##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to
 Commission file number 000-04065
 Lancaster Colony Corporation
 (Exact name of registrant as specified in its charter)
 Ohio
    
    13-1955943(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)37 West Broad Street
    
    43215Columbus, Ohio
    
    (Zip Code)(Address of principal executive offices)
 614-224-7141  (Registrants telephone number, including area code)
 þ o
  Large accelerated filer
þ
    
    Accelerated filer
o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:Consolidated Balance Sheets  March 31, 2008 and June 30, 2007Consolidated Statements of Income  Three and Nine Months Ended March 31, 2008 and 2007Consolidated Statements of Cash Flows  Nine Months Ended March 31, 2008 and 2007Notes to Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 6. ExhibitsSIGNATURESINDEX TO EXHIBITSEX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements
 LANCASTER
COLONY CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS  UNAUDITED
 March 31
    
    
    June 30(Amounts in thousands, except share data)
    
    2008
    
    
    2007ASSETSCurrent Assets:Cash and equivalents
    
    $
    12,252
    
    
    $
    8,318Receivables (less allowance for doubtful accounts,
March  $850 and June  $916)
    
    
    89,831
    
    
    
    92,635Inventories:Raw materials
    
    
    37,879
    
    
    
    40,358Finished goods and work in process
    
    
    92,312
    
    
    
    109,359Total inventories
    
    
    130,191
    
    
    
    149,717Deferred income taxes and other current assets
    
    
    31,255
    
    
    
    28,241Total current assets
    
    
    263,529
    
    
    
    278,911Property, Plant and Equipment:Land, buildings and improvements
    
    
    157,985
    
    
    
    162,276Machinery and equipment
    
    
    272,934
    
    
    
    350,357Total cost
    
    
    430,919
    
    
    
    512,633Less accumulated depreciation
    
    
    236,928
    
    
    
    304,202Property, plant and equipment  net
    
    
    193,991
    
    
    
    208,431Other Assets:Goodwill
    
    
    89,590
    
    
    
    89,590Other intangible assets  net
    
    
    12,132
    
    
    
    13,111Other noncurrent assets
    
    
    7,671
    
    
    
    8,454Total
    
    $
    566,913
    
    
    $
    598,497LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term bank loans
    
    $
    
    
    
    $
    42,500Accounts payable
    
    
    46,463
    
    
    
    48,423Accrued liabilities
    
    
    42,312
    
    
    
    50,867Total current liabilities
    
    
    88,775
    
    
    
    141,790Long-Term Debt
    
    
    77,500
    
    
    
    Other Noncurrent Liabilities
    
    
    15,774
    
    
    
    10,702Deferred Income Taxes
    
    
    1,192
    
    
    
    1,696Shareholders Equity:Preferred stock  authorized 3,050,000 shares;
outstanding  noneCommon stock  authorized 75,000,000 shares; outstanding 
March 31, 2008 28,818,402 shares;
June 30, 2007  30,748,390 shares
    
    
    82,482
    
    
    
    81,665Retained earnings
    
    
    951,792
    
    
    
    937,376Accumulated other comprehensive loss
    
    
    (4,278
    )
    
    
    (5,167
    )Common stock in treasury, at cost
    
    
    (646,324
    )
    
    
    (569,565
    )Total shareholders equity
    
    
    383,672
    
    
    
    444,309Total
    
    $
    566,913
    
    
    $
    598,497
  3




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LANCASTER
COLONY CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME  UNAUDITED
 Three Months Ended
    
    
    Nine Months EndedMarch 31
    
    
    March 31(Amounts in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net Sales
    
    $
    270,276
    
    
    $
    265,692
    
    
    $
    861,458
    
    
    $
    820,088Cost of Sales
    
    
    234,045
    
    
    
    219,991
    
    
    
    728,467
    
    
    
    674,811Gross Margin
    
    
    36,231
    
    
    
    45,701
    
    
    
    132,991
    
    
    
    145,277Selling, General and
Administrative Expenses
    
    
    22,615
    
    
    
    23,463
    
    
    
    70,635
    
    
    
    69,324Restructuring and Impairment Charge
    
    
    
    
    
    
    1,004
    
    
    
    182
    
    
    
    1,004Operating Income
    
    
    13,616
    
    
    
    21,234
    
    
    
    62,174
    
    
    
    74,949Other Income (Expense):Interest Expense
    
    
    (621
    )
    
    
    
    
    
    
    (2,545
    )
    
    
    (13
    )Other Income  Continued Dumping and
Subsidy Offset Act
    
    
    
    
    
    
    
    
    
    
    2,533
    
    
    
    699Interest Income and Other  Net
    
    
    290
    
    
    
    263
    
    
    
    707
    
    
    
    816Income from Continuing Operations
Before Income Taxes
    
    
    13,285
    
    
    
    21,497
    
    
    
    62,869
    
    
    
    76,451Taxes Based on Income
    
    
    4,500
    
    
    
    7,902
    
    
    
    22,516
    
    
    
    28,006Income from Continuing Operations
    
    
    8,785
    
    
    
    13,595
    
    
    
    40,353
    
    
    
    48,445Discontinued Operations, Net of Tax:Loss from Discontinued Operations
    
    
    
    
    
    
    (835
    )
    
    
    
    
    
    
    (4,075
    )(Loss) Gain on Sale of Discontinued
Operations
    
    
    (159
    )
    
    
    739
    
    
    
    (159
    )
    
    
    739Total Discontinued Operations
    
    
    (159
    )
    
    
    (96
    )
    
    
    (159
    )
    
    
    (3,336
    )Net Income
    
    $
    8,626
    
    
    $
    13,499
    
    
    $
    40,194
    
    
    $
    45,109Income Per Common Share from
Continuing Operations:Basic and Diluted
    
    $
    .30
    
    
    $
    .43
    
    
    $
    1.35
    
    
    $
    1.53Loss Per Common Share from
Discontinued Operations:Basic and Diluted
    
    $
    (.01
    )
    
    $
    
    
    
    $
    (.01
    )
    
    $
    (.11
    )Net Income Per Common Share:Basic and Diluted
    
    $
    .30
    
    
    $
    .43
    
    
    $
    1.35
    
    
    $
    1.42Cash Dividends Per Common Share
    
    $
    .28
    
    
    $
    .27
    
    
    $
    .83
    
    
    $
    .80Weighted Average Common
Shares Outstanding:Basic
    
    
    29,115
    
    
    
    31,531
    
    
    
    29,794
    
    
    
    31,728Diluted
    
    
    29,128
    
    
    
    31,560
    
    
    
    29,799
    
    
    
    31,755
  4




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LANCASTER
COLONY CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months EndedMarch 31(Amounts in thousands)
    
    2008
    
    
    2007Cash Flows From Operating Activities:Net income
    
    $
    40,194
    
    
    $
    45,109Adjustments to reconcile net income to net
cash provided by operating activities:Loss from discontinued operations
    
    
    159
    
    
    
    3,336Depreciation and amortization
    
    
    22,276
    
    
    
    21,784Deferred income taxes and other noncash changes
    
    
    2,262
    
    
    
    431Restructuring and impairment charge
    
    
    (202
    )
    
    
    2,382Gain on sale of property
    
    
    (124
    )
    
    
    (53
    )Loss (gain) on sale of business
    
    
    5,947
    
    
    
    (8
    )Pension plan activity
    
    
    2,116
    
    
    
    (557
    )Changes in operating assets and liabilities:Receivables
    
    
    (5,694
    )
    
    
    (4,578
    )Inventories
    
    
    7,920
    
    
    
    6,913Other current assets
    
    
    (4,589
    )
    
    
    (5,244
    )Accounts payable and accrued liabilities
    
    
    2,168
    
    
    
    402Net cash provided by operating activities from
continuing operations
    
    
    72,433
    
    
    
    69,917Cash Flows From Investing Activities:Payments on property additions
    
    
    (16,003
    )
    
    
    (38,871
    )Proceeds from sale of discontinued operations
    
    
    91
    
    
    
    10,119Proceeds from sale of property
    
    
    233
    
    
    
    76Net proceeds from sale of business
    
    
    19,575
    
    
    
    8Purchases of short-term investments
    
    
    
    
    
    
    (5,000
    )Proceeds from short-term investment sales, calls and maturities
    
    
    
    
    
    
    40,765Other  net
    
    
    (2,133
    )
    
    
    (2,294
    )Net cash provided by investing activities from
continuing operations
    
    
    1,763
    
    
    
    4,803Cash Flows From Financing Activities:Net repayment of $100 million credit facility
    
    
    (42,500
    )
    
    
    Proceeds from debt
    
    
    126,104
    
    
    
    Payments on debt
    
    
    (48,604
    )
    
    
    Purchase of treasury stock
    
    
    (76,759
    )
    
    
    (41,891
    )Payment of dividends
    
    
    (24,603
    )
    
    
    (25,321
    )Proceeds from the exercise of stock options
    
    
    646
    
    
    
    3,118Decrease in cash overdraft balance
    
    
    (4,294
    )
    
    
    (4,815
    )Net cash used in financing activities from
continuing operations
    
    
    (70,010
    )
    
    
    (68,909
    )Cash Flows From Discontinued Operations:Net cash used in operating activities from discontinued operations
    
    
    (254
    )
    
    
    (3,635
    )Net cash used in investing activities from discontinued operations
    
    
    
    
    
    
    (252
    )Net cash used in discontinued operations
    
    
    (254
    )
    
    
    (3,887
    )Effect of exchange rate changes on cash
    
    
    2
    
    
    
    (8
    )Net change in cash and equivalents
    
    
    3,934
    
    
    
    1,916Cash and equivalents at beginning of year
    
    
    8,318
    
    
    
    6,050Cash and equivalents at end of period
    
    $
    12,252
    
    
    $
    7,966Supplemental Disclosure Of Operating Cash Flows:Cash paid during the period for income taxes
    
    $
    22,981
    
    
    $
    32,345
  5




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except share and per share data)
 Note 1  Summary of Significant Accounting Policies
 Basis of Presentation
  Property, Plant and Equipment
  Significant Accounting Policies
  Note 2  Business Divestiture
   Note 3  Impact of Recently Issued Accounting Standards
  6




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
       Note 4  Goodwill and Other Intangible Assets
  7




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  March 31
    
    
    June 302008
    
    
    2007Specialty FoodsTrademarks (40-year life)Gross carrying value
    
    $
    370
    
    
    $
    370Accumulated amortization
    
    
    (156
    )
    
    
    (149
    )Net Carrying Value
    
    $
    214
    
    
    $
    221Customer Relationships (12-15-year life)Gross carrying value
    
    $
    13,020
    
    
    $
    13,020Accumulated amortization
    
    
    (1,948
    )
    
    
    (1,233
    )Net Carrying Value
    
    $
    11,072
    
    
    $
    11,787Non-compete Agreements (5-8-year life)Gross carrying value
    
    $
    1,540
    
    
    $
    1,540Accumulated amortization
    
    
    (694
    )
    
    
    (531
    )Net Carrying Value
    
    $
    846
    
    
    $
    1,009Glassware and Candles  Customer Lists (12-year life)Gross carrying value
    
    $
    
    
    
    $
    250Accumulated amortization
    
    
    
    
    
    
    (156
    )Net Carrying Value
    
    $
    
    
    
    $
    94Total Net Carrying Value
    
    $
    12,132
    
    
    $
    13,111
   Note 5  Long-Term Debt
   8




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 Note 6  Pension Benefits
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedMarch 31
    
    
    March 312008
    
    
    2007
    
    
    2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    39
    
    
    $
    128
    
    
    $
    117
    
    
    $
    382Interest cost
    
    
    543
    
    
    
    618
    
    
    
    1,837
    
    
    
    1,882Expected return on plan assets
    
    
    (647
    )
    
    
    (746
    )
    
    
    (2,257
    )
    
    
    (2,242
    )SFAS 88 settlement/curtailment charge
    
    
    
    
    
    
    287
    
    
    
    2,972
    
    
    
    638Amortization of unrecognized net loss
    
    
    30
    
    
    
    73
    
    
    
    116
    
    
    
    203Amortization of prior service cost
    
    
    25
    
    
    
    61
    
    
    
    77
    
    
    
    183Amortization of unrecognized net
obligation existing at transition
    
    
    1
    
    
    
    
    
    
    
    3
    
    
    
    2Net periodic benefit cost
    
    $
    (9
    )
    
    $
    421
    
    
    $
    2,865
    
    
    $
    1,048
     Note 7  Postretirement Benefits
  9




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedMarch 31
    
    
    March 312008
    
    
    2007
    
    
    2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    7
    
    
    $
    42
    
    
    $
    20
    
    
    $
    100Interest cost
    
    
    58
    
    
    
    119
    
    
    
    173
    
    
    
    317Amortization of unrecognized net loss
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    95Amortization of prior service asset
    
    
    (2
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    (6
    )SFAS 88 curtailment benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Net periodic benefit cost
    
    $
    63
    
    
    $
    201
    
    
    $
    189
    
    
    $
    497
   Note 8  Stock-Based Compensation
   Stock Options and Stock Settled Stock Appreciation Rights
     10




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
    WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding at beginning of period
    
    
    361,500
    
    
    $
    40.42Exercised
    
    
    (17,200
    )
    
    
    37.23Granted
    
    
    153,550
    
    
    
    38.31Forfeited
    
    
    (17,150
    )
    
    
    40.72Expired
    
    
    (72,100
    )
    
    
    37.23Outstanding at end of period
    
    
    408,600
    
    
    $
    40.31
    
    
    
    3.04
    
    
    $
    253Exercisable and vested at end of period
    
    
    253,483
    
    
    $
    41.52
    
    
    
    1.92
    
    
    $
    Vested and expected to vest at end of period
    
    
    402,458
    
    
    $
    40.34
    
    
    
    3.01
    
    
    $
    243
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested at beginning of period
    
    
    7,787
    
    
    $
    8.14Granted
    
    
    153,550
    
    
    
    6.00Vested
    
    
    (6,220
    )
    
    
    8.14Forfeited
    
    
    
    
    
    
    Unvested at end of period
    
    
    155,117
    
    
    $
    6.02
  Restricted Stock
  11




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
   WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested restricted stock at beginning of period
    
    
    3,500
    
    
    $
    42.70Granted
    
    
    27,100
    
    
    
    38.29Vested
    
    
    (3,500
    )
    
    
    42.70Forfeited
    
    
    
    
    
    
    Unvested restricted stock at end of period
    
    
    27,100
    
    
    $
    38.29Vested and exercisable restricted stock at end of period
    
    
    
    
    
    
    Vested and expected to vest restricted stock at end of period
    
    
    26,162
    
    
    $
    38.29
   Note 9  Restructuring and Impairment Charge
     12




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
  Accrual at
    
    
    
    
    
    
    2008
    
    
    Accrual atJune 30,
    
    
    2008
    
    
    Cash
    
    
    March 31,2007
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargeEmployee Separation Costs
    
    $
    266
    
    
    $
    173
    
    
    $
    (315
    )
    
    $
    124Other Costs
    
    
    219
    
    
    
    
    
    
    
    (65
    )
    
    
    154Subtotal
    
    $
    485
    
    
    
    173
    
    
    $
    (380
    )
    
    $
    278Accelerated Depreciation
    
    
    
    
    
    
    9Inventory Write-Down
    
    
    
    
    
    
    17Total Restructuring and Impairment Charge
    
    
    
    
    
    $
    199
  Note 10  Income Taxes
  Note 11  Business Segment Information
  Three Months Ended
    
    
    Nine Months EndedMarch 31
    
    
    March 312008
    
    
    2007
    
    
    2008
    
    
    2007Net SalesSpecialty Foods
    
    $
    197,249
    
    
    $
    178,212
    
    
    $
    597,188
    
    
    $
    543,093Glassware and Candles
    
    
    33,577
    
    
    
    50,238
    
    
    
    147,043
    
    
    
    175,325Automotive
    
    
    39,450
    
    
    
    37,242
    
    
    
    117,227
    
    
    
    101,670Total
    
    $
    270,276
    
    
    $
    265,692
    
    
    $
    861,458
    
    
    $
    820,088Operating IncomeSpecialty Foods
    
    $
    14,361
    
    
    $
    22,046
    
    
    $
    66,444
    
    
    $
    76,997Glassware and Candles
    
    
    (38
    )
    
    
    987
    
    
    
    1,595
    
    
    
    4,109Automotive
    
    
    1,339
    
    
    
    441
    
    
    
    3,896
    
    
    
    (425
    )Corporate Expenses
    
    
    (2,046
    )
    
    
    (2,240
    )
    
    
    (9,761
    )
    
    
    (5,732
    )Total
    
    $
    13,616
    
    
    $
    21,234
    
    
    $
    62,174
    
    
    $
    74,949
 13




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Tabular amounts in thousands, except share and per share data)
 Note 12  Commitments and Contingencies
    Note 13  Comprehensive Income
  14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 LANCASTER COLONY CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Tabular dollars in thousands)
 OVERVIEW
 This Managements Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) describes the matters that we consider to be important in understanding the results of our
operations for the three and nine months ended March 31, 2008 and our financial condition as of
March 31, 2008. Our fiscal year begins on July 1 and ends on June 30. Unless otherwise noted,
references to year pertain to our fiscal year; for example, 2008 refers to fiscal 2008, which is
the period from July 1, 2007 to June 30, 2008. In the discussion that follows, we analyze the
results of our operations for the three and nine months ended March 31, 2008, including the trends
in our overall business, followed by a discussion of our financial condition.
 The following discussion should be read in conjunction with our consolidated financial
statements and the notes thereto, all included elsewhere in this report. The forward-looking
statements in this section and other parts of this report involve risks and uncertainties including
statements regarding our plans, objectives, goals, strategies, and financial performance. Our
actual results could differ materially from the results anticipated in these forward-looking
statements as a result of factors set forth under the caption Forward-Looking Statements.
 EXECUTIVE SUMMARY
 Business Overview
    
    
    leveraging the strength of our retail brands to increase current product sales and
introduce new products;
    
    continuing to grow our foodservice business through the strength of our reputation in
product development and quality; and
    
    pursuing acquisitions that meet our strategic criteria.
 15




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Summary of 2008 Results
    16




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RESULTS OF CONSOLIDATED OPERATIONS
 Net Sales and Gross Margin
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31
    
    
    
    
    
    
    
    
    
    
    March 312008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeNet SalesSpecialty Foods
    
    $
    197,249
    
    
    $
    178,212
    
    
    $
    19,037
    
    
    
    11
    %
    
    $
    597,188
    
    
    $
    543,093
    
    
    $
    54,095
    
    
    
    10
    %Glassware and Candles
    
    
    33,577
    
    
    
    50,238
    
    
    
    (16,661
    )
    
    
    (33
    )%
    
    
    147,043
    
    
    
    175,325
    
    
    
    (28,282
    )
    
    
    (16
    )%Automotive
    
    
    39,450
    
    
    
    37,242
    
    
    
    2,208
    
    
    
    6
    %
    
    
    117,227
    
    
    
    101,670
    
    
    
    15,557
    
    
    
    15
    %Total
    
    $
    270,276
    
    
    $
    265,692
    
    
    $
    4,584
    
    
    
    2
    %
    
    $
    861,458
    
    
    $
    820,088
    
    
    $
    41,370
    
    
    
    5
    %Gross Margin
    
    $
    36,231
    
    
    $
    45,701
    
    
    $
    (9,470
    )
    
    
    (21
    )%
    
    $
    132,991
    
    
    $
    145,277
    
    
    $
    (12,286
    )
    
    
    (8
    )%Gross Margin
as a Percent of Sales
    
    
    13.4
    %
    
    
    17.2
    %
    
    
    
    
    
    
    
    
    
    
    15.4
    %
    
    
    17.7
    %
       17




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Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31
    
    
    
    
    
    
    
    
    
    
    March 312008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeSelling, General and
Administrative Expenses
    
    $
    22,615
    
    
    $
    23,463
    
    
    $
    (848
    )
    
    
    (4
    )%
    
    $
    70,635
    
    
    $
    69,324
    
    
    $
    1,311
    
    
    
    2
    %SG&A Expenses as a
Percent of Sales
    
    
    8.4
    %
    
    
    8.8
    %
    
    
    
    
    
    
    
    
    
    
    8.2
    %
    
    
    8.5
    %
  Restructuring and Impairment Charge
     18




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##### Table of Contents



Accrual at
    
    
    
    
    
    
    2008
    
    
    Accrual atJune 30,
    
    
    2008
    
    
    Cash
    
    
    March 31,2007
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargeEmployee Separation Costs
    
    $
    266
    
    
    $
    173
    
    
    $
    (315
    )
    
    $
    124Other Costs
    
    
    219
    
    
    
    
    
    
    
    (65
    )
    
    
    154Subtotal
    
    $
    485
    
    
    
    173
    
    
    $
    (380
    )
    
    $
    278Accelerated Depreciation
    
    
    
    
    
    
    9Inventory Write-Down
    
    
    
    
    
    
    17Total Restructuring and Impairment Charge
    
    
    
    
    
    $
    199
  Operating Income
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedMarch 31
    
    
    
    
    
    
    
    
    
    
    March 312008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeOperating IncomeSpecialty Foods
    
    $
    14,361
    
    
    $
    22,046
    
    
    $
    (7,685
    )
    
    
    (35
    )%
    
    $
    66,444
    
    
    $
    76,997
    
    
    $
    (10,553
    )
    
    
    (14
    )%Glassware and Candles
    
    
    (38
    )
    
    
    987
    
    
    
    (1,025
    )
    
    
    N/M
    
    
    
    1,595
    
    
    
    4,109
    
    
    
    (2,514
    )
    
    
    (61
    )%Automotive
    
    
    1,339
    
    
    
    441
    
    
    
    898
    
    
    
    204
    %
    
    
    3,896
    
    
    
    (425
    )
    
    
    4,321
    
    
    
    N/MCorporate Expenses
    
    
    (2,046
    )
    
    
    (2,240
    )
    
    
    194
    
    
    
    (9
    )%
    
    
    (9,761
    )
    
    
    (5,732
    )
    
    
    (4,029
    )
    
    
    70
    %Total
    
    $
    13,616
    
    
    $
    21,234
    
    
    $
    (7,618
    )
    
    
    (36
    )%
    
    $
    62,174
    
    
    $
    74,949
    
    
    $
    (12,775
    )
    
    
    (17
    )%Operating Income
as a Percent of SalesSpecialty Foods
    
    
    7.3
    %
    
    
    12.4
    %
    
    
    
    
    
    
    
    
    
    
    11.1
    %
    
    
    14.2
    %Glassware and Candles
    
    
    
    
    
    
    2.0
    %
    
    
    
    
    
    
    
    
    
    
    1.1
    %
    
    
    2.3
    %Automotive
    
    
    3.4
    %
    
    
    1.2
    %
    
    
    
    
    
    
    
    
    
    
    3.3
    %
    
    
    Consolidated
    
    
    5.0
    %
    
    
    8.0
    %
    
    
    
    
    
    
    
    
    
    
    7.2
    %
    
    
    9.1
    %
 Interest Expense
  Other Income  Continued Dumping and Subsidy Offset Act
  19




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Interest Income and Other  Net
  Income from Continuing Operations Before Income Taxes
  Income from Continuing Operations
   Discontinued Operations
  Net Income
  20




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FINANCIAL CONDITION
       CONTRACTUAL OBLIGATIONS
  CRITICAL ACCOUNTING POLICIES
  RECENTLY ISSUED ACCOUNTING STANDARDS
  21




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RECENTLY ADOPTED ACCOUNTING STANDARDS
  Forward-Looking Statements
  22




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##### Table of Contents




    
    the overall strength of the economy;
    
    changes in financial markets;
    
    slower than anticipated sales growth;
    
    the extent of operational efficiencies achieved;
    
    the success of new product introductions;
    
    price and product competition;
    
    increases in energy and raw-material costs;
    
    the reaction of customers or consumers to price increases we may implement;
    
    our ability to consummate good-fitting acquisitions; and
    
    the uncertainty regarding the effect or outcome of our decision to explore
strategic alternatives among our nonfood operations.
   
    
    the potential for loss of larger programs or key customer relationships;
    
    the effect of consolidation of customers within key market channels;
    
    the continued solvency of key customers;
    
    the success and cost of new product development efforts;
    
    the lack of market acceptance of new products;
    
    the reaction of customers or consumers to the effect of price increases we may implement;
    
    changes in demand for our products, which may result from loss of brand reputation
or customer goodwill;
    
    changes in market trends;
    
    the extent to which future business acquisitions are completed and acceptably integrated;
    
    the possible occurrence of product recalls;
    
    efficiencies in plant operations, including the ability to optimize overhead
utilization in nonfood operations;
    
    fluctuations in the cost and availability of raw materials;
    
    adverse changes in energy costs and other factors that may affect costs of
producing, distributing or transporting our products;
    
    maintenance of competitive position with respect to other manufacturers, including
import sources of production;
    
    dependence on key personnel;
    
    stability of labor relations;
    
    fluctuations in energy costs;
    
    dependence on contract copackers;
    
    effect of governmental regulations, including environmental matters;
 23




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##### Table of Contents




    
    legislation and litigation affecting the future administration of CDSOA;
    
    access to any required financing;
    
    changes in income tax laws;
    
    the uncertainty regarding the effect or outcome of our decision to explore
strategic alternatives among our nonfood operations;
    
    changes in estimates in critical accounting judgments; and
    
    innumerable other factors.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control Over Financial Reporting.
 24




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PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number
    
    Maximum NumberTotal
    
    Average
    
    of Shares
    
    of Shares That MayNumber
    
    Price
    
    Purchased as
    
    Yet be Purchasedof Shares
    
    Paid Per
    
    Part of Publicly
    
    Under the Plans orPeriod
    
    Purchased
    
    Share
    
    Announced Plans
    
    ProgramsJanuary 1-31, 2008
    
    
    270,255
    
    
    $
    36.44
    
    
    
    270,255
    
    
    
    1,826,056February 1-29, 2008
    
    
    270,303
    
    
    $
    36.94
    
    
    
    270,303
    
    
    
    1,555,753March 1-31, 2008
    
    
    185,304
    
    
    $
    38.41
    
    
    
    185,304
    
    
    
    1,370,449Total
    
    
    725,862
    
    
    $
    37.13
    
    
    
    725,862
    
    
    
    1,370,449
  
 Item 6. Exhibits
  25




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SIGNATURES
  Lancaster Colony Corporation(Registrant)Date:      May 12, 2008
    By:

/s/ John B. Gerlach, Jr.John B. Gerlach, Jr.Chairman, Chief Executive Officer,
President and Director
(Principal Executive Officer)Date:      May 12, 2008
    By:

/s/ John L. BoylanJohn L. BoylanTreasurer, Vice President,
Assistant Secretary,
Chief Financial Officer
and Director
(Principal Financial
and Accounting Officer)
 26




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##### Table of Contents



LANCASTER
COLONY CORPORATION AND SUBSIDIARIES
FORM 10-Q
MARCH 31, 2008
 
 INDEX TO EXHIBITS
 ExhibitNumber
    
    Description
    
    Located at31.1
    
    Certification of CEO under Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    Certification of CFO under Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32
    
    Certification of CEO and CFO under Section 906 of the Sarbanes-Oxley
Act of 2002
    
    Filed herewith
 27