of one-hundredth of a
                            share of Series A Participating Preferred Shares at
                            an exercise price of $185, subject to certain
                            adjustments. Alternatively, once exercisable, each
                            right will also entitle the holder to buy shares of
                            the Company's common stock having a market value of
                            twice the exercise price. The rights may be
                            exercised on or after the time when a person or
                            group of persons without the approval of the Board
                            of Directors acquire beneficial ownership of 15
                            percent or more of the Company's common stock or
                            announce the initiation of a tender or exchange
                            offer which, if successful, would cause such person
                            or group to beneficially own 30 percent or more of
                            the common stock. The person or group effecting such
                            15 percent acquisition or undertaking such tender
                            offer will not be entitled to exercise any rights.
                            If the Company is acquired in a merger or other
                            business combination, each right will entitle the
                            holder, other than the acquiring person, to purchase
                            securities of the surviving company having a market
                            value equal to twice the exercise price of the
                            rights. Until the rights become exercisable, they
                            may be redeemed by the Company at a price of one
                            cent per right. These rights expire in April 2010
                            unless earlier redeemed by the Company under
                            circumstances permitted by the Rights Agreement.

                            In November 1999, the Company's Board of Directors
                            approved a share repurchase authorization of
                            2,000,000 shares of which 411,688 remained
                            authorized for future purchase as of June 30, 2000.
                            In May 2000, the Company's Board of Directors
                            authorized an additional 3,000,000 shares for future
                            purchases, all of which remain authorized for future
                            purchase at June 30, 2000.

          9. STOCK OPTIONS  Under terms of an incentive option plan approved by
                            the shareholders in November 1995, the Company has
                            reserved 3,000,000 common shares for issuance to
                            qualified key employees. All options granted under
                            the plan are exercisable at prices not less than
                            fair market value as of the date of grant. At June
                            30, 2000, 2,452,654 shares were available for future
                            grants under the plan. In general, options granted
                            under the plan vest immediately and have a maximum
                            term of 10 years. Both reserved common shares and
                            shares available for future grants have been
                            restated to reflect the stock split in January 1998.

                            As permitted by SFAS No. 123, the Company has
                            elected to follow Accounting Principles Board
                            ("APB") Opinion No. 25, "Accounting for Stock Issued
                            to Employees" and related interpretations, in
                            accounting for its stock-based compensation. Under
                            APB Opinion No. 25, because the exercise price of
                            the Company's stock options was at least equal to
                            the market price of the underlying stock on the date
                            of grant, no compensation expense was recognized.


<PAGE>   17
                   The following summarizes for each of the three years in the
                   period ended June 30, 2000 the activity relating to stock
                   options granted under the 1995 plan mentioned above as well
                   as those granted under a separate plan that expired in May
                   1995, as restated to reflect the stock split in January 1998:

<TABLE>
<CAPTION>

                                                                     2000                  1999                 1998
                           ----------------------------------------------------------------------------------------------------
                                                                         Weighted               Weighted             Weighted
                                                                 Number    Average     Number    Average     Number   Average
                                                                   of     Exercise       of     Exercise      of     Exercise
                                                                 Shares     Price      Shares     Price      Shares     Price
                           ----------------------------------------------------------------------------------------------------
<S>                        <C>                                  <C>       <C>         <C>         <C>      <C>        <C>
                           Outstanding at beginning of period   430,149   $26.75       277,986    $27.78    497,095    $28.18
                            Exercised                           (45,653)   24.54       (21,108)    23.62   (215,659)    28.62
                            Granted                                                    293,350     27.15
                            Forfeited                            (3,550)   27.13      (120,079)    30.85     (3,450)    30.75
                           ----------------------------------------------------------------------------------------------------
                           Outstanding at end of the period     380,946   $26.98       430,149    $26.75    277,986    $27.78
                           ====================================================================================================
                           Exercisable at end of period         294,437   $27.46       318,449    $27.32    186,692    $29.73
                           ====================================================================================================
</TABLE>

                   The weighted average fair value of options granted during
                   fiscal 1999 was $5.27 per share.

                   The following table summarizes information about the options
                   outstanding at June 30, 2000:

<TABLE>
<CAPTION>
                                                  Options Outstanding                               Options Exercisable
                           -------------------------------------------------------------    -----------------------------------
                                                                 Weighted Average
                              Range of         Number         Remaining      Exercise              Number    Weighted Average
                           Exercise Prices   Outstanding  Contractual Life     Price             Exercisable  Exercise Price
                           -------------------------------------------------------------    -----------------------------------
<S>                        <C>                <C>               <C>           <C>                 <C>             <C>
                           $30.75              82,500           1.59          $30.75               74,434         $30.75
                           $27.13 - $29.84    244,556           1.73          $27.15              202,412         $27.16
                           $17.06 - $22.25     53,890           3.53          $20.41               17,591         $17.06
                           =============================================================    ==================================
</TABLE>

                   The fair value of the options presented above was estimated
                   at the date of grant using the Black-Scholes option pricing
                   model with the following assumptions for options granted in
                   1999: risk free interest rate of 5.77%; dividend yield of
                   1.7%; volatility factor of the expected market price of the
                   Company's common stock of 27.39%; and a weighted average
                   expected option life of 2.71 years.

                   Had compensation cost for the Company's stock option plan
                   been determined based on the fair value at the grant dates
                   for awards under the plan consistent with the method of SFAS
                   No. 123, the Company's net income and earnings per share
                   would have been reduced to the pro forma amounts indicated
                   below:

<TABLE>
<CAPTION>
                                                                                      For Years Ended June 30
                           (Dollars In Thousands Except Per Share Figures)     2000             1999              1998
                           ----------------------------------------------------------------------------------------------------
<S>                        <C>                     <C>                      <C>                <C>              <C>
                           Net income              As reported              $99,264            $95,129          $96,130
                                                   Pro forma                $99,078            $94,555          $96,057
                           Earnings per Share:
                             Basic and Diluted     As reported                $2.51              $2.28            $2.22

                             Basic                 Pro forma                  $2.51              $2.26            $2.22
                             Diluted               Pro forma                  $2.50              $2.26            $2.22
                           ====================================================================================================
</TABLE>

      10. PENSION  The Company and certain of its operating subsidiaries
        AND OTHER  provide multiple defined benefit pension and postretirement
   POSTRETIREMENT  medical and life insurance benefit plans. Benefits under
         BENEFITS  the defined benefit pension plans are primarily based on
                   negotiated rates and years of service and cover the union
                   workers at such locations. The Company contributes to these
                   pension plans at least the minimum amount required by
                   regulation or contract. The Company recognizes the cost of
                   postretirement medical and life insurance benefits as the
                   employees render service in accordance with SFAS No. 106,
                   "Employers' Accounting for Postretirement Benefits Other than
                   Pensions." Benefits are funded as incurred.
<PAGE>   18


                   Relevant information with respect to these defined benefit
                   pension and postretirement medical and life insurance
                   benefits as of June 30, can be summarized as follows:

<TABLE>
<CAPTION>
                                                                                                           OTHER
                                                                  PENSION BENEFITS                POSTRETIREMENT BENEFITS
                           ------------------------------------------------------------------    ---------------------------
                           (Dollars In Thousands)                        2000         1999           2000            1999
                           ------------------------------------------------------------------    ---------------------------
<S>                        <C>                                          <C>          <C>            <C>             <C>
                           CHANGE IN BENEFIT OBLIGATION
                           Benefit obligation at beginning of year      $28,273      $28,409        $2,757          $2,850
                           Service cost                                     625          491           111             109
                           Interest cost                                  1,954        1,851           199             192
                           Amendments                                                    808
                           Actuarial (gain)                                (804)      (1,526)         (125)           (192)
                           Benefits paid                                 (2,073)      (1,760)         (285)           (202)
                           ------------------------------------------------------------------    --------------------------
                           Benefit obligation at end of year             27,975       28,273         2,657           2,757
                           ------------------------------------------------------------------    ---------------------------
                           CHANGE IN PLAN ASSETS
                           Fair value of plan assets
                             at beginning of year                        35,066       34,794
                           Actual return on plan assets                    (177)       1,738
                           Employer contribution                             65          294           286             202
                           Benefits paid                                 (2,073)      (1,760)         (286)           (202)
                           ------------------------------------------------------------------     ---------------------------
                           Fair value of plan assets at end of year      32,881       35,066
                           ------------------------------------------------------------------     ---------------------------
                           Funded status                                  4,906        6,793        (2,657)         (2,757)
                           Unrecognized net actuarial (gain)             (3,788)      (6,436)         (743)           (643)
                           Unrecognized prior service cost                2,598        2,797
                           Unrecognized net transition obligation           146          177
                           ------------------------------------------------------------------     ---------------------------
                           Prepaid (accrued) benefit cost                $3,862       $3,331       ($3,400)        ($3,400)
                           ==================================================================     ===========================

                           WEIGHTED-AVERAGE ASSUMPTIONS AS OF JUNE 30
                           ------------------------------------------------------------------     --------------------------- -
                           Discount rate                                   7.60%        7.25%         7.60%           7.25%
                           Expected return on plan assets                  9.00%        9.00%
</TABLE>

                   For measurement purposes, annual increases in medical costs
                   for fiscal 2000 are assumed to total approximately 6.5% per
                   year and gradually decline to 5% by approximately the year
                   2003 and remain level thereafter. Annual increases in medical
                   costs for fiscal 1999 were assumed to total approximately 7%
                   per year and gradually decline to 5% by approximately the
                   year 2003 and remain level thereafter.
<TABLE>
<CAPTION>
                                                                                                               OTHER
                                                                       PENSION BENEFITS                POSTRETIREMENT BENEFITS
                           ------------------------------------------------------------------    ------------------------------
                           (Dollars In Thousands)                   2000      1999     1998           2000     1999    1998
                           ------------------------------------------------------------------    ------------------------------
<S>                        <C>                                     <C>       <C>       <C>             <C>      <C>      <C>
                           COMPONENTS OF NET PERIODIC
                             BENEFIT COST
                           Service cost                             $625      $491      $559          $111     $109     $102
                           Interest cost                           1,954     1,851     1,785           199      192      215
                           Expected return on plan assets         (3,072)   (3,056)   (2,649)
                           Amortization of unrecognized net gain    (203)     (202)     (230)          (25)     (11)      (4)
                           Amortization of prior service cost        199       200       148
                           Amortization of unrecognized
                             net obligation existing at transition    32        31        31
                           -------------------------------------------------------------------      ---------------------------
                           Net periodic benefit cost (benefit)     ($465)    ($685)    ($356)         $285     $290     $313
                           -------------------------------------------------------------------      ---------------------------
</TABLE>

                   The majority of the pension plan assets are invested in
                   bonds, short-term investments and common stock including
                   shares of the Company's common stock with a market value of
                   $2,721,000 and $4,814,000 as of June 30, 2000 and 1999,
                   respectively.

<PAGE>   19

                   Assumed health care cost rates can have a significant effect
                   on the amounts reported for the health care plans. A
                   one-percentage-point change in assumed health care cost trend
                   rates would have the following effect:

<TABLE>
<CAPTION>

                                                                                    1-PERCENTAGE-       1-PERCENTAGE-
                           (Dollars In Thousands)                                   POINT INCREASE      POINT DECREASE
                           --------------------------------------------------------------------------------------------------------
<S>                        <C>                                                           <C>                 <C>
                           Effect on total of service and interest cost components       $29                 ($25)

                           Effect on postretirement benefit obligation as of
                           June 30, 2000                                                $168                ($147)
</TABLE>

                   The Company and certain of its subsidiaries also participate
                   in multiemployer plans that provide pension and
                   postretirement health and welfare benefits to the union
                   workers at such locations. The Company's contributions
                   required by its participation in the multiemployer plans
                   totaled $2,920,000, $2,904,000 and $2,723,000 in 2000, 1999
                   and 1998, respectively.

                   During fiscal 1998, the Company adopted the Lancaster Colony
                   Corporation 401(k) Profit Sharing Plan and Trust ("401(k)
                   Plan"). In general, the 401(k) Plan extends participation to
                   all domestic employees, except those covered by a collective
                   bargaining agreement. The Company's contribution is 40% of
                   the participant's contribution up to a maximum of 4% of the
                   participant's annual compensation and is funded annually at
                   the end of the 401(k) Plan year, December 31. The funds are
                   invested in mutual funds with the exception of the Company
                   contribution which is invested in Company stock. The
                   Company's 401(k) Plan contributions totaled approximately
                   $811,000, $800,000 and $174,000 for the years ended June 30,
                   2000, 1999 and 1998, respectively.

                   The Company also sponsors an Employee Stock Ownership Plan
                   ("ESOP"). Effective January 1, 1998, the ESOP was frozen and
                   all benefit accruals under and further contributions to the
                   ESOP ceased. All participants in the plan at that time were
                   immediately 100% vested. The ESOP was fully paid by the
                   Company and generally provided coverage to all domestic
                   employees, except those covered by a collective bargaining
                   agreement.

  11. COMMITMENTS  The Company has operating leases with initial
                   noncancelable lease terms in excess of one year, covering the
                   rental of various facilities and equipment, which expire at
                   various dates through fiscal 2011. Certain of these leases
                   contain renewal options, some provide options to purchase
                   during the lease term and some require contingent rentals
                   based on usage. The future minimum rental commitments due
                   under these leases are summarized as follows (in thousands):
                   2001-$3,724; 2002-$2,800; 2003-$2,144; 2004-$1,489;
                   2005-$513; thereafter-$2,290.

                   Total rent expense, including short-term cancelable leases,
                   during 2000, 1999 and 1998 is summarized as follows:

<TABLE>
<CAPTION>
                           (Dollars In Thousands)                                       2000            1999            1998
                           --------------------------------------------------------------------------------------------------------
<S>                        <C>                                                          <C>             <C>             <C>
                           Operating leases:
                             Minimum rentals                                            $4,877          $4,844          $5,477
                             Contingent rentals                                            452             328             534
                           Short-term cancelable leases                                  2,246           2,172           2,113
                           --------------------------------------------------------------------------------------------------------
                             Total                                                      $7,575          $7,344          $8,124
                           ========================================================================================================
</TABLE>


12. CONTINGENCIES  At June 30, 2000, the Company is a party to various
     AND ENVIRON-  legal and environmental matters which have arisen in
           MENTAL  the ordinary course of business. Such matters did not
          MATTERS  have a material adverse effect on the current year
                   results of operations and, in the opinion of management,
                   their ultimate disposition will not have a material adverse
                   effect on the Company's consolidated financial statements.

<PAGE>   20



INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of Lancaster Colony Corporation
-----------------------------------------------------------------


We have audited the accompanying consolidated balance sheets of Lancaster Colony
Corporation and its subsidiaries as of June 30, 2000 and 1999, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended June 30, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Lancaster Colony Corporation and
its subsidiaries as of June 30, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2000 in conformity with accounting principles generally accepted in the
United States of America.


/S/ Deloitte & Touche LLP

Columbus, Ohio
August 23, 2000




SELECTED QUARTERLY FINANCIAL DATA
Lancaster Colony Corporation and Subsidiaries
For the Years Ended June 30, 2000 and 1999
---------------------------------------------

<TABLE>
<CAPTION>

                                                                         Diluted
(Thousands Except Per       Net            Gross             Net         Earnings         Stock Prices          Dividends Paid
Share Figures)              Sales          Margin            Income      Per Share      High        Low            Per Share
-----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>           <C>                <C>          <C>           <C>         <C>            <C>
2000

First quarter            $  260,444       $ 78,637          $22,573       $ .56        $36.938     $29.000          $.15
Second quarter              324,407        101,542           33,120         .83         37.000      29.500           .16
Third quarter               262,764         78,523           20,102         .51         34.750      26.563           .16
Fourth quarter              256,643         76,696           23,469         .61         32.000      18.500           .16
-----------------------------------------------------------------------------------------------------------------------------------
   YEAR                  $1,104,258       $335,398          $99,264       $2.51        $37.000     $18.500          $.63
===================================================================================================================================
1999

First quarter            $  244,080       $ 73,267          $20,338       $ .48        $40.000     $27.750          $.14
Second quarter              300,590         92,284           28,213         .67         32.125      24.063           .15
Third quarter               247,227         76,519           21,834         .53         32.000      26.500           .15
Fourth quarter              253,805         79,846           24,744         .61         35.813      24.688           .15
-----------------------------------------------------------------------------------------------------------------------------------
   YEAR                  $1,045,702       $321,916          $95,129       $2.28        $40.000     $24.063          $.59
===================================================================================================================================
</TABLE>


Lancaster Colony common stock trades on The Nasdaq Stock Market(R) under the
symbol LANC. Stock prices were provided by The Nasdaq Stock Market(R). The
number of shareholders as of September 14, 2000 was approximately 6,900. The
highest and lowest prices for the Company's common stock from July 1, 2000 to
September 14, 2000 were $26.250 and $20.625.