##### 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 December 31, 2007
 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  December 31, 2007 and June 30, 2007Consolidated Statements of Income  Three and Six Months Ended December 31, 2007 and 2006Consolidated Statements of Cash Flows  Six Months Ended December 31, 2007 and 2006Notes to Consolidated Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4.
    
    Controls and ProceduresPART
II - OTHER INFORMATIONItem 1A.
    
    Risk FactorsItem 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 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
 December 31
    
    
    June 30(Amounts in thousands, except share data)
    
    2007
    
    
    2007ASSETSCurrent Assets:Cash and equivalents
    
    $
    4,464
    
    
    $
    8,318Receivables (less allowance for doubtful accounts,
December  $836 and June  $916)
    
    
    93,805
    
    
    
    92,635Inventories:Raw materials
    
    
    38,164
    
    
    
    40,358Finished goods and work in process
    
    
    89,962
    
    
    
    109,359Total inventories
    
    
    128,126
    
    
    
    149,717Deferred income taxes and other current assets
    
    
    27,830
    
    
    
    28,241Total current assets
    
    
    254,225
    
    
    
    278,911Property, Plant and Equipment:Land, buildings and improvements
    
    
    164,720
    
    
    
    162,276Machinery and equipment
    
    
    274,328
    
    
    
    350,357Total cost
    
    
    439,048
    
    
    
    512,633Less accumulated depreciation
    
    
    240,630
    
    
    
    304,202Property, plant and equipment  net
    
    
    198,418
    
    
    
    208,431Other Assets:Goodwill
    
    
    89,590
    
    
    
    89,590Other intangible assets  net
    
    
    12,423
    
    
    
    13,111Other noncurrent assets
    
    
    7,964
    
    
    
    8,454Total
    
    $
    562,620
    
    
    $
    598,497LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term bank loans
    
    $
    
    
    
    $
    42,500Accounts payable
    
    
    43,809
    
    
    
    48,423Accrued liabilities
    
    
    44,113
    
    
    
    50,867Total current liabilities
    
    
    87,922
    
    
    
    141,790Long-Term Debt
    
    
    47,600
    
    
    
    Other Noncurrent Liabilities
    
    
    16,606
    
    
    
    10,702Deferred Income Taxes
    
    
    827
    
    
    
    1,696Shareholders Equity:Preferred stock  authorized 3,050,000 shares; outstanding  noneCommon stock  authorized 75,000,000 shares; outstanding 
December 31, 2007  29,508,464 shares;
June 30, 2007  30,748,390 shares
    
    
    81,937
    
    
    
    81,665Retained earnings
    
    
    951,280
    
    
    
    937,376Accumulated other comprehensive loss
    
    
    (4,178
    )
    
    
    (5,167
    )Common stock in treasury, at cost
    
    
    (619,374
    )
    
    
    (569,565
    )Total shareholders equity
    
    
    409,665
    
    
    
    444,309Total
    
    $
    562,620
    
    
    $
    598,497
  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)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net Sales
    
    $
    305,612
    
    
    $
    292,332
    
    
    $
    591,182
    
    
    $
    554,396Cost of Sales
    
    
    258,023
    
    
    
    237,405
    
    
    
    494,422
    
    
    
    454,820Gross Margin
    
    
    47,589
    
    
    
    54,927
    
    
    
    96,760
    
    
    
    99,576Selling, General and
Administrative Expenses
    
    
    24,080
    
    
    
    23,658
    
    
    
    48,020
    
    
    
    45,861Restructuring and Impairment Charge
    
    
    46
    
    
    
    
    
    
    
    182
    
    
    
    Operating Income
    
    
    23,463
    
    
    
    31,269
    
    
    
    48,558
    
    
    
    53,715Other Income (Expense):Interest Expense
    
    
    (966
    )
    
    
    (13
    )
    
    
    (1,924
    )
    
    
    (13
    )Other Income  Continued Dumping and
Subsidy Offset Act
    
    
    2,533
    
    
    
    699
    
    
    
    2,533
    
    
    
    699Interest Income and Other  Net
    
    
    255
    
    
    
    191
    
    
    
    417
    
    
    
    553Income from Continuing Operations
Before Income Taxes
    
    
    25,285
    
    
    
    32,146
    
    
    
    49,584
    
    
    
    54,954Taxes Based on Income
    
    
    9,287
    
    
    
    11,786
    
    
    
    18,016
    
    
    
    20,104Income from Continuing Operations
    
    
    15,998
    
    
    
    20,360
    
    
    
    31,568
    
    
    
    34,850Loss from Discontinued Operations,
Net of Tax
    
    
    
    
    
    
    (2,531
    )
    
    
    
    
    
    
    (3,240
    )Net Income
    
    $
    15,998
    
    
    $
    17,829
    
    
    $
    31,568
    
    
    $
    31,610Income Per Common Share from
Continuing Operations:Basic and Diluted
    
    $
    .54
    
    
    $
    .64
    
    
    $
    1.05
    
    
    $
    1.09Loss Per Common Share from
Discontinued Operations:Basic and Diluted
    
    $
    
    
    
    $
    (.08
    )
    
    $
    
    
    
    $
    (.10
    )Net Income Per Common Share:Basic and Diluted
    
    $
    .54
    
    
    $
    .56
    
    
    $
    1.05
    
    
    $
    .99Cash Dividends Per Common Share
    
    $
    .28
    
    
    $
    .27
    
    
    $
    .55
    
    
    $
    .53Weighted Average Common
Shares Outstanding:Basic
    
    
    29,855
    
    
    
    31,735
    
    
    
    30,133
    
    
    
    31,827Diluted
    
    
    29,860
    
    
    
    31,770
    
    
    
    30,140
    
    
    
    31,853
  4




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LANCASTER COLONY CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 Six Months EndedDecember 31(Amounts in thousands)
    
    2007
    
    
    2006Cash Flows From Operating Activities:Net income
    
    $
    31,568
    
    
    $
    31,610Adjustments to reconcile net income to net
cash provided by operating activities:Loss from discontinued operations
    
    
    
    
    
    
    3,240Depreciation and amortization
    
    
    15,027
    
    
    
    14,281Deferred income taxes and other noncash changes
    
    
    609
    
    
    
    (750
    )Restructuring and impairment charge
    
    
    (129
    )
    
    
    Gain on sale of property
    
    
    (149
    )
    
    
    (36
    )Loss (gain) on sale of business
    
    
    5,705
    
    
    
    (8
    )Pension plan activity
    
    
    2,638
    
    
    
    (173
    )Changes in operating assets and liabilities:Receivables
    
    
    (9,332
    )
    
    
    (15,094
    )Inventories
    
    
    9,985
    
    
    
    13,393Other current assets
    
    
    (1,745
    )
    
    
    (2,695
    )Accounts payable and accrued liabilities
    
    
    1,966
    
    
    
    (1,234
    )Net cash provided by operating activities from
continuing operations
    
    
    56,143
    
    
    
    42,534Cash Flows From Investing Activities:Payments on property additions
    
    
    (12,430
    )
    
    
    (23,090
    )Net proceeds from sale of property
    
    
    217
    
    
    
    54Net proceeds from sale of business
    
    
    19,817
    
    
    
    8Proceeds from short-term investment sales, calls and maturities
    
    
    
    
    
    
    35,765Other  net
    
    
    (1,644
    )
    
    
    (639
    )Net cash provided by investing activities from
continuing operations
    
    
    5,960
    
    
    
    12,098Cash Flows From Financing Activities:Net
repayment of $100 million credit facility
    
    
    (42,500
    )
    
    
    Proceeds from debt
    
    
    96,104
    
    
    
    Payments on debt
    
    
    (48,504
    )
    
    
    Purchase of treasury stock
    
    
    (49,809
    )
    
    
    (28,350
    )Payment of dividends
    
    
    (16,489
    )
    
    
    (16,808
    )Proceeds from the exercise of stock options
    
    
    188
    
    
    
    2,532Decrease in cash overdraft balance
    
    
    (4,949
    )
    
    
    (6,521
    )Net cash used in financing activities from
continuing operations
    
    
    (65,959
    )
    
    
    (49,147
    )Cash Flows From Discontinued Operations:Net cash used in operating activities from discontinued operations
    
    
    
    
    
    
    (718
    )Net cash used in investing activities from discontinued operations
    
    
    
    
    
    
    (4
    )Net cash used in discontinued operations
    
    
    
    
    
    
    (722
    )Effect of exchange rate changes on cash
    
    
    2
    
    
    
    (12
    )Net change in cash and equivalents
    
    
    (3,854
    )
    
    
    4,751Cash and equivalents at beginning of year
    
    
    8,318
    
    
    
    6,050Cash and equivalents at end of period
    
    $
    4,464
    
    
    $
    10,801Supplemental Disclosure Of Operating Cash Flows:Cash paid during the period for income taxes
    
    $
    15,506
    
    
    $
    20,401
  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
   December 31
    
    
    June 302007
    
    
    2007Specialty FoodsTrademarks (40-year life)Gross carrying value
    
    $
    370
    
    
    $
    370Accumulated amortization
    
    
    (154
    )
    
    
    (149
    )Net Carrying Value
    
    $
    216
    
    
    $
    221Customer Relationships (12-15-year life)Gross carrying value
    
    $
    13,020
    
    
    $
    13,020Accumulated amortization
    
    
    (1,713
    )
    
    
    (1,233
    )Net Carrying Value
    
    $
    11,307
    
    
    $
    11,787Non-compete Agreements (5-8-year life)Gross carrying value
    
    $
    1,540
    
    
    $
    1,540Accumulated amortization
    
    
    (640
    )
    
    
    (531
    )Net Carrying Value
    
    $
    900
    
    
    $
    1,009Glassware and Candles  Customer Lists (12-year life)Gross carrying value
    
    $
    
    
    
    $
    250Accumulated amortization
    
    
    
    
    
    
    (156
    )Net Carrying Value
    
    $
    
    
    
    $
    94Total Net Carrying Value
    
    $
    12,423
    
    
    $
    13,111
 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)
   Note 5  Long-Term Debt
   Note 6  Pension Benefits
   Three Months
    
    
    Six MonthsEnded
    
    
    EndedDecember 31
    
    
    December 312007
    
    
    2006
    
    
    2007
    
    
    2006Components of net periodic benefit costService cost
    
    $
    39
    
    
    $
    127
    
    
    $
    78
    
    
    $
    254Interest cost
    
    
    647
    
    
    
    632
    
    
    
    1,294
    
    
    
    1,264Expected return on plan assets
    
    
    (805
    )
    
    
    (748
    )
    
    
    (1,610
    )
    
    
    (1,496
    )SFAS 88 settlement charge
    
    
    2,972
    
    
    
    351
    
    
    
    2,972
    
    
    
    351Amortization of unrecognized net loss
    
    
    43
    
    
    
    65
    
    
    
    86
    
    
    
    130Amortization of prior service cost
    
    
    26
    
    
    
    61
    
    
    
    52
    
    
    
    122Amortization of unrecognized net
obligation existing at transition
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2Net periodic benefit cost
    
    $
    2,923
    
    
    $
    489
    
    
    $
    2,874
    
    
    $
    627
  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  Postretirement Benefits
   Three Months
    
    
    Six MonthsEnded
    
    
    EndedDecember 31
    
    
    December 312007
    
    
    2006
    
    
    2007
    
    
    2006Components of net periodic benefit costService cost
    
    $
    7
    
    
    $
    25
    
    
    $
    13
    
    
    $
    58Interest cost
    
    
    57
    
    
    
    92
    
    
    
    115
    
    
    
    198Amortization of unrecognized net loss
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    53Amortization of prior service asset
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )
    
    
    (4
    )SFAS 88 curtailment benefit
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Net periodic benefit cost
    
    $
    63
    
    
    $
    127
    
    
    $
    126
    
    
    $
    296
   Note 8  Stock-Based Compensation
   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)
 Stock Options
     WeightedWeighted
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding stock options vested and
expected to vest at beginning of period
    
    
    361,500
    
    
    $
    40.42Exercised
    
    
    (5,000
    )
    
    
    37.23Granted
    
    
    
    
    
    
    Forfeited
    
    
    (17,150
    )
    
    
    40.72Outstanding stock options vested and
expected to vest at end of period
    
    
    339,350
    
    
    $
    40.45
    
    
    
    1.69
    
    
    $
    208Exercisable and vested stock options
at end of period
    
    
    331,563
    
    
    $
    40.43
    
    
    
    1.68
    
    
    $
    208
  WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested stock options at beginning of period
    
    
    7,787
    
    
    $
    8.14Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Unvested stock options at end of period
    
    
    7,787
    
    
    $
    8.14
  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)
 Restricted Stock
   WeightedNumber
    
    
    Averageof
    
    
    Grant DateShares
    
    
    Fair ValueUnvested restricted stock at beginning of period
    
    
    3,500
    
    
    $
    42.70Granted
    
    
    3,500
    
    
    
    38.14Vested
    
    
    (3,500
    )
    
    
    42.70Forfeited
    
    
    
    
    
    
    Unvested restricted stock at end of period
    
    
    3,500
    
    
    $
    38.14
   Note 9  Restructuring and Impairment Charge
    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)
  Accrual at
    
    
    
    
    
    
    2008
    
    
    Accrual atJune 30,
    
    
    2008
    
    
    Cash
    
    
    December 31,2007
    
    
    Charge
    
    
    Outlays
    
    
    2007Restructuring and Impairment ChargeEmployee Separation Costs
    
    $
    266
    
    
    $
    172
    
    
    $
    (271
    )
    
    $
    167Other Costs
    
    
    219
    
    
    
    
    
    
    
    (35
    )
    
    
    184Subtotal
    
    $
    485
    
    
    
    172
    
    
    $
    (306
    )
    
    $
    351Accelerated Depreciation
    
    
    
    
    
    
    10Inventory Write-Down
    
    
    
    
    
    
    17Total Restructuring and Impairment Charge
    
    
    
    
    
    $
    199
  Note 10  Income Taxes
  Note 11  Business Segment Information
  Three Months Ended
    
    
    Six Months EndedDecember 31
    
    
    December 312007
    
    
    2006
    
    
    2007
    
    
    2006Net SalesSpecialty Foods
    
    $
    215,150
    
    
    $
    192,594
    
    
    $
    399,939
    
    
    $
    364,881Glassware and Candles
    
    
    54,297
    
    
    
    70,581
    
    
    
    113,466
    
    
    
    125,087Automotive
    
    
    36,165
    
    
    
    29,157
    
    
    
    77,777
    
    
    
    64,428Total
    
    $
    305,612
    
    
    $
    292,332
    
    
    $
    591,182
    
    
    $
    554,396Operating IncomeSpecialty Foods
    
    $
    28,309
    
    
    $
    30,769
    
    
    $
    52,083
    
    
    $
    54,951Glassware and Candles
    
    
    (780
    )
    
    
    3,923
    
    
    
    1,633
    
    
    
    3,122Automotive
    
    
    1,116
    
    
    
    (1,429
    )
    
    
    2,557
    
    
    
    (866
    )Corporate Expenses
    
    
    (5,182
    )
    
    
    (1,994
    )
    
    
    (7,715
    )
    
    
    (3,492
    )Total
    
    $
    23,463
    
    
    $
    31,269
    
    
    $
    48,558
    
    
    $
    53,715
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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
  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, 2007 and our financial condition as of
December 31, 2007. Our fiscal year begins on July 1 and ends on June 30. Unless otherwise noted,
references to year pertain to our fiscal year; for example, 2008 refers to fiscal 2008, which is
the period from July 1, 2007 to June 30, 2008. In the discussion that follows, we analyze the
results of our operations for the three and six months ended December 31, 2007, 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.
 14




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Forward-Looking Statements
  Summary of 2008 Results
   15




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RESULTS OF CONSOLIDATED OPERATIONS
 Net Sales and Gross Margin
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeNet SalesSpecialty Foods
    
    $
    215,150
    
    
    $
    192,594
    
    
    $
    22,556
    
    
    
    12
    %
    
    $
    399,939
    
    
    $
    364,881
    
    
    $
    35,058
    
    
    
    10
    %Glassware and Candles
    
    
    54,297
    
    
    
    70,581
    
    
    
    (16,284
    )
    
    
    (23
    )%
    
    
    113,466
    
    
    
    125,087
    
    
    
    (11,621
    )
    
    
    (9
    )%Automotive
    
    
    36,165
    
    
    
    29,157
    
    
    
    7,008
    
    
    
    24
    %
    
    
    77,777
    
    
    
    64,428
    
    
    
    13,349
    
    
    
    21
    %Total
    
    $
    305,612
    
    
    $
    292,332
    
    
    $
    13,280
    
    
    
    5
    %
    
    $
    591,182
    
    
    $
    554,396
    
    
    $
    36,786
    
    
    
    7
    %Gross Margin
    
    $
    47,589
    
    
    $
    54,927
    
    
    $
    (7,338
    )
    
    
    (13
    )%
    
    $
    96,760
    
    
    $
    99,576
    
    
    $
    (2,816
    )
    
    
    (3
    )%Gross Margin
as a Percent of Sales
    
    
    15.6
    %
    
    
    18.8
    %
    
    
    
    
    
    
    
    
    
    
    16.4
    %
    
    
    18.0
    %
     16




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeSelling, General and
Administrative Expenses
    
    $
    24,080
    
    
    $
    23,658
    
    
    $
    422
    
    
    
    2
    %
    
    $
    48,020
    
    
    $
    45,861
    
    
    $
    2,159
    
    
    
    5
    %SG&A Expenses as a
Percent of Sales
    
    
    7.9
    %
    
    
    8.1
    %
    
    
    
    
    
    
    
    
    
    
    8.1
    %
    
    
    8.3
    %
  Restructuring and Impairment Charge
    17




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##### Table of Contents



Accrual at
    
    
    
    
    
    
    2008
    
    
    Accrual atJune 30,
    
    
    2008
    
    
    Cash
    
    
    December 31,2007
    
    
    Charge
    
    
    Outlays
    
    
    2007Restructuring and Impairment ChargeEmployee Separation Costs
    
    $
    266
    
    
    $
    172
    
    
    $
    (271
    )
    
    $
    167Other Costs
    
    
    219
    
    
    
    
    
    
    
    (35
    )
    
    
    184Subtotal
    
    $
    485
    
    
    
    172
    
    
    $
    (306
    )
    
    $
    351Accelerated Depreciation
    
    
    
    
    
    
    10Inventory Write-Down
    
    
    
    
    
    
    17Total Restructuring and Impairment Charge
    
    
    
    
    
    $
    199
  Operating Income
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedDecember 31
    
    
    
    
    
    
    
    
    
    
    December 312007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeOperating IncomeSpecialty Foods
    
    $
    28,309
    
    
    $
    30,769
    
    
    $
    (2,460
    )
    
    
    (8
    )%
    
    $
    52,083
    
    
    $
    54,951
    
    
    $
    (2,868
    )
    
    
    (5
    )%Glassware and Candles
    
    
    (780
    )
    
    
    3,923
    
    
    
    (4,703
    )
    
    
    (120
    )%
    
    
    1,633
    
    
    
    3,122
    
    
    
    (1,489
    )
    
    
    (48
    )%Automotive
    
    
    1,116
    
    
    
    (1,429
    )
    
    
    2,545
    
    
    
    178
    %
    
    
    2,557
    
    
    
    (866
    )
    
    
    3,423
    
    
    
    395
    %Corporate Expenses
    
    
    (5,182
    )
    
    
    (1,994
    )
    
    
    (3,188
    )
    
    
    160
    %
    
    
    (7,715
    )
    
    
    (3,492
    )
    
    
    (4,223
    )
    
    
    121
    %Total
    
    $
    23,463
    
    
    $
    31,269
    
    
    $
    (7,806
    )
    
    
    (25
    )%
    
    $
    48,558
    
    
    $
    53,715
    
    
    $
    (5,157
    )
    
    
    (10
    )%Operating Income
as a Percent of SalesSpecialty Foods
    
    
    13.2
    %
    
    
    16.0
    %
    
    
    
    
    
    
    
    
    
    
    13.0
    %
    
    
    15.1
    %Glassware and Candles
    
    
    (1.4
    )%
    
    
    5.6
    %
    
    
    
    
    
    
    
    
    
    
    1.4
    %
    
    
    2.5
    %Automotive
    
    
    3.1
    %
    
    
    (4.9
    )%
    
    
    
    
    
    
    
    
    
    
    3.3
    %
    
    
    (1.3
    )%Consolidated
    
    
    7.7
    %
    
    
    10.7
    %
    
    
    
    
    
    
    
    
    
    
    8.2
    %
    
    
    9.7
    %
 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
  20




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##### Table of Contents



RECENTLY ADOPTED ACCOUNTING STANDARDS
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control Over Financial Reporting.
 21




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##### Table of Contents



PART II OTHER INFORMATION
 
 Item 1A. Risk Factors
  Inherent risks associated with our idle real property, such as our inability to sell it in a
reasonable time period, could have an adverse effect on our business and results of operations.
    
 Item 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, 2007
    
    
    285,242
    
    
    $
    39.09
    
    
    
    285,242
    
    
    
    2,486,787November 1-30, 2007
    
    
    90,162
    
    
    $
    37.80
    
    
    
    90,162
    
    
    
    2,396,625December 1-31, 2007
    
    
    300,314
    
    
    $
    39.98
    
    
    
    300,314
    
    
    
    2,096,311Total
    
    
    675,718
    
    
    $
    39.31
    
    
    
    675,718
    
    
    
    2,096,311
  22




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##### Table of Contents



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

Withheld
    
    VotedJohn L. Boylan
    
    
    26,190,562
    
    
    
    1,644,556
    
    
    
    2,365,694Henry M. ONeill, Jr.
    
    
    27,601,254
    
    
    
    233,864
    
    
    
    2,365,694Zuheir Sofia
    
    
    27,652,872
    
    
    
    182,246
    
    
    
    2,365,694
   
 Item 6. Exhibits .
 23




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##### Table of Contents



SIGNATURES
  Lancaster Colony Corporation(Registrant)Date:   February 11, 2008
    
    By:
    
    /s/John B. Gerlach, Jr.John B. Gerlach, Jr.Chairman, Chief Executive Officer,President and Director(Principal Executive Officer)Date:   February 11, 2008
    
    By:
    
    /s/John L. BoylanJohn L. BoylanTreasurer, Vice President,Assistant Secretary,Chief Financial Officerand Director(Principal Financialand Accounting Officer)
 24




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##### Table of Contents



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FORM 10-Q
DECEMBER 31, 2007
 
 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
 25