(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Ohio		13-1955943
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
37 West Broad Street		43215
Columbus, Ohio		(Zip Code)
(Address of principal executive offices)

614-224-7141
(Registrant’s telephone number, including area code)

Title of each class		Name of each exchange on which registered
Common Stock, without par value		The NASDAQ Stock Market LLC
(including Series A Participating		(NASDAQ Global Select Market)
Preferred Share Purchase Rights)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one.)

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes o No þ

     The aggregate market value of Common Stock held by non-affiliates on December 31, 2008 was approximately $653,508,000, based on the closing price of these shares on that day.

     As of August 18, 2009, there were approximately 28,102,000 shares of Common Stock, without par value, outstanding.

Portions of the registrant’s definitive proxy statement to be filed for its 2009 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

 

 

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

PART I
Item 1. Business			3
Item 1A. Risk Factors			6
Item 1B. Unresolved Staff Comments			11
Item 2. Properties			11
Item 3. Legal Proceedings			12
Item 4. Submission of Matters to a Vote of Security Holders			12
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			12
Item 6. Selected Financial Data			14
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			30
Item 8. Financial Statements and Supplementary Data			30
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			58
Item 9A. Controls and Procedures			58
Item 9B. Other Information			60
PART III
Item 10. Directors, Executive Officers and Corporate Governance			60
Item 11. Executive Compensation			60
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			60
Item 13. Certain Relationships and Related Transactions, and Director Independence			60
Item 14. Principal Accounting Fees and Services			60
PART IV
Item 15. Exhibits, Financial Statement Schedules			61
Signatures			62
Index to Exhibits			64
EX-21
EX-23
EX-31.1
EX-31.2
EX-32

     Lancaster Colony Corporation, an Ohio corporation (reincorporated in 1992, successor to a Delaware corporation originally incorporated in 1961), is a diversified manufacturer and marketer of consumer products focusing primarily on specialty foods for the retail and foodservice markets. We also manufacture and market candles for the food, drug and mass markets. Less significantly, we are also engaged in the distribution of various products, including glassware and candles, to commercial markets. In recent years, our strategy has shifted away from operating businesses in a variety of industries towards emphasizing the growth and success we have achieved in our Specialty Foods segment. Fiscal 2009 marked another significant year in implementing this strategy as we continued to focus our capital investment in the Specialty Foods segment. Our principal executive offices are located at 37 West Broad Street, Columbus, Ohio 43215 and our telephone number is
614-224-7141.

     As used in this Annual Report on Form 10-K and except as the context otherwise may require, the terms “we,” “us,” “our,” “registrant,” or “the Company” mean Lancaster Colony Corporation and all entities owned or controlled by Lancaster Colony Corporation except where it is clear that the term only means the parent company. 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.

     Our Internet Web site address is http://www.lancastercolony.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through our Web site as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The information contained on our Web site or connected to it is not incorporated into this Annual Report on Form 10-K.

     We operate in two business segments – “Specialty Foods” and “Glassware and Candles” – with the sales of these segments accounting for approximately 87% and 13%, respectively, of consolidated net sales for the year ended June 30, 2009. The financial information relating to business segments for the three years in the periods ended June 30, 2009, 2008 and 2007 is included in Note 15 to the consolidated financial statements, which is included in Part II, Item 8 of this Annual Report on Form 10-K. Further description of each business segment within which we operate is provided below.

     The food products we manufacture and sell include salad dressings and sauces marketed under the brand names “Marzetti,” “T. Marzetti,” “Cardini’s,” “Pfeiffer” and “Girard’s”; fruit glazes, vegetable dips and fruit dips marketed under the brand name “T. Marzetti”; frozen breads marketed under the brand names “New York BRAND” and “Mamma Bella”; frozen Parkerhouse style yeast dinner rolls and sweet rolls, as well as biscuits, marketed under such brand names as “Sister Schubert’s,” “Marshall’s” and “Mary B’s”; premium dry egg noodles marketed under the brand names “Inn Maid” and “Amish Kitchen”; frozen specialty noodles and pastas marketed under the brand names “Reames” and “Aunt Vi’s”; croutons and related products marketed under the brand names “New York BRAND,” “Texas Toast,” “Chatham Village,” “Cardini’s” and “T. Marzetti” and caviar marketed under the brand name “Romanoff.” A portion of our sales in this segment relates to products sold under private label to retailers, distributors and restaurants primarily in the United States. Additionally, a portion of our sales relates to frozen specialty noodles and pastas sold to industrial customers for use as ingredients in their products.

     The dressings, sauces, croutons, fruit glazes, vegetable dips, fruit dips, frozen breads and yeast rolls are sold primarily through sales personnel, food brokers and distributors in various metropolitan areas in the United States, with sales being made to retail, club stores and foodservice markets. We have strong

placement of products in U.S. grocery produce departments through our refrigerated salad dressings, vegetable and fruit dips, and croutons. Within the frozen aisles of grocery retailers, we also have prominent market positions of frozen yeast rolls, as well as garlic breads. Products we sell in the foodservice markets are often custom-formulated and include salad dressings, sandwich and dipping sauces, frozen breads and yeast rolls. Similar to our retail efforts, we utilize our research and development resources to accommodate a strong desire for new and differentiated products among our foodservice users. The dry egg noodles, frozen specialty noodles and pasta are sold through sales personnel, food brokers and distributors to retail, foodservice and industrial markets.

     Sales attributable to one customer comprised approximately 15%, 13% and 13% of this segment’s total net sales in 2009, 2008 and 2007, respectively. No other customer accounted for more than 10% of this segment’s total net sales. Although we have the leading market share in several product categories, all of the markets in which we sell food products are highly competitive in the areas of price, quality and customer service.

     The Specialty Foods segment reported its 39th consecutive year of record sales in 2009. Our strong retail brands and product development capabilities continue to be a source of future growth for this segment. In foodservice markets, we attempt to expand existing customer relationships and pursue new opportunities by leveraging our culinary skills and experience to support the development of new menu offerings. Acquisitions are also a component of our future growth plans, with a focus on fit and value.

     A significant portion of this segment’s product lines is manufactured at our 15 plants located throughout the United States. However, certain items are also manufactured and packaged by third parties located in the United States, Canada and Europe.

     Efficient and cost-effective production remains a key focus of the Specialty Foods segment. In 2009, we consolidated our Atlanta dressing operation into our other existing food facilities as part of our cost-reduction efforts within this segment. Beyond this segment’s ongoing initiatives for cost savings and operational improvements, in recent years we completed the construction of two new production facilities in Hart County, Kentucky. In 2007, we began production at our new salad dressing plant with the incremental capacity enabling us to achieve operating efficiencies at both the new and existing dressing plant locations. In 2008, we started production at a newly constructed facility for the manufacture of frozen yeast rolls. This new facility has helped to satisfy increased customer demand and improve operating efficiencies.

     The operations of this segment are not affected to any material extent by seasonal fluctuations, although sales of frozen retail products tend to be most pronounced in the fiscal second quarter. We do not utilize any franchises or concessions in this business segment. The trademarks that we utilize are significant to the overall success of this segment. The patents and licenses under which we operate, however, are not essential to the overall success of this segment.

Glassware and Candles

     We sell candles, candle accessories, and other home fragrance products in a variety of sizes, forms and fragrance in retail markets to mass merchants, supermarkets, drug stores and specialty shops under the “Candle-lite” brand name. A portion of our candle business is marketed under private label. Of less significance, we also sell candles, glassware and various other products to customers in certain commercial markets, including restaurants, hotels, hospitals and schools.

     All the markets in which we sell candle products are highly competitive in the areas of design, price, quality and customer service. Sales attributable to one customer comprised approximately 49%, 34% and 30% of this segment’s total net sales in 2009, 2008 and 2007, respectively. No other customer accounted for more than 10% of this segment’s total net sales.

     Seasonal retail stocking patterns cause certain of this segment’s products to experience increased sales in the first half of the fiscal year. We do not use any franchises or concessions in this segment. The patents and licenses under which we operate are not essential to the overall success of this segment. Certain trademarks are important, however, to this segment’s marketing efforts.

NET SALES BY CLASS OF PRODUCTS

     The following table sets forth business segment information with respect to the percentage of net sales contributed by each class of similar products that account for at least 10% of our consolidated net sales in any year from 2007 through 2009:

		2009				2008				2007
Specialty Foods:
Non-frozen			54	%			53	%			51	%
Frozen			33	%			29	%			26	%
Glassware and Candles:
Consumer table and giftware			13	%			15	%			18	%

     Net sales attributable to Wal-Mart Stores, Inc. (“Wal-Mart”) totaled approximately 20%, 17% and 17% of consolidated net sales for 2009, 2008 and 2007, respectively.

RESEARCH AND DEVELOPMENT

     The estimated amount spent during each of the last three years on research and development activities determined in accordance with generally accepted accounting principles is not considered material.

BACKLOG

     The nature of our backlog varies by segment. Orders in our Specialty Foods segment are generally filled in three to seven days following the receipt of the order. In our Glassware and Candles segment, certain orders are received in a highly seasonal manner, and the timing of the receipt of several large customer orders can materially impact the amount of the backlog at any point in time without being an indication of longer-term sales. Due to these variables, we do not view the amount of backlog at any particular point in time as a meaningful indicator of longer-term shipments.

ENVIRONMENTAL MATTERS

     Certain of our operations are subject to various Federal, state and local environmental protection laws. Based upon available information, compliance with these laws and regulations is not expected to have a material adverse effect upon the level of capital expenditures, earnings or our competitive position for the remainder of the current and succeeding year.

EMPLOYEES AND LABOR RELATIONS

     As of June 30, 2009, we had approximately 3,200 employees. Approximately 24% of these employees are represented under various collective bargaining agreements, which expire at various times through calendar year 2013. Approximately 8% of our labor force is covered by collective bargaining agreements that have already expired and are in the renegotiation process, or that will expire within one year. While we believe that labor relations with unionized employees are good, a prolonged labor dispute could have a material adverse effect on our business and results of operations.

FOREIGN OPERATIONS AND EXPORT SALES

     Foreign operations and export sales have not been significant in the past and are not expected to be significant in the future based upon existing operations.

RAW MATERIALS

     During 2009, we obtained adequate supplies of raw materials for all of our segments. We rely on a variety of raw materials for the day-to-day production of our products, including soybean oil, certain dairy-related products, flour, fragrances and colorant agents, paraffin and other waxes and plastic and paper packaging materials.

     We purchase the majority of these materials on the open market to meet current requirements, but we also have some longer-term, fixed-price contracts. See further discussion in our contractual obligations disclosure in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Although the availability of certain of these materials has become more influenced by the level of global demand, we anticipate that future sources of supply will generally be adequate for our needs.

Item 1A. Risk Factors

     An investment in our common stock is subject to certain risks inherent in our business. The material risks and uncertainties that we believe affect us are described below. Before making an investment decision, you should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference in this Annual Report on Form 10-K.

     If any of the following risks occur, our financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of our common stock could decline significantly.

Competitive conditions within our markets could impact our sales volumes and operating margins.

     Competition within all our markets is intense and is expected to remain so. Numerous competitors exist, many of which are larger in size. Global production overcapacity has also had an impact on operations within our Glassware and Candles segment. These competitive conditions could lead to significant downward pressure on the prices of our products, which could have a material adverse effect on our revenues and profitability.

     Competitive considerations in the various product categories in which we sell are multifaceted and include price, product innovation, product quality, brand recognition and loyalty, effectiveness of marketing, promotional activity and the ability to identify and satisfy consumer preferences. In order to protect existing market share or capture increased market share among our retail channels, we may decide to increase our spending on marketing, advertising and new product innovation. The success of marketing, advertising and new product innovation is subject to risks, including uncertainties about trade and consumer acceptance. As a result, any increased expenditures we make may not maintain or enhance market share and could result in lower profitability.

Wal-Mart is our largest customer, and the loss of its business could cause our sales and net income to decrease.

     Our net sales to Wal-Mart represented approximately 20% of consolidated net sales for the year ended June 30, 2009. We believe that our relationship with Wal-Mart is good, but we cannot assure that we will be able to maintain this relationship. The loss of, or a significant reduction in, this business could have a material adverse effect on our sales and profitability. Unfavorable changes in Wal-Mart’s financial condition could also have a material adverse effect on our business and results of operations.

Increases in the costs or limitations to the availability of raw materials we use to produce our products could adversely affect our business by increasing our costs to produce goods.

     We purchase a majority of our key raw materials on the open market. Our ability to avoid the adverse effects of a pronounced, sustained price increase in our raw materials is limited. However, we try to limit our exposure to price fluctuations for raw materials by occasionally entering into longer-term, fixed-price contracts for certain raw materials. Our principal raw-material needs include soybean oil, various dairy-related products, flour, paper and plastic packaging materials and wax. We have observed increased volatility in the costs of many of these raw materials in recent years. From 2007 through the first half of 2009, commodity markets for grain-based products, on which our food products depend, including dairy, soybean oil and flour products, rose significantly and were unusually volatile due to concerns over grain-based fuel sources and worldwide demand. Further, fluctuating petroleum prices have impacted our costs of wax and inbound freight on all purchased materials.

     We anticipate that future sources of supply will generally be adequate for our needs, but disruptions in availability and increased prices could have a material adverse effect on our business and results of operations. The increase in the costs of raw materials used in our Specialty Foods segment during 2007 to

2009 had an adverse impact on our operating income. We took measures to offset the impact of these higher costs, including the implementation of higher pricing. However, there is no assurance that we will not experience further increases in the costs of raw materials, and uncertainty exists as to our ability to implement offsetting measures. Such further increases, as well as an inability to effectively implement additional measures to offset higher costs, could have a material adverse effect on our business and results of operations.

     Because we produce certain products at a single manufacturing site, it is possible that we could experience a production disruption that results in a reduction or elimination of the availability of some of our products. Should we not be able to obtain alternate production capability in a timely manner, a negative impact on our operations could result.

     Our operations could be impacted by both genuine and fictitious claims regarding our products and our competitors’ products. Under adverse circumstances, we may need to recall some of our products if they become adulterated, misbranded, contaminated, or contain a defect, which could create a substantial product hazard or create an unreasonable risk of serious injury or death, and we may also be liable if the consumption of any of our products causes injury.

     Any claim or product recall could result in noncompliance with regulations of the Food and Drug Administration or the U.S. Consumer Product Safety Commission. Such an action could force us to stop selling our products and create significant adverse publicity that could harm our credibility and decrease market acceptance of our products.

     If we are required to defend against a product liability claim, whether or not we are found liable under the claim, we could incur substantial costs, our reputation could suffer and our customers might substantially reduce their existing or future orders from us.

     In addition, either a significant product recall or a product liability claim involving a competitor’s products or products in markets related to those in which we compete could result in a loss of consumer confidence in our products or our markets generally and could have a material impact on consumer demand. For example, in fiscal 2007, media reports of contaminated produce products led to a decrease in consumer demand for bagged salads, which affected sales within our Specialty Foods segment.

     We are subject to volatility in energy-related costs that affect the cost of producing our products. This is especially true in our Glassware and Candles segment, in which we use large amounts of wax, and in our Specialty Foods segment, in which we utilize petroleum-derived packaging materials. Increases in these types of costs could have a material adverse effect on our business and results of operations.

     Our ability to obtain adequate and reasonably-priced methods of transportation to distribute our products is a key factor to our success. Our Specialty Foods segment requires the use of refrigerated trailers to ship many of its products. Delays in transportation, especially in our Specialty Foods segment, where orders are generally filled in three to seven days following the receipt of the order, could have a material adverse effect on our business and results of operations. Further, high fuel costs also negatively impact our financial results. We are often required to pay fuel surcharges to third-party transporters of our products due to high fuel costs. These fuel surcharges can be substantial and would increase our cost of goods sold. If we were unable to pass

those high costs to our customers in the form of price increases, those high costs could have a material adverse effect on our business and results of operations.

     Two of our union contracts will be subject to renegotiation during fiscal 2010. We believe that our labor relations with unionized employees are good, but our inability to successfully negotiate the renewal of these contracts could have a material adverse effect on our business and results of operations. Any prolonged work stoppages could also have an adverse effect on our results of operations.

     We are also subject to risks of other business disruptions associated with our dependence on our production facilities and our distribution systems. Natural disasters, terrorist activity or other events could interrupt our production or distribution and have a material adverse effect on our business and results of operations.

     The Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA”) provides for the distribution of monies collected by U.S. Customs from antidumping cases to qualifying domestic producers. Our reported CDSOA receipts totaled approximately $8.7 million, $2.5 million and $0.7 million in 2009, 2008 and 2007, respectively. These remittances related to certain candles being imported from the People’s Republic of China.

     Legislation was enacted in February 2006 to repeal the applicability of the CDSOA to duties collected on products imported after September 2007. However, all duties collected on an entry filed before October 1, 2007 will continue to be available for distribution under former section 1675(c) of the CDSOA. Accordingly, we may receive some level of annual distributions for an undetermined period of years in the future as the monies collected that relate to entries filed prior to October 2007 are administratively finalized by U.S. Customs. Without further legislative action, we expect these distributions will eventually cease.

     The uncertainties surrounding the legislative and administrative challenges have been compounded by cases brought in U.S. courts challenging the CDSOA. In two separate cases, the U.S. Court of International Trade (“CIT”) ruled that the procedure for determining recipients eligible to receive CDSOA distributions is unconstitutional. The U.S. Court of Appeals for the Federal Circuit reversed one of the CIT decisions in February 2009, but the case remains subject to further appeal. The second CIT case has been stayed pending resolution of this appeal. Other cases remain pending that challenge certain aspects of the CDSOA, any of which could affect the amount of funds available for distribution, including funds relating to entries prior to October 2007.

     The extent to which we may receive any future CDSOA distributions is subject to the legal challenges and uncertainties described above. Accordingly, we cannot predict the amount of future distributions, and it is possible that we may not receive any further distributions. Any reduction in CDSOA distributions could reduce our earnings and cash flow.

     We recorded restructuring and impairment charges totaling approximately $1.6 million, $1.3 million and $3.5 million in 2009, 2008 and 2007, respectively. Likewise, future events may occur that would adversely affect the reported value of our assets and require impairment charges. Such events may include, but are not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment on our customer base, or a material adverse change in our relationship with significant customers.

     From time to time, we evaluate acquiring other businesses that would strategically fit within our various operations. If we are unable to consummate, successfully integrate and grow these acquisitions and to realize

contemplated revenue synergies and cost savings, our financial results could be adversely affected. In addition, we may, from time to time, divest businesses that are less of a strategic fit within our portfolio or do not meet our growth or profitability targets. As a result, our profitability may be impacted by either gains or losses on the sales of those businesses or lost operating income or cash flows from those businesses. We may also not be able to divest businesses that are not core businesses or may not be able to do so on terms that are favorable to us. Further, a buyer’s inability to fulfill contractual obligations that were assigned as part of a business divestiture, including those relating to customer contracts, could lead to future financial loss on our part. In addition, we may be required to incur asset impairment or restructuring charges related to acquired or divested businesses, which may reduce our profitability and cash flows. These potential acquisitions or divestitures present financial, managerial and operational challenges, including diversion of management attention from existing businesses, difficulty with integrating or separating personnel and financial and other systems, increased expenses, assumption of unknown liabilities, indemnities and potential disputes with the buyers or sellers.

     We made several business divestitures in 2008 and 2007. These divestitures were made pursuant to agreements that contain customary indemnification provisions, some of which run in favor of the purchasers. In the future, if any of these indemnification provisions are triggered, we may be required to make indemnification payments to these purchasers or other parties. Any potential payments that we may be required to make under our divestiture agreements could have a material adverse effect on our business and results of operations.

     For the first time in several years, we began incurring borrowings in 2007. These borrowings continued throughout 2008 and much of 2009. We may incur indebtedness in 2010, perhaps at higher average levels than in 2009. A consequence of such indebtedness could be a reduction in the level of our profitability due to higher interest expense. Depending on the future extent and availability of our borrowings, we could also become more vulnerable to economic downturns, require curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise be unable to meet our obligations when due. For more information regarding our debt, see the “Liquidity and Capital Resources” section in Item 7 of this Annual Report on Form 10-K.

     Certain of our business operations are subject to regulation by various Federal, state and local government entities and agencies. As a producer of food products for human consumption, our operations are subject to stringent production, packaging, quality, labeling and distribution standards, including regulations mandated by the Federal Food, Drug and Cosmetic Act. We cannot predict if future regulation by various Federal, state and local governmental entities and agencies would adversely affect our business and results of operations.

     In addition, our business operations and the past and present ownership and operation of our properties are subject to extensive and changing Federal, state and local environmental laws and regulations pertaining to the discharge of materials into the environment, the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment. We cannot assure that environmental issues relating to presently known matters or identified sites or to other matters or sites will not require additional, currently unanticipated investigation, assessment or expenditures.

     We rely on the success of our well-recognized brand names. We intend to maintain our strong brand recognition by continuing to devote resources to advertising, marketing and other brand-building efforts. If we are not successful in maintaining our brand recognition, this could have a material adverse effect on our business and results of operations.

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.

     As a result of recent strategic alternative activities, we currently hold various parcels of real property that are not currently used in our operations. These facilities have a net book value at June 30, 2009 of approximately $2.6 million. In addition, we may make further specific determinations in the future with respect to additional facilities or sell other operations while retaining the associated real property. These determinations could be announced at any time. Possible adverse consequences resulting from or related to these properties may include various accounting charges, disposition costs related to the potential sale of a property, costs associated with leasing obligations, and other normal or attendant risks and uncertainties associated with holding, leasing or selling real property.

     Although most of our properties have been subjected to periodic environmental assessments, these assessments may be limited in scope and may not include or identify all potential environmental liabilities or risks associated with any particular property. We cannot be certain that our environmental assessments have identified all potential environmental liabilities or that we will not incur material environmental liabilities in the future. If we do incur or discover any material environmental liabilities or potential environmental liabilities in the future, we may face significant remediation costs and find it difficult to sell or lease any affected properties.

     In addition, if and as these properties become ready and available for sale, it may take months and possibly longer to sell these properties at a suitable price. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell a property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of any property. If we are unable to sell a property when we determine to do so, it could have an adverse effect on our cash flow and results of operations.

Mr. Gerlach, our Chief Executive Officer and Chairman of our board of directors, has a significant ownership interest in our Company.

     As of June 30, 2009, Mr. Gerlach owned or controlled approximately 29% of the outstanding shares of our common stock. Accordingly, Mr. Gerlach has significant influence on all matters submitted to a vote of the holders of our common stock, including the election of directors. Mr. Gerlach’s voting power also may have the effect of discouraging transactions involving an actual or a potential change of control of our Company, regardless of whether a premium is offered over then-current market prices.

     The interests of Mr. Gerlach may conflict with the interests of other holders of our common stock.

Anti-takeover provisions could make it more difficult for a third party to acquire us.

     We have adopted a shareholder rights plan and initially declared a dividend distribution of one right for each outstanding share of common stock to shareholders of record as of April 20, 2000, including any transfer or new issuance of common shares of the Company. Under certain circumstances, if a person or group acquires 15 percent or more of our outstanding common stock, holders of the rights (other than the person or group triggering their exercise) will be entitled to purchase one one-hundredth of a share of Series A Participating Preferred Share at a price of $185 per unit, subject to certain adjustments. The rights expire on April 20, 2010, unless extended by our Board of Directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our Board of Directors, our rights plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of Directors regarding that acquisition. Further, certain provisions of our charter documents, including provisions limiting the ability of shareholders to raise matters at a meeting of shareholders without giving advance notice and provisions classifying our Board of Directors, may make it more difficult for a third party to gain control of our Board of Directors. This may have the effect of delaying or preventing changes of control or management of the Company, which could have an adverse effect on the market price of our stock.

     Additionally, Ohio corporate law contains certain provisions that could have the effect of delaying or preventing a change of control. The Ohio Control Share Acquisition Act found in Chapter 1701 of the Ohio Revised Code provides that certain notice and informational filings and a special shareholder meeting and voting procedures must be followed prior to consummation of a proposed “control share acquisition,” as defined in the Ohio Revised Code. Assuming compliance with the prescribed notice and information filings, a proposed control share acquisition may be accomplished only if, at a special meeting of shareholders, the acquisition is approved by both a majority of the voting power of the Company represented at the meeting and a majority of the voting power remaining after excluding the combined voting power of the “interested shares,” as defined in the Ohio Revised Code. The Interested Shareholder Transactions Act found in Chapter 1704 of the Ohio Revised Code generally prohibits certain transactions, including mergers, majority share acquisitions and certain other control transactions, with an “interested shareholder,” as defined in the Ohio Revised Code, for a three-year period after becoming an interested shareholder, unless our Board of Directors approved the initial acquisition. After the three-year waiting period, such a transaction may require additional approvals under this Act, including approval by two-thirds of all of the Company’s voting shares and a majority of the Company’s voting shares not owned by the interested shareholder. The application of these provisions of the Ohio Revised Code, or any similar anti-takeover law adopted in Ohio, could have the effect of delaying or preventing a change of control, which could have an adverse effect on the market price of our stock.

Item 1B. Unresolved Staff Comments

     None

Item 2. Properties

     We use approximately 2.7 million square feet of space for our operations. Of this space, approximately 0.5 million square feet are leased.

     The following table summarizes our locations that in total exceed 75,000 square feet of space (including aggregation of multiple facilities) and that are considered our principal manufacturing and warehousing operations:

				Approximate				Terms of
Location		Business Segment		Square Feet				Occupancy
Altoona, IA (1)		Specialty Foods			109,000			Owned/Leased
Bedford Heights, OH (3)		Specialty Foods			98,000			Owned/Leased
Columbus, OH (4)		Specialty Foods			393,000			Owned/Leased
Grove City, OH		Specialty Foods			195,000			Owned
Horse Cave, KY		Specialty Foods			333,000			Owned
Luverne, AL		Specialty Foods			91,000			Owned
Milpitas, CA (2)		Specialty Foods			130,000			Owned/Leased
Wilson, NY		Specialty Foods			80,000			Owned
Leesburg, OH		Glassware and Candles			860,000			Owned
Jackson, OH		Glassware and Candles			122,000			Owned

     As a result of our strategic alternative activities, we also hold various parcels of real property that we do not currently use in our operations. The related facilities contain in excess of 1.5 million square feet.

     We currently are a party to various legal proceedings. Such matters did not have a material adverse effect on the current-year results of operations. While we believe that the ultimate outcome of these various proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or future results of operations, litigation is always subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction prohibiting us from manufacturing or selling one or more products. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on net income for the period in which the ruling occurs and future periods.

     None

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

     Our common stock trades on The NASDAQ Global Select Market under the symbol LANC. The following table sets forth the high and low prices for Lancaster Colony Corporation common shares and the dividends paid for each quarter of 2009 and 2008. Stock prices were provided by The NASDAQ Stock Market LLC.

										Dividends
		Stock Prices								Paid
		High				Low				Per Share
2009
First quarter		$	39.24			$	29.57			$	.280
Second quarter			38.37				26.01				.285
Third quarter			43.46				31.90				.285
Fourth quarter			48.92				40.42				.285
Year										$	1.135
2008
First quarter		$	44.02			$	35.89			$	.27
Second quarter			44.10				36.11				.28
Third quarter			41.05				32.72				.28
Fourth quarter			41.62				30.27				.28
Year										$	1.11

     The number of shareholders as of August 18, 2009 was approximately 9,600. The highest and lowest prices for our common stock from July 1, 2009 to August 18, 2009 were $47.52 and $41.52.

     We have paid dividends for 184 consecutive quarters. Future dividends will depend on our earnings, financial condition and other factors.

     Our Board of Directors (“Board”) approved a share repurchase authorization of 2,000,000 shares in August 2007. Approximately 509,000 shares from this authorization remained authorized for future purchase at June 30, 2009. In the fourth quarter, we made no repurchases of our common stock. This share repurchase authorization does not have a stated expiration date.

PERFORMANCE GRAPH

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
OF LANCASTER COLONY CORPORATION, THE S&P MIDCAP 400 INDEX
AND THE DOW JONES U.S. FOOD PRODUCERS INDEX

     The graph set forth below compares the five-year cumulative total return from investing $100 on June 30, 2004 in each of our Common Stock, the S&P Midcap 400 Index and the Dow Jones U.S. Food Producers Index. It is assumed that all dividends are reinvested.

Cumulative Total Return (Dollars)

				6/04					6/05					6/06					6/07					6/08					6/09
	Lancaster Colony Corporation				100.00					105.51					104.59					113.81					84.77					127.16
	S&P Midcap 400				100.00					114.03					128.83					152.67					141.47					101.83
	Dow Jones U.S. Food Producers				100.00					105.09					114.30					133.88					121.69					102.46

     There can be no assurance that our stock performance will continue into the future with the same or similar trends depicted in the above graph.

(Thousands Except		Years Ended June 30
Per Share Figures)		2009				2008				2007				2006				2005
Operations
Net Sales		$	1,051,491			$	980,915			$	945,810			$	924,571			$	907,345
Gross Margin		$	215,492			$	157,341			$	181,740			$	189,074			$	191,014
Percent of Sales			20.5	%			16.0	%			19.2	%			20.4	%			21.1	%
Interest Expense		$	(1,217	)		$	(3,076	)		$	(150	)		$	—			$	—
Percent of Sales			0.1	%			0.3	%			0.0	%			0.0	%			0.0	%
Other Income — Continued Dumping and Subsidy Offset Act		$	8,696			$	2,533			$	699			$	11,376			$	26,226
Income from Continuing Operations
Before Income Taxes		$	137,006			$	75,668			$	101,260			$	125,734			$	141,928
Percent of Sales			13.0	%			7.7	%			10.7	%			13.6	%			15.6	%
Taxes Based on Income		$	47,920			$	27,229			$	36,981			$	44,494			$	52,550
Income from Continuing Operations		$	89,086			$	48,439			$	64,279			$	81,240			$	89,378
Percent of Sales			8.5	%			4.9	%			6.8	%			8.8	%			9.9	%
Continuing Operations Diluted Income per Common Share		$	3.18			$	1.64			$	2.03			$	2.42			$	2.56
Cash Dividends per Common Share		$	1.135			$	1.11			$	1.07			$	3.03			$	.98
Financial Position
Cash, Equivalents and Short-Term Investments		$	38,484			$	19,417			$	8,316			$	41,815			$	184,580
Total Assets		$	498,481			$	520,178			$	598,497			$	628,021			$	731,278
Working Capital		$	148,233			$	144,925			$	137,121			$	235,283			$	370,559
Property, Plant and Equipment—Net		$	170,900			$	179,573			$	194,589			$	162,107			$	131,837
Long-Term Debt		$	—			$	55,000			$	—			$	—			$	—
Property Additions		$	11,336			$	16,832			$	53,589			$	51,860			$	18,917
Depreciation and Amortization		$	21,870			$	24,138			$	24,081			$	24,980			$	26,351
Shareholders’ Equity		$	402,556			$	359,218			$	444,309			$	494,421			$	587,726
Per Common Share		$	14.32			$	12.63			$	14.45			$	15.33			$	17.17
Weighted Average Common Shares Outstanding—Diluted			28,051				29,499				31,603				33,502				34,925

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 years in the periods ended June 30, 2009, 2008 and 2007 and our liquidity and capital resources as of June 30, 2009 and 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 last three years, including the trends in our overall business, followed by a discussion of our cash flows and liquidity and contractual obligations. We then provide a review of the critical accounting policies and estimates that we believe are most important to an understanding of our MD&A and our consolidated financial statements. We conclude our MD&A with information on recently issued accounting pronouncements.

     The following discussion should be read in conjunction with the “Selected Financial Data” and our consolidated financial statements and the notes thereto, all included elsewhere in this Annual Report on Form 10-K. 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

     Lancaster Colony Corporation is a diversified manufacturer and marketer of consumer products focusing primarily on specialty foods for the retail and foodservice markets. We also manufacture and market candles for the food, drug and mass markets. Less significantly, we are also engaged in the distribution of various products, including glassware and candles, to commercial markets. Our operations are organized in two reportable segments: “Specialty Foods” and “Glassware and Candles.” Over 90% of the sales of each segment are made to customers in the United States.

     In recent years, our strategy has shifted away from operating businesses in a variety of industries towards emphasizing the growth and success we have achieved in our Specialty Foods segment. Fiscals 2008 and 2007 were significant years in implementing this strategy as we divested nonfood operations and focused our capital investment in the Specialty Foods segment. In June 2008, we sold substantially all of the assets of our remaining automotive operations. In November 2007, we sold most of our consumer and floral glass operating assets. These transactions, combined with other strategic dispositions and investments in 2007 and 2008, have resulted in transforming our company into a predominately food-focused business. See further discussion of these divestitures in Note 2 in the notes to the consolidated financial statements. In 2009, approximately 87% of our consolidated net sales and effectively all of our operating income were derived from the Specialty Foods segment. For perspective, in 1999, our Specialty Foods segment comprised approximately 40% and 44% of our reported consolidated net sales and operating income, respectively. Below is a list of the material transactions and other events in 2007 and 2008 that contributed toward our transition to a food-focused business:

	•		June 2008 – Sale of the remaining automotive operations, ending the previously reported Automotive segment;
	•		November 2007 – Sale of substantially all of the operating assets of our consumer and floral glass operations;
	•		September 2007 – Substantial completion and operational start-up of new frozen yeast roll facility in Horse Cave, Kentucky. This facility adjoins the dressing facility noted below and allows us to take advantage of various synergies;
	•		June 2007 – Sale of our automotive accessory operations based in Coshocton, Ohio and LaGrange, Georgia;

     Although we have made substantial progress in implementing our new strategy, we continue to own the candle operations referred to above. Due to existing market conditions, further progress on our strategic evaluation of these operations may not be imminent. However, we will continue to review our options and may revisit our efforts as market conditions improve. Our only other remaining nonfood operation is primarily engaged in distributing glassware, candles and other products to commercial markets. This operation is not material to our consolidated operations, and we continue to review various strategic alternatives with respect to this operation.

     Our current strategy focuses our efforts on the most profitable part of our business and minimizes the amount of financial and management resources devoted to sectors that have trended toward lower growth potential and operating margins. In 2008, our results were adversely affected by high commodity and petroleum costs, but we took several steps, including initiating price increases, intended to mitigate these higher costs. These steps proved successful in 2009 as our fiscal year net sales rose by 7% and operating income rose to 12% of net sales versus 8% of net sales in the prior year. Without distraction from significant issues previously posed by our divested automotive and glassware businesses, we believe we are now better positioned to maximize the future potential of our Specialty Foods segment.

     We view our food operations as having the potential to achieve future growth in sales and profitability due to attributes such as:

	•		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.

     Our goal is to continue to grow our specialty foods retail and foodservice business by:

	•		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
	•		pursuing acquisitions that meet our strategic criteria.

     Within retail markets, our Specialty Foods group utilizes numerous branded products to support growth and maintain market competitiveness. We place great emphasis on our product innovation and development efforts so as to enhance growth by providing distinctive new products meeting the evolving needs and preferences of consumers.

     Our foodservice sales primarily consist of products sold to restaurant chains. We have experienced broad-based growth in our foodservice sales, as we build on our strong reputation for product development and quality.

     We expect that part of our long-term growth in the Specialty Foods segment will result from acquisitions. We continue to review potential acquisitions that we believe will provide good complements to our existing product lines, enhance our gross margins or offer good expansion opportunities in a manner that fits our overall goals. Consistent with this strategy, in June 2007, we acquired the principal assets of Marshall Biscuit, a privately-owned producer and marketer of frozen yeast rolls and biscuits based in Saraland,

Alabama. The purchase price was approximately $23.1 million, and the transaction is discussed in further detail in Note 2 in the notes to the consolidated financial statements.

     As noted above, we recently made substantial capital investments to support our existing food operations and future growth opportunities. In 2007, we began production activities at a newly constructed dressing facility located in Kentucky. Our investment in constructing this facility exceeded $45 million. During 2007, we also commenced and largely completed construction of an adjacent facility for the manufacture of frozen yeast rolls. This facility required a slightly smaller total investment and began operation in early 2008. Both projects will help accommodate potential future sales growth and also provide greater manufacturing efficiencies. Based on our current plans and expectations, we believe that total capital expenditures for 2010 will be approximately $15 million.

     The following is an overview of our consolidated operating results for the year ended June 30, 2009. The prior-year results reflect the classification of the sold automotive operations as discontinued operations. There were no discontinued operations in 2009.

     Consolidated net sales reached approximately $1,051 million during 2009, increasing 7% as compared to prior-year sales of $981 million, driven by growth coming from our Specialty Foods segment as partially offset by a decline in Glassware and Candles segment sales. The Specialty Foods segment’s growth benefited both from pricing actions, as well as higher volumes in both the retail and foodservice markets. The decrease in sales of the Glassware and Candles segment is primarily attributable to the November 2007 sale of our consumer and floral glass operations, as well as the prior-year disposition of inventory related to closing our industrial glassware facility. Net sales attributable to these divested and closed operations totaled approximately $22 million in 2008.

     Gross margin increased 37% to approximately $215.5 million from the prior-year comparable total of $157.3 million. Pricing actions taken during the year and a more favorable trend in raw-material costs during the last six months of the year contributed to the higher gross margin.

     Overall results were also affected by the funds received under CDSOA. In 2009, we received approximately $8.7 million under CDSOA, as compared to approximately $2.5 million in 2008 and approximately $0.7 million in 2007. For a more-detailed discussion of CDSOA, see the subcaption “Other Income – Continued Dumping and Subsidy Offset Act” of this MD&A.

     Income from continuing operations for the current year was approximately $89.1 million, or $3.18 per diluted share, compared to $48.4 million, or $1.64 per diluted share, in the prior year. Net income totaled approximately $89.1 million in 2009, or $3.18 per diluted share, compared to net income of $37.6 million, or $1.28 per diluted share, in 2008, which was net of an after-tax loss from discontinued operations of approximately $10.8 million, or $.37 per diluted share. The prior-year loss on sale from discontinued operations was approximately $13.5 million, or $.46 per diluted share. Net income in 2007 totaled approximately $45.7 million, or $1.45 per diluted share, and was inclusive of an after-tax loss from discontinued operations of approximately $18.6 million, or $.59 per diluted share. The 2007 loss on the sale of discontinued operations was approximately $15.1 million, or $.48 per diluted share.

     Even though the current general economic conditions pose various challenges to our markets, we hope to attain growth in consolidated sales during 2010, primarily by introducing new products, pursuing growth with existing customers and expanding our market presence. However, any revenue growth from additional sales may be at least partially offset by downward pricing adjustments in certain of our foodservice supply arrangements that occur as a result of lower key ingredient costs. We will also continue to review acquisition opportunities within the Specialty Foods segment that are consistent with our growth strategy, represent good value or otherwise provide significant strategic benefits.

     Within our Specialty Foods segment, we anticipate that the comparatively lower ingredient costs we have seen in the last half of 2009 may generally persist and yield favorable comparisons during at least the first half of 2010. We also anticipate, however, that our year-over-year comparative benefit from past pricing

actions is basically complete as we have lapped prior retail price increases. In addition, it is possible that a recovery in general economic conditions and other changes in the economy and regulatory environment could cause a sharp increase in the costs of food commodities and other raw materials. To help offset or stabilize the impact of rising commodity costs, we have pursued other operational strategies that we believe will aid our future results. For instance, as part of our cost reduction efforts, we consolidated our Atlanta production operations into our other existing facilities in early 2009. We are continuing to limit some of our exposure to volatile swings in food commodity costs through a structured purchasing program for certain future requirements.

     With respect to our Glassware and Candles segment, we implemented higher pricing among selected products during 2009. We anticipate that 2010 may benefit from these pricing actions, higher production levels and the likelihood of somewhat lower wax costs attainable in at least the first half of 2010.

     For a more-detailed discussion of the effect of commodity costs, see the “Impact of Inflation” section of this MD&A below.

     In order to ensure that our capitalization is adequate to support our future internal growth prospects, acquire food businesses consistent with our strategic goals, and maintain cash returns to our shareholders through cash dividends and share repurchases, we will need to maintain sufficient flexibility in our future capital structure. We will continue to reassess our allocation of capital periodically, as well as the timing, nature and extent of our share repurchase activities, to ensure that we maintain adequate operating flexibility while providing appropriate levels of cash returns to our shareholders.

     The relative proportion of sales contributed by each of our business segments can impact a year-to-year comparison of the consolidated statements of income. The following table summarizes the sales mix over each of the last three years:

		2009				2008				2007
Segment Sales Mix:
Specialty Foods			87	%			82	%			77	%
Glassware and Candles			13	%			18	%			23	%

						Year Ended
						June 30								Change
(Dollars in thousands)		2009				2008				2007				2009 vs. 2008								2008 vs. 2007
Net Sales
Specialty Foods		$	909,897			$	808,507			$	728,657			$	101,390				13	%		$	79,850				11	%
Glassware and Candles			141,594				172,408				217,153				(30,814	)			(18	)%			(44,745	)			(21	)%
Total		$	1,051,491			$	980,915			$	945,810			$	70,576				7	%		$	35,105				4	%
Gross Margin		$	215,492			$	157,341			$	181,740			$	58,151				37	%		$	(24,399	)			(13	)%
Gross Margin as a Percentage of Sales			20.5	%			16.0	%			19.2	%

     Consolidated net sales for the year ended June 30, 2009 increased 7% to approximately $1,051 million from the prior-year total of approximately $981 million. The sales growth was driven by increased sales in the Specialty Foods segment as partially offset by a decline in sales of the Glassware and Candles segment. The Specialty Foods segment’s growth benefited from pricing actions, as well as higher volumes in both the retail and foodservice markets. All such growth was internally generated. The decrease in net sales of the Glassware and Candles segment is primarily attributable to the November 2007 sale of our consumer and floral glass operations and the prior-year disposition of inventory related to closing our industrial glassware facility. Net sales attributable to these divested and closed operations totaled approximately $22 million in 2008. Consolidated net sales for the year ended June 30, 2008 increased 4% over the 2007 total of approximately $946 million. This increase was due to the same factors largely contributing to the 2009 increase over 2008 including higher Specialty Foods segment sales on increased pricing and volumes, offset

somewhat by the decline in sales in the Glassware and Candles segment due to divested and closed businesses. Net sales attributable to the divested and closed businesses totaled approximately $62 million in 2007.

     Our gross margin as a percentage of net sales was approximately 20.5% in 2009 compared with 16.0% in 2008 and 19.2% in 2007. In the Specialty Foods segment, gross margin percentages improved in 2009, benefiting from both pricing actions and higher sales volumes, which offset the adverse impact of higher ingredient costs incurred during the first half of the fiscal year. We estimate the year-over-year unfavorable impact of commodity costs at approximately $15 million. Gross margin percentages in the Glassware and Candles segment declined from the prior year due to higher wax costs, declines in candle sales and lower capacity utilization within candle manufacturing operations. Relative to 2007, we encountered markedly higher raw material costs in 2008, especially for key food commodities and wax. Increased food pricing generally lagged the timing of cost increases and did not fully recover their impact. Also affecting 2008 results were a charge of approximately $6.4 million recorded in cost of sales for the loss on the sale of our consumer and floral glass operations, a pension settlement charge of approximately $3.0 million recorded in corporate expenses and income of approximately $1.1 million to reflect a favorable adjustment of prior-year self-insured deductibles under our general liability insurance. Other factors influencing 2007 included start-up costs associated with a new food manufacturing facility as well as approximately $1.4 million of inventory write-downs associated with the closure of our industrial glass operation.

Selling, General and Administrative Expenses

						Year Ended
						June 30								Change
(Dollars in thousands)		2009				2008				2007				2009 vs. 2008								2008 vs. 2007
Selling, General and Administrative Expenses		$	84,238			$	80,751			$	79,704			$	3,487				4	%		$	1,047				1	%
SG&A Expense as a Percentage of Sales			8.0	%			8.2	%			8.4	%

     Selling, general and administrative expenses for 2009 totaled approximately $84.2 million and increased 4%, as compared with the 2008 total of $80.8 million, while the 2008 total had increased 1% from the 2007 total of $79.7 million. Included in 2009 and 2007 totals were recoveries of bad debt associated with the 2002 bankruptcy filing of Kmart Corporation totaling approximately $0.7 million and $1.0 million, respectively. We wrote off approximately $14.3 million related to this bankruptcy in 2002. The decrease in selling, general and administrative expenses as a percentage of sales was influenced by the extent to which the higher sales leveraged our existing selling and organizational infrastructure.

Restructuring and Impairment Charge

     Specialty Foods Segment

     In the first quarter of 2009, we began consolidating our Atlanta dressing operation into our other existing food facilities as part of our cost-reduction efforts within the Specialty Foods segment. During 2009, we recorded related restructuring and impairment charges of approximately $0.8 million ($0.5 million after taxes). The majority of these charges resulted in cash outlays and consisted of one-time termination benefits. This closure was essentially complete at September 30, 2008. The disposition of the associated real estate occurred in December 2008 and resulted in a gain of approximately $0.5 million, which is recorded in cost of sales. We do not expect any other costs or cash expenditures related to this closure. The operations of this closed location have not been reclassified to discontinued operations under the guidance provided in Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).

     An analysis of the restructuring activity for 2009 recorded within the Specialty Foods segment follows:

		Accrual at								2009				Accrual at
		June 30,				2009				Cash				June 30,
		2008				Charge				Outlays				2009
Restructuring and Impairment Charges
Employee Separation Costs		$	—			$	555			$	(555	)		$	—
Other Costs			—				162				(162	)			—
Subtotal		$	—				717			$	(717	)		$	—
Fixed Asset Impairment							47
Total						$	764

     Other Segments

     In 2007, we announced our plan to close our industrial glass operation located in Lancaster, Ohio. During 2007, we recorded restructuring and impairment charges, within the Glassware and Candles segment, of approximately $3.5 million ($2.3 million after taxes) including $1.4 million recorded in cost of sales for the write-down of inventories. Active business operations have ceased for this operation. The operations of this closed unit have not been reclassified to discontinued operations under the guidance provided in SFAS 144. During 2008, we recorded additional charges of approximately $1.3 million ($0.8 million after taxes), including less than $0.1 million recorded in cost of sales for the write-down of inventories, for costs incurred during the period. The majority of these charges were for disposal-related activities associated with idle real property.

     During 2009, we recorded additional restructuring and impairment charges of approximately $0.8 million ($0.5 million after taxes) for costs incurred during the period. The majority of these charges were for disposal-related activities associated with idle real property. These charges were recorded within corporate expenses as the remaining assets and liabilities from this closed operation are now considered corporate assets and liabilities.

     The total costs associated with this plant closure were approximately $5.7 million and include all of the above-noted costs. This closure was essentially complete at September 30, 2008. We do not currently expect other significant restructuring costs related to this closure.

     An analysis of the restructuring activity for 2009 recorded within corporate expenses follows:

		Accrual at								2009				Accrual at
		June 30,				2009				Cash				June 30,
		2008				Charge				Outlays				2009
Restructuring and Impairment Charges
Employee Separation Costs		$	69			$	—			$	(69	)		$	—
Other Costs			1,184				842				(2,026	)			—
Total		$	1,253			$	842			$	(2,095	)		$	—

     During 2009, certain real property previously used by our divested consumer and floral glass operations met the criteria defined in SFAS 144 to be considered “held for sale.” We sold certain of these “held for sale” properties in 2009. The remaining properties, along with other previously-deemed “held for sale” properties, have a total net book value of approximately $2.6 million and have been reclassified to current assets within Deferred Income Taxes and Other Current Assets on the Consolidated Balance Sheet. In accordance with SFAS 144, we are no longer depreciating these “held for sale” assets and they are being actively marketed for sale.

Operating Income

						Year Ended
						June 30								Change
(Dollars in thousands)		2009				2008				2007				2009 vs. 2008								2008 vs. 2007
Operating Income
Specialty Foods		$	145,848			$	88,975			$	101,518			$	56,873				64	%		$	(12,543	)			(12	)%
Glassware and Candles			(5,671	)			(1,887	)			5,712				(3,784	)			(201	)%			(7,599	)			(133	)%
Corporate Expenses			(10,529	)			(11,751	)			(7,320	)			1,222				(10	)%			(4,431	)			61	%
Total		$	129,648			$	75,337			$	99,910			$	54,311				72	%		$	(24,573	)			(25	)%
Operating Income as a Percentage of Sales
Specialty Foods			16.0	%			11.0	%			13.9	%
Glassware and Candles			(4.0	)%			(1.1	)%			2.6	%
Consolidated			12.3	%			7.7	%			10.6	%

     Due to the factors discussed above, consolidated operating income for 2009 totaled approximately $129.6 million, a 72% increase from 2008 operating income of $75.3 million. The 2008 total had decreased 25% from 2007 operating income totaling approximately $99.9 million. See further discussion of operating results by segment following the discussion of “Net Income” below.

Interest Expense

     We incurred interest expense of approximately $1.2 million in 2009 related to long-term borrowings. Higher levels of indebtedness resulted in interest expense of approximately $3.1 million in 2008 as compared to less than $0.2 million in 2007. The current-year decrease in interest expense was due to lower interest rates on our debt as well as an overall decrease in average borrowing levels. We had no outstanding borrowings at June 30, 2009.

Other Income — Continued Dumping and Subsidy Offset Act

     The CDSOA provides for the distribution of monies collected by U.S. Customs from antidumping cases to qualifying domestic producers. Our reported CDSOA receipts totaled approximately $8.7 million, $2.5 million and $0.7 million in 2009, 2008 and 2007, respectively. These remittances related to certain candles being imported from the People’s Republic of China.

     Legislation was enacted in February 2006 to repeal the applicability of the CDSOA to duties collected on products imported after September 2007. However, all duties collected on an entry filed before October 1, 2007 will continue to be available for distribution under former section 1675(c) of the CDSOA. Accordingly, we may receive some level of annual distributions for an undetermined period of years in the future as the monies collected that relate to entries filed prior to October 2007 are administratively finalized by U.S. Customs. Without further legislative action, we expect these distributions will eventually cease.

     The uncertainties surrounding the legislative and administrative challenges have been compounded by cases brought in U.S. courts challenging the CDSOA. In two separate cases, the CIT ruled that the procedure for determining recipients eligible to receive CDSOA distributions is unconstitutional. The U.S. Court of Appeals for the Federal Circuit reversed one of the CIT decisions in February 2009, but the case remains subject to further appeal. The second CIT case has been stayed pending resolution of this appeal. Other cases remain pending that challenge certain aspects of the CDSOA, any of which could affect the amount of funds available for distribution, including funds relating to entries prior to October 2007.

     The extent to which we may receive any future CDSOA distributions is subject to the legal challenges and uncertainties described above. Accordingly, we cannot predict the amount of future distributions, and it is possible that we may not receive any further distributions. Any reduction in CDSOA distributions could reduce our earnings and cash flow.

Interest Income and Other — Net

     Interest income and other for 2009 totaled an expense of approximately $0.1 million as compared to income of $0.9 million in 2008 and $0.8 million in 2007. The decrease from 2008 to 2009 reflects a lower level of interest income due to lower interest rates.

Income from Continuing Operations Before Income Taxes

     As affected by the factors discussed above, our income from continuing operations before income taxes for 2009 of approximately $137.0 million increased 81% from the 2008 total of $75.7 million. The 2007 total income from continuing operations before income taxes was approximately $101.3 million. Our effective tax rate on income from continuing operations was 35.0%, 36.0% and 36.5% in 2009, 2008 and 2007, respectively. The 2009 rate was influenced by a higher Federal deduction related to domestic production activities and an overall lower state tax rate. Relative to 2007, the 2008 rate was also influenced by a higher Federal deduction related to domestic production activities.

Income from Continuing Operations

     Income from continuing operations totaled approximately $89.1 million, $48.4 million and $64.3 million for 2009, 2008 and 2007, respectively, as influenced by the factors noted above. Income from continuing operations per share totaled approximately $3.18 per basic and diluted share in 2009, as compared to $1.64 per basic and diluted share in 2008 and $2.04 and $2.03 per basic and diluted share, respectively, in 2007. Income per share in each of the last three years has been beneficially affected by share repurchases, which have totaled approximately $172.1 million over the three-year period ended June 30, 2009.

Discontinued Operations

     There were no discontinued operations in 2009. In 2008, we recorded a loss from discontinued operations of approximately $10.8 million, net of tax, including an after-tax loss on sale of approximately $13.5 million. Loss from discontinued operations per share totaled approximately $.37 per basic and diluted share in 2008. In 2007, we recorded a loss from discontinued operations of approximately $18.6 million, net of tax, including an after-tax loss on sale of approximately $15.1 million. Loss from discontinued operations per share totaled approximately $.59 per basic and diluted share in 2007. See further discussion in Note 2 in the notes to the consolidated financial statements.

Net Income

     Net income for 2009 of approximately $89.1 million increased from 2008 net income of $37.6 million. Net income was approximately $45.7 million in 2007. Diluted net income per share totaled approximately $3.18 in 2009, a 148% increase from the prior-year total of $1.28. The latter amount was 12% lower than 2007 diluted earnings per share of $1.45.

SEGMENT REVIEW — SPECIALTY FOODS

     Net sales of the Specialty Foods segment during 2009 surpassed the record level achieved in 2008, and operating income of approximately $145.8 million increased 64% from the 2008 level of $89.0 million. The benefits from both pricing actions and higher sales volumes offset the adverse impact of higher ingredient costs incurred during the first half of the fiscal year. Net sales during 2009 totaled approximately $909.9 million, a 13% increase over the prior-year total of $808.5 million. Sales for 2008 increased 11% over the 2007 total of approximately $728.7 million. The percentage of retail customer sales within the segment was approximately 51% during 2009 and 2008, as compared to 52% in 2007.

     We estimate that more than half of the Specialty Foods segment’s 2009 sales growth was derived from pricing actions, although we also attained higher volumes in both the retail and foodservice markets. Recently introduced New York BRAND products such as Texas Toast Croutons, Pizzeria Dip’N Sticks and Ciabatta Cheese Rolls contributed to the volume growth. In foodservice markets, our sales increase was broad based with growth among various customers and product lines, including dressings and sauces, frozen rolls and frozen pasta. In 2008, net sales of the Specialty Foods segment also benefited from improved pricing and greater sales volumes of both retail and foodservice products. The retail increases occurred

among numerous product lines, including frozen yeast rolls, produce dressings and dips, and croutons. Retail sales in 2008 further benefited from the incremental sales totaling approximately $12 million from Marshall Biscuit, which was acquired in June 2007. Also influencing the relative comparability of 2008 was the adverse effect on prior-year sales resulting from consumer food safety concerns regarding fresh produce, which indirectly affected sales of related products such as our retail produce dressings and vegetable dips. The foodservice increases in 2008 occurred generally through broad foodservice growth and improved pricing.

     Operating income of the Specialty Foods segment in 2009 totaled approximately $145.8 million, a 64% increase from the 2008 total of $89.0 million. The 2008 level was 12% lower than the 2007 level of $101.5 million. The 2009 increase primarily reflects higher pricing and greater sales volumes. These improvements offset the adverse impact of higher ingredient costs incurred during the first half of the fiscal year. We estimate the unfavorable year-over-year impact of commodity costs at approximately $15 million. Substantially and broadly higher food commodity costs were a significant factor in our 2008 results. Many key commodities, such as soybean oil and flour, reached record highs. We estimate that the extent of such increased costs exceeded the 2007 levels by more than $65 million, and only about half of these increases could be recovered through higher pricing. Of much lesser impact were higher energy costs, increased segment depreciation and amortization, and start-up costs in the first half of 2008 associated with the opening of a new frozen roll facility.

     Glassware and Candles segment sales totaled approximately $141.6 million during 2009, as compared to $172.4 million in 2008 and $217.2 million in 2007. The declines in net sales of the Glassware and Candles segment for 2009 and 2008 were influenced by the sale of our consumer and floral glass operations in November 2007, as well as the earlier closure of our industrial glassware facility. Net sales attributable to these divested and closed operations totaled approximately $22 million in 2008 and approximately $62 million in 2007. The 2009 decline was also affected by lower candle sales. Unsettled economic and competitive retail market conditions contributed to this decline. Candle sales in 2008 were also adversely affected by softer holiday season sales, as influenced by certain seasonal programs from 2007 that were not repeated in 2008 and generally lackluster retail market conditions.

     The segment recorded an operating loss of approximately $5.7 million and $1.9 million during 2009 and 2008, respectively, decreasing from operating income of approximately $5.7 million in 2007. The 2009 decline reflects the decrease in candle sales, higher wax costs and lower capacity utilization. Comparisons to 2008 were affected by the approximately $6.4 million loss recorded in cost of sales from the November 2007 sale of our consumer and floral glass operations, as well as the loss of subsequent contribution from these operations over the balance of 2008. Margins for 2008 as compared to 2007 were also adversely affected by rising wax input costs and lower candle production levels. However, the 2007 results also reflected a restructuring charge of approximately $3.5 million, including $1.4 million recorded in cost of sales for the write-down of inventories, related to the closure of our industrial glass manufacturing facility located in Lancaster, Ohio.

     We began implementing higher pricing on various candle products during 2009. We anticipate that recent comparative declines in wax costs and improved capacity utilization may begin to benefit the segment’s cost of goods sold in 2010. Future results may also remain sensitive to capacity utilization rates due to the relatively high level of fixed manufacturing costs that exists in this segment.

     The 2009 corporate expenses totaled approximately $10.5 million as compared to $11.8 million in 2008 and $7.3 million in 2007. The decrease in the 2009 expenses of approximately $1.3 million from 2008 relates to 2008 encompassing a pension settlement charge of approximately $3.0 million associated with one of our divested automotive operations. On a comparative basis, this decrease was somewhat offset by 2009 expenses including restructuring and other costs related to divested and closed operations. The increase in the 2008 corporate expenses of approximately $4.5 million as compared to 2007 primarily relates to the inclusion of the previously-mentioned $3.0 million pension settlement. Also contributing to this increase

were holding costs associated with held for sale property remaining from one of our automotive divestures and higher legal and professional fees.

     In order to ensure that our capitalization is adequate to support our future internal growth prospects, acquire food businesses consistent with our strategic goals, and maintain cash returns to our shareholders through cash dividends and share repurchases, we will need to maintain sufficient flexibility in our future capital structure. Our balance sheet retained fundamental financial strength during 2009, and we ended the year with approximately $38.5 million in cash and equivalents at June 30, 2009, along with shareholders’ equity in excess of $402 million and no debt.

     On October 5, 2007, we entered into a new unsecured revolving credit facility, which replaced the credit facility existing on September 30, 2007. Under the new facility, we may borrow up to a maximum of $160 million at any one time. Loans may be used for general corporate purposes. We had no borrowings outstanding under this facility at June 30, 2009. The facility expires on October 5, 2012, and all outstanding amounts are due and payable on that day.

     The facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At June 30, 2009, we were in compliance with all applicable provisions and covenants of the facility, and we met the requirements of the financial covenants by substantial margins.

     We currently expect to remain in compliance with the facility’s covenants for the foreseeable future. A default under the facility could accelerate the repayment of our outstanding indebtedness and limit our access to additional credit available under the facility. Such an event could require curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise impact our ability to meet our obligations when due. At June 30, 2009, we were not aware of any event that would constitute a default under the facility.

     We believe that internally generated funds and our existing aggregate balances in cash and equivalents, in addition to our currently available bank credit arrangements, should be adequate to meet our foreseeable cash requirements. If we were to borrow outside of our credit facility under current market terms, our average interest rate may increase significantly and have an adverse effect on our results of operations.

     For additional information regarding our credit facility, see Note 5 in the notes to the consolidated financial statements.

						Year Ended
						June 30								Change
(Dollars in thousands)		2009				2008				2007				2009 vs. 2008								2008 vs. 2007
Provided by Operating Activities		$	133,164			$	70,932			$	82,923			$	62,232				88	%		$	(11,991	)			(14	)%
(Used in) Provided by Investing Activities			(10,974	)			710				(43,000	)			(11,684	)			N/M				43,710				102	%
Used in Financing Activities			(103,123	)			(109,372	)			(58,871	)			6,249				6	%			(50,501	)			(86)	%

     Our cash flows for the years 2007 through 2009 are presented in the Consolidated Statements of Cash Flows. Cash flow generated from operations remains the primary source of financing for our internal growth. Cash provided by operating activities from continuing operations in 2009 totaled approximately $133.2 million, an increase of 88% as compared with the prior-year total of $70.9 million, which decreased from the 2007 total of $82.9 million. The 2009 increase results from a higher level of income from continuing operations and comparatively favorable relative changes in working capital components, especially inventory and prepaid Federal income taxes, as partially offset by the comparative pension plan activity and the prior-year loss on divestitures, as well as the comparatively unfavorable relative change in

accounts payable. The decrease in inventories since June 2008 primarily relates to operational changes, especially within our Glassware and Candles segment. The 2008 decrease was influenced by lower income from continuing operations and the extent of comparatively unfavorable relative changes in working capital components, especially receivables and prepaid Federal income taxes.

     Net cash from investing activities totaled a use of approximately $11.0 million in 2009, a source of approximately $0.7 million in 2008 and use of approximately $43.0 million for 2007. The 2009 decrease in cash from investing activities reflects the absence of any divestitures, as partially offset by a lower level of capital expenditures in 2009. Aside from the $19.1 million source from the sale of our glass operations, the 2008 increase in cash from investing activities reflects a substantially lower level of capital expenditures in 2008 as compared to 2007. Capital expenditures totaled approximately $11.3 million in 2009, compared to $16.8 million in 2008 and $53.6 million in 2007. Capital expenditures were higher in 2007 as compared to historical levels due to the construction of a new salad dressing facility and a new frozen yeast roll facility. Capital spending allocations during 2009 by segment approximated 94% for Specialty Foods, 4% for Glassware and Candles and 2% for Corporate. Based on our current plans and expectations, we believe that total capital expenditures for 2010 will be approximately $15 million.

     Financing activities used net cash totaling approximately $103.1 million, $109.4 million and $58.9 million in 2009, 2008 and 2007, respectively. The 2009 decrease is due primarily to a decrease in treasury share repurchases and an increase in proceeds from the exercise of stock options, as partially offset by the net change in borrowing activity and a decrease in the cash overdraft balance. The 2008 increase in cash used for financing activities is due primarily to increased treasury share repurchases as well as relative changes in net borrowing activities. The total payment for cash dividends for the year ended June 30, 2009 was approximately $31.9 million. The dividend payout rate for 2009 was $1.135 per share as compared to $1.11 per share during 2008, and $1.07 per share in 2007. This past fiscal year marked the 46th consecutive year in which our dividend rate was increased. Cash utilized for share repurchases totaled approximately $16.9 million, $89.3 million and $65.9 million in 2009, 2008 and 2007, respectively. Our Board approved a share repurchase authorization of 2,000,000 shares in August 2007. Approximately 509,000 shares from this authorization remained authorized for future purchase at June 30, 2009.

     The future levels of share repurchases and declared dividends are subject to the periodic review of our Board and are generally determined after an assessment is made of such factors as anticipated earnings levels, cash flow requirements and general business conditions.

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

     We are contingently liable with respect to lawsuits, taxes and various other matters that routinely arise in the normal course of business. Except as discussed above, we do not have any related party transactions that materially affect our results of operations, cash flow or financial condition.

OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “Variable Interest Entities,” that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures.

     We have various contractual obligations that are appropriately recorded as liabilities in our consolidated financial statements. Certain other items, such as purchase obligations, are not recognized as liabilities in our consolidated financial statements. Examples of items not recognized as liabilities in our consolidated financial statements are commitments to purchase raw materials or inventory that has not yet been received as of June 30, 2009 and future minimum lease payments for the use of property and equipment under operating lease agreements.

     The following table summarizes our contractual obligations as of June 30, 2009 (in thousands):

		Payment Due by Period
						Less than												More than
Contractual Obligations		Total				1 Year				1-3 Years				3-5 Years				5 Years
Operating Lease Obligations (1)		$	11,539			$	3,713			$	4,912			$	2,379			$	535
Purchase Obligations (2)			74,048				68,416				5,392				240				—
Minimum Required Pension Contributions			32				32				—				—				—
Other Long-Term Liabilities (as reflected on Consolidated Balance Sheet) (3)			1,088				62				1,026				—				—
Total		$	86,707			$	72,223			$	11,330			$	2,619			$	535

IMPACT OF INFLATION

     Our manufacturing costs during 2009, 2008 and 2007 were influenced by substantially higher raw-material costs, especially for various key food commodities and candle wax. The year over year increases in raw-material costs for the Specialty Foods segment is estimated at approximately $15 million in 2009 and to have exceeded $65 million in 2008. By the second half of 2009, prices for food commodities turned favorable on a year over year basis for the first time since 2005, but remained above long-term, historic levels. It appears that a long-term trend toward markedly higher costs for certain commodities, such as soybean oil and flour, may be sustainable. Historically, our diversity of operations has helped minimize our exposure to some raw-material costs. As we focus more on our food operations, however, our results of operations have become more sensitive to increased prices in food commodities.

     Over the course of 2009 and 2008, we adjusted various selling prices of food products to offset the effects of increased raw-material costs. However, these adjustments generally lagged the increase in our costs, having a net positive impact on our 2009 operating margins and a net negative impact in 2008. During 2010, any revenue growth from additional sales may be at least partially offset by downward pricing adjustments in certain of our foodservice supply arrangements that occur as a result of lower key ingredient costs. We also attempt to minimize the exposure to increased costs through our ongoing efforts to achieve greater manufacturing and distribution efficiencies through the improvement of work processes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     This MD&A discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including, but not limited to, those related to accounts receivable, inventories, marketing and distribution costs, asset impairments and self-insurance reserves. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have typically not had a significant impact on our consolidated financial statements. While a summary of our significant accounting policies can be found in Note 1 in the notes to the consolidated financial statements, we believe the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

     We recognize revenue upon transfer of title and risk of loss provided evidence of an arrangement exists, pricing is fixed or determinable, and collectability is probable. Net sales are recorded net of estimated sales discounts, returns and certain sales incentives, including coupons and rebates.

Receivables and the Allowance for Doubtful Accounts

     We provide an allowance for doubtful accounts based on the aging of accounts receivable balances and historical write-off experience and on-going reviews of our trade receivables. Measurement of potential losses requires credit review of existing customer relationships, consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the economic health of customers. In addition to credit concerns, we also evaluate the adequacy of our allowances for customer deductions considering several factors including historical losses and existing customer relationships.

Valuation of Inventory

     When necessary, we provide allowances to adjust the carrying value of our inventory to the lower of cost or net realizable value, including any costs to sell or dispose. The determination of whether inventory items are slow moving, obsolete or in excess of needs requires estimates about the future demand for our products. The estimates as to future demand used in the valuation of inventory are subject to the ongoing success of our products and may differ from actual due to such factors as changes in customer and consumer demand. A decrease in product demand due to changing customer tastes, consumer buying patterns or loss of shelf space to competitors could significantly impact our evaluation of our excess and obsolete inventories.

Long-Lived Assets

     We monitor the recoverability of the carrying value of our long-lived assets by periodically considering whether or not indicators of impairment are present. If such indicators are present, we determine if the assets are recoverable by comparing the sum of the undiscounted future cash flows to the assets’ carrying amount. Our cash flows are based on historical results adjusted to reflect our best estimate of future market and operating conditions. If the carrying amounts are greater, then the assets are not recoverable. In that instance, we compare the carrying amounts to the fair value to determine the amount of the impairment to be recorded.

Goodwill and Intangible Assets

     Goodwill is not amortized. It is evaluated annually, at April 30, through asset impairment testing as appropriate. Intangible assets with lives restricted by contractual, legal, or other means are amortized over their useful lives. We periodically evaluate the future economic benefit of the recorded goodwill and intangible assets when events or circumstances indicate potential recoverability concerns. Carrying amounts are adjusted appropriately when determined to have been impaired.

Accrued Marketing and Distribution

     Various marketing programs are offered to customers to reimburse them for a portion or all of their promotional activities related to our products. Additionally, we often incur various costs associated with shipping products to the customer. We provide accruals for the costs of marketing and distribution based on historical information as may be modified by estimates of actual costs incurred. Actual costs may differ significantly if factors such as the level and success of the customers’ programs, changes in customer utilization practices, or other conditions differ from expectations.

     Self-insurance accruals are made for certain claims associated with employee health care, workers’ compensation and general liability insurance. These accruals include estimates that may be based on historical loss development factors. Differences in estimates and assumptions could result in an accrual requirement materially different from the calculated accrual.

     To determine our ultimate obligation under our defined benefit pension plans and our other postretirement benefit plans, we must estimate the future cost of benefits and attribute that cost to the time period during which each covered employee works. To record the related net assets and obligation of such benefit plans, we use assumptions related to inflation, investment returns, mortality, employee turnover, medical costs and discount rates. To determine the discount rate, we, along with our third-party actuaries, considered several factors, including the June 30, 2009 rates of various bond indices, such as the Moody’s Aa long-term bond index, yield curve analysis results from our actuaries based on expected cash flows of our plans, and the past history of discount rates used for the plan valuation. We, along with our third-party actuaries, review all of these assumptions on an ongoing basis to ensure that the most reasonable information available is being considered. Changes in assumptions and future investment returns could potentially have a material impact on pension expense and related funding requirements. Upon adoption in 2007 of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” we recognized the overfunded or underfunded status of our defined benefit plans as an asset or liability in our Consolidated Balance Sheet. We recognize changes in that funded status, caused by subsequent plan revaluations, through comprehensive income. As most of our defined benefit plans and post-employment obligations relate to nonfood operations that have been divested or closed, we may also experience future plan settlements or curtailments having unanticipated effects on operating results.

     In June 2008, the FASB issued a FASB Staff Position (“FSP”) on the FASB’s Emerging Issues Task Force (“EITF”) Issue No. 03-06-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (“FSP EITF 03-06-1”). This FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”) under the two-class method described in SFAS No. 128, “Earnings Per Share.” It affects entities that accrue or pay nonforfeitable cash dividends on share-based payment awards during the awards’ service period. FSP EITF 03-06-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years and will require a retrospective adjustment to all prior period EPS. We are currently evaluating the impact this FSP will have on our calculation and presentation of EPS.

     In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. This FSP expands the disclosure set forth in SFAS No. 132(R) by adding required disclosures about (1) how investment allocation decisions are made by management, (2) major categories of plan assets, and (3) significant concentration of risk. Additionally, the FSP requires an employer to disclose information about the valuation of plan assets similar to that required under SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). This FSP is effective for fiscal years ending after December 15, 2009, with earlier adoption permitted. We are currently reviewing the additional disclosure requirements regarding our benefit plans assets.

     In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (“SFAS 168”). SFAS 168 is a replacement of FASB Statement No. 162. SFAS 168 establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB for the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. While there will be no impact of SFAS 168 on our financial statements, references

to authoritative guidance within the financial statements will be updated, as deemed necessary, beginning with the first quarter 2010
Form 10-Q.

     Effective July 1, 2008, we adopted the provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) and SFAS 157. The adoption of SFAS 159 and SFAS 157 did not have a material impact on our financial position or results of operations. Effective June 30, 2009, we adopted the provisions of SFAS No. 165 “Subsequent Events.” See further discussion in Note 1 in the notes to the consolidated financial statements.

     We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar words. These statements discuss future expectations, contain projections regarding future developments, operations or financial conditions, or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control including, without limitation, the specific influences outlined below. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements.

     Specific influences relating to these forward-looking statements include, but are not limited to:

	•		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;
	•		legislation and litigation affecting the future administration of 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 7A. Quantitative and Qualitative Disclosures About Market Risk

     We have exposure to market risks primarily from changes in interest rates and ingredient prices. We have not had any material exposure to market risk associated with derivative financial instruments or derivative commodity instruments.

INTEREST RATE RISK

     We are subject to interest rate risk primarily associated with our borrowings. Interest rate risk is the risk that changes in interest rates could adversely affect earnings and cash flows. Rates under our credit facility are set at the time of each borrowing and are based on predetermined formulas connected to certain benchmark rates. Increases in these rates could have an adverse impact on our earnings and cash flows. At current borrowing levels, we do not believe that a hypothetical adverse change of 10% in interest rates would have a material effect on our financial position. At the end of 2009, we had no borrowings outstanding under our credit facility. The nature and amount of our borrowings may vary as a result of business requirements, market conditions and other factors.

COMMODITY PRICE RISK

     We purchase a variety of commodities and other materials, such as soybean oil, flour, wax and packaging materials, which we use to manufacture our products. The market prices for these commodities are subject to fluctuation based upon a number of economic factors and may become volatile at times. While we do not use any derivative commodity instruments to hedge against commodity price risk, we do actively manage a portion of the risk through a structured purchasing program for certain future requirements. This program gives us more predictable input costs, which may help stabilize our margins during periods of volatility in commodity markets.

Item 8. Financial Statements and Supplementary Data

To the Board of Directors and Shareholders of
Lancaster Colony Corporation:

     We have audited the accompanying consolidated balance sheets of Lancaster Colony Corporation and subsidiaries (the “Company”) as of June 30, 2009 and 2008, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended June 30, 2009. Our audits also included the financial statement schedule listed in the Table of Contents at Item 15. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

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

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Lancaster Colony Corporation and subsidiaries as of June 30, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

     As discussed in Note 6 to the consolidated financial statements, the Company changed its method of accounting for uncertain tax positions with the adoption of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, effective
July 1, 2007.

     As discussed in Note 1 to the consolidated financial statements, the Company adopted the recognition and disclosure provisions of Financial Accounting Standards Board No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plan, in 2007.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of June 30, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 26, 2009, expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP        Deloitte & Touche LLP

Columbus, Ohio
August 26, 2009

CONSOLIDATED BALANCE SHEETS

		June 30
(Amounts in thousands, except share data)		2009				2008
ASSETS
Current Assets:
Cash and equivalents		$	38,484			$	19,417
Receivables (less allowance for doubtful accounts, 2009—$942; 2008—$1,069)			61,152				59,409
Inventories:
Raw materials			33,067				34,787
Finished goods and work in process			69,456				85,516
Total inventories			102,523				120,303
Deferred income taxes and other current assets			20,653				34,545
Total current assets			222,812				233,674
Property, Plant and Equipment:
Land, buildings and improvements			130,683				138,771
Machinery and equipment			239,380				240,490
Total cost			370,063				379,261
Less accumulated depreciation			199,163				199,688
Property, plant and equipment—net			170,900				179,573
Other Assets:
Goodwill			89,840				89,840
Other intangible assets—net			10,678				11,841
Other noncurrent assets			4,251				5,250
Total		$	498,481			$	520,178
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	41,180			$	45,964
Accrued liabilities			33,399				42,785
Total current liabilities			74,579				88,749
Long-Term Debt			—				55,000
Other Noncurrent Liabilities			16,719				14,547
Deferred Income Taxes			4,627				2,664
Shareholders’ Equity:
Preferred stock—authorized 3,050,000 shares; outstanding—none
Common stock—authorized 75,000,000 shares; outstanding, 2009—28,101,885 shares; 2008—28,452,237 shares			88,962				82,652
Retained earnings			998,476				941,244
Accumulated other comprehensive loss			(9,085	)			(5,775	)
Common stock in treasury, at cost			(675,797	)			(658,903	)
Total shareholders’ equity			402,556				359,218
Total		$	498,481			$	520,178

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

		Years Ended June 30
(Amounts in thousands, except per share data)		2009				2008				2007
Net Sales		$	1,051,491			$	980,915			$	945,810
Cost of Sales			835,999				823,574				764,070
Gross Margin			215,492				157,341				181,740
Selling, General and Administrative Expenses			84,238				80,751				79,704
Restructuring and Impairment Charges			1,606				1,253				2,126
Operating Income			129,648				75,337				99,910
Other (Expense) Income:
Interest expense			(1,217	)			(3,076	)			(150	)
Other income—Continued Dumping and Subsidy Offset Act			8,696				2,533				699
Interest income and other—net			(121	)			874				801
Income from Continuing Operations Before Income Taxes			137,006				75,668				101,260
Taxes Based on Income			47,920				27,229				36,981
Income from Continuing Operations			89,086				48,439				64,279
Discontinued Operations, Net of Tax:
Income (Loss) from Discontinued Operations			—				2,633				(3,475	)
Loss on Sale of Discontinued Operations			—				(13,452	)			(15,120	)
Total Discontinued Operations			—				(10,819	)			(18,595	)
Net Income		$	89,086			$	37,620			$	45,684
Income Per Common Share from Continuing Operations:
Basic		$	3.18			$	1.64			$	2.04
Diluted		$	3.18			$	1.64			$	2.03
Loss Per Common Share from Discontinued Operations:
Basic and Diluted		$	—			$	(.37	)		$	(.59	)
Net Income Per Common Share:
Basic and Diluted		$	3.18			$	1.28			$	1.45
Weighted Average Common Shares Outstanding:
Basic			28,033				29,494				31,576
Diluted			28,051				29,499				31,603

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Years Ended June 30
(Amounts in thousands)		2009				2008				2007
Cash Flows From Operating Activities:
Net income		$	89,086			$	37,620			$	45,684
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations			—				10,819				18,595
Depreciation and amortization			21,870				24,138				24,081
Deferred income taxes and other noncash changes			3,767				4,593				(4,226	)
Restructuring and impairment charges			(1,221	)			774				3,302
Gain on sale of property			(861	)			(603	)			(51	)
Loss (gain) on divestitures			—				6,414				(8	)
Pension plan activity			(2,316	)			2,035				(485	)
Changes in operating assets and liabilities:
Receivables			(2,287	)			(5,851	)			1,252
Inventories			17,780				(7,487	)			(5,704	)
Other current assets			13,868				(8,277	)			(3,608	)
Accounts payable and accrued liabilities			(6,522	)			6,757				4,091
Net cash provided by operating activities from continuing operations			133,164				70,932				82,923
Cash Flows From Investing Activities:
Cash paid for acquisitions			—				(250	)			(23,000	)
Payments on property additions			(11,336	)			(16,832	)			(53,589	)
Proceeds from sale of property			2,000				935				179
Net proceeds from divestitures			—				19,108				8
Purchases of short-term investments			—				—				(5,000	)
Proceeds from short-term investment sales, calls and maturities			—				—				40,765
Other—net			(1,638	)			(2,251	)			(2,363	)
Net cash (used in) provided by investing activities from continuing operations			(10,974	)			710				(43,000	)
Cash Flows From Financing Activities:
Net repayment of $100 million credit facility			—				(42,500	)			—
Proceeds from debt			25,000				146,104				42,500
Payments on debt			(80,000	)			(91,104	)			—
Purchase of treasury stock			(16,894	)			(89,338	)			(65,858	)
Payment of dividends			(31,854	)			(32,578	)			(33,696	)
Proceeds from the exercise of stock options			5,407				648				3,515
Decrease in cash overdraft balance			(4,782	)			(604	)			(5,332	)
Net cash used in financing activities from continuing operations			(103,123	)			(109,372	)			(58,871	)
Cash Flows From Discontinued Operations:
Net cash provided by operating activities from discontinued operations			—				22,385				11,233
Net cash provided by investing activities from discontinued operations			—				26,444				9,993
Net cash provided by discontinued operations			—				48,829				21,226
Effect of exchange rate changes on cash			—				2				(12	)
Net change in cash and equivalents			19,067				11,101				2,266
Cash and equivalents at beginning of year			19,417				8,316				6,050
Cash and equivalents at end of year		$	38,484			$	19,417			$	8,316

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

														Accumulated
		Common Stock												Other								Total
(Amounts in thousands,		Outstanding								Retained				Comprehensive				Treasury				Shareholders’
except per share data)		Shares				Amount				Earnings				Loss				Stock				Equity
Balance, June 30, 2006			32,246			$	78,017			$	925,388			$	(5,277	)		$	(503,707	)		$	494,421
Net income											45,684												45,684
Translation adjustment															(12	)							(12	)
Minimum pension liability, net of $1,427 tax effect															2,578								2,578
Comprehensive Income																							48,250
Cash dividends — common stock ($1.07 per share)											(33,696	)											(33,696	)
Purchase of treasury stock			(1,589	)															(65,858	)			(65,858	)
Stock-based plans			91				3,515																3,515
Stock-based compensation expense							133																133
Adoption of SFAS 158, net of $1,502 tax effect															(2,456	)							(2,456	)
Balance, June 30, 2007			30,748				81,665				937,376				(5,167	)			(569,565	)			444,309
Net income											37,620												37,620
Translation adjustment															(131	)							(131	)
Net pension and postretirement benefit losses, net of $339 tax effect															(477	)							(477	)
Comprehensive Income																							37,012
Cash dividends — common stock ($1.11 per share)											(32,578	)											(32,578	)
Purchase of treasury stock			(2,340	)															(89,338	)			(89,338	)
Stock-based plans			44				648																648
Stock-based compensation expense							339																339
Cumulative effect of FIN 48 adoption											(1,174	)											(1,174	)
Balance, June 30, 2008			28,452				82,652				941,244				(5,775	)			(658,903	)			359,218
Net income											89,086												89,086
Net pension and postretirement benefit losses, net of $1,897 tax effect															(3,310	)							(3,310	)
Comprehensive Income																							85,776
Cash dividends — common stock ($1.135 per share)											(31,854	)											(31,854	)
Purchase of treasury stock			(496	)															(16,894	)			(16,894	)
Stock-based plans			146				5,347																5,347
Stock-based compensation expense							963																963
Balance, June 30, 2009			28,102			$	88,962			$	998,476			$	(9,085	)		$	(675,797	)		$	402,556