Form 10-Q

0000950123-11-048396.txt : 20110510 0000950123-11-048396.hdr.sgml : 20110510 20110510164943 ACCESSION NUMBER: 0000950123-11-048396 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20110331 FILED AS OF DATE: 20110510 DATE AS OF CHANGE: 20110510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCASTER COLONY CORP CENTRAL INDEX KEY: 0000057515 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030] IRS NUMBER: 131955943 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04065 FILM NUMBER: 11828879 BUSINESS ADDRESS: STREET 1: 37 W. BROAD STREET STREET 2: 5TH FLOOR CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142247141 MAIL ADDRESS: STREET 1: 37 W. BROAD STREET STREET 2: 5TH FLOOR CITY: COLUMBUS STATE: OH ZIP: 43215 10-Q 1 c16546e10vq.htm FORM 10-Q Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2011


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

For the transition period from to

Commission file number 000-04065

Lancaster Colony Corporation

(Exact name of registrant as specified in its charter)


Ohio		13-1955943
(State or other jurisdiction of		(I.R.S. 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)

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 þ No o

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	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

As of April 29, 2011, there were approximately 27,441,000 shares of Common Stock, without par value, outstanding.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (unaudited):			3

Consolidated Balance Sheets — March 31, 2011 and June 30, 2010			3

Consolidated Statements of Income — Three and Nine Months Ended March 31, 2011 and 2010			4

Consolidated Statements of Cash Flows — Nine Months Ended March 31, 2011 and 2010			5

Notes to Consolidated Financial Statements			6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15

Item 3. Quantitative and Qualitative Disclosures About Market Risk			21

Item 4. Controls and Procedures			21

PART II — OTHER INFORMATION

Item 1A. Risk Factors			22

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

Item 6. Exhibits			22

SIGNATURES			23

INDEX TO EXHIBITS			24

Exhibit 10.1
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

PART I — FINANCIAL INFORMATION


Item 1.		Consolidated Financial Statements

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)


	March 31			June 30
(Amounts in thousands, except share data)	2011			2010
ASSETS
Current Assets:
Cash and equivalents	$	107,702		$	100,890
Receivables (less allowance for doubtful accounts, March—$602; June—$516)		77,928			67,766
Inventories:
Raw materials		35,593			36,812
Finished goods and work in process		68,528			84,697

Total inventories		104,121			121,509
Deferred income taxes and other current assets		27,466			27,234

Total current assets		317,217			317,399

Property, Plant and Equipment:
Land, buildings and improvements		137,446			129,747
Machinery and equipment		259,204			242,024

Total cost		396,650			371,771
Less accumulated depreciation		215,576			205,674

Property, plant and equipment — net		181,074			166,097

Other Assets:
Goodwill		89,840			89,840
Other intangible assets — net		8,641			9,514
Other noncurrent assets		4,657			3,603


Total	$	601,429		$	586,453


LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	39,976		$	41,904
Accrued liabilities		38,362			36,049

Total current liabilities		78,338			77,953

Other Noncurrent Liabilities		16,667			19,138

Deferred Income Taxes		8,578			4,454

Shareholders’ Equity:
Preferred stock — authorized 3,050,000 shares; outstanding — none
Common stock — authorized 75,000,000 shares; outstanding —
March — 27,437,047 shares; June — 28,167,549 shares		96,725			94,885
Retained earnings		1,130,446			1,080,015
Accumulated other comprehensive loss		(9,566	)		(9,797	)
Common stock in treasury, at cost		(719,759	)		(680,195	)

Total shareholders’ equity		497,846			484,908


Total	$	601,429		$	586,453

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended					Nine Months Ended
	March 31					March 31
(Amounts in thousands, except per share data)	2011		2010			2011		2010

Net Sales	$	252,623	$	250,328		$	833,912	$	808,603

Cost of Sales		200,089		188,405			645,063		598,196


Gross Margin		52,534		61,923			188,849		210,407

Selling, General and Administrative Expenses		23,060		24,328			72,441		69,196

Restructuring and Impairment Charges		—		87			—		2,133


Operating Income		29,474		37,508			116,408		139,078

Other Income (Expense):
Other income — Continued Dumping and Subsidy Offset Act		—		—			961		893
Interest income and other — net		54		(6	)		149		53


Income Before Income Taxes		29,528		37,502			117,518		140,024

Taxes Based on Income		10,087		13,280			40,447		47,870


Net Income	$	19,441	$	24,222		$	77,071	$	92,154


Net Income Per Common Share:
Basic and Diluted	$	.71	$	.86		$	2.77	$	3.27

Cash Dividends Per Common Share	$	.33	$	.30		$	.96	$	.885

Weighted Average Common Shares Outstanding:
Basic		27,494		28,173			27,755		28,134
Diluted		27,520		28,198			27,781		28,163

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended
	March 31
(Amounts in thousands)	2011			2010

Cash Flows From Operating Activities:
Net income	$	77,071		$	92,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,469			15,666
Deferred income taxes and other noncash changes		5,643			1,777
Restructuring and impairment charges		—			528
Loss (gain) on sale of property		14			(25	)
Pension plan activity		(1,442	)		(405	)
Changes in operating assets and liabilities:
Receivables		(10,803	)		(19,204	)
Inventories		17,388			4,990
Other current assets		(2,231	)		(9,350	)
Accounts payable and accrued liabilities		(2,081	)		743

Net cash provided by operating activities		98,028			86,874


Cash Flows From Investing Activities:
Payments on property additions		(26,857	)		(8,088	)
Proceeds from sale of property		19			28
Other — net		207			(953	)

Net cash used in investing activities		(26,631	)		(9,013	)


Cash Flows From Financing Activities:
Purchase of treasury stock		(39,564	)		—
Payment of dividends		(26,640	)		(24,959	)
Proceeds from the exercise of stock awards		269			4,276
Increase in cash overdraft balance		1,350			—

Net cash used in financing activities		(64,585	)		(20,683	)

Net change in cash and equivalents		6,812			57,178
Cash and equivalents at beginning of year		100,890			38,484

Cash and equivalents at end of period	$	107,702		$	95,662


Supplemental Disclosure of Operating Cash Flows:
Cash paid during the period for income taxes	$	37,821		$	55,634

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the interim consolidated financial statements reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim consolidated financial statements are considered to be of a normal recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year. Accordingly, these financial statements should be read in conjunction with the financial statements and notes thereto contained in our 2010 Annual Report on Form 10-K. Unless otherwise noted, the term “year” and references to a particular year pertain to our fiscal year, which begins on July 1 and ends on June 30; for example, 2011 refers to fiscal 2011, which is the period from July 1, 2010 to June 30, 2011.

Subsequent Events

We have evaluated events occurring between the end of our most recent fiscal quarter and the date the financial statements were issued and, except as disclosed in Note 11 regarding receipts under the Continued Dumping and Subsidy Offset Act of 2000, noted no events that would require recognition or disclosure in these financial statements.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Purchases of property, plant and equipment included in accounts payable at March 31, 2011 and 2010 were approximately $0.2 million and $0.5 million, respectively. These purchases, less the preceding June 30 balances, have been excluded from the property additions and the change in accounts payable in the Consolidated Statements of Cash Flows.

Held for Sale

As a result of various prior-years restructuring and divestiture activities, we have certain “held for sale” properties with a total net book value of approximately $2.9 million at March 31, 2011. We have classified approximately $0.4 million of these “held for sale” assets as current assets and they are included in Deferred Income Taxes and Other Current Assets on the Consolidated Balance Sheet. The remaining balance of approximately $2.5 million is included in Other Noncurrent Assets. In accordance with GAAP for property, plant and equipment, we are no longer depreciating these “held for sale” assets and they are being actively marketed for sale.

Earnings Per Share

Earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock and common stock equivalents (stock options, restricted stock and stock-settled stock appreciation rights) outstanding during each period. Unvested shares of restricted stock granted to employees are considered participating securities since employees receive nonforfeitable dividends prior to vesting and, therefore, are included in the earnings allocation in computing EPS under the two-class method. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing income available to common shareholders by the diluted weighted average number of common shares outstanding during the period, which includes the dilutive potential common shares associated with outstanding stock options, restricted stock and stock-settled stock appreciation rights.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

Basic and diluted net income per common share were calculated as follows:


	Three Months						Nine Months
	Ended						Ended
	March 31						March 31
	2011			2010			2011			2010
Net income	$	19,441		$	24,222		$	77,071		$	92,154
Net income available to participating securities		(25	)		(45	)		(109	)		(158	)

Net income available to common shareholders	$	19,416		$	24,177		$	76,962		$	91,996


Weighted average common shares outstanding — basic		27,494			28,173			27,755			28,134
Incremental share effect from:
Stock options		—			1			—			4
Restricted stock		3			2			5			6
Stock-settled stock appreciation rights		23			22			21			19

Weighted average common shares outstanding — diluted		27,520			28,198			27,781			28,163


Net income per common share — basic and diluted	$	.71		$	.86		$	2.77		$	3.27

Comprehensive Income

Total comprehensive income for the three and nine months ended March 31, 2011 was approximately $19.5 million and $77.3 million, respectively. Total comprehensive income for the three and nine months ended March 31, 2010 was approximately $24.3 million and $92.6 million, respectively. The March 31, 2011 and 2010 comprehensive income consists of net income and pension and postretirement amortization.

Significant Accounting Policies

There were no changes to our Significant Accounting Policies from those disclosed in our 2010 Annual Report on Form 10-K.

Note 2 — Impact of Recently Issued Accounting Standards

There were no recently issued accounting pronouncements that impact our consolidated financial statements.

Note 3 — Goodwill and Other Intangible Assets

Goodwill attributable to the Specialty Foods segment was approximately $89.8 million at March 31, 2011 and June 30, 2010.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

The following table summarizes our identifiable other intangible assets, all included in the Specialty Foods segment:


	March 31			June 30
	2011			2010
Trademarks (40-year life)
Gross carrying value	$	370		$	370
Accumulated amortization		(184	)		(177	)

Net Carrying Value	$	186		$	193

Customer Relationships (12 to 15-year life)
Gross carrying value	$	13,020		$	13,020
Accumulated amortization		(4,757	)		(4,054	)

Net Carrying Value	$	8,263		$	8,966

Non-compete Agreements (5 to 8-year life)
Gross carrying value	$	1,540		$	1,540
Accumulated amortization		(1,348	)		(1,185	)

Net Carrying Value	$	192		$	355

Total Net Carrying Value	$	8,641		$	9,514

Amortization expense relating to these assets was approximately $0.3 million and $0.9 million for both the three and nine months ended March 31, 2011 and 2010, respectively. Total annual amortization expense is estimated to be approximately $1.1 million next year, $0.9 million for each of the following three years and $0.8 million for the fifth year.

Note 4 — Long-Term Debt

At March 31, 2011 and June 30, 2010, we had an unsecured revolving credit facility under which we may borrow up to a maximum of $160 million at any one time, with the potential to expand the total credit availability to $260 million based on obtaining consent of the issuing bank and certain other conditions. The facility expires in October 2012, and all outstanding amounts are then due and payable. At March 31, 2011 and June 30, 2010, we had no borrowings outstanding under this facility. Loans may be used for general corporate purposes. At March 31, 2011, we had approximately $6.6 million of standby letters of credit outstanding, which reduce the amount available for borrowing on the unsecured revolving credit facility.

Based on the long-term nature of this facility, when we have outstanding borrowings under this facility, we classify the outstanding balance as long-term debt. We paid no interest for the three and nine months ended March 31, 2011 and 2010.

The facility contains two principal financial covenants: an interest expense test that requires us to maintain an interest coverage ratio not less than 2.5 to 1 at the end of each fiscal quarter; and an indebtedness test that requires us to maintain a leverage ratio not greater than 3 to 1 at all times. The interest coverage ratio is calculated by dividing Consolidated EBIT (as defined more specifically in the credit agreement) by Consolidated Interest Expense (as defined more specifically in the credit agreement), and the leverage ratio is calculated by dividing Consolidated Debt (as defined more specifically in the credit agreement) by Consolidated EBITDA (as defined more specifically in the credit agreement). We met the requirements of these financial covenants at March 31, 2011 and June 30, 2010.

Note 5 — Pension Benefits

We and certain of our operating subsidiaries have sponsored multiple defined benefit pension plans covering union workers at certain locations. As a result of restructuring activities in recent years, at March 31, 2011 there were no active employees continuing to accrue service cost or otherwise eligible to receive plan benefits. Benefits being paid under the plans are primarily based on negotiated rates and years of service. We contribute to these plans at least the minimum amount required by regulation or contract.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

The following table discloses net periodic benefit cost for our pension plans:


	Three Months						Nine Months
	Ended						Ended
	March 31						March 31
	2011			2010			2011			2010
Components of net periodic benefit cost
Service cost	$	—		$	—		$	—		$	45
Interest cost		487			529			1,461			1,588
Expected return on plan assets		(507	)		(537	)		(1,521	)		(1,613	)
Curtailment charge		—			—			—			349
Amortization of unrecognized net loss		136			124			410			372
Amortization of prior service cost		—			—			—			5

Net periodic benefit cost	$	116		$	116		$	350		$	746

In the first quarter of 2010, one of our plans became subject to curtailment accounting. This resulted in the immediate recognition of all of the outstanding prior service cost of the plan, which was approximately $0.3 million. This charge was recorded in Restructuring and Impairment Charges and related to our Specialty Foods segment.

For the three and nine months ended March 31, 2011, we made pension plan contributions totaling approximately $1.8 million. We do not expect to make any further contributions to our pension plans during the remainder of 2011.

Note 6 — Postretirement Benefits

We and certain of our operating subsidiaries provide multiple postretirement medical and life insurance benefit plans. We recognize the cost of benefits as the employees render service. Postretirement benefits are funded as incurred.

The following table discloses net periodic benefit cost for our postretirement plans:


	Three Months						Nine Months
	Ended						Ended
	March 31						March 31
	2011			2010			2011			2010
Components of net periodic benefit cost
Service cost	$	6		$	4		$	18		$	12
Interest cost		34			48			102			144
Amortization of unrecognized gain		(12	)		(4	)		(36	)		(10	)
Amortization of prior service asset		(1	)		(1	)		(3	)		(3	)

Net periodic benefit cost	$	27		$	47		$	81		$	143

For the three and nine months ended March 31, 2011, we made less than $0.1 million and approximately $0.1 million, respectively, in contributions to our postretirement medical and life insurance benefit plans. We expect to make approximately $0.1 million more in contributions to our postretirement medical and life insurance benefit plans during the remainder of 2011.

Note 7 — Stock-Based Compensation

As approved by our shareholders in November 1995, the terms of the 1995 Key Employee Stock Option Plan (the “1995 Plan”) reserved 3,000,000 common shares for issuance to qualified key employees. All

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

options granted under the 1995 Plan were exercisable at prices not less than fair market value as of the date of grant. In general, options granted under the 1995 Plan vested immediately and had a maximum term of five years. The 1995 Plan expired in August 2005, but there were options issued under this plan that were exercisable through February 2010. There were no options outstanding under this plan at March 31, 2011.

Our shareholders have approved the adoption of and subsequent amendments to the Lancaster Colony Corporation 2005 Stock Plan (the “2005 Plan”). The 2005 Plan reserved 2,000,000 common shares for issuance to our employees and directors, and all awards granted under the 2005 Plan will be exercisable at prices not less than fair market value as of the date of the grant. The vesting period for awards granted under the 2005 Plan varies as to the type of award granted, but generally these awards have a maximum term of five years.

Stock Options

Until 2008, we used stock options as the primary vehicle for rewarding certain employees with long-term incentives for their efforts in helping to create long-term shareholder value. We calculated the fair value of option grants using the Black-Scholes option-pricing model. There were no grants of stock options during the nine months ended March 31, 2011 and 2010.

We recognized compensation expense over the requisite service period. Total compensation cost related to stock options was zero for the three and nine months ended March 31, 2011 and 2010. There were no stock option exercises during the nine months ended March 31, 2011, and there are no outstanding stock options at March 31, 2011.

During the three and nine months ended March 31, 2010, we received approximately $0.3 million and $4.0 million, respectively, in cash from the exercise of stock options. The aggregate intrinsic value of these options was approximately $0.1 million and $0.9 million, respectively. A related tax benefit of less than $0.1 million and approximately $0.3 million was recorded in the three and nine months ended March 31, 2010, respectively. These tax benefits were included in the financing section of the Consolidated Statements of Cash Flows and resulted from incentive stock option disqualifying dispositions and exercises of non-qualified options. The benefits included less than $0.1 million of gross windfall tax benefits for the three and nine months ended March 31, 2010.

Stock-Settled Stock Appreciation Rights

Since 2008, we have used periodic grants of stock-settled stock appreciation rights (“SSSARs”) as a vehicle for rewarding certain employees with long-term incentives for their efforts in helping to create long-term shareholder value. We calculate the fair value of SSSARs grants using the Black-Scholes option-pricing model. Our policy is to issue shares upon SSSAR exercise from new shares that had been previously authorized.

In February 2011 and 2010, we granted 94,000 and 167,950 SSSARs, respectively, to various employees under the terms of the 2005 Plan. The weighted average per right fair value of the 2011 SSSARs grant was $10.12 and was estimated at the date of grant using the following assumptions: risk-free interest rate of 1.27%; dividend yield of 2.28%; volatility factor of the expected market price of our common stock of 28.78%; and a weighted average expected life of 3.11 years. The weighted average per right fair value of the 2010 SSSARs grant was $11.81 and was estimated at the date of grant using the following assumptions: risk-free interest rate of 1.67%; dividend yield of 2.04%; volatility factor of the expected market price of our common stock of 29.97%; and a weighted average expected life of 3.5 years. For both grants, the volatility factor was estimated based on actual historical volatility of our stock for a time period equal to the term of the SSSARs. The SSSARs from both grants vest one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date and one-third on the third anniversary of the grant date. We are assuming a forfeiture rate of four percent for each of these grants.

We recognize compensation expense over the requisite service period. Total compensation cost related to SSSARs was approximately $0.3 million and $0.9 million for the three and nine months ended March 31,

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

2011, respectively, as compared to approximately $0.2 million and $0.4 million for the three and nine months ended March 31, 2010, respectively. These amounts were reflected in Cost of Sales or Selling, General and Administrative Expenses based on the grantees’ salaries expense classification and were allocated to each segment appropriately. We recorded a tax benefit of approximately $0.1 million and $0.3 million for the three and nine months ended March 31, 2011, respectively, as compared to less than $0.1 million and approximately $0.1 million for the three and nine months ended March 31, 2010, respectively. We also recorded gross windfall tax benefits of approximately $0.1 million for the three and nine months ended March 31, 2011, as compared to approximately $0.3 million for the three and nine months ended March 31, 2010. These windfall tax benefits were included in the financing section of the Consolidated Statements of Cash Flows.

The following table summarizes the activity relating to SSSARs granted under the 2005 Plan for the nine months ended March 31, 2011:

Weighted

Average

Number

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Rights

Price

Life in Years

Value

Outstanding at beginning of period

309

49.55

Exercised

(30

)

39.21

Granted

57.78

Forfeited

)

51.74

Outstanding at end of period

364

52.49

3.70

2,952

Exercisable and vested at end of period

139

46.39

2.87

1,972

Vested and expected to vest at end of period

358

52.49

3.69

2,905

The following table summarizes the status of, and changes to, unvested SSSARs during the nine months ended March 31, 2011:


				Weighted
	Number			Average
	of			Grant Date
	Rights			Fair Value
Unvested at beginning of period		266		$	9.77
Granted		94		$	10.12
Vested		(127	)	$	8.63
Forfeited		(8	)	$	10.12

Unvested at end of period		225		$	10.55

At March 31, 2011, there was approximately $2.2 million of unrecognized compensation cost related to SSSARs that we will recognize over a weighted-average period of approximately 2.23 years.

Restricted Stock

Since 2008, we have used periodic grants of restricted stock as a vehicle for rewarding our nonemployee directors and certain employees with long-term incentives for their efforts in helping to create long-term shareholder value.

In February 2011 and 2010, we granted a total of 6,750 and 25,000 shares of restricted stock, respectively, to various key employees under the terms of the 2005 Plan. The restricted stock granted in 2011 had a grant date fair value of approximately $0.4 million based on a per share closing stock price of $57.78. The restricted stock granted in 2010 had a grant date fair value of approximately $1.5 million based on a per share closing stock price of $58.79. The restricted stock under each of these grants vests on the third anniversary of the grant date. We are assuming a forfeiture rate of four percent for each of these grants. Under the terms of the grants, employees will receive dividends on unforfeited restricted stock regardless of

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

their vesting status. An additional 21,500 shares of restricted stock that were granted to various key employees in February 2008 vested during the third quarter of 2011.

In November 2010, we granted a total of 8,155 shares of restricted stock to our seven nonemployee directors under the terms of the 2005 Plan. The restricted stock had a grant date fair value of approximately $0.4 million based on a per share closing stock price of $51.52. This restricted stock vests over a one-year period, and all of these shares are expected to vest. Dividends earned on the stock during the vesting period are held in escrow and will be paid to the directors at the time the stock vests. An additional 8,435 shares of restricted stock that were granted to our seven nonemployee directors in November 2009 vested during the second quarter of 2011, and the directors were paid the related dividends that had been held in escrow.

We recognize compensation expense over the requisite service period. Total compensation cost related to restricted stock for the three and nine months ended March 31, 2011 was approximately $0.3 million and $0.9 million, respectively, as compared to approximately $0.2 million and $0.6 million in the corresponding periods of the prior year. These amounts were reflected in Cost of Sales or Selling, General and Administrative Expenses based on the grantees’ salaries expense classification and were allocated to each segment appropriately. We recorded a tax benefit of approximately $0.1 million and $0.3 million for the three and nine months ended March 31, 2011, respectively, as compared to approximately $0.1 million and $0.2 million in the corresponding periods of the prior year. We recorded gross windfall tax benefits of approximately $0.1 million for the three and nine months ended March 31, 2011. We recorded gross windfall tax benefits of zero and less than $0.1 million for the three and nine months ended March 31, 2010, respectively. These windfall tax benefits were included in the financing section of the Consolidated Statements of Cash Flows.

The following table summarizes the activity relating to restricted stock granted under the 2005 Plan for the nine-month period ended March 31, 2011:


				Weighted
	Number			Average
	of			Grant Date
	Shares			Fair Value
Unvested restricted stock at beginning of period		61		$	48.43
Granted		15		$	54.35
Vested		(30	)	$	41.83
Forfeited		(2	)	$	49.86

Unvested restricted stock at end of period		44		$	54.88

Expected to vest restricted stock at end of period		44		$	54.89

At March 31, 2011, there was approximately $1.6 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of approximately 1.88 years.

Note 8 — Restructuring and Impairment Charges

Specialty Foods Segment — Fiscal 2010

In 2010, we closed our dressings and sauces manufacturing operation located in Wilson, New York. During the three and nine months ended March 31, 2010, we recorded restructuring charges of approximately $0.1 million (less than $0.1 million after taxes) and $2.3 million ($1.5 million after taxes), respectively. The total costs associated with this plant closure were approximately $2.3 million ($1.5 million after taxes) and were mainly recorded in the first half of 2010. This closure was essentially complete at December 31, 2009. We do not expect any other restructuring costs or cash expenditures related to this closure.

Note 9 — Income Taxes

The gross tax contingency reserve at March 31, 2011 was approximately $1.5 million and consisted of tax liabilities of approximately $0.8 million and penalties and interest of approximately $0.7 million. We

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

have classified approximately $0.1 million of the gross tax contingency reserve as current liabilities as these amounts are expected to be resolved within the next 12 months. The remaining liability of approximately $1.4 million is included in long-term liabilities. We expect that the amount of these liabilities will change within the next 12 months; however, we do not expect the change to have a significant effect on our financial position or results of operations. We recognize interest and penalties related to these tax liabilities in income tax expense.

During 2010, we executed several state tax voluntary disclosure agreements. The settlement of these liabilities resulted in pre-tax income of approximately $0.9 million, which impacted our effective tax rate for the nine months ended March 31, 2010 by approximately 0.5%.

Note 10 — Business Segment Information

The following summary of financial information by business segment is consistent with the basis of segmentation and measurement of segment profit or loss presented in our June 30, 2010 consolidated financial statements:


	Three Months Ended						Nine Months Ended
	March 31						March 31
	2011			2010			2011			2010
Net Sales
Specialty Foods	$	217,436		$	216,471		$	692,539		$	675,911
Glassware and Candles		35,187			33,857			141,373			132,692

Total	$	252,623		$	250,328		$	833,912		$	808,603


Operating Income
Specialty Foods	$	31,664		$	38,702		$	121,025		$	138,000
Glassware and Candles		676			1,672			5,044			9,485
Corporate Expenses		(2,866	)		(2,866	)		(9,661	)		(8,407	)

Total	$	29,474		$	37,508		$	116,408		$	139,078

Note 11 — Commitments and Contingencies

In addition to the items discussed below, at March 31, 2011, we were a party to various claims and litigation matters arising in the ordinary course of business. Such matters did not have a material adverse effect on the current-year results of operations and, in our opinion, their ultimate disposition will not have a material adverse effect on our consolidated financial statements.

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 $1.0 million in the second quarter of 2011, as compared to a distribution of approximately $0.9 million in the corresponding period of 2010. 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. 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.

In addition to this legislative development, cases have been 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 both CIT decisions and the U.S. Supreme Court did not hear either

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)

case. This effectively ended the constitutional challenges brought in these cases, but other cases challenging the CDSOA remain active.

Subsequent to March 31, 2011, we received notice of special CDSOA distributions totaling approximately $12.5 million, of which we have received $2.6 million and expect to receive the remainder by June 30, 2011. These distributions relate to the resolution of the constitutional challenges discussed above.

We are unable to determine, at this time, what the ultimate outcome of other litigation will be, and it is possible that further legal action, potential additional changes in the law and other factors could affect the amount of funds available for distribution, including funds relating to entries prior to October 2007. Accordingly, we cannot predict the amount of future distributions we may receive. Any change in CDSOA distributions could affect our earnings and cash flow.


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

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Tabular dollars in thousands)

OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that we consider to be important in understanding the results of our operations for the three and nine months ended March 31, 2011 and our financial condition as of March 31, 2011. 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, 2011 refers to fiscal 2011, which is the period from July 1, 2010 to June 30, 2011. In the discussion that follows, we analyze the results of our operations for the three and nine months ended March 31, 2011, including the trends in our overall business, followed by a discussion of our financial condition.

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto, all included elsewhere in this report. The forward-looking statements in this section and other parts of this report involve risks and uncertainties including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption “Forward-Looking Statements.”

EXECUTIVE SUMMARY

Business Overview

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. Although not material to our consolidated operations, 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. Fiscal years prior to 2009 were significant years in implementing this strategy as we divested various nonfood operations and focused our capital investment in the 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 grow our specialty foods retail and foodservice business over time by:

	•		leveraging the strength of our retail brands to increase current product sales and introduce new products;

	•		growing our foodservice sales through the strength of our reputation in product development and quality; and

	•		pursuing acquisitions that meet our strategic criteria.

We have made substantial capital investments to support our existing food operations and future growth opportunities. Based on our current plans and expectations, including a current plant expansion at our Kentucky frozen roll facility, we believe that total capital expenditures for 2011 will approach $40 million.

Summary of 2011 Results

The following is a comparative overview of our consolidated operating results for the three and nine months ended March 31, 2011 and 2010.

Net sales for the third quarter ended March 31, 2011 increased 1% to approximately $252.6 million from the prior-year total of $250.3 million. This sales growth reflects higher sales in both operating segments. The Specialty Foods segment’s increase reflects higher foodservice sales, which were partially offset by lower retail sales. The increase in sales of the Glassware and Candles segment primarily reflects product placement with new customers. Gross margin decreased 15% to approximately $52.5 million from the prior-year third quarter total of $61.9 million. Increasing raw-material costs, as well as a less favorable sales mix and higher freight costs within the Specialty Foods segment, contributed to the lower gross margin. Net income for the three months ended March 31, 2011 totaled approximately $19.4 million, or $.71 per diluted share. Net income totaled approximately $24.2 million in the third quarter of 2010, or $.86 per diluted share.

Year-to-date net sales for the period ended March 31, 2011 increased 3% to approximately $833.9 million from the prior year-to-date total of $808.6 million. Gross margin decreased to approximately $188.8 million from the prior year-to-date total of $210.4 million. Net income for the nine months ended March 31, 2011 totaled approximately $77.1 million, or $2.77 per diluted share. Net income totaled approximately $92.2 million in the nine months ended March 31, 2010, or $3.27 per diluted share.

RESULTS OF CONSOLIDATED OPERATIONS

Net Sales and Gross Margin


	Three Months Ended											Nine Months Ended
	March 31											March 31
	2011			2010			Change					2011			2010			Change
Net Sales
Specialty Foods	$	217,436		$	216,471		$	965		0	%	$	692,539		$	675,911		$	16,628		2	%
Glassware and Candles		35,187			33,857			1,330		4	%		141,373			132,692			8,681		7	%

Total	$	252,623		$	250,328		$	2,295		1	%	$	833,912		$	808,603		$	25,309		3	%

Gross Margin	$	52,534		$	61,923		$	(9,389	)	(15	)%	$	188,849		$	210,407		$	(21,558	)	(10	)%

Gross Margin as a Percentage of Sales		20.8	%		24.7	%							22.6	%		26.0	%

Consolidated net sales for the third quarter and nine months ended March 31, 2011 increased 1% and 3%, respectively, reflecting higher sales in both operating segments.

For the three and nine months ended March 31, 2011, net sales of the Specialty Foods segment increased by less than 1% and approximately 2%, respectively. Contribution from higher pricing for these respective periods was approximately 2% and less than 1%. The segment’s foodservice net sales rose approximately 12% and 9% for the three and nine month periods, respectively, on increased volumes, particularly from new programs with existing large chain restaurants, and higher pricing. Retail net sales for the nine month period were approximately 3% lower than the prior-year comparative period as influenced by the prior year rationalization of some product lines associated with the December 2009 closing of one of our dressing facilities. Retail net sales for the three-month period declined by approximately 9%, reflecting weaker demand for certain product lines, especially frozen rolls and refrigerated dips. The later Easter holiday occurring in 2011 also affected the sales comparisons, with the impact being estimated to total approximately 3% and 1%, respectively, of the segment’s net sales for the three and nine month periods. The later Easter timing should improve retail sales comparisons for the three months ended June 30, 2011, although the ultimate effect on demand from recently implemented pricing actions is uncertain.

The increase in net sales of the Glassware and Candles segment for both the three and nine months ended March 31, 2011 primarily reflected the addition of new customer accounts.

As a percentage of sales, our consolidated gross margin for the three and nine months ended March 31, 2011 was 20.8% and 22.6%, respectively, as compared to 24.7% and 26.0% achieved in the prior-year comparative periods.

In the Specialty Foods segment, gross margin percentages declined in both the three and nine months ended March 31, 2011, reflecting comparatively higher ingredient costs (especially for soybean oil, dairy products, sugar and eggs), higher distribution costs, a less favorable sales mix and lower production levels within our frozen roll operations. We estimate that higher material costs adversely affected our gross margins in these periods by approximately 3% and 2% of net sales, respectively. The increase in freight and warehousing costs were, in part, influenced by higher diesel costs. Looking forward, we see higher material and freight costs continuing to persist, presenting a comparative challenge to the fourth fiscal quarter. Based on current market conditions, we expect to offset most of the higher material costs with the benefit of recent price increases, including various retail pricing actions taken late in the third fiscal quarter.

Despite the benefits of achieving higher sales volumes, gross margin percentages in the Glassware and Candles segment declined from the prior-year periods primarily due to higher wax costs, which we believe are likely to persist and adversely affect comparative results through at least the end of our fiscal 2011. This segment also experienced a less favorable sales mix.

Selling, General and Administrative Expenses


	Three Months Ended											Nine Months Ended
	March 31											March 31
	2011			2010			Change					2011			2010			Change
Selling, General and Administrative Expenses	$	23,060		$	24,328		$	(1,268	)	(5	)%	$	72,441		$	69,196		$	3,245	5	%

SG&A Expenses as a Percentage of Sales		9.1	%		9.7	%							8.7	%		8.6	%

Consolidated selling, general and administrative costs of approximately $23.1 million and $72.4 million for the three and nine months ended March 31, 2011 decreased by 5% and increased by 5%, respectively, from the $24.3 million and $69.2 million incurred for the three and nine months ended March 31, 2010, respectively. The third quarter decrease reflects lower consumer-directed marketing expenses and professional fees within the Specialty Foods segment. Higher sales-based expenses, increased compensation expense, greater consumer-directed marketing costs and higher corporate expenses related to idle real estate contributed to the overall increase for the nine months ended March 31, 2011.

Restructuring and Impairment Charges

Specialty Foods Segment — Fiscal 2010

Operating Income

The foregoing factors contributed to consolidated operating income totaling approximately $29.5 million and $116.4 million for the three and nine months ended March 31, 2011, respectively. These amounts represent decreases of 21% and 16%, respectively, from the corresponding periods of the prior year. By segment, our operating income can be summarized as follows:


	Three Months Ended											Nine Months Ended
	March 31											March 31
	2011			2010			Change					2011			2010			Change
Operating Income
Specialty Foods	$	31,664		$	38,702		$	(7,038	)	(18	)%	$	121,025		$	138,000		$	(16,975	)	(12	)%
Glassware and Candles		676			1,672			(996	)	(60	)%		5,044			9,485			(4,441	)	(47	)%
Corporate Expenses		(2,866	)		(2,866	)		—		0	%		(9,661	)		(8,407	)		(1,254	)	15	%

Total	$	29,474		$	37,508		$	(8,034	)	(21	)%	$	116,408		$	139,078		$	(22,670	)	(16	)%

Operating Income as a Percentage of Sales
Specialty Foods		14.6	%		17.9	%							17.5	%		20.4	%
Glassware and Candles		1.9	%		4.9	%							3.6	%		7.1	%
Consolidated		11.7	%		15.0	%							14.0	%		17.2	%

Other Income — Continued Dumping and Subsidy Offset Act

Interest Income and Other — Net

Interest income and other was less than $0.1 million and approximately $0.1 million for the three and nine months ended March 31, 2011, respectively, as compared to less than $0.1 million for the three and nine months ended March 31, 2010.

Income Before Income Taxes

As impacted by the factors discussed above, income before income taxes for the three months ended March 31, 2011 decreased by approximately $8.0 million to $29.5 million from the prior-year total of $37.5 million. Income before income taxes for the nine months ended March 31, 2011 and 2010 was approximately $117.5 million and $140.0 million, respectively. Our effective tax rate of 34.4% for the nine months ended March 31, 2011 increased slightly from the prior-year rate of 34.2%. This increase reflected, in part, the prior-year favorable resolution of certain previously-reserved state tax matters, as further discussed in Note 9 to the consolidated financial statements.

Net Income

Third quarter net income for 2011 of approximately $19.4 million decreased from the preceding year’s net income for the quarter of $24.2 million, as influenced by the factors noted above. Year-to-date net income of approximately $77.1 million was lower than the prior year-to-date total of $92.2 million. Net income per share for the third quarter of 2011 totaled $.71 per basic and diluted share, as compared to $.86 per basic and diluted share recorded in the prior year. Year-to-date net income per share was $2.77 per basic and diluted share, as compared to $3.27 per basic and diluted share for the prior-year period.

FINANCIAL CONDITION

For the nine months ended March 31, 2011, net cash provided by operating activities totaled approximately $98.0 million as compared to $86.9 million in the prior-year period. The increase results from relative changes in working capital, including the effect of routine differences in the timing and amounts associated with our Federal income tax accruals and payments, as partially offset by lower net income. The increase in receivables since June 2010 relates to the strength of sales in March relative to June.

Cash used in investing activities for the nine months ended March 31, 2011 was approximately $26.6 million as compared to $9.0 million in the prior year. This increase reflects a higher level of capital expenditures in 2011 due to the expansion of our frozen roll facility in Kentucky. This project is anticipated to be completed by the middle of calendar 2011.

Cash used in financing activities for the nine months ended March 31, 2011 of approximately $64.6 million increased from the prior-year total of $20.7 million due primarily to a higher level of share repurchases and lower proceeds from the exercise of stock awards. At March 31, 2011, approximately 1,679,000 shares remained authorized for future buyback under the existing share repurchase program.

Under our unsecured revolving credit 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 March 31, 2011. The facility expires in October 2012, and all outstanding amounts are then due and payable. At March 31, 2011, we had approximately $6.6 million of standby letters of credit outstanding, which reduce the amount available for borrowing on the unsecured revolving credit facility.

The facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At March 31, 2011, 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 any 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 March 31, 2011, 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 4 to the consolidated financial statements.

CONTRACTUAL OBLIGATIONS

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 have not yet been received as of March 31, 2011 and future minimum lease payments for the use of property and equipment under operating lease agreements. Aside from expected changes in raw-material needs due to changes in product demand and the planned plant expansion noted in the following paragraph, there have been no significant changes to the contractual obligations disclosed in our 2010 Annual Report on Form 10-K.

In August 2010, Sister Schubert’s Homemade Rolls, Inc. (“SS”), an indirect wholly owned subsidiary of ours, entered into a Construction Contract (the “Contract”) with Gray Construction, Inc. (“Gray”) for an addition to the existing SS production facility located in Hart County, Kentucky. Subject to certain conditions, the Contract provides that the total cost to be charged SS for Gray’s work is not to exceed a guaranteed maximum price of approximately $13 million. The Contract was included as Exhibit 10.1 on our Form 8-K, which was filed on August 27, 2010. As of March 31, 2011, we were still obligated for approximately $4 million under the Contract and we had equipment purchase commitments of approximately $4 million outstanding.

CRITICAL ACCOUNTING POLICIES

There have been no changes in critical accounting policies from those disclosed in our 2010 Annual Report on Form 10-K.

RECENTLY ISSUED ACCOUNTING STANDARDS

There were no recently issued accounting pronouncements that impact our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This Quarterly Report on Form 10-Q 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. More detailed statements regarding significant events that could affect our financial results are included in Item 1A of our Annual Report on Form 10-K and also our Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission and are available on our website at www.lancastercolony.com.

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 or other defective product costs;

	•		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;

	•		dependence on contract copackers and limited or exclusive sources for certain goods;

	•		effect of governmental regulations, including environmental matters;

	•		legislation and litigation affecting the future administration of the Continued Dumping and Subsidy Offset Act of 2000;

	•		access to any required financing;

	•		changes in income tax laws;

	•		unknown costs relating to the holding or disposition of idle real estate;

	•		changes in estimates in critical accounting judgments; and

	•		innumerable other factors.


Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Our market risks have not changed materially from those disclosed in our 2010 Annual Report on Form 10-K.


Item 4.		Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer evaluated, with the participation of management, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2011 to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is 1) recorded, processed,

summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and 2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting. No changes were made to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION


Item 1A.		Risk Factors

There have been no material changes to the risk factors disclosed under Item 1A in our 2010 Annual Report on Form 10-K.


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

(c) In November 2010, our Board of Directors approved a share repurchase authorization of 2,000,000 shares, of which approximately 1,679,000 shares remained authorized for future repurchases at March 31, 2011. This share repurchase authorization does not have a stated expiration date. In the third quarter, we made the following repurchases of our common stock:


					Total Number
	Total		Average		of Shares		Maximum Number
	Number		Price		Purchased as		of Shares That May
	of Shares		Paid Per		Part of Publicly		Yet be Purchased
Period	Purchased		Share		Announced Plans		Under the Plans

January 1–31, 2011		70,163	$	54.34		70,163		1,852,822
February 1–28, 2011⁽¹⁾		92,374	$	57.52		92,374		1,760,448
March 1–31, 2011		81,904	$	56.51		81,904		1,678,544


Total		244,441	$	56.27		244,441		1,678,544


⁽¹⁾		Includes 7,128 shares that were repurchased in satisfaction of tax withholding obligations arising from the vesting of restricted stock granted to employees under the Lancaster Colony Corporation 2005 Stock Plan.


Item 6.		Exhibits

See Index to Exhibits following Signatures.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Lancaster Colony Corporation (Registrant)
Date: May 10, 2011	By:	/s/John B. Gerlach, Jr.
		John B. Gerlach, Jr.
		Chairman, Chief Executive Officer, President and Director (Principal Executive Officer)

Date: May 10, 2011	By:	/s/John L. Boylan
		John L. Boylan
		Treasurer, Vice President, Assistant Secretary, Chief Financial Officer and Director (Principal Financial and Accounting Officer)

LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FORM 10-Q
MARCH 31, 2011

INDEX TO EXHIBITS


Exhibit
Number			Description	Located at

	10.1	*	Form of Restricted Stock Award Agreement for employees and consultants under the Lancaster Colony Corporation 2005 Stock Plan	Filed herewith

	10.2	*	Form of Stock Appreciation Rights Award Agreement for employees and consultants under the Lancaster Colony Corporation 2005 Stock Plan	Filed herewith

	31.1		Certification of CEO under Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

	31.2		Certification of CFO under Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

	32		Certification of CEO and CFO under Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

101.INS			XBRL Instance Document	Furnished herewith

101.SCH			XBRL Taxonomy Extension Schema Document	Furnished herewith

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document	Furnished herewith

101.LAB			XBRL Taxonomy Extension Label Linkbase Document	Furnished herewith

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document	Furnished herewith


*		Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.

EX-10.1 2 c16546exv10w1.htm EXHIBIT 10.1 Exhibit 10.1

Exhibit 10.1

LANCASTER COLONY CORPORATION

FORM OF RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (this “Agreement”) is dated as of _____, _____, by and between Lancaster Colony Corporation, an Ohio corporation (the “Company”), and _____, a Service Provider for the Company (the “Grantee”).

W I T N E S S E T H

WHEREAS, the Company desires to award Restricted Stock to the Grantee in accordance with the provisions of the Amended and Restated 2005 Stock Plan (the “Plan”); and

WHEREAS, the Grantee wishes to accept such award; and

WHEREAS, the execution of this Agreement has been authorized by a resolution of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of the Company that was duly adopted on _____, _____; and

WHEREAS, the Company hereby confirms to the Grantee the grant, effective on _____, _____(the “Grant Date”), pursuant to the Plan, of _____shares of Restricted Stock (“Awarded Shares”) subject to the terms and conditions of the Plan and the terms and conditions described below; and

WHEREAS, the parties hereto understand and agree that any terms used and not defined herein have the same meanings as in the Plan.

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

1. Provisions of the Plan Controlling. The Grantee specifically understands and agrees that the Awarded Shares are being granted under the Plan, and are being granted to the Grantee as Restricted Stock pursuant to the Plan, copies of which the Grantee acknowledges the Grantee has read and understands and by which the Grantee agrees to be bound. The provisions of the Plan are incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Agreement, the provisions of the Plan will control.

2. Vesting of Awarded Shares.

(a) Except as provided in Section 2(b) and 2(c), the Awarded Shares shall be forfeited to the Company for no consideration in the event the Grantee (i) voluntarily ceases to retain Continuous Status as an Employee or Consultant prior to the third anniversary of the Grant Date or (ii) ceases to retain Continuous Status as an Employee or Consultant as a result of being terminated by the Company, with or without cause, prior to the third anniversary of the Grant Date.

(b) The Awarded Shares shall be fully vested in the Grantee and no longer subject to a risk of forfeiture pursuant to Section 2(a) upon the occurrence of the earlier of the following events:

(i) the date on which the Grantee dies or ceases to retain Continuous Status as an Employee or Consultant as a result of the Grantee’s Disability; or

(ii) the third anniversary of the Grant Date.

(i) one third of the Awarded Shares shall be fully vested in the Grantee and no longer subject to a risk of forfeiture pursuant to Section 2(a) if Grantee Retires after the first anniversary of the Grant Date but before the second anniversary of the Grant Date; and

(ii) two thirds of the Awarded Shares shall be fully vested in the Grantee and no longer subject to a risk of forfeiture pursuant to Section 2(a) if Grantee Retires after the second anniversary of the Grant Date but before the third anniversary of the Grant Date.

For purposes of this Agreement: “Retire” shall mean, unless the Board determines otherwise, the Grantee’s termination of his or her employment (other than by death or Disability) after the Grantee attains age 63 and has achieved ten years of Continuous Status as an Employee or Consultant; “Vesting Date” shall mean the earliest of a Change in Control or the events described in Section 2(b) or Section 2(c).

3. Dividend and Voting Rights.

(a) Dividends payable with respect to the Awarded Shares during the period prior to the Vesting Date shall be paid to the Grantee in the same manner as paid on the Common Stock of the Company, unless the Grantee forfeits the Awarded Shares pursuant to Section 2(a) hereof, in which case the Grantee shall also forfeit the right to receive any dividends not paid prior to such forfeiture.

(b) The Grantee shall have the right to vote any Awarded Shares; provided, that such voting rights shall lapse with respect to any Awarded Shares that are forfeited to the Company pursuant to this Agreement.

4. Additional Shares. If the Company pays a stock dividend or declares a stock split on or with respect to any of its Common Stock, or otherwise distributes securities of the Company to the holders of its Common Stock, the shares of stock or other securities of the Company issued with respect to the Awarded Shares then subject to the restrictions contained in this Agreement shall be held in escrow and shall be distributed to the Grantee on the Vesting Date, unless the Grantee forfeits the Awarded Shares pursuant to Section 2(a) hereof, in which case the Grantee shall also forfeit the right to receive such stock or other securities. If the Company shall distribute to its shareholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Awarded Shares then subject to the restrictions contained in this Agreement shall be held in escrow and shall be distributed to the Grantee on such Vesting Date, unless the Grantee forfeits the Awarded Shares pursuant to Section 2(a) hereof, in which case the Grantee shall also forfeit the right to receive such stock.

5. Effect of Change in Control. Notwithstanding anything in this Agreement to the contrary, including Section 2, in the event of a Change in Control, the Awarded Shares will be affected in accordance with Section 15 of the Plan.

6. Adjustments. The Awarded Shares shall be subject to adjustment in accordance with Section 15 of the Plan.

7. Legends. To the extent certificates representing the Awarded Shares are issued to the Grantee pursuant to this Agreement, such certificates shall have endorsed thereon legends substantially as follows (or in such other form as counsel for the Company may determine is necessary or appropriate):

“The shares represented by this certificate are subject to restrictions set forth in a Restricted Stock Award Agreement with this Company dated _____, _____, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

8. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any delivery of Awarded Shares to the Grantee, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such delivery that the Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Company of a portion of the Awarded Shares to be delivered to the Grantee. If such election is made, the Awarded Shares so retained shall be credited against such withholding requirement at the Fair Market Value of a Share on the date of such delivery, with any fractional Shares that would otherwise be delivered being rounded up to the next nearest whole Share. In no event shall the Fair Market Value of Awarded Shares to be withheld pursuant to this Section 8 to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld.

9. Notices. Any notices required or permitted by the terms of this Agreement or the Plan must be in writing, shall be delivered to the Grantee at his or her address on file with the Company or to the Company addressed as follows (or to such other address or addresses of which notice in the same manner has previously been given), and will be deemed to have been duly given (a) when delivered in person, (b) when dispatched by electronic facsimile transfer (if confirmed in writing by mail simultaneously dispatched), (c) one business day after having been dispatched by a nationally recognized overnight courier service or (d) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid:

Lancaster Colony Corporation
37 West Broad Street
Columbus, Ohio 43215
Attention: Corporate Secretary

10. No Employment Contract; Right to Terminate Employment. The grant of the Awarded Shares to the Grantee is a voluntary, discretionary award being made on a one-time

basis and it does not constitute a commitment to make any future awards. The grant of the Awarded Shares and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Grantee any right to continue employment with the Company or any Subsidiary, as the case may be, or interfere in any way with the right of the Company or a Subsidiary to terminate the employment of the Grantee at any time.

11. Relation to Other Benefits. Any economic or other benefit to the Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.

12. Information. Information about the Grantee and the Grantee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Grantee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Grantee’s country or elsewhere, including the United States of America. The Grantee consents to the processing of information relating to the Grantee and the Grantee’s participation in the Plan in any one or more of the ways referred to above.

13. Benefit of Agreement. Subject to the provisions of the Plan and the other provisions hereof, this Agreement is for the benefit of and is binding on the heirs, executors, administrators, successors and assigns of the parties hereto.

14. Entire Agreement. This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement; provided, however, in any event, this Agreement shall be subject to and governed by the Plan. The Board shall have authority, subject to the express provisions of the Plan and this Agreement, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations that are, in the judgment of the Board, necessary or desirable for the administration of the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in this Agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All actions by the Board under the provisions of this Section 14 shall be conclusive for all purposes.

15. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Grantee with respect to the Awarded Shares without the Grantee’s consent.

16. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

17. Governing Law. This Agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio.

18. Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

19. Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the Awarded Shares and participation in the Plan or future grants of Restricted Stock that may be granted under the Plan by electronic means. Notwithstanding anything in this Agreement to the contrary, Grantee hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of Restricted Stock grants and the execution of award agreements through electronic signature.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Executed in the name and on behalf of the Company in Columbus, Ohio as of the _____day of _____.


	LANCASTER COLONY CORPORATION
	By:
		Name:
		Title:

ACCEPTANCE OF AGREEMENT

Grantee hereby: (a) acknowledges receiving a copy of the Plan, which has either been previously delivered or is provided with this Agreement, and represents that he or she is familiar with and understands all provisions of the Plan and this Agreement; (b) voluntarily and knowingly accepts this Agreement and the Awarded Shares granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; and (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement. Grantee further acknowledges receiving a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders and a copy of the prospectus pertaining to the Plan.

EX-10.2 3 c16546exv10w2.htm EXHIBIT 10.2 Exhibit 10.2

Exhibit 10.2

LANCASTER COLONY CORPORATION

FORM OF STOCK APPRECIATION RIGHTS AGREEMENT

This Stock Appreciation Rights Agreement (this “Agreement”) is dated as of _____, _____, by and between Lancaster Colony Corporation, an Ohio corporation (the “Company”), and _____, a Service Provider for the Company (the “Grantee”).

W I T N E S S E T H

WHEREAS, the Company desires to award free-standing Stock Appreciation Rights to the Grantee in accordance with the provisions of the Amended and Restated 2005 Stock Plan (the “Plan”); and

WHEREAS, the Grantee wishes to accept such award; and

WHEREAS, the Company hereby confirms to the Grantee the grant, effective on _____, _____(the “Grant Date”), pursuant to the Plan, of _____free-standing Stock Appreciation Rights (“SARs”) subject to the terms and conditions of the Plan and the terms and conditions described below, which SARs are a right to receive Shares with a Fair Market Value equal to 100% of the Spread at the time of exercise; and

WHEREAS, the parties hereto understand and agree that any terms used and not defined herein have the same meanings as in the Plan.

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

1. Definitions. As used in this Agreement:

(a) “Base Price” means $_____, which is not less than the Fair Market Value of a Share on the Grant Date.

(b) “Spread” means the excess of the Fair Market Value of a Share on the date on which a SAR is exercised over the Base Price.

2. Vesting of SARs. The SARs shall become exercisable as follows:

(a) one-third of the SARs shall become exercisable on the first anniversary of the Grant Date if the Grantee shall have retained Continuous Status as an Employee or Consultant through such date;

(b) an additional one-third of the SARs shall become exercisable on the second anniversary of the Grant Date if the Grantee shall have retained Continuous Status as an Employee or Consultant through such date;

(c) the remaining one-third of the SARs shall become exercisable on the third anniversary of the Grant Date if the Grantee shall have retained Continuous Status as an Employee or Consultant through such date;

provided, that notwithstanding anything in this Section 2 to the contrary, any Qualifying SARs that have not become exercisable prior to the date of Grantee’s Retirement shall become exercisable, subject to Section 4(c), in accordance with the schedule set forth in clauses (a), (b) and (c) of this Section 2 but without regard to whether Grantee has retained Continuous Status as an Employee or Consultant. In calculating the one-third amounts described in Sections 2(a), (b) and (c), fractional SARs shall be rounded down to the nearest whole SAR for each of the first two anniversaries of the Grant Date, and the remaining SARs shall be included with those SARs that become exercisable on the third anniversary of the Grant Date. To the extent exercisable, the SARs may be exercised from time to time in accordance with the Plan and this Agreement. To the extent the SARs or any portion thereof do not become exercisable as provided in this Section 2, such unexercisable SARs or portion thereof shall be forfeited to the Company for no consideration. For purposes of this Agreement: “Retirement” shall mean, unless the Board determines otherwise, the Grantee’s termination of his or her employment (other than by death or Disability) at least six months after the Grant Date and after the Grantee attains age 63 and has achieved ten years of Continuous Status as an Employee or Consultant.

3. Exercise of SARs.

(a) To the extent exercisable as provided in Section 2 or Section 5 of this Agreement, the SARs may be exercised in whole or in part by delivery to the Company of a statement in form and substance satisfactory to the Committee specifying the number of SARs to be exercised.

(b) Upon exercise, the Company will issue to the Grantee the number of Shares equal to the quotient of (i) the product of (A) the Spread multiplied by (B) the number of SARs exercised divided by (ii) the Fair Market Value of a Share on the date of exercise, with such quotient rounded down to the nearest whole Share.

4. Termination of SARs. The SARs shall terminate upon the earliest to occur of the following:

(a) 90 days after the Grantee ceases to retain Continuous Status as an Employee or Consultant other than upon the Grantee’s death or Disability or Retirement;

(b) 180 days after the Grantee ceases to retain Continuous Status as an Employee or Consultant as a result of the Grantee’s Disability;

(c) One year after the Grantee ceases to retain Continuous Status as an Employee or Consultant as a result of the Grantee’s death; and

(d) Five years from the Grant Date.

5. Effect of Change in Control. Notwithstanding anything in this Agreement to the contrary, including Section 2, in the event of a Change in Control, the SARs will be affected in accordance with Section 15 of the Plan.

6. Transferability. No SAR may be transferred by the Grantee other than by will or the laws of descent and distribution. The SARs may be exercised during a Grantee’s lifetime only by the Grantee or, in the event of the Grantee legal incapacity, by the Grantee’s guardian or legal representative acting in a fiduciary capacity on behalf of the Grantee under state law and court supervision. The SARs may be exercised after the Grantee’s death by (a) the Grantee’s designated beneficiary, provided such beneficiary has been designated prior to the Grantee’s death in a form acceptable to the Committee, or (b) the personal representative of the Grantee’s estate or by the person(s) to whom the SARs are transferred pursuant to the Grantee’s will or in accordance with the laws of descent and distribution.

7. Compliance with Law. The SARs shall not be exercisable if such exercise would involve a violation of any applicable federal or state securities law, and the Company hereby agrees to make reasonable efforts to comply with any applicable federal and state securities law.

8. Adjustments. The SARs shall be subject to adjustment in accordance with Section 15 of the Plan.

9. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with the exercise of the SARs, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to such exercise that the Grantee make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Company of a portion of the Shares to be delivered to the Grantee. If such election is made, the Shares so retained shall be credited against such withholding requirement at the Fair Market Value of a Share on the date of such delivery, with any fractional Shares that would otherwise be delivered being rounded up to the next nearest whole Share. In no event shall the Fair Market Value of Shares to be withheld pursuant to this Section 9 to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld.

10. Notices. Any notices required or permitted by the terms of this Agreement or the Plan must be in writing, shall be delivered to the Grantee at his or her address on file with the Company or to the Company addressed as follows (or to such other address or addresses of which notice in the same manner has previously been given), and will be deemed to have been duly given (a) when delivered in person, (b) when dispatched by electronic facsimile transfer (if confirmed in writing by mail simultaneously dispatched), (c) one business day after having been dispatched by a nationally recognized overnight courier service or (d) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid:

Lancaster Colony Corporation
37 West Broad Street
Columbus, Ohio 43215
Attention: Corporate Secretary

11. No Employment Contract; Right to Terminate Employment. The grant of SARs to the Grantee is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the SARs and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Grantee any right to continue employment with the Company or any Subsidiary, as the case may be, or interfere in any way with the right of the Company or a Subsidiary to terminate the employment of the Grantee at any time.

12. Relation to Other Benefits. Any economic or other benefit to the Grantee under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or a Subsidiary.

13. Information. Information about the Grantee and the Grantee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Grantee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Grantee’s country or elsewhere, including the United States of America. The Grantee consents to the processing of information relating to the Grantee and the Grantee’s participation in the Plan in any one or more of the ways referred to above.

14. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the rights of the Grantee with respect to the SARs without the Grantee’s consent.

15. Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

16. Governing Law. This Agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio.

17. Provisions of the Plan Controlling. The Grantee specifically understands and agrees that the SARs are being granted under the Plan, copies of which Plan the Grantee acknowledges the Grantee has read, understands and by which the Grantee agrees to be bound. The provisions of the Plan are incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Agreement, the provisions of the Plan will control. The Board shall have authority, subject to the express provisions of the Plan and this Agreement, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations that are, in the judgment of the Board, necessary or desirable for the administration of the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in this Agreement in the manner and to the extent it

shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All actions by the Board under the provisions of this Section 17 shall be conclusive for all purposes.

18. Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the SARs and participation in the Plan or future grants of Stock Appreciation Rights that may be granted under the Plan by electronic means. Notwithstanding anything in this Agreement to the contrary, Grantee hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of Stock Appreciation Rights grants and the execution of award agreements through electronic signature.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Executed in the name and on behalf of the Company in Columbus, Ohio as of the _____day of _____.


	LANCASTER COLONY CORPORATION
	By:
		Name:
		Title:

ACCEPTANCE OF AGREEMENT

Grantee hereby: (a) acknowledges receiving a copy of the Plan, which has either been previously delivered or is provided with this agreement, and represents that he or she is familiar with and understands all provisions of the Plan and this Agreement; (b) voluntarily and knowingly accepts this Agreement and the SARs granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; and (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement. Grantee further acknowledges receiving a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders and a copy of the prospectus pertaining to the Plan.

EX-31.1 4 c16546exv31w1.htm EXHIBIT 31.1 Exhibit 31.1

Exhibit 31.1

Certification by Chief Executive Officer

I, John B. Gerlach, Jr., certify that:

I have reviewed this quarterly report on Form 10-Q of Lancaster Colony Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 10, 2011	By:	/s/ John B. Gerlach, Jr.
		John B. Gerlach, Jr.
		Chief Executive Officer

EX-31.2 5 c16546exv31w2.htm EXHIBIT 31.2 Exhibit 31.2

Exhibit 31.2

Certification by Chief Financial Officer

I, John L. Boylan, certify that:

I have reviewed this quarterly report on Form 10-Q of Lancaster Colony Corporation;

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 10, 2011	By:	/s/ John L. Boylan
		John L. Boylan
		Chief Financial Officer

EX-32 6 c16546exv32.htm EXHIBIT 32 Exhibit 32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18, UNITED STATES CODE, SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lancaster Colony Corporation (the “Company”) on Form 10-Q for the quarter ending March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John B. Gerlach, Jr., Chief Executive Officer of the Company, and John L. Boylan, Chief Financial Officer of the Company, respectively, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

	(1)		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


	By:	/s/ John B. Gerlach, Jr.
		John B. Gerlach, Jr.
		Chief Executive Officer

	May 10, 2011

	By:	/s/ John L. Boylan
		John L. Boylan
		Chief Financial Officer

	May 10, 2011

EX-101.INS 7 lanc-20110331.xml EX-101 INSTANCE DOCUMENT 0000057515 2010-03-31 0000057515 2009-06-30 0000057515 2011-01-01 2011-03-31 0000057515 2010-01-01 2010-03-31 0000057515 2009-07-01 2010-03-31 0000057515 2011-03-31 0000057515 2010-06-30 0000057515 2011-04-29 0000057515 2010-07-01 2011-03-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares false --06-30 Q3 2011 2011-03-31 10-Q 0000057515 27441000 Large Accelerated Filer LANCASTER COLONY CORP 27234000 27466000 1777000 5643000 3.27 0.86 2.77 0.71 129747000 137446000 893000 0 961000 0 <div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Note 5 — Pension Benefits</b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">We and certain of our operating subsidiaries have sponsored multiple defined benefit pension plans covering union workers at certain locations. As a result of restructuring activities in recent years, at March 31, 2011 there were no active employees continuing to accrue service cost or otherwise eligible to receive plan benefits. Benefits being paid under the plans are primarily based on negotiated rates and years of service. We contribute to these plans at least the minimum amount required by regulation or contract. </div> <p style="text-indent: 32px; font-size: 10pt;" align="center"> </p></div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The following table discloses net periodic benefit cost for our pension plans: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="44%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Three Months</b></td> <td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Nine Months</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Ended</b></td> <td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Ended</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>March 31</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>March 31</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left"><b>Components of net periodic benefit cost</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Service cost</div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">45</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Interest cost</div></td> <td> </td> <td> </td> <td align="right"><b>487</b></td> <td> </td> <td> </td> <td> </td> <td align="right">529</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>1,461</b></td> <td> </td> <td> </td> <td> </td> <td align="right">1,588</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Expected return on plan assets</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(507</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(537</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(1,521</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,613</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Curtailment charge</div></td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right">349</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Amortization of unrecognized net loss</div></td> <td> </td> <td> </td> <td align="right"><b>136</b></td> <td> </td> <td> </td> <td> </td> <td align="right">124</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>410</b></td> <td> </td> <td> </td> <td> </td> <td align="right">372</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Amortization of prior service cost</div></td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>—</b></td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Net periodic benefit cost</div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>116</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">116</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>350</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">746</td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr></table></div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In the first quarter of 2010, one of our plans became subject to curtailment accounting. This resulted in the immediate recognition of all of the outstanding prior service cost of the plan, which was approximately $0.3 million. This charge was recorded in Restructuring and Impairment Charges and related to our Specialty Foods segment. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">For the three and nine months ended March 31, 2011, we made pension plan contributions totaling approximately $1.8 million. We do not expect to make any further contributions to our pension plans during the remainder of 2011. </div></div> </div> -405000 -1442000 <div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Note 6 — Postretirement Benefits</b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">We and certain of our operating subsidiaries provide multiple postretirement medical and life insurance benefit plans. We recognize the cost of benefits as the employees render service. Postretirement benefits are funded as incurred. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The following table discloses net periodic benefit cost for our postretirement plans: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="44%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Three Months</b></td> <td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Nine Months</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Ended</b></td> <td> </td> <td> </td> <td colspan="6" nowrap="nowrap" align="center"><b>Ended</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>March 31</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>March 31</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left"><b>Components of net periodic benefit cost</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Service cost</div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>6</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>18</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">12</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Interest cost</div></td> <td> </td> <td> </td> <td align="right"><b>34</b></td> <td> </td> <td> </td> <td> </td> <td align="right">48</td> <td> </td> <td> </td> <td> </td> <td align="right"><b>102</b></td> <td> </td> <td> </td> <td> </td> <td align="right">144</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Amortization of unrecognized gain</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(12</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(36</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(10</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Amortization of prior service asset</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(1</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(3</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Net periodic benefit cost</div></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>27</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">47</td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>81</b></td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">143</td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr></table></div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify"> <div style="padding-left: 0%; width: 100%; padding-right: 0%;"> <p style="text-align: left;"><font style="font-family: TimesNewRomanPSMT,Times New Roman,Times,serif;" class="_mt" size="2">For the three and nine months ended March 31, 2011, we made less than $0.1 million and approximately $0.1 million, respectively, in contributions to our postretirement medical and life insurance benefit plans. We expect to make approximately $0.1 million more in contributions to our postretirement medical and life insurance benefit plans during the remainder of 2011.</font></p></div></div></div> </div>

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<div> <div style="width: 5.821in; font-family: 'Times New Roman',Times,serif; height: 655px; margin-left: 0.25in;"> <div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Note 11 — Commitments and Contingencies</b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In addition to the items discussed below, at March 31, 2011, we were a party to various claims and litigation matters arising in the ordinary course of business. Such matters did not have a material adverse effect on the current-year results of operations and, in our opinion, their ultimate disposition will not have a material adverse effect on our consolidated financial statements. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">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 $1.0 million in the second quarter of 2011, as compared to a distribution of approximately $0.9 million in the corresponding period of 2010. These remittances related to certain candles being imported from the People's Republic of China. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Legislation was enacted in February 2006 to repeal the applicability of the CDSOA to duties collected on products imported after September 2007. 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. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" class="MetaData" align="justify">In addition to this legislative development, cases have been 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 both CIT decisions and the U.S. Supreme Court did not hear either case. This effectively ended the constitutional challenges brought in these cases, but other cases challenging the CDSOA remain active. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" class="MetaData" align="justify">Subsequent to March 31, 2011, we received notice of special CDSOA distributions totaling approximately $12.5 million, of which we have received $2.6 million and expect to receive the remainder by June 30, 2011. These distributions relate to the resolution of the constitutional challenges discussed above.</div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" class="MetaData" align="justify">We are unable to determine, at this time, what the ultimate outcome of other litigation will be, and it is possible that further legal action, potential additional changes in the law and other factors could affect the amount of funds available for distribution, including funds relating to entries prior to October 2007. Accordingly, we cannot predict the amount of future distributions we may receive. Any change in CDSOA distributions could affect our earnings and cash flow.</div></div> </div>

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<div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Note 7 — Stock-Based Compensation</b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">As approved by our shareholders in November 1995, the terms of the 1995 Key Employee Stock Option Plan (the "1995 Plan") reserved 3,000,000 common shares for issuance to qualified key employees. All options granted under the 1995 Plan were exercisable at prices not less than fair market value as of the date of grant. In general, options granted under the 1995 Plan vested immediately and had a maximum term of five years. The 1995 Plan expired in August 2005, but there were options issued under this plan that were exercisable through February 2010. There were no options outstanding under this plan at March 31, 2011. </div></div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Our shareholders have approved the adoption of and subsequent amendments to the Lancaster Colony Corporation 2005 Stock Plan (the "2005 Plan"). The 2005 Plan reserved 2,000,000 common shares for issuance to our employees and directors, and all awards granted under the 2005 Plan will be exercisable at prices not less than fair market value as of the date of the grant. The vesting period for awards granted under the 2005 Plan varies as to the type of award granted, but generally these awards have a maximum term of five years. </div> <div style="margin-top: 10pt; margin-left: 1%; font-size: 10pt;" align="justify"><b><i>Stock Options</i></b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Until 2008, we used stock options as the primary vehicle for rewarding certain employees with long-term incentives for their efforts in helping to create long-term shareholder value. We calculated the fair value of option grants using the Black-Scholes option-pricing model. There were no grants of stock options during the nine months ended March 31, 2011 and 2010. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">We recognized compensation expense over the requisite service period. Total compensation cost related to stock options was zero for the three and nine months ended March 31, 2011 and 2010. There were no stock option exercises during the nine months ended March 31, 2011, and there are no outstanding stock options at March 31, 2011. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">During the three and nine months ended March 31, 2010, we received approximately $0.3 million and $4.0 million, respectively, in cash from the exercise of stock options. The aggregate intrinsic value of these options was approximately $0.1 million and $0.9 million, respectively. A related tax benefit of less than $0.1 million and approximately $0.3 million was recorded in the three and nine months ended March 31, 2010, respectively. These tax benefits were included in the financing section of the Consolidated Statements of Cash Flows and resulted from incentive stock option disqualifying dispositions and exercises of non-qualified options. The benefits included less than $0.1 million of gross windfall tax benefits for the three and nine months ended March 31, 2010. </div> <div style="margin-top: 10pt; margin-left: 1%; font-size: 10pt;" align="justify"><b><i>Stock-Settled Stock Appreciation Rights</i></b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Since 2008, we have used periodic grants of stock-settled stock appreciation rights ("SSSARs") as a vehicle for rewarding certain employees with long-term incentives for their efforts in helping to create long-term shareholder value. We calculate the fair value of SSSARs grants using the Black-Scholes option-pricing model. Our policy is to issue shares upon SSSAR exercise from new shares that had been previously authorized. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In February 2011 and 2010, we granted 94,000 and 167,950 SSSARs, respectively, to various employees under the terms of the 2005 Plan. The weighted average per right fair value of the 2011 SSSARs grant was $10.12 and was estimated at the date of grant using the following assumptions: risk-free interest rate of 1.27%; dividend yield of 2.28%; volatility factor of the expected market price of our common stock of 28.78%; and a weighted average expected life of 3.11 years. The weighted average per right fair value of the 2010 SSSARs grant was $11.81 and was estimated at the date of grant using the following assumptions: risk-free interest rate of 1.67%; dividend yield of 2.04%; volatility factor of the expected market price of our common stock of 29.97%; and a weighted average expected life of 3.5 years. For both grants, the volatility factor was estimated based on actual historical volatility of our stock for a time period equal to the term of the SSSARs. The SSSARs from both grants vest one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date and one-third on the third anniversary of the grant date. We are assuming a forfeiture rate of four percent for each of these grants. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">We recognize compensation expense over the requisite service period. Total compensation cost related to SSSARs was approximately $0.3 million and $0.9 million for the three and nine months ended March 31, 2011, respectively, as compared to approximately $0.2 million and $0.4 million for the three and nine months ended March 31, 2010, respectively. These amounts were reflected in Cost of Sales or Selling, General and Administrative Expenses based on the grantees' salaries expense classification and were allocated to each segment appropriately. We recorded a tax benefit of approximately $0.1 million and $0.3 million for the three and nine months ended March 31, 2011, respectively, as compared to less than $0.1 million and approximately $0.1 million for the three and nine months ended March 31, 2010, respectively. We also recorded gross windfall tax benefits of approximately $0.1 million for the three and nine months ended March 31, 2011, as compared to approximately $0.3 million for the three and nine months ended March 31, 2010. These windfall tax benefits were included in the financing section of the Consolidated Statements of Cash Flows. </div></div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; font-size: 10pt;" align="justify"> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The following table summarizes the activity relating to SSSARs granted under the 2005 Plan for the nine months ended March 31, 2011: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="44%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Weighted</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Weighted</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Average</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Number</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Average</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Remaining</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Aggregate</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>of</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Exercise</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Contractual</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Intrinsic</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>Rights</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>Price</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>Life in Years</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>Value</b></td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Outstanding at beginning of period</div></td> <td> </td> <td> </td> <td align="right"><b>309</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>49.55</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Exercised</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(30</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>39.21</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Granted</div></td> <td> </td> <td> </td> <td align="right"><b>94</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>57.78</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Forfeited</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(9</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>51.74</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Outstanding at end of period</div></td> <td> </td> <td> </td> <td align="right"><b>364</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>52.49</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>3.70</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>2,952</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Exercisable and vested at end of period</div></td> <td> </td> <td> </td> <td align="right"><b>139</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>46.39</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>2.87</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>1,972</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Vested and expected to vest at end of period</div></td> <td> </td> <td> </td> <td align="right"><b>358</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>52.49</b></td> <td> </td> <td> </td> <td> </td> <td align="right"><b>3.69</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>2,905</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr></table></div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The following table summarizes the status of, and changes to, unvested SSSARs during the nine months ended March 31, 2011: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="72%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="9%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Weighted</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Number</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Average</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>of</b></td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"><b>Grant Date</b></td> <td> </td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>Rights</b></td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>Fair Value</b></td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Unvested at beginning of period</div></td> <td> </td> <td> </td> <td align="right"><b>266</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>9.77</b></td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Granted</div></td> <td> </td> <td> </td> <td align="right"><b>94</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10.12</b></td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Vested</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(127</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>8.63</b></td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Forfeited</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right"><b>(8</b></td> <td nowrap="nowrap"><b>)</b></td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10.12</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Unvested at end of period</div></td> <td> </td> <td> </td> <td align="right"><b>225</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>10.55</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr></table></div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">At March 31, 2011, there was approximately $2.2 million of unrecognized compensation cost related to SSSARs that we will recognize over a weighted-average period of approximately 2.23 years. </div> <div style="margin-top: 10pt; margin-left: 1%; font-size: 10pt;" align="justify"><b><i>Restricted Stock</i></b> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Since 2008, we have used periodic grants of restricted stock as a vehicle for rewarding our nonemployee directors and certain employees with long-term incentives for their efforts in helping to create long-term shareholder value. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In February 2011 and 2010, we granted a total of 6,750 and 25,000 shares of restricted stock, respectively, to various key employees under the terms of the 2005 Plan. The restricted stock granted in 2011 had a grant date fair value of approximately $0.4 million based on a per share closing stock price of $57.78. The restricted stock granted in 2010 had a grant date fair value of approximately $1.5 million based on a per share closing stock price of $58.79. The restricted stock under each of these grants vests on the third anniversary of the grant date. We are assuming a forfeiture rate of four percent for each of these grants. Under the terms of the grants, employees will receive dividends on unforfeited restricted stock regardless of their vesting status. An additional 21,500 shares of restricted stock that were granted to various key employees in February 2008 vested during the third quarter of 2011. </div></div> <div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;"> <div style="margin-top: 10pt; font-size: 10pt;" align="justify"> </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In November 2010, we granted a total of 8,155 shares of restricted stock to our seven nonemployee directors under the terms of the 2005 Plan. The restricted stock had a grant date fair value of approximately $0.4 million based on a per share closing stock price of $51.52. This restricted stock vests over a one-year period, and all of these shares are expected to vest. Dividends earned on the stock during the vesting period are held in escrow and will be paid to the directors at the time the stock vests. An additional 8,435 shares of restricted stock that were granted to our seven nonemployee directors in November 2009 vested during the second quarter of 2011, and the directors were paid the related dividends that had been held in escrow. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">We recognize compensation expense over the requisite service period. Total compensation cost related to restricted stock for the three and nine months ended March 31, 2011 was approximately $0.3 million and $0.9 million, respectively, as compared to approximately $0.2 million and $0.6 million in the corresponding periods of the prior year. These amounts were reflected in Cost of Sales or Selling, General and Administrative Expenses based on the grantees' salaries expense classification and were allocated to each segment appropriately. We recorded a tax benefit of approximately $0.1 million and $0.3 million for the three and nine months ended March 31, 2011, respectively, as compared to approximately $0.1 million and $0.2 million in the corresponding periods of the prior year. We recorded gross windfall tax benefits of approximately $0.1 million for the three and nine months ended March 31, 2011. We recorded gross windfall tax benefits of zero and less than $0.1 million for the three and nine months ended March 31, 2010, respectively. These windfall tax benefits were included in the financing section of the Consolidated Statements of Cash Flows. </div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The following table summarizes the activity relating to restricted stock granted under the 2005 Plan for the nine-month period ended March 31, 2011: </div> <div align="center"> <table style="font-size: 10pt;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="72%"> <p align="left"> </p></td> <td width="3%"> <p align="left"> </p></td> <td width="1%"> <p align="left"> </p></td> <td width="9%"> <p align="left"> </p></td> <td width="1%"> <p align="left"> </p></td> <td width="3%"> <p align="left"> </p></td> <td width="1%"> <p align="left"> </p></td> <td width="9%"> <p align="left"> </p></td> <td width="1%"> <p align="left"> </p></td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>Weighted</b></p></td> <td> <p align="left"> </p></td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>Number</b></p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>Average</b></p></td> <td> <p align="left"> </p></td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>of</b></p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>Grant Date</b></p></td> <td> <p align="left"> </p></td></tr> <tr style="font-size: 10pt;" valign="bottom"><td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>Shares</b></p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"> <p align="center"><b>Fair Value</b></p></td> <td> <p align="left"> </p></td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Unvested restricted stock at beginning of period</div></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td align="right"> <p align="right"><b>61</b></p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td align="left"> <p align="left"><b>$</b></p></td> <td align="right"> <p align="right"><b>48.43</b></p></td> <td> <p align="left"> </p></td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Granted</div></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td align="right"> <p align="right"><b>15</b></p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td align="left"> <p align="left"><b>$</b></p></td> <td align="right"> <p align="right"><b>54.35</b></p></td> <td> <p align="left"> </p></td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Vested</div></td> <td> <p align="left"> </p></td> <td nowrap="nowrap" align="left"> <p align="left"> </p></td> <td align="right"> <p align="right"><b>(30</b></p></td> <td nowrap="nowrap"> <p align="left"><b>)</b></p></td> <td> <p align="left"> </p></td> <td align="left"> <p align="left"><b>$</b></p></td> <td align="right"> <p align="right"><b>41.83</b></p></td> <td> <p align="left"> </p></td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;" align="left">Forfeited</div></td> <td> <p align="left"> </p></td> <td nowrap="nowrap" align="left"> <p align="left"> </p></td> <td align="right"> <p align="right"><b>(2</b></p></td> <td nowrap="nowrap"> <p align="left"><b>)</b></p></td> <td> <p align="left"> </p></td> <td align="left"> <p align="left"><b>$</b></p></td> <td align="right"> <p align="right"><b>49.86</b></p></td> <td> <p align="left"> </p></td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left"> </div></td> <td> <p align="left"> </p></td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td> <td> <p align="left"> </p></td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Unvested restricted stock at end of period</div></td> <td> </td> <td> </td> <td align="right"><b>44</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>54.88</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;" align="left">Expected to vest restricted stock at end of period</div></td> <td> </td> <td> </td> <td align="right"><b>44</b></td> <td> </td> <td> </td> <td align="left"><b>$</b></td> <td align="right"><b>54.89</b></td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr></table></div> <div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">At March 31, 2011, there was approximately $1.6 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of approximately 1.88 years. </div></div> </div>

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