##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 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 December 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
Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Accelerated filer o
Smaller reporting company o
 o þ




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##### 



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 TABLE OF CONTENTS
  
 PART I  FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:

3Consolidated Balance Sheets  December 31, 2008 and June 30, 2008

3Consolidated Statements of Income  Three and Six Months Ended December 31, 2008 and
2007

4Consolidated Statements of Cash Flows  Six Months Ended December 31, 2008 and 2007

5Notes to Consolidated Financial Statements

6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

14Item 3. Quantitative and Qualitative Disclosures About Market Risk

22Item 4. Controls and Procedures

22PART II  OTHER INFORMATIONItem 1A. Risk Factors

22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

23Item 4. Submission of Matters to a Vote of Security Holders

24Item 6. Exhibits

24SIGNATURES

25INDEX TO EXHIBITS

26EX-3.1EX-3.2EX-10.1EX-10.2EX-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
 December 31
    
    
    June 30(Amounts in thousands, except share data)
    
    2008
    
    
    2008ASSETSCurrent Assets:Cash and equivalents
    
    $
    30,340
    
    
    $
    19,417Receivables (less allowance for doubtful accounts,
December  $1,156 and June  $1,069)
    
    
    75,064
    
    
    
    59,409Inventories:Raw materials
    
    
    32,450
    
    
    
    34,787Finished goods and work in process
    
    
    63,409
    
    
    
    85,516Total inventories
    
    
    95,859
    
    
    
    120,303Deferred income taxes and other current assets
    
    
    24,648
    
    
    
    34,545Total current assets
    
    
    225,911
    
    
    
    233,674Property, Plant and Equipment:Land, buildings and improvements
    
    
    128,178
    
    
    
    138,771Machinery and equipment
    
    
    243,180
    
    
    
    240,490Total cost
    
    
    371,358
    
    
    
    379,261Less accumulated depreciation
    
    
    195,846
    
    
    
    199,688Property, plant and equipment  net
    
    
    175,512
    
    
    
    179,573Other Assets:Goodwill
    
    
    89,840
    
    
    
    89,840Other intangible assets  net
    
    
    11,259
    
    
    
    11,841Other noncurrent assets
    
    
    4,837
    
    
    
    5,250Total
    
    $
    507,359
    
    
    $
    520,178LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    34,309
    
    
    $
    45,964Accrued liabilities
    
    
    42,983
    
    
    
    42,785Total current liabilities
    
    
    77,292
    
    
    
    88,749Long-Term Debt
    
    
    45,000
    
    
    
    55,000Other Noncurrent Liabilities
    
    
    15,543
    
    
    
    14,547Deferred Income Taxes
    
    
    3,122
    
    
    
    2,664Shareholders Equity:Preferred stock  authorized 3,050,000 shares;
outstanding  noneCommon stock  authorized 75,000,000 shares; outstanding -
December 31, 2008  27,970,230 shares;
June 30, 2008 - 28,452,237 shares
    
    
    83,032
    
    
    
    82,652Retained earnings
    
    
    964,839
    
    
    
    941,244Accumulated other comprehensive loss
    
    
    (5,672
    )
    
    
    (5,775
    )Common stock in treasury, at cost
    
    
    (675,797
    )
    
    
    (658,903
    )Total shareholders equity
    
    
    366,402
    
    
    
    359,218Total
    
    $
    507,359
    
    
    $
    520,178
  3




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 UNAUDITED
 Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 31(Amounts in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net Sales
    
    $
    288,242
    
    
    $
    269,447
    
    
    $
    552,079
    
    
    $
    513,405Cost of Sales
    
    
    230,079
    
    
    
    225,837
    
    
    
    454,247
    
    
    
    424,963Gross Margin
    
    
    58,163
    
    
    
    43,610
    
    
    
    97,832
    
    
    
    88,442Selling, General and
Administrative Expenses
    
    
    21,917
    
    
    
    21,217
    
    
    
    42,178
    
    
    
    42,259Restructuring and Impairment Charges
    
    
    (8
    )
    
    
    46
    
    
    
    1,606
    
    
    
    182Operating Income
    
    
    36,254
    
    
    
    22,347
    
    
    
    54,048
    
    
    
    46,001Other (Expense) Income:Interest expense
    
    
    (639
    )
    
    
    (966
    )
    
    
    (1,130
    )
    
    
    (1,924
    )Other income  Continued Dumping and
Subsidy Offset Act
    
    
    8,696
    
    
    
    2,533
    
    
    
    8,696
    
    
    
    2,533Interest income and other  net
    
    
    (271
    )
    
    
    241
    
    
    
    (196
    )
    
    
    396Income from Continuing Operations
Before Income Taxes
    
    
    44,040
    
    
    
    24,155
    
    
    
    61,418
    
    
    
    47,006Taxes Based on Income
    
    
    15,588
    
    
    
    8,881
    
    
    
    21,946
    
    
    
    17,085Income from Continuing Operations
    
    
    28,452
    
    
    
    15,274
    
    
    
    39,472
    
    
    
    29,921Income from Discontinued Operations,
Net of Tax
    
    
    
    
    
    
    724
    
    
    
    
    
    
    
    1,647Net Income
    
    $
    28,452
    
    
    $
    15,998
    
    
    $
    39,472
    
    
    $
    31,568Income Per Common Share from
Continuing Operations:Basic and Diluted
    
    $
    1.02
    
    
    $
    .51
    
    
    $
    1.40
    
    
    $
    .99Income Per Common Share from
Discontinued Operations:Basic and Diluted
    
    $
    
    
    
    $
    .02
    
    
    $
    
    
    
    $
    .05Net Income Per Common Share:Basic and Diluted
    
    $
    1.02
    
    
    $
    .54
    
    
    $
    1.40
    
    
    $
    1.05Cash Dividends Per Common Share
    
    $
    .285
    
    
    $
    .28
    
    
    $
    .565
    
    
    $
    .55Weighted Average Common
Shares Outstanding:Basic
    
    
    27,948
    
    
    
    29,855
    
    
    
    28,105
    
    
    
    30,133Diluted
    
    
    27,959
    
    
    
    29,860
    
    
    
    28,113
    
    
    
    30,140
  4




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Six Months EndedDecember 31(Amounts in thousands)
    
    2008
    
    
    2007Cash Flows From Operating Activities:Net income
    
    $
    39,472
    
    
    $
    31,568Adjustments to reconcile net income to net
cash provided by operating activities:Income from discontinued operations
    
    
    
    
    
    
    (1,647
    )Depreciation and amortization
    
    
    10,970
    
    
    
    12,925Deferred income taxes and other noncash changes
    
    
    (420
    )
    
    
    608Restructuring and impairment charge
    
    
    (1,221
    )
    
    
    (129
    )Gain on sale of property
    
    
    (776
    )
    
    
    (150
    )Loss on sale of business
    
    
    
    
    
    
    5,705Pension plan activity
    
    
    (28
    )
    
    
    2,638Changes in operating assets and liabilities:Receivables
    
    
    (15,834
    )
    
    
    (16,780
    )Inventories
    
    
    24,444
    
    
    
    11,240Other current assets
    
    
    11,949
    
    
    
    (1,405
    )Accounts payable and accrued liabilities
    
    
    (5,663
    )
    
    
    5,457Net cash provided by operating activities from
continuing operations
    
    
    62,893
    
    
    
    50,030Cash Flows From Investing Activities:Payments on property additions
    
    
    (6,749
    )
    
    
    (11,881
    )Proceeds from sale of property
    
    
    1,263
    
    
    
    217Proceeds from sale of business
    
    
    
    
    
    
    19,817Other  net
    
    
    (964
    )
    
    
    (1,787
    )Net cash (used in) provided by investing activities from
continuing operations
    
    
    (6,450
    )
    
    
    6,366Cash Flows From Financing Activities:Net repayment of $100 million credit facility
    
    
    
    
    
    
    (42,500
    )Proceeds from debt
    
    
    25,000
    
    
    
    96,104Payments on debt
    
    
    (35,000
    )
    
    
    (48,504
    )Purchase of treasury stock
    
    
    (16,894
    )
    
    
    (49,809
    )Payment of dividends
    
    
    (15,877
    )
    
    
    (16,489
    )Proceeds from the exercise of stock options
    
    
    
    
    
    
    188Decrease in cash overdraft balance
    
    
    (2,749
    )
    
    
    (4,949
    )Net cash used in financing activities from
continuing operations
    
    
    (45,520
    )
    
    
    (65,959
    )Cash Flows From Discontinued Operations:Net cash provided by operating activities from discontinued operations
    
    
    
    
    
    
    6,114Net cash used in investing activities from discontinued operations
    
    
    
    
    
    
    (406
    )Net cash provided by discontinued operations
    
    
    
    
    
    
    5,708Effect of exchange rate changes on cash
    
    
    
    
    
    
    2Net change in cash and equivalents
    
    
    10,923
    
    
    
    (3,853
    )Cash and equivalents at beginning of year
    
    
    19,417
    
    
    
    8,316Cash and equivalents at end of period
    
    $
    30,340
    
    
    $
    4,463Supplemental Disclosure Of Operating Cash Flows:Cash paid during the period for income taxes
    
    $
    2,964
    
    
    $
    15,506
  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  Impact of Recently Issued Accounting Standards
  Note 3  Goodwill and Other Intangible Assets
  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)
  December 31
    
    
    June 302008
    
    
    2008Specialty FoodsTrademarks (40-year life)Gross carrying value
    
    $
    370
    
    
    $
    370Accumulated amortization
    
    
    (163
    )
    
    
    (158
    )Net Carrying Value
    
    $
    207
    
    
    $
    212Customer Relationships (12 to 15-year life)Gross carrying value
    
    $
    13,020
    
    
    $
    13,020Accumulated amortization
    
    
    (2,650
    )
    
    
    (2,182
    )Net Carrying Value
    
    $
    10,370
    
    
    $
    10,838Non-compete Agreements (5 to 8-year life)Gross carrying value
    
    $
    1,540
    
    
    $
    1,540Accumulated amortization
    
    
    (858
    )
    
    
    (749
    )Net Carrying Value
    
    $
    682
    
    
    $
    791Total Net Carrying Value
    
    $
    11,259
    
    
    $
    11,841
  Note 4  Long-Term Debt
  Note 5  Pension Benefits
  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)
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedDecember 31
    
    
    December 312008
    
    
    2007
    
    
    2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    30
    
    
    $
    39
    
    
    $
    60
    
    
    $
    78Interest cost
    
    
    541
    
    
    
    647
    
    
    
    1,082
    
    
    
    1,294Expected return on plan assets
    
    
    (602
    )
    
    
    (805
    )
    
    
    (1,204
    )
    
    
    (1,610
    )SFAS 88 settlement charge
    
    
    
    
    
    
    2,972
    
    
    
    
    
    
    
    2,972Amortization of unrecognized net loss
    
    
    62
    
    
    
    43
    
    
    
    124
    
    
    
    86Amortization of prior service cost
    
    
    26
    
    
    
    26
    
    
    
    52
    
    
    
    52Amortization of unrecognized net
obligation existing at transition
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2Net periodic benefit cost
    
    $
    58
    
    
    $
    2,923
    
    
    $
    116
    
    
    $
    2,874
   Note 6  Postretirement Benefits
   Three Months
    
    
    Six MonthsEnded
    
    
    EndedDecember 31
    
    
    December 312008
    
    
    2007
    
    
    2008
    
    
    2007Components of net periodic benefit costService cost
    
    $
    5
    
    
    $
    7
    
    
    $
    9
    
    
    $
    13Interest cost
    
    
    50
    
    
    
    57
    
    
    
    99
    
    
    
    115Amortization of unrecognized gain
    
    
    (5
    )
    
    
    
    
    
    
    (9
    )
    
    
    Amortization of prior service asset
    
    
    (2
    )
    
    
    (1
    )
    
    
    (3
    )
    
    
    (2
    )Net periodic benefit cost
    
    $
    48
    
    
    $
    63
    
    
    $
    96
    
    
    $
    126
 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 7  Stock-Based Compensation
   Stock Options and Stock-Settled Stock Appreciation Rights
       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)
  WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding at beginning of period
    
    
    392,550
    
    
    $
    40.26Exercised
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    Forfeited
    
    
    (18,250
    )
    
    
    41.43Outstanding at end of period
    
    
    374,300
    
    
    $
    40.21
    
    
    
    2.39
    
    
    $
    Exercisable and vested at end of period
    
    
    220,459
    
    
    $
    41.52
    
    
    
    1.16
    
    
    $
    Vested and expected to vest at end of period
    
    
    368,658
    
    
    $
    40.24
    
    
    
    2.36
    
    
    $
    
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested at beginning of period
    
    
    155,117
    
    
    $
    6.02Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    (1,276
    )
    
    
    7.30Unvested at end of period
    
    
    153,841
    
    
    $
    6.01
  Restricted Stock
   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)
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested restricted stock at beginning of period
    
    
    26,600
    
    
    $
    38.29Granted
    
    
    14,000
    
    
    
    29.38Vested
    
    
    (3,000
    )
    
    
    38.14Forfeited
    
    
    (300
    )
    
    
    38.31Unvested restricted stock at end of period
    
    
    37,300
    
    
    $
    34.96Vested and exercisable restricted stock at end of period
    
    
    
    
    
    
    Vested and expected to vest restricted stock at end of period
    
    
    36,662
    
    
    $
    34.90
   Note 8  Restructuring and Impairment Charges
 Specialty Foods Segment
   Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    December 31,2008
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    
    
    
    $
    555
    
    
    $
    (555
    )
    
    $
    Other Costs
    
    
    
    
    
    
    162
    
    
    
    (162
    )
    
    
    Subtotal
    
    $
    
    
    
    
    717
    
    
    $
    (717
    )
    
    $
    Fixed Asset Impairment
    
    
    
    
    
    
    47Total
    
    
    
    
    
    $
    764
 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)
 Other Segments
     Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    December 31,2008
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    69
    
    
    $
    
    
    
    $
    (69
    )
    
    $
    Other Costs
    
    
    1,184
    
    
    
    842
    
    
    
    (2,026
    )
    
    
    Total
    
    $
    1,253
    
    
    $
    842
    
    
    $
    (2,095
    )
    
    $
    
 SFAS 144 to be
 Note 9  Income Taxes
  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)
 Note 10  Business Segment Information
  Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 312008
    
    
    2007
    
    
    2008
    
    
    2007Net SalesSpecialty Foods
    
    $
    245,393
    
    
    $
    215,150
    
    
    $
    466,179
    
    
    $
    399,939Glassware and Candles
    
    
    42,849
    
    
    
    54,297
    
    
    
    85,900
    
    
    
    113,466Total
    
    $
    288,242
    
    
    $
    269,447
    
    
    $
    552,079
    
    
    $
    513,405Operating Income (Loss)Specialty Foods
    
    $
    39,651
    
    
    $
    28,309
    
    
    $
    63,140
    
    
    $
    52,083Glassware and Candles
    
    
    (1,007
    )
    
    
    (780
    )
    
    
    (3,869
    )
    
    
    1,633Corporate Expenses
    
    
    (2,390
    )
    
    
    (5,182
    )
    
    
    (5,223
    )
    
    
    (7,715
    )Total
    
    $
    36,254
    
    
    $
    22,347
    
    
    $
    54,048
    
    
    $
    46,001
 Note 11  Commitments and Contingencies
    Note 12  Comprehensive Income
  13




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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 six months ended December 31, 2008 and our financial condition as of
December 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, 2009 refers to fiscal 2009, which is
the period from July 1, 2008 to June 30, 2009. In the discussion that follows, we analyze the
results of our operations for the three and six months ended December 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
    
    
    leading retail market positions in several branded products with a high-quality perception;
    
    a broad customer base in both retail and foodservice accounts;
    
    well-regarded culinary expertise among foodservice accounts;
    
    recognized leadership in foodservice product development;
    
    demonstrated experience in integrating complementary business acquisitions; and
    
    historically strong cash flow generation that supports growth opportunities.
  
    
    leveraging the strength of our retail brands to increase current product sales and
introduce new products;
    
    continuing to grow our foodservice sales through the strength of our reputation in
product development and quality; and
 14




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##### Table of Contents




    
    pursuing acquisitions that meet our strategic criteria.
  Summary of 2009 Results
    RESULTS OF CONSOLIDATED OPERATIONS
 Net Sales and Gross Margin
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeNet SalesSpecialty Foods
    
    $
    245,393
    
    
    $
    215,150
    
    
    $
    30,243
    
    
    
    14
    %
    
    $
    466,179
    
    
    $
    399,939
    
    
    $
    66,240
    
    
    
    17
    %Glassware and Candles
    
    
    42,849
    
    
    
    54,297
    
    
    
    (11,448
    )
    
    
    (21
    )%
    
    
    85,900
    
    
    
    113,466
    
    
    
    (27,566
    )
    
    
    (24
    )%Total
    
    $
    288,242
    
    
    $
    269,447
    
    
    $
    18,795
    
    
    
    7
    %
    
    $
    552,079
    
    
    $
    513,405
    
    
    $
    38,674
    
    
    
    8
    %Gross Margin
    
    $
    58,163
    
    
    $
    43,610
    
    
    $
    14,553
    
    
    
    33
    %
    
    $
    97,832
    
    
    $
    88,442
    
    
    $
    9,390
    
    
    
    11
    %Gross Margin
as a Percentage of Sales
    
    
    20.2
    %
    
    
    16.2
    %
    
    
    
    
    
    
    
    
    
    
    17.7
    %
    
    
    17.2
    %
  15




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##### Table of Contents



Selling, General and Administrative Expenses
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeSelling, General and
Administrative Expenses
    
    $
    21,917
    
    
    $
    21,217
    
    
    $
    700
    
    
    
    3
    %
    
    $
    42,178
    
    
    $
    42,259
    
    
    $
    (81
    )
    
    
    0
    %SG&A Expenses as a
Percentage of Sales
    
    
    7.6
    %
    
    
    7.9
    %
    
    
    
    
    
    
    
    
    
    
    7.6
    %
    
    
    8.2
    %
  16




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##### Table of Contents



Restructuring and Impairment Charges
 Specialty Foods Segment
   Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    December 31,2008
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    
    
    
    $
    555
    
    
    $
    (555
    )
    
    $
    Other Costs
    
    
    
    
    
    
    162
    
    
    
    (162
    )
    
    
    Subtotal
    
    $
    
    
    
    
    717
    
    
    $
    (717
    )
    
    $
    Fixed Asset Impairment
    
    
    
    
    
    
    47Total
    
    
    
    
    
    $
    764
 Other Segments
     Accrual at
    
    
    
    
    
    
    2009
    
    
    Accrual atJune 30,
    
    
    2009
    
    
    Cash
    
    
    December 31,2008
    
    
    Charge
    
    
    Outlays
    
    
    2008Restructuring and Impairment ChargesEmployee Separation Costs
    
    $
    69
    
    
    $
    
    
    
    $
    (69
    )
    
    $
    Other Costs
    
    
    1,184
    
    
    
    842
    
    
    
    (2,026
    )
    
    
    Total
    
    $
    1,253
    
    
    $
    842
    
    
    $
    (2,095
    )
    
    $
    
 17




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##### Table of Contents



SFAS 144 to be
 Operating Income (Loss)
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeOperating Income (Loss)Specialty Foods
    
    $
    39,651
    
    
    $
    28,309
    
    
    $
    11,342
    
    
    
    40
    %
    
    $
    63,140
    
    
    $
    52,083
    
    
    $
    11,057
    
    
    
    21
    %Glassware and Candles
    
    
    (1,007
    )
    
    
    (780
    )
    
    
    (227
    )
    
    
    (29
    )%
    
    
    (3,869
    )
    
    
    1,633
    
    
    
    (5,502
    )
    
    
    (337
    )%Corporate Expenses
    
    
    (2,390
    )
    
    
    (5,182
    )
    
    
    2,792
    
    
    
    (54
    )%
    
    
    (5,223
    )
    
    
    (7,715
    )
    
    
    2,492
    
    
    
    (32
    )%Total
    
    $
    36,254
    
    
    $
    22,347
    
    
    $
    13,907
    
    
    
    62
    %
    
    $
    54,048
    
    
    $
    46,001
    
    
    $
    8,047
    
    
    
    17
    %Operating Income (Loss) as a Percentage of SalesSpecialty Foods
    
    
    16.2
    %
    
    
    13.2
    %
    
    
    
    
    
    
    
    
    
    
    13.5
    %
    
    
    13.0
    %Glassware and Candles
    
    
    (2.4
    )%
    
    
    (1.4
    )%
    
    
    
    
    
    
    
    
    
    
    (4.5
    )%
    
    
    1.4
    %Consolidated
    
    
    12.6
    %
    
    
    8.3
    %
    
    
    
    
    
    
    
    
    
    
    9.8
    %
    
    
    9.0
    %
 Interest Expense
  Other Income  Continued Dumping and Subsidy Offset Act
   18




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##### Table of Contents



Interest Income and Other  Net
  Income from Continuing Operations Before Income Taxes
  Income from Continuing Operations
   Discontinued Operations
  Net Income
  FINANCIAL CONDITION
    19




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##### Table of Contents



CONTRACTUAL OBLIGATIONS
  CRITICAL ACCOUNTING POLICIES
  RECENTLY ISSUED ACCOUNTING STANDARDS
  RECENTLY ADOPTED ACCOUNTING STANDARDS
  20




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    the potential for loss of larger programs or key customer relationships;
    
    the effect of consolidation of customers within key market channels;
    
    the continued solvency of key customers;
    
    the success and cost of new product development efforts;
    
    the lack of market acceptance of new products;
    
    the reaction of customers or consumers to the effect of price increases we may implement;
    
    changes in demand for our products, which may result from loss of brand reputation
or customer goodwill;
    
    changes in market trends;
    
    the extent to which future business acquisitions are completed and acceptably integrated;
    
    the possible occurrence of product recalls;
    
    efficiencies in plant operations, including the ability to optimize overhead
utilization in 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;
    
    the impact of fluctuations in our pension plan asset values on funding levels,
contributions required and benefit costs;
    
    dependence on key personnel;
    
    stability of labor relations;
    
    fluctuations in energy costs;
    
    dependence on contract copackers;
    
    effect of governmental regulations, including environmental matters;
    
    legislation and litigation affecting the future administration of the Continued
Dumping and Subsidy Offset Act of 2000;
    
    access to any required financing;
 21




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##### Table of Contents




    
    changes in income tax laws;
    
    the uncertainty regarding the effect or outcome of our decision to explore
strategic alternatives among our nonfood operations;
    
    unexpected costs relating to the holding or disposition of idle real estate;
    
    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.
 
 PART II OTHER INFORMATION
 
 Item 1A. Risk Factors
  Mr. Gerlach, our Chairman of our board of directors and Chief Executive Officer, has a
significant ownership interest in our Company.
   Anti-takeover provisions could make it more difficult for a third party to acquire us.
  22




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##### Table of Contents



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
    
    ProgramsOctober 1-31, 2008
    
    
    200,000
    
    
    $
    34.03
    
    
    
    200,000
    
    
    
    509,077November 1-30, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    509,077December 1-31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    509,077Total
    
    
    200,000
    
    
    $
    34.03
    
    
    
    200,000
    
    
    
    509,077
  23




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
 Section 14(a)
 Shares
    
    
    
    
    
    SharesVoted
    
    Shares
    
    NotFor
    

Withheld
    
    VotedRobert L. Fox
    
    
    26,774,241
    
    
    
    223,034
    
    
    
    1,189,100John B. Gerlach, Jr.
    
    
    26,781,921
    
    
    
    215,354
    
    
    
    1,189,100Edward H. Jennings
    
    
    26,774,699
    
    
    
    222,576
    
    
    
    1,189,100
        
 Item 6. Exhibits
  24




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##### Table of Contents



SIGNATURES
  Lancaster Colony Corporation(Registrant)Date: February 9, 2009
    By:

/s/ John B. Gerlach, Jr.John B. Gerlach, Jr.Chairman, Chief Executive Officer,
President and Director
(Principal Executive Officer)Date: February 9, 2009
    By:

/s/ John L. BoylanJohn L. BoylanTreasurer, Vice President,
Assistant Secretary,
Chief Financial Officer
and Director
(Principal Financial
and Accounting Officer) 25




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 FORM 10-Q
DECEMBER 31, 2008
 
 INDEX TO EXHIBITS
 ExhibitNumber
    
    Description
    
    Located at3.1
    
    Amended and Restated Articles of Incorporation of Lancaster
Colony Corporation approved by the shareholders November 17, 2008
    
    Filed herewith3.2
    
    Amended and Restated Regulations of Lancaster Colony Corporation
approved by the shareholders November 17, 2008
    
    Filed herewith10.1*
    
    Key Employee Severance Agreement between Lancaster Colony
Corporation and John L. Boylan
    
    Filed herewith10.2*
    
    Key Employee Severance Agreement between Lancaster Colony
Corporation and Bruce L. Rosa
    
    Filed herewith31.1
    
    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
 
 *
    
    Indicates a management contract or compensatory plan, contract or arrangement in which
any Director or any Executive Officer participates. 26