##### 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, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-04065
 Lancaster Colony Corporation
 (Exact name of registrant as specified in its charter)
 Ohio
    
    13-1955943(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)37 West Broad StreetColumbus, Ohio
    
    43215(Address of principal executive offices)
    
    (Zip Code)
 614-224-7141  (Registrants telephone number, including area code)
 þ o
 Yes o
No o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
 Yes o No þ




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##### 



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    
    3Item 1. Consolidated Financial Statements:
    
    
    3Consolidated Balance Sheets  December 31, 2009 and June 30, 2009
    
    
    3Consolidated Statements of Income  Three and Six Months Ended December 31, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows  Six Months Ended December 31, 2009 and 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATION
    
    
    25Item 1A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26INDEX TO EXHIBITS
    
    
    27EX-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)
    
    2009
    
    
    2009ASSETSCurrent Assets:Cash and equivalents
    
    $
    91,391
    
    
    $
    38,484Receivables (less allowance for doubtful accounts,
December  $847 and June  $942)
    
    
    85,484
    
    
    
    61,152Inventories:Raw materials
    
    
    30,637
    
    
    
    33,067Finished goods and work in process
    
    
    51,659
    
    
    
    69,456Total inventories
    
    
    82,296
    
    
    
    102,523Deferred income taxes and other current assets
    
    
    23,231
    
    
    
    20,653Total current assets
    
    
    282,402
    
    
    
    222,812Property, Plant and Equipment:Land, buildings and improvements
    
    
    129,074
    
    
    
    130,683Machinery and equipment
    
    
    234,941
    
    
    
    239,380Total cost
    
    
    364,015
    
    
    
    370,063Less accumulated depreciation
    
    
    199,056
    
    
    
    199,163Property, plant and equipment  net
    
    
    164,959
    
    
    
    170,900Other Assets:Goodwill
    
    
    89,840
    
    
    
    89,840Other intangible assets  net
    
    
    10,096
    
    
    
    10,678Other noncurrent assets
    
    
    3,958
    
    
    
    4,251Total
    
    $
    551,255
    
    
    $
    498,481LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    37,643
    
    
    $
    41,180Accrued liabilities
    
    
    32,695
    
    
    
    33,399Total current liabilities
    
    
    70,338
    
    
    
    74,579Other Noncurrent Liabilities
    
    
    16,776
    
    
    
    16,719Deferred Income Taxes
    
    
    5,195
    
    
    
    4,627Shareholders Equity:Preferred stock  authorized 3,050,000 shares; outstanding  noneCommon stock  authorized 75,000,000 shares; outstanding 
December  28,201,359 shares; June  28,101,885 shares
    
    
    93,537
    
    
    
    88,962Retained earnings
    
    
    1,049,921
    
    
    
    998,476Accumulated other comprehensive loss
    
    
    (8,715
    )
    
    
    (9,085
    )Common stock in treasury, at cost
    
    
    (675,797
    )
    
    
    (675,797
    )Total shareholders equity
    
    
    458,946
    
    
    
    402,556Total
    
    $
    551,255
    
    
    $
    498,481
   3




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##### Table of Contents



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)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net Sales
    
    $
    304,115
    
    
    $
    288,242
    
    
    $
    558,275
    
    
    $
    552,079Cost of Sales
    
    
    219,338
    
    
    
    230,079
    
    
    
    409,791
    
    
    
    454,247Gross Margin
    
    
    84,777
    
    
    
    58,163
    
    
    
    148,484
    
    
    
    97,832Selling, General and
Administrative Expenses
    
    
    24,400
    
    
    
    21,917
    
    
    
    44,868
    
    
    
    42,178Restructuring and Impairment Charges
    
    
    1,216
    
    
    
    (8
    )
    
    
    2,046
    
    
    
    1,606Operating Income
    
    
    59,161
    
    
    
    36,254
    
    
    
    101,570
    
    
    
    54,048Other (Expense) Income:Interest expense
    
    
    
    
    
    
    (639
    )
    
    
    
    
    
    
    (1,130
    )Other income  Continued Dumping and
Subsidy Offset Act
    
    
    893
    
    
    
    8,696
    
    
    
    893
    
    
    
    8,696Interest income and other  net
    
    
    34
    
    
    
    (271
    )
    
    
    59
    
    
    
    (196
    )Income Before Income Taxes
    
    
    60,088
    
    
    
    44,040
    
    
    
    102,522
    
    
    
    61,418Taxes Based on Income
    
    
    20,561
    
    
    
    15,588
    
    
    
    34,590
    
    
    
    21,946Net Income
    
    $
    39,527
    
    
    $
    28,452
    
    
    $
    67,932
    
    
    $
    39,472Net Income Per Common Share:Basic and Diluted
    
    $
    1.40
    
    
    $
    1.02
    
    
    $
    2.41
    
    
    $
    1.40Cash Dividends Per Common Share
    
    $
    .30
    
    
    $
    .285
    
    
    $
    .585
    
    
    $
    .565Weighted Average Common
Shares Outstanding:Basic
    
    
    28,147
    
    
    
    27,948
    
    
    
    28,114
    
    
    
    28,105Diluted
    
    
    28,176
    
    
    
    27,955
    
    
    
    28,145
    
    
    
    28,110
   4




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Six Months EndedDecember 31(Amounts in thousands)
    
    2009
    
    
    2008Cash Flows From Operating Activities:Net income
    
    $
    67,932
    
    
    $
    39,472Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    10,882
    
    
    
    10,970Deferred income taxes and other noncash changes
    
    
    909
    
    
    
    (420
    )Restructuring and impairment charges
    
    
    528
    
    
    
    (1,221
    )Gain on disposal of property
    
    
    (3
    )
    
    
    (776
    )Pension plan activity
    
    
    251
    
    
    
    (28
    )Changes in operating assets and liabilities:Receivables
    
    
    (24,714
    )
    
    
    (15,834
    )Inventories
    
    
    20,047
    
    
    
    24,444Other current assets
    
    
    (2,560
    )
    
    
    11,949Accounts payable and accrued liabilities
    
    
    (4,091
    )
    
    
    (5,663
    )Net cash provided by operating activities
    
    
    69,181
    
    
    
    62,893Cash Flows From Investing Activities:Payments on property additions
    
    
    (3,701
    )
    
    
    (6,749
    )Proceeds from sale of property
    
    
    6
    
    
    
    1,263Other  net
    
    
    (720
    )
    
    
    (964
    )Net cash used in investing activities
    
    
    (4,415
    )
    
    
    (6,450
    )Cash Flows From Financing Activities:Proceeds from debt
    
    
    
    
    
    
    25,000Payments on debt
    
    
    
    
    
    
    (35,000
    )Purchase of treasury stock
    
    
    
    
    
    
    (16,894
    )Payment of dividends
    
    
    (16,487
    )
    
    
    (15,877
    )Proceeds from the exercise of stock options
    
    
    3,923
    
    
    
    Increase (decrease) in cash overdraft balance
    
    
    705
    
    
    
    (2,749
    )Net cash used in financing activities
    
    
    (11,859
    )
    
    
    (45,520
    )Net change in cash and equivalents
    
    
    52,907
    
    
    
    10,923Cash and equivalents at beginning of year
    
    
    38,484
    
    
    
    19,417Cash and equivalents at end of period
    
    $
    91,391
    
    
    $
    30,340Supplemental Disclosure of Operating Cash Flows:Cash paid during the period for income taxes
    
    $
    32,448
    
    
    $
    2,964
   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
  Subsequent Events
  Property, Plant and Equipment
  Earnings Per Share
   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)
  Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 312009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    39,527
    
    
    $
    28,452
    
    
    $
    67,932
    
    
    $
    39,472Net income allocated to participating securities
    
    
    (39
    )
    
    
    (23
    )
    
    
    (68
    )
    
    
    (32
    )Net income allocated to common shareholders
    
    $
    39,488
    
    
    $
    28,429
    
    
    $
    67,864
    
    
    $
    39,440Weighted average common shares outstanding (in thousands):Basic
    
    
    28,147
    
    
    
    27,948
    
    
    
    28,114
    
    
    
    28,105Incremental share effect from:Stock options
    
    
    3
    
    
    
    
    
    
    
    5
    
    
    
    Restricted stock
    
    
    4
    
    
    
    7
    
    
    
    8
    
    
    
    5Stock-settled stock appreciation rights
    
    
    22
    
    
    
    
    
    
    
    18
    
    
    
    Diluted
    
    
    28,176
    
    
    
    27,955
    
    
    
    28,145
    
    
    
    28,110Net income per common share  basic and diluted
    
    $
    1.40
    
    
    $
    1.02
    
    
    $
    2.41
    
    
    $
    1.40
 Significant Accounting Policies
 Form 10-K.
 Note 2  Impact of Recently Issued Accounting Standards
  Note 3  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)
  December 31
    
    
    June 302009
    
    
    2009Trademarks (40-year life)Gross carrying value
    
    $
    370
    
    
    $
    370Accumulated amortization
    
    
    (172
    )
    
    
    (167
    )Net Carrying Value
    
    $
    198
    
    
    $
    203Customer Relationships (12 to 15-year
life)Gross carrying value
    
    $
    13,020
    
    
    $
    13,020Accumulated amortization
    
    
    (3,586
    )
    
    
    (3,118
    )Net Carrying Value
    
    $
    9,434
    
    
    $
    9,902Non-compete Agreements (5 to 8-year life)Gross carrying value
    
    $
    1,540
    
    
    $
    1,540Accumulated amortization
    
    
    (1,076
    )
    
    
    (967
    )Net Carrying Value
    
    $
    464
    
    
    $
    573Total Net Carrying Value
    
    $
    10,096
    
    
    $
    10,678
  Note 4  Long-Term Debt
    Note 5  Pension Benefits
   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)
  Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 312009
    
    
    2008
    
    
    2009
    
    
    2008Components of net periodic benefit costService cost
    
    $
    18
    
    
    $
    30
    
    
    $
    45
    
    
    $
    60Interest cost
    
    
    530
    
    
    
    541
    
    
    
    1,059
    
    
    
    1,082Expected return on plan assets
    
    
    (538
    )
    
    
    (602
    )
    
    
    (1,076
    )
    
    
    (1,204
    )Curtailment charge
    
    
    
    
    
    
    
    
    
    
    349
    
    
    
    Amortization of unrecognized net loss
    
    
    124
    
    
    
    62
    
    
    
    248
    
    
    
    124Amortization of prior service cost
    
    
    
    
    
    
    26
    
    
    
    5
    
    
    
    52Amortization of unrecognized net
obligation existing at transition
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    2Net periodic benefit cost
    
    $
    134
    
    
    $
    58
    
    
    $
    630
    
    
    $
    116
   Note 6  Postretirement Benefits
   Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 312009
    
    
    2008
    
    
    2009
    
    
    2008Components of net periodic benefit costService cost
    
    $
    4
    
    
    $
    5
    
    
    $
    8
    
    
    $
    9Interest cost
    
    
    48
    
    
    
    50
    
    
    
    96
    
    
    
    99Amortization of unrecognized gain
    
    
    (3
    )
    
    
    (5
    )
    
    
    (6
    )
    
    
    (9
    )Amortization of prior service asset
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )
    
    
    (3
    )Net periodic benefit cost
    
    $
    48
    
    
    $
    48
    
    
    $
    96
    
    
    $
    96
   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)
 Note 7  Stock-Based Compensation
   Stock Options
      WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life in Years
    
    
    ValueOutstanding at beginning of period
    
    
    96,350
    
    
    $
    41.52Exercised
    
    
    (88,050
    )
    
    
    41.52Forfeited
    
    
    
    
    
    
    Outstanding at end of period
    
    
    8,300
    
    
    $
    41.52
    
    
    
    .16
    
    
    $
    68Exercisable and vested at end of period
    
    
    8,300
    
    
    $
    41.52
    
    
    
    .16
    
    
    $
    68Vested and expected to vest at end of period
    
    
    8,300
    
    
    $
    41.52
    
    
    
    .16
    
    
    $
    68
  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)
  Stock-Settled Stock Appreciation Rights
    WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicRights
    
    
    Price
    
    
    Life in Years
    
    
    ValueOutstanding at beginning of period
    
    
    222,240
    
    
    $
    38.85Exercised
    
    
    (15,441
    )
    
    
    38.31Granted
    
    
    
    
    
    
    Forfeited
    
    
    (1,417
    )
    
    
    38.31Outstanding at end of period
    
    
    205,382
    
    
    $
    38.90
    
    
    
    3.54
    
    
    $
    2,215Exercisable and vested at end of period
    
    
    27,315
    
    
    $
    38.31
    
    
    
    3.16
    
    
    $
    311Vested and expected to vest at end of period
    
    
    198,549
    
    
    $
    38.89
    
    
    
    3.54
    
    
    $
    2,142
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateRights
    
    
    Fair ValueUnvested at beginning of period
    
    
    179,234
    
    
    $
    6.39Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    (1,167
    )
    
    
    6.00Unvested at end of period
    
    
    178,067
    
    
    $
    6.39
  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
    
    
    42,950
    
    
    $
    35.61Granted
    
    
    8,435
    
    
    
    50.86Vested
    
    
    (14,300
    )
    
    
    29.57Forfeited
    
    
    (150
    )
    
    
    38.31Unvested restricted stock at end of period
    
    
    36,935
    
    
    $
    41.42Expected to vest restricted stock at end of period
    
    
    36,365
    
    
    $
    41.46
  Note 8  Restructuring and Impairment Charges
 Specialty Foods Segment  Fiscal 2010
    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
    
    
    
    
    
    
    2010
    
    
    Accrual atJune 30,
    
    
    2010
    
    
    Cash
    
    
    December 31,2009
    
    
    Charges
    
    
    Outlays
    
    
    2009Restructuring ChargesEmployee Separation Costs
    
    $
    
    
    
    $
    1,643
    
    
    $
    (1,643
    )
    
    $
    Other Costs
    
    
    
    
    
    
    54
    
    
    
    (54
    )
    
    
    Subtotal
    
    $
    
    
    
    
    1,697
    
    
    $
    (1,697
    )
    
    $
    Pension Curtailment Charges
    
    
    
    
    
    
    349Inventory Write-Down
    
    
    
    
    
    
    179Total Restructuring Charges
    
    
    
    
    
    $
    2,225
  Specialty Foods Segment  Fiscal 2009
  Other Segments  Fiscal 2009
  Held for Sale
   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 9  Income Taxes
   Note 10  Business Segment Information
  Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 312009
    
    
    2008
    
    
    2009
    
    
    2008Net SalesSpecialty Foods
    
    $
    243,099
    
    
    $
    245,393
    
    
    $
    459,440
    
    
    $
    466,179Glassware and Candles
    
    
    61,016
    
    
    
    42,849
    
    
    
    98,835
    
    
    
    85,900Total
    
    $
    304,115
    
    
    $
    288,242
    
    
    $
    558,275
    
    
    $
    552,079Operating Income (Loss)Specialty Foods
    
    $
    56,146
    
    
    $
    39,651
    
    
    $
    99,298
    
    
    $
    63,140Glassware and Candles
    
    
    6,142
    
    
    
    (1,007
    )
    
    
    7,813
    
    
    
    (3,869
    )Corporate Expenses
    
    
    (3,127
    )
    
    
    (2,390
    )
    
    
    (5,541
    )
    
    
    (5,223
    )Total
    
    $
    59,161
    
    
    $
    36,254
    
    
    $
    101,570
    
    
    $
    54,048
 Note 11  Commitments and Contingencies
     14




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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  Comprehensive Income
   15




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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, 2009 and our financial condition as of
December 31, 2009. 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, 2010 refers to fiscal 2010, which is
the period from July 1, 2009 to June 30, 2010. In the discussion that follows, we analyze the
results of our operations for the three and six months ended December 31, 2009, 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;
    
    growing our foodservice sales through the strength of our reputation in product
development and quality; and
    
    pursuing acquisitions that meet our strategic criteria.
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##### Table of Contents



Summary of 2010 Results
    RESULTS OF CONSOLIDATED OPERATIONS
 Net Sales and Gross Margin
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312009
    
    
    2008
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    ChangeNet SalesSpecialty Foods
    
    $
    243,099
    
    
    $
    245,393
    
    
    $
    (2,294
    )
    
    
    (1
    )%
    
    $
    459,440
    
    
    $
    466,179
    
    
    $
    (6,739
    )
    
    
    (1
    )%Glassware and Candles
    
    
    61,016
    
    
    
    42,849
    
    
    
    18,167
    
    
    
    42
    %
    
    
    98,835
    
    
    
    85,900
    
    
    
    12,935
    
    
    
    15
    %Total
    
    $
    304,115
    
    
    $
    288,242
    
    
    $
    15,873
    
    
    
    6
    %
    
    $
    558,275
    
    
    $
    552,079
    
    
    $
    6,196
    
    
    
    1
    %Gross Margin
    
    $
    84,777
    
    
    $
    58,163
    
    
    $
    26,614
    
    
    
    46
    %
    
    $
    148,484
    
    
    $
    97,832
    
    
    $
    50,652
    
    
    
    52
    %Gross Margin
as a Percentage of Sales
    
    
    27.9
    %
    
    
    20.2
    %
    
    
    
    
    
    
    
    
    
    
    26.6
    %
    
    
    17.7
    %
     17




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##### Table of Contents



Selling, General and Administrative Expenses
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312009
    
    
    2008
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    ChangeSelling, General and
Administrative Expenses
    
    $
    24,400
    
    
    $
    21,917
    
    
    $
    2,483
    
    
    
    11
    %
    
    $
    44,868
    
    
    $
    42,178
    
    
    $
    2,690
    
    
    
    6
    %SG&A Expenses as a
Percentage of Sales
    
    
    8.0
    %
    
    
    7.6
    %
    
    
    
    
    
    
    
    
    
    
    8.0
    %
    
    
    7.6
    %
  Restructuring and Impairment Charges
 Specialty Foods Segment  Fiscal 2010
 
   18




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##### Table of Contents



Accrual at
    
    
    
    
    
    
    2010
    
    
    Accrual atJune 30,
    
    
    2010
    
    
    Cash
    
    
    December 31,2009
    
    
    Charges
    
    
    Outlays
    
    
    2009Restructuring ChargesEmployee Separation Costs
    
    $
    
    
    
    $
    1,643
    
    
    $
    (1,643
    )
    
    $
    Other Costs
    
    
    
    
    
    
    54
    
    
    
    (54
    )
    
    
    Subtotal
    
    $
    
    
    
    
    1,697
    
    
    $
    (1,697
    )
    
    $
    Pension Curtailment Charges
    
    
    
    
    
    
    349Inventory Write-Down
    
    
    
    
    
    
    179Total Restructuring Charges
    
    
    
    
    
    $
    2,225
  Specialty Foods Segment  Fiscal 2009
 
 Other Segments  Fiscal 2009
 
 Held for Sale
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##### Table of Contents



Operating Income (Loss)
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312009
    
    
    2008
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    ChangeOperating Income (Loss)Specialty Foods
    
    $
    56,146
    
    
    $
    39,651
    
    
    $
    16,495
    
    
    
    42
    %
    
    $
    99,298
    
    
    $
    63,140
    
    
    $
    36,158
    
    
    
    57
    %Glassware and Candles
    
    
    6,142
    
    
    
    (1,007
    )
    
    
    7,149
    
    
    
    710
    %
    
    
    7,813
    
    
    
    (3,869
    )
    
    
    11,682
    
    
    
    302
    %Corporate Expenses
    
    
    (3,127
    )
    
    
    (2,390
    )
    
    
    (737
    )
    
    
    31
    %
    
    
    (5,541
    )
    
    
    (5,223
    )
    
    
    (318
    )
    
    
    6
    %Total
    
    $
    59,161
    
    
    $
    36,254
    
    
    $
    22,907
    
    
    
    63
    %
    
    $
    101,570
    
    
    $
    54,048
    
    
    $
    47,522
    
    
    
    88
    %Operating Income (Loss) as
a Percentage of SalesSpecialty Foods
    
    
    23.1
    %
    
    
    16.2
    %
    
    
    
    
    
    
    
    
    
    
    21.6
    %
    
    
    13.5
    %Glassware and Candles
    
    
    10.1
    %
    
    
    (2.4
    )%
    
    
    
    
    
    
    
    
    
    
    7.9
    %
    
    
    (4.5
    )%Consolidated
    
    
    19.5
    %
    
    
    12.6
    %
    
    
    
    
    
    
    
    
    
    
    18.2
    %
    
    
    9.8
    %
 Interest Expense
  Other Income  Continued Dumping and Subsidy Offset Act
     20




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##### Table of Contents



Income Before Income Taxes
  Net Income
  FINANCIAL CONDITION
        21




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##### Table of Contents



CONTRACTUAL OBLIGATIONS
  CRITICAL ACCOUNTING POLICIES
  RECENTLY ISSUED ACCOUNTING STANDARDS
  RECENTLY ADOPTED ACCOUNTING STANDARDS
  FORWARD-LOOKING STATEMENTS
   22




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##### Table of Contents



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




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##### Table of Contents




    
    legislation and litigation affecting the future administration of the CDSOA;
    
    access to any required financing;
    
    changes in income tax laws;
    
    unexpected costs relating to the holding or disposition of idle real estate;
    
    changes in estimates in critical accounting judgments; and
    
    innumerable other factors.
 
 Item 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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##### Table of Contents



PART II OTHER INFORMATION
 
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  Shares
    
    
    
    
    
    
    SharesVoted
    
    
    Shares
    
    
    NotFor
    
    
    Withheld
    
    
    VotedJames B. Bachmann
    
    
    26,515,101
    
    
    
    122,201
    
    
    
    1,534,459Neeli Bendapudi
    
    
    25,962,135
    
    
    
    675,167
    
    
    
    1,534,459John L. Boylan
    
    
    25,180,818
    
    
    
    1,456,484
    
    
    
    1,534,459
  
 Item 6.
    
    Exhibits
   25




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##### Table of Contents



SIGNATURES
  Lancaster Colony Corporation(Registrant)Date: February 5, 2010
    By:
    /s/ John B. Gerlach, Jr.John B. Gerlach, Jr.Chairman, Chief Executive Officer,
President and Director
(Principal Executive Officer)Date: February 5, 2010
    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
DECEMBER 31, 2009

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