F0RM 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PWZU/KlqG3rfrgUkxfEeLWe5ZGxK16TMSBUIhUP8NmvUX+MZlwWxpI+i2i5C+u24 GdgTKTrfT0lllvVR2GO4Wg== 0000950152-09-001099.txt : 20090209 0000950152-09-001099.hdr.sgml : 20090209 20090209161402 ACCESSION NUMBER: 0000950152-09-001099 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090209 DATE AS OF CHANGE: 20090209 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: 09581454 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 l35390ae10vq.htm FORM 10-Q F0RM 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 December 31, 2008


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

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 January 30, 2009, there were approximately 27,970,000 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:		3
Consolidated Balance Sheets — December 31, 2008 and June 30, 2008		3
Consolidated Statements of Income — Three and Six Months Ended December 31, 2008 and 2007		4
Consolidated Statements of Cash Flows — Six Months Ended December 31, 2008 and 2007		5
Notes to Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		22

Item 4. Controls and Procedures		22

PART II — OTHER INFORMATION

Item 1A. Risk Factors		22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23

Item 4. Submission of Matters to a Vote of Security Holders		24

Item 6. Exhibits		24

SIGNATURES		25

INDEX TO EXHIBITS		26
EX-3.1
EX-3.2
EX-10.1
EX-10.2
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	December 31			June 30
(Amounts in thousands, except share data)	2008			2008
ASSETS
Current Assets:
Cash and equivalents	$	30,340		$	19,417
Receivables (less allowance for doubtful accounts, December — $1,156 and June — $1,069)		75,064			59,409
Inventories:
Raw materials		32,450			34,787
Finished goods and work in process		63,409			85,516

Total inventories		95,859			120,303
Deferred income taxes and other current assets		24,648			34,545

Total current assets		225,911			233,674

Property, Plant and Equipment:
Land, buildings and improvements		128,178			138,771
Machinery and equipment		243,180			240,490

Total cost		371,358			379,261
Less accumulated depreciation		195,846			199,688

Property, plant and equipment — net		175,512			179,573

Other Assets:
Goodwill		89,840			89,840
Other intangible assets — net		11,259			11,841
Other noncurrent assets		4,837			5,250


Total	$	507,359		$	520,178


LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	34,309		$	45,964
Accrued liabilities		42,983			42,785

Total current liabilities		77,292			88,749

Long-Term Debt		45,000			55,000

Other Noncurrent Liabilities		15,543			14,547

Deferred Income Taxes		3,122			2,664

Shareholders’ Equity:
Preferred stock — authorized 3,050,000 shares; outstanding — none
Common stock — authorized 75,000,000 shares; outstanding - December 31, 2008 — 27,970,230 shares; June 30, 2008 - 28,452,237 shares		83,032			82,652
Retained earnings		964,839			941,244
Accumulated other comprehensive loss		(5,672	)		(5,775	)
Common stock in treasury, at cost		(675,797	)		(658,903	)

Total shareholders’ equity		366,402			359,218


Total	$	507,359		$	520,178

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended						Six Months Ended
	December 31						December 31
(Amounts in thousands, except per share data)	2008			2007			2008			2007
Net Sales	$	288,242		$	269,447		$	552,079		$	513,405

Cost of Sales		230,079			225,837			454,247			424,963


Gross Margin		58,163			43,610			97,832			88,442

Selling, General and Administrative Expenses		21,917			21,217			42,178			42,259

Restructuring and Impairment Charges		(8	)		46			1,606			182


Operating Income		36,254			22,347			54,048			46,001

Other (Expense) Income:
Interest expense		(639	)		(966	)		(1,130	)		(1,924	)
Other income — Continued Dumping and Subsidy Offset Act		8,696			2,533			8,696			2,533
Interest income and other — net		(271	)		241			(196	)		396


Income from Continuing Operations Before Income Taxes		44,040			24,155			61,418			47,006

Taxes Based on Income		15,588			8,881			21,946			17,085


Income from Continuing Operations		28,452			15,274			39,472			29,921

Income from Discontinued Operations, Net of Tax		—			724			—			1,647


Net Income	$	28,452		$	15,998		$	39,472		$	31,568


Income Per Common Share from Continuing Operations:
Basic and Diluted	$	1.02		$	.51		$	1.40		$	.99

Income Per Common Share from Discontinued Operations:
Basic and Diluted	$	—		$	.02		$	—		$	.05

Net Income Per Common Share:
Basic and Diluted	$	1.02		$	.54		$	1.40		$	1.05

Cash Dividends Per Common Share	$	.285		$	.28		$	.565		$	.55

Weighted Average Common Shares Outstanding:
Basic		27,948			29,855			28,105			30,133
Diluted		27,959			29,860			28,113			30,140

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended
	December 31
(Amounts in thousands)	2008			2007
Cash Flows From Operating Activities:
Net income	$	39,472		$	31,568
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations		—			(1,647	)
Depreciation and amortization		10,970			12,925
Deferred income taxes and other noncash changes		(420	)		608
Restructuring and impairment charge		(1,221	)		(129	)
Gain on sale of property		(776	)		(150	)
Loss on sale of business		—			5,705
Pension plan activity		(28	)		2,638
Changes in operating assets and liabilities:
Receivables		(15,834	)		(16,780	)
Inventories		24,444			11,240
Other current assets		11,949			(1,405	)
Accounts payable and accrued liabilities		(5,663	)		5,457

Net cash provided by operating activities from continuing operations		62,893			50,030


Cash Flows From Investing Activities:
Payments on property additions		(6,749	)		(11,881	)
Proceeds from sale of property		1,263			217
Proceeds from sale of business		—			19,817
Other — net		(964	)		(1,787	)

Net cash (used in) provided by investing activities from continuing operations		(6,450	)		6,366


Cash Flows From Financing Activities:
Net repayment of $100 million credit facility		—			(42,500	)
Proceeds from debt		25,000			96,104
Payments on debt		(35,000	)		(48,504	)
Purchase of treasury stock		(16,894	)		(49,809	)
Payment of dividends		(15,877	)		(16,489	)
Proceeds from the exercise of stock options		—			188
Decrease in cash overdraft balance		(2,749	)		(4,949	)

Net cash used in financing activities from continuing operations		(45,520	)		(65,959	)


Cash Flows From Discontinued Operations:
Net cash provided by operating activities from discontinued operations		—			6,114
Net cash used in investing activities from discontinued operations		—			(406	)

Net cash provided by discontinued operations		—			5,708


Effect of exchange rate changes on cash		—			2

Net change in cash and equivalents		10,923			(3,853	)
Cash and equivalents at beginning of year		19,417			8,316

Cash and equivalents at end of period	$	30,340		$	4,463


Supplemental Disclosure Of Operating Cash Flows:
Cash paid during the period for income taxes	$	2,964		$	15,506

See accompanying notes to consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except share and per share data)

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles 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 2008 Annual Report on Form 10-K. The prior-year results reflect the classification of sold Automotive operations as discontinued operations. 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, 2009 refers to fiscal 2009, which is the period from July 1, 2008 to June 30, 2009.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Purchases of property, plant and equipment included in accounts payable at December 31, 2008 and 2007 were less than $0.1 million and approximately $0.3 million, respectively. These purchases, less the preceding June 30 balances, have been excluded from the property additions in the Consolidated Statements of Cash Flows.

Significant Accounting Policies

There were no changes to our Significant Accounting Policies from those disclosed in our 2008 Annual Report on Form 10-K.

Note 2 — Impact of Recently Issued Accounting Standards

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

Note 3 — Goodwill and Other Intangible Assets

Goodwill attributable to the Specialty Foods segment was approximately $89.8 million at December 31, 2008 and June 30, 2008.

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

The following table summarizes our identifiable other intangible assets by segment as of December 31, 2008 and June 30, 2008:


	December 31			June 30
	2008			2008
Specialty Foods
Trademarks (40-year life)
Gross carrying value	$	370		$	370
Accumulated amortization		(163	)		(158	)

Net Carrying Value	$	207		$	212

Customer Relationships (12 to 15-year life)
Gross carrying value	$	13,020		$	13,020
Accumulated amortization		(2,650	)		(2,182	)

Net Carrying Value	$	10,370		$	10,838

Non-compete Agreements (5 to 8-year life)
Gross carrying value	$	1,540		$	1,540
Accumulated amortization		(858	)		(749	)

Net Carrying Value	$	682		$	791

Total Net Carrying Value	$	11,259		$	11,841

Amortization expense relating to these assets was approximately $0.3 million and $0.6 million for both the three and six months ended December 31, 2008 and 2007, respectively. Total annual amortization expense is estimated to be approximately $1.2 million for each of the next two years, $1.1 million for the third year and $0.9 million for the fourth and fifth years.

Note 4 — Long-Term Debt

At December 31, 2008 and June 30, 2008, 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 on October 5, 2012, and all outstanding amounts are due and payable on that day. The facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. Loans may be used for general corporate purposes. At December 31, 2008 and June 30, 2008, we were in compliance with all applicable provisions and covenants of the facility, and we had $45.0 million and $55.0 million, respectively, outstanding under the facility with a weighted average interest rate of 1.49% and 2.93%, respectively. Based on the long-term nature of this facility and in accordance with generally accepted accounting principles, we have classified the outstanding balance as long-term debt. We paid approximately $0.7 million and $1.1 million of interest for the three and six months ended December 31, 2008, respectively, as compared to approximately $1.0 million and $1.9 million in the corresponding periods of the prior year. Based on the borrowing rates currently available to us under the facility, the fair market value of our long-term debt is not materially different from the carrying value.

Note 5 — Pension Benefits

We and certain of our operating subsidiaries provide multiple defined benefit pension plans. Benefits under the plans are primarily based on negotiated rates and years of service and cover the union workers at such locations. We contribute to these plans at least the minimum amount required by regulation or contract. We recognize the cost of plan benefits as the employees render service.

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

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


	Three Months						Six Months
	Ended						Ended
	December 31						December 31
	2008			2007			2008			2007
Components of net periodic benefit cost
Service cost	$	30		$	39		$	60		$	78
Interest cost		541			647			1,082			1,294
Expected return on plan assets		(602	)		(805	)		(1,204	)		(1,610	)
SFAS 88 settlement charge		—			2,972			—			2,972
Amortization of unrecognized net loss		62			43			124			86
Amortization of prior service cost		26			26			52			52
Amortization of unrecognized net obligation existing at transition		1			1			2			2

Net periodic benefit cost	$	58		$	2,923		$	116		$	2,874

In the second quarter of 2008, one of our plans experienced lump sum payments that exceeded the plan’s annual service and interest costs. This resulted in an accelerated recognition of plan costs of approximately $3.0 million for the three and six months ended December 31, 2007, as required under SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS 88). This charge was included in our corporate expenses within continuing operations because the costs are related to the retained liabilities of the sold companies.

For the three and six months ended December 31, 2008, we made less than $0.1 million and approximately $0.1 million in contributions to our pension plans, respectively. We expect to make approximately $2.9 million more in contributions to our pension plans during the remainder of 2009. The recent deterioration in the securities markets has negatively impacted our plan asset values, the effect of which has not been reflected in the consolidated financial statements as, according to accounting guidance, the plans will not be remeasured until the end of 2009. Upon remeasurement, if the fair value of plan assets has not recovered, or declines further, we could experience an adverse change in the funded status of our plans which would lead to additional cash contributions and increased benefit costs for 2010. We will further assess the impact of these changes when we are evaluating the year-end pension remeasurement results.

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						Six Months
	Ended						Ended
	December 31						December 31
	2008			2007			2008			2007
Components of net periodic benefit cost
Service cost	$	5		$	7		$	9		$	13
Interest cost		50			57			99			115
Amortization of unrecognized gain		(5	)		—			(9	)		—
Amortization of prior service asset		(2	)		(1	)		(3	)		(2	)

Net periodic benefit cost	$	48		$	63		$	96		$	126

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

For the three and six months ended December 31, 2008, we made approximately $0.1 million 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 2009.

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 options granted under the 1995 Plan were exercisable at prices not less than fair market value as of the date of grant. The 1995 Plan expired in August 2005, but there are still options outstanding that were issued under this plan. In general, options granted under the 1995 Plan vested immediately and had a maximum term of five years. Our policy is to issue shares upon option exercise from new shares that had been previously authorized.

Our shareholders approved the adoption of the Lancaster Colony Corporation 2005 Stock Plan (the “2005 Plan”) at our 2005 Annual Meeting of Shareholders. 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 options 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 and Stock-Settled Stock Appreciation Rights

Under SFAS No. 123R, “Share-Based Payment,” we calculate fair value of option grants using the Black-Scholes option-pricing model.

In February 2008, we granted 153,550 stock-settled stock appreciation rights (“SSSARs”) to various employees under the terms of the 2005 Plan mentioned above. The weighted average per share fair value of the SSSARs grant was $6.00 and was estimated at the date of grant using the Black-Scholes option-pricing model. Assumptions used in the model for this prior-year grant are described in our 2008 Annual Report on Form 10-K. These SSSARs 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 this grant.

There were no grants of stock options or SSSARs in the six months ended December 31, 2008 and 2007.

We recognize compensation expense over the requisite service period. Total compensation cost related to these share-based payment arrangements for the three and six months ended December 31, 2008 was less than $0.1 million and approximately $0.1 million, respectively, as compared to less than $0.1 million for the three and six months ended December 31, 2007. These amounts were reflected in Selling, General and Administrative Expenses and were allocated to each segment appropriately. A tax benefit of less than $0.1 million and approximately $0.1 million was recorded for the three and six months ended December 31, 2008, respectively, compared to zero for the comparable periods of 2008. No initial tax benefits are recorded for the portion of these compensation costs that relate to incentive stock options, which do not qualify for a tax deduction until, and only if, a disqualifying disposition occurs.

There were no stock option exercises during the six months ended December 31, 2008.

During the three and six months ended December 31, 2007, we received approximately $0.2 million in cash from the exercise of stock options. The aggregate intrinsic value of these options was less than $0.1 million for the three and six months ended December 31, 2007. A related tax benefit of less than $0.1 million was recorded in the three and six months ended December 31, 2007. 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 include less than $0.1 million of gross windfall tax benefits for the three and six months ended December 31, 2007.

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

The following summarizes the activity relating to stock options granted under the 1995 Plan and SSSARs granted under the 2005 Plan mentioned above for the six months ended December 31, 2008:

Weighted

Average

Number

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Shares

Price

Life

Value

Outstanding at beginning of period

392,550

40.26

Exercised

—

Granted

—

Forfeited

(18,250

)

41.43

Outstanding at end of period

374,300

40.21

2.39

—

Exercisable and vested at end of period

220,459

41.52

1.16

—

Vested and expected to vest at end of period

368,658

40.24

2.36

—

The following summarizes the status of, and changes to, unvested options and SSSARs during the six months ended December 31, 2008:


				Weighted
	Number			Average
	of			Grant Date
	Shares			Fair Value
Unvested at beginning of period		155,117		$	6.02
Granted		—			—
Vested		—			—
Forfeited		(1,276	)		7.30

Unvested at end of period		153,841		$	6.01

At December 31, 2008, there was approximately $0.6 million of total unrecognized compensation cost related to stock options and SSSARs that we will recognize over a weighted-average period of approximately 2.16 years.

Restricted Stock

On November 17, 2008, we granted a total of 14,000 shares of restricted stock to our seven nonemployee directors under the terms of the 2005 Plan discussed above. The restricted stock had a grant date fair value of approximately $0.4 million based on a per share closing stock price of $29.38. This restricted stock vests over a one-year period, and all of these shares are expected to vest. Dividends earned on the stock are held in escrow and will be paid to the directors at the time the stock vests. Compensation expense related to the restricted stock award will be recognized over the requisite service period. An additional 3,000 shares of restricted stock that were granted to our seven nonemployee directors on November 19, 2007 vested during the second quarter of 2009, and the directors were paid the related dividends that had been held in escrow.

On February 27, 2008, we granted a total of 23,600 shares of restricted stock to various key employees under the terms of the 2005 Plan discussed above. The restricted stock had a grant date fair value of approximately $0.9 million based on a per share closing stock price of $38.31. The restricted stock vests on the third anniversary of the grant date. We are assuming a forfeiture rate of four percent for this grant. Under the terms of the grant, employees will receive dividends on unforfeited restricted stock regardless of their vesting status.

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

The following summarizes the activity related to restricted stock transactions for the six-month period ended December 31, 2008:


				Weighted
	Number			Average
	of			Grant Date
	Shares			Fair Value
Unvested restricted stock at beginning of period		26,600		$	38.29
Granted		14,000			29.38
Vested		(3,000	)		38.14
Forfeited		(300	)		38.31

Unvested restricted stock at end of period		37,300		$	34.96

Vested and exercisable restricted stock at end of period		—			—

Vested and expected to vest restricted stock at end of period		36,662		$	34.90

We recognize compensation expense over the requisite service period. Compensation expense of approximately $0.1 million and $0.2 million was recorded for the three and six months ended December 31, 2008, respectively, in Selling, General and Administrative Expenses, as compared to less than $0.1 million and approximately $0.1 million in the corresponding periods of the prior year. A tax benefit of less than $0.1 million and approximately $0.1 million was recorded for the three and six months ended December 31, 2008, respectively, as compared to less than $0.1 million for the three and six months ended December 31, 2007 related to this restricted stock.

At December 31, 2008, there was approximately $1.0 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted average period of 1.69 years.

Note 8 — Restructuring and Impairment Charges

Specialty Foods Segment

In the first quarter of 2009, we began consolidating our Atlanta dressing operation into our other existing food facilities as part of our cost-reduction efforts within the Specialty Foods segment. During the three months ended December 31, 2008, we recorded an adjustment to the restructuring and impairment charges that resulted in a reduction of the charges of less than $0.1 million. During the six months ended December 31, 2008, we recorded restructuring and impairment charges of approximately $0.8 million ($0.5 million after taxes). The majority of these charges resulted in cash outlays and consisted of one-time termination benefits. This closure was essentially complete at September 30, 2008, except for the disposition of the associated real estate, which occurred in December 2008 and resulted in a gain of approximately $0.5 million, which is recorded in cost of sales. No other costs or cash expenditures are expected related to this closure. The operations of this closed location have not been reclassified to discontinued operations under the guidance provided in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).

An analysis of the restructuring activity for the six months ended December 31, 2008 recorded within the Specialty Foods segment follows:


	Accrual at				2009			Accrual at
	June 30,		2009		Cash			December 31,
	2008		Charge		Outlays			2008
Restructuring and Impairment Charges
Employee Separation Costs	$	—	$	555	$	(555	)	$	—
Other Costs		—		162		(162	)		—

Subtotal	$	—		717	$	(717	)	$	—

Fixed Asset Impairment				47

Total			$	764

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

Other Segments

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

During the three and six months ended December 31, 2008, we recorded additional restructuring and impairment charges of less than $0.1 million and approximately $0.8 million ($0.5 million after taxes), respectively, for costs incurred during the period. The majority of these charges were for disposal-related activities associated with idle real property. These charges were recorded within corporate expenses as the remaining assets and liabilities from this closed operation are now considered corporate assets and liabilities.

The total costs associated with this plant closure were approximately $5.7 million and include all of the above-noted costs. This closure was essentially complete at September 30, 2008. No other costs or cash expenditures are expected related to this closure.

An analysis of the restructuring activity for the six months ended December 31, 2008 recorded within corporate expenses follows:


	Accrual at				2009			Accrual at
	June 30,		2009		Cash			December 31,
	2008		Charge		Outlays			2008
Restructuring and Impairment Charges
Employee Separation Costs	$	69	$	—	$	(69	)	$	—
Other Costs		1,184		842		(2,026	)		—

Total	$	1,253	$	842	$	(2,095	)	$	—

During 2009, certain real property previously used by our divested consumer and floral glass operations met the criteria defined in SFAS 144 to be considered “held for sale.” During the quarter ended December 31, 2008, we sold certain of these “held for sale” properties with a net book value of less than $0.1 million for a gain of $0.4 million, which is recorded in cost of sales. The remaining properties, along with other previously-deemed “held for sale” properties, with a total net book value of approximately $3.1 million, have been reclassified to current assets and are included in Deferred Income Taxes and Other Current Assets on the Consolidated Balance Sheet. In accordance with SFAS 144, we are no longer depreciating these held for sale assets.

Note 9 — Income Taxes

The gross tax contingency reserve at December 31, 2008 was approximately $2.7 million and consisted of tax liabilities of approximately $1.6 million and penalties and interest of approximately $1.1 million. In accordance with FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” these liabilities have been classified in the Consolidated Balance Sheet as long-term since payment is not expected to occur within the next 12 months. 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 do not have any unrecognized tax benefits for uncertain tax positions. We recognize interest and penalties related to these tax liabilities in income tax expense.

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

Note 10 — Business Segment Information

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, 2008 consolidated financial statements:


	Three Months Ended						Six Months Ended
	December 31						December 31
	2008			2007			2008			2007
Net Sales
Specialty Foods	$	245,393		$	215,150		$	466,179		$	399,939
Glassware and Candles		42,849			54,297			85,900			113,466

Total	$	288,242		$	269,447		$	552,079		$	513,405


Operating Income (Loss)
Specialty Foods	$	39,651		$	28,309		$	63,140		$	52,083
Glassware and Candles		(1,007	)		(780	)		(3,869	)		1,633
Corporate Expenses		(2,390	)		(5,182	)		(5,223	)		(7,715	)

Total	$	36,254		$	22,347		$	54,048		$	46,001

Note 11 — Commitments and Contingencies

In addition to the items discussed below, at December 31, 2008, 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 $8.7 million in the second quarter of 2009, as compared to a distribution of approximately $2.5 million in the corresponding period of 2008. These remittances related to certain candles being imported from the People’s Republic of China.

The CDSOA has faced a growing number of legal challenges. In February 2006, legislation was enacted to repeal the applicability of the CDSOA to duties collected on imported products after September 2007. This legislation is expected to reduce overall distributions, with distributions eventually ceasing. In addition, the U.S. Court of International Trade (“CIT”) ruled in two separate cases that the procedure for determining recipients eligible to receive CDSOA distributions is unconstitutional. The CIT rulings are still under appeal, and other cases have been brought, from time to time, challenging various aspects of the CDSOA. The ultimate resolution of ongoing litigation concerning the CDSOA and the effects, if any, the litigation will have on our financial results or receipt of future CDSOA distributions, are uncertain. Based on the current legal challenges, we cannot predict the amount of future distributions and it is possible that we may not receive any further distributions.

Note 12 — Comprehensive Income

Total comprehensive income for the three and six months ended December 31, 2008 was approximately $28.5 million and $39.6 million, respectively. Total comprehensive income for the three and six months ended December 31, 2007 was approximately $16.9 million and $32.6 million, respectively. The December 31, 2008 comprehensive income consists of net income and pension amortization. The December 31, 2007 comprehensive income consists of net income, foreign currency translation adjustments and pension amortization.

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

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

OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that we consider to be important in understanding the results of our operations for the three and six months ended December 31, 2008 and our financial condition as of December 31, 2008. Our fiscal year begins on July 1 and ends on June 30. Unless otherwise noted, references to “year” pertain to our fiscal year; for example, 2009 refers to fiscal 2009, which is the period from July 1, 2008 to June 30, 2009. In the discussion that follows, we analyze the results of our operations for the three and six months ended December 31, 2008, including the trends in our overall business, followed by a discussion of our financial condition.

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

EXECUTIVE SUMMARY

Business Overview

Lancaster Colony Corporation is primarily a manufacturer and marketer of consumer goods. Our focus is manufacturing and marketing specialty foods for the retail and foodservice markets. We also manufacture and market candles for the food, drug and mass markets. Less significantly, we have operations engaged in the distribution of various products, including glassware and candles, to commercial markets. Our operating businesses 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 2008 marked another significant year in implementing this strategy as we continued to divest nonfood operations and focus our capital investment in the Specialty Foods segment. In June 2008, we sold substantially all of the assets of our remaining automotive operations. In November 2007, we sold most of our consumer and floral glass operating assets. These transactions, combined with other strategic dispositions and investments in 2007 and 2008, have resulted in transforming our company into a food-focused business.

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

	•		leading retail market positions in several branded products with a high-quality perception;

	•		a broad customer base in both retail and foodservice accounts;

	•		well-regarded culinary expertise among foodservice accounts;

	•		recognized leadership in foodservice product development;

	•		demonstrated experience in integrating complementary business acquisitions; and

	•		historically strong cash flow generation that supports growth opportunities.

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

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

	•		continuing to grow our foodservice sales through the strength of our reputation in product development and quality; and

•

pursuing acquisitions that meet our strategic criteria.

We have made substantial capital investments to support our existing food operations and future growth opportunities. Based on our current plans and expectations, we believe that total capital expenditures for 2009 will not exceed $15 million.

Summary of 2009 Results

The following is an overview of our consolidated operating results for the three and six months ended December 31, 2008. The prior-year results reflect the classification of the sold automotive operations as discontinued operations.

Net sales for the second quarter ended December 31, 2008 increased 7% to approximately $288.2 million from the prior-year total of $269.4 million. This sales growth was driven by increased sales in the Specialty Foods segment as partially offset by a decline in sales of the Glassware and Candles segment. The Specialty Foods segment’s growth reflected higher volumes of foodservice products, as well as price increases. The decrease in sales of the Glassware and Candles segment is primarily due to prior-year sales attributable to divested operations. Gross margin increased 33% to approximately $58.2 million from the prior-year second quarter total of $43.6 million, as influenced by the approximately $5.7 million prior-year loss on the sale of the glass businesses and the approximately $3.0 million prior-year pension settlement charge. Our manufacturing costs have been influenced by higher costs for various commodities and other raw materials. Within our Specialty Foods segment, we began implementing price increases in 2008, to offset the segment’s higher costs. Other income for the current-year second quarter totaled approximately $7.8 million compared to $1.8 million in the prior-year comparative period. These figures included Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA”) receipts totaling approximately $8.7 million in the second quarter of 2009 and approximately $2.5 million in the corresponding period of 2008. Income from continuing operations for the current-year second quarter was approximately $28.5 million, or $1.02 per diluted share, compared to $15.3 million, or $.51 per diluted share, in the prior year. Net income for the three months ended December 31, 2008 also totaled approximately $28.5 million, or $1.02 per diluted share. Net income totaled approximately $16.0 million in the second quarter of 2008, or $.54 per diluted share, which was net of after-tax income from discontinued operations of approximately $0.7 million, or $.02 per diluted share. There was no impact of discontinued operations in the current quarter of 2009.

Year-to-date net sales for the period ended December 31, 2008 increased 8% to approximately $552.1 million from the prior year-to-date total of $513.4 million. Gross margin increased to approximately $97.8 million from the prior year-to-date total of $88.4 million. Income from continuing operations for the current year-to-date period was approximately $39.5 million or $1.40 per diluted share, compared to $29.9 million, or $.99 per diluted share, in the prior year. Net income for the six months ended December 31, 2008 also totaled approximately $39.5 million, or $1.40 per diluted share. Net income totaled approximately $31.6 million in the six months ended December 31, 2007, or $1.05 per diluted share, which was net of after-tax income from discontinued operations of approximately $1.6 million, or $.05 per diluted share. There was no impact of discontinued operations in the six months ended December 31, 2008.

RESULTS OF CONSOLIDATED OPERATIONS

Net Sales and Gross Margin


	Three Months Ended											Six Months Ended
	December 31											December 31
	2008			2007			Change					2008			2007			Change
Net Sales
Specialty Foods	$	245,393		$	215,150		$	30,243		14	%	$	466,179		$	399,939		$	66,240		17	%
Glassware and Candles		42,849			54,297			(11,448	)	(21	)%		85,900			113,466			(27,566	)	(24	)%

Total	$	288,242		$	269,447		$	18,795		7	%	$	552,079		$	513,405		$	38,674		8	%

Gross Margin	$	58,163		$	43,610		$	14,553		33	%	$	97,832		$	88,442		$	9,390		11	%

Gross Margin as a Percentage of Sales		20.2	%		16.2	%							17.7	%		17.2	%

Consolidated net sales for the second quarter increased 7%, reflecting 14% growth in sales of the Specialty Foods segment, as partially offset by lower sales in the Glassware and Candles segment. The

Specialty Foods segment sales increase occurred in both the retail and foodservice markets. The November 2007 sale of our consumer and floral glass operations and lower candle sales contributed to the decline in sales of the Glassware and Candles segment.

For both the three and six months ended December 31, 2008, net sales of the Specialty Foods segment reflected higher pricing that added approximately 10% over the net sales of the prior-year’s comparative periods. Volume growth was also achieved across many foodservice and frozen retail products, including several recently-introduced items. All such growth was internally generated.

The decline in net sales of the Glassware and Candles segment for both the three and six months ended December 31, 2008 was influenced by the sale of our consumer and floral glass operations in November 2007. Comparative year-to-date sales were also adversely impacted by the prior-year disposition of inventory related to closing our industrial glassware facility. Net sales attributable to these divested and closed operations totaled approximately $7.6 million and $22.3 million for the three and six months ended December 31, 2007, respectively. Candle sales have encountered unsettled and competitive retail market conditions and such sales were lower during the second quarter holiday season, which also contributed to lower year-to-date sales.

As a percentage of sales, our consolidated gross margin for the three and six months ended December 31, 2008 was 20.2% and 17.7%, respectively, as compared to 16.2% and 17.2% achieved in the prior-year comparative periods. Pricing improvements that mitigated the higher costs experienced over the last year contributed to the current year’s higher gross margins. Prior-year gross margins for the quarter and year-to-date periods also reflect the approximately $5.7 million loss on the sale of our consumer and floral glass operations and an approximately $3.0 million pension settlement charge that was recorded in corporate expenses.

In the Specialty Foods segment, gross margin percentages improved in both the three and six months ended December 31, 2008, benefiting from the higher sales volumes and improvements in pricing, which offset the adverse impact of higher ingredient costs, such as for soybean oil, flour and egg products. We estimate the year-over-year impact of such higher costs at approximately $11 million and $31 million for the comparative three and six-month periods, respectively. For our third and fourth fiscal quarters, we anticipate our ingredient costs will be lower than the unprecedented highs of the prior year.

Gross margin percentages in the Glassware and Candles segment declined from the prior-year period due to increases in paraffin wax costs and lower capacity utilization, as partially offset by the prior-year loss on the sale of our consumer and floral glass operations. The prior-year margins were positively impacted by the contribution provided by the glass operations we have since exited. We are in the process of implementing higher pricing on various candle products. We anticipate that recent declines in wax and other related costs may continue in the near term, although the benefit of such reductions will not become evident in cost of goods sold until near fiscal year end.

Selling, General and Administrative Expenses


	Three Months Ended										Six Months Ended
	December 31										December 31
	2008			2007			Change				2008			2007			Change
Selling, General and Administrative Expenses	$	21,917		$	21,217		$	700	3	%	$	42,178		$	42,259		$	(81	)	0	%

SG&A Expenses as a Percentage of Sales		7.6	%		7.9	%						7.6	%		8.2	%

Consolidated selling, general and administrative costs of approximately $21.9 million and $42.2 million for the three and six months ended December 31, 2008 increased by 3% and decreased by less than 1%, respectively, from the $21.2 million and $42.3 million incurred for the three and six months ended December 31, 2007. The decrease in selling, general and administrative expenses as a percentage of sales was influenced by the nature and extent of the sales growth achieved through pricing, sales mix and minimal year-over-year changes in selling, general and administrative expenses.

Restructuring and Impairment Charges

Specialty Foods Segment

In the first quarter of 2009, we began consolidating our Atlanta dressing operation into our other existing food facilities as part of our cost-reduction efforts within the Specialty Foods segment. During the three months ended December 31, 2008, we recorded an adjustment to the restructuring and impairment charges that resulted in a reduction of the charges of less than $0.1 million. During the six months ended December 31, 2008, we recorded restructuring and impairment charges of approximately $0.8 million ($0.5 million after taxes). The majority of these charges resulted in cash outlays and consisted of one-time termination benefits. This closure was essentially complete at September 30, 2008, except for the disposition of the associated real estate, which occurred in December 2008. No other costs or cash expenditures are expected related to this closure. The operations of this closed location have not been reclassified to discontinued operations under the guidance provided in Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).

An analysis of the restructuring activity for the six months ended December 31, 2008 recorded within the Specialty Foods segment follows:


	Accrual at				2009			Accrual at
	June 30,		2009		Cash			December 31,
	2008		Charge		Outlays			2008
Restructuring and Impairment Charges
Employee Separation Costs	$	—	$	555	$	(555	)	$	—
Other Costs		—		162		(162	)		—

Subtotal	$	—		717	$	(717	)	$	—

Fixed Asset Impairment				47

Total			$	764

Other Segments

An analysis of the restructuring activity for the six months ended December 31, 2008 recorded within corporate expenses follows:


	Accrual at				2009			Accrual at
	June 30,		2009		Cash			December 31,
	2008		Charge		Outlays			2008
Restructuring and Impairment Charges
Employee Separation Costs	$	69	$	—	$	(69	)	$	—
Other Costs		1,184		842		(2,026	)		—

Total	$	1,253	$	842	$	(2,095	)	$	—

During 2009, certain real property previously used by our divested consumer and floral glass operations met the criteria defined in SFAS 144 to be considered “held for sale.” These properties, along with other previously-deemed “held for sale” properties, with a total net book value of approximately $3.1 million, have been reclassified to current assets and are included in Deferred Income Taxes and Other Current Assets on the Consolidated Balance Sheet. In accordance with SFAS 144, we are no longer depreciating these held for sale assets.

Operating Income (Loss)

The foregoing factors contributed to consolidated operating income totaling approximately $36.3 million and $54.0 million for the three and six months ended December 31, 2008, respectively. These amounts represent increases of 62% and 17% from the corresponding periods of the prior year. By segment, our operating income can be summarized as follows:


	Three Months Ended											Six Months Ended
	December 31											December 31
	2008			2007			Change					2008			2007			Change
Operating Income (Loss)

Specialty Foods	$	39,651		$	28,309		$	11,342		40	%	$	63,140		$	52,083		$	11,057		21	%

Glassware and Candles		(1,007	)		(780	)		(227	)	(29	)%		(3,869	)		1,633			(5,502	)	(337	)%

Corporate Expenses		(2,390	)		(5,182	)		2,792		(54	)%		(5,223	)		(7,715	)		2,492		(32	)%


Total	$	36,254		$	22,347		$	13,907		62	%	$	54,048		$	46,001		$	8,047		17	%


Operating Income (Loss) as a Percentage of Sales

Specialty Foods		16.2	%		13.2	%							13.5	%		13.0	%

Glassware and Candles		(2.4	)%		(1.4	)%							(4.5	)%		1.4	%

Consolidated		12.6	%		8.3	%							9.8	%		9.0	%

Interest Expense

We incurred interest expense of approximately $0.6 million and $1.1 million for the three and six months ended December 31, 2008, respectively, related to long-term borrowings. We incurred interest expense of approximately $1.0 million and $1.9 million for the three and six months ended December 31, 2007, respectively, related to borrowings during these periods. The decrease in interest expense was due to lower interest rates on our debt in the current year.

Other Income — Continued Dumping and Subsidy Offset Act

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

The CDSOA has faced a growing number of legal challenges. In February 2006, legislation was enacted to repeal the applicability of the CDSOA to duties collected on imported products after September 2007. This legislation is expected to reduce overall distributions, with distributions eventually ceasing. In addition, the U.S. Court of International Trade (“CIT”) ruled in two separate cases that the procedure for determining recipients eligible to receive CDSOA distributions is unconstitutional. The CIT rulings are still under appeal, and other cases have been brought, from time to time, challenging various aspects of the CDSOA. The ultimate resolution of ongoing litigation concerning the CDSOA and the effects, if any, the litigation will have on our financial results or receipt of future CDSOA distributions, are uncertain. Based on the current legal challenges, we cannot predict the amount of future CDSOA distributions and it is possible that we may not receive any further distributions.

Interest Income and Other — Net

Interest income and other was approximately $(0.3) million and $(0.2) million for the three and six months ended December 31, 2008, respectively, as compared to approximately $0.2 million and $0.4 million in the corresponding periods of the prior year. The decrease for the quarter and year-to-date periods reflects a lower level of interest income due to lower interest rates.

Income from Continuing Operations Before Income Taxes

As impacted by the factors discussed above, income from continuing operations before income taxes for the three months ended December 31, 2008 increased by approximately $19.8 million to $44.0 million from the prior-year total of $24.2 million. Income from continuing operations before income taxes for the six months ended December 31, 2008 and 2007 was approximately $61.4 million and $47.0 million, respectively.

Income from Continuing Operations

Second quarter income from continuing operations for 2009 of approximately $28.5 million increased from the preceding year’s income from continuing operations for the quarter of $15.3 million, as influenced by the factors noted above. Year-to-date income from continuing operations of approximately $39.5 million increased from the prior year-to-date total of $29.9 million. Our effective tax rate of 35.7% for the six months ended December 31, 2008 decreased from the prior-year rate of 36.3% due to a lower state tax rate.

Income from continuing operations per share for the second quarter of 2009 totaled $1.02 per basic and diluted share, as compared to $.51 per basic and diluted share recorded in the prior year. This amount was influenced by our share repurchase program, which contributed to a 6% year-over-year reduction in weighted average shares outstanding. Year-to-date income from continuing operations per share was $1.40 on a basic and diluted basis compared to $.99 for the prior-year period.

Discontinued Operations

There were no discontinued operations in 2009. Income from discontinued operations, net of tax, totaled approximately $0.7 million and $1.6 million for the three and six months ended December 31, 2007, respectively, or approximately $.02 and $.05 per basic and diluted share, respectively.

Net Income

Second quarter net income for 2009 of approximately $28.5 million increased from the preceding year’s net income for the quarter of $16.0 million, as influenced by the factors noted above. Year-to-date net income of approximately $39.5 million was higher than the prior year-to-date total of $31.6 million. Net income per share for the second quarter of 2009 totaled $1.02 per basic and diluted share, as compared to $.54 per basic and diluted share recorded in the prior year. Year-to-date net income per share was $1.40 per basic and diluted share, as compared to $1.05 per basic and diluted share for the prior-year period.

FINANCIAL CONDITION

The prior-year cash flows reflect the classification of the sold Automotive operations as discontinued operations.

For the six months ended December 31, 2008, net cash provided by operating activities from continuing operations totaled approximately $62.9 million as compared to $50.0 million in the prior-year period. The increase results from a higher level of net income and comparatively favorable relative changes in working capital components, including inventory and other current assets, as partially offset by the prior-year noncash impacts of the pension settlement charge and loss on the sale of the glass businesses, as well as the comparatively unfavorable relative change in accounts payable and accrued liabilities. The increase in receivables and decrease in inventories since June 2008 primarily relates to seasonal influences on sales within the Glassware and Candles segment.

Cash used in investing activities from continuing operations for the six months ended December 31, 2008 was approximately $6.5 million as compared to $6.4 million provided in the prior year. This decrease

reflects the impact of the prior-year net proceeds from the sale of the glass businesses of approximately $19.8 million, as partially offset by a lower level of capital expenditures in 2009.

Cash used in financing activities from continuing operations for the six months ended December 31, 2008 of approximately $45.5 million decreased from the prior-year total of $66.0 million due primarily to a decrease in treasury share repurchases, as partially offset by the net change in borrowing activity. At December 31, 2008, approximately 509,000 shares remained authorized for future buyback under the existing buyback program.

On October 5, 2007, we entered into a new unsecured revolving credit facility, which replaced the credit facility existing on September 30, 2007. Under the new facility, we may borrow up to a maximum of $160 million at any one time, with potential to expand the total credit availability to $260 million based on consent of the issuing bank and certain other conditions. We currently have $45.0 million outstanding under this facility. The facility expires on October 5, 2012, and all outstanding amounts are due and payable on that day. The facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At December 31, 2008, we were in compliance with all applicable provisions and covenants of the facility. Loans may be used for general corporate purposes.

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.

CONTRACTUAL OBLIGATIONS

We have various contractual obligations that are appropriately recorded as liabilities in our consolidated financial statements. Certain other obligations, such as purchase obligations, are not recognized as liabilities in our consolidated financial statements. Examples of obligations 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 December 31, 2008 and future minimum lease payments for the use of property and equipment under operating lease agreements. Aside from additional borrowings under our credit facility and expected changes in raw-material needs due to changes in product demand, there have been no significant changes to the contractual obligations disclosed in our 2008 Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES

There have been no changes in critical accounting policies from those disclosed in our 2008 Annual Report on Form 10-K.

RECENTLY ISSUED ACCOUNTING STANDARDS

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

RECENTLY ADOPTED ACCOUNTING STANDARDS

Effective July 1, 2008, we adopted the provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), and SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). The adoption of SFAS 159 and SFAS 157 did not have a material impact on our financial position or results of operations.

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.

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

	•		the potential for loss of larger programs or key customer relationships;

	•		the effect of consolidation of customers within key market channels;

	•		the continued solvency of key customers;

	•		the success and cost of new product development efforts;

	•		the lack of market acceptance of new products;

	•		the reaction of customers or consumers to the effect of price increases we may implement;

	•		changes in demand for our products, which may result from loss of brand reputation or customer goodwill;

	•		changes in market trends;

	•		the extent to which future business acquisitions are completed and acceptably integrated;

	•		the possible occurrence of product recalls;

	•		efficiencies in plant operations, including the ability to optimize overhead utilization in nonfood operations;

	•		fluctuations in the cost and availability of raw materials;

	•		adverse changes in energy costs and other factors that may affect costs of producing, distributing or transporting our products;

	•		maintenance of competitive position with respect to other manufacturers, including import sources of production;

	•		the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs;

	•		dependence on key personnel;

	•		stability of labor relations;

	•		fluctuations in energy costs;

	•		dependence on contract copackers;

	•		effect of governmental regulations, including environmental matters;

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

	•		access to any required financing;

	•		changes in income tax laws;

	•		the uncertainty regarding the effect or outcome of our decision to explore strategic alternatives among our nonfood operations;

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

	•		changes in estimates in critical accounting judgments; and

	•		innumerable other factors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risks have not changed materially from those disclosed in our 2008 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 December 31, 2008 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

We are adding the following risk factors to those disclosed under Item 1A in our 2008 Annual Report on Form 10-K:

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

As of September 19, 2008, Mr. Gerlach owned or controlled approximately 29% of the outstanding shares of our common stock. Accordingly, Mr. Gerlach has significant influence on all matters submitted to a vote of the holders of our common stock, including the election of directors. Mr. Gerlach’s voting power also may have the effect of discouraging transactions involving an actual or a potential change of control of our Company, regardless of whether a premium is offered over then-current market prices.

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

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

We have adopted a shareholder rights plan and initially declared a dividend distribution of one right for each outstanding share of common stock to shareholders of record as of April 20, 2000, including any transfer or new issuance of common shares of the Company. Under certain circumstances, if a person or group acquires 15 percent or more of our outstanding common stock, holders of the rights (other than the person or group triggering their exercise) will be entitled to purchase one one-hundredth of a share of Series A Participating Preferred Share at a price of $185 per unit, subject to certain adjustments. The rights

expire on April 20, 2010, unless extended by our Board of Directors. Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our Board of Directors, our rights plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of Directors regarding that acquisition. Further, certain provisions of our charter documents, including provisions limiting the ability of shareholders to raise matters at a meeting of shareholders without giving advance notice and provisions classifying our Board of Directors, may make it more difficult for a third party to gain control of our Board of Directors. This may have the effect of delaying or preventing changes of control or management of the Company, which could have an adverse effect on the market price of our stock.

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

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

(c) In August 2007, our Board of Directors approved a share repurchase authorization of 2,000,000 shares, of which approximately 509,000 shares remained authorized for future repurchases at December 31, 2008. In the second quarter, we made the following repurchases of our common stock:


					Total Number		Maximum Number
	Total		Average		of Shares		of Shares That May
	Number		Price		Purchased as		Yet be Purchased
	of Shares		Paid Per		Part of Publicly		Under the Plans or
Period	Purchased		Share		Announced Plans		Programs
October 1-31, 2008		200,000	$	34.03		200,000		509,077

November 1-30, 2008		—	$	—		—		509,077

December 1-31, 2008		—	$	—		—		509,077


Total		200,000	$	34.03		200,000		509,077

This share repurchase authorization does not have a stated expiration date.

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

We held our 2008 Annual Meeting of the Shareholders on November 17, 2008. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934. The following three incumbent directors, whose terms will expire in 2011, were elected at the annual meeting:


	Shares				Shares
	Voted		Shares		Not
	“For”		“Withheld”		Voted
Robert L. Fox		26,774,241		223,034		1,189,100

John B. Gerlach, Jr.		26,781,921		215,354		1,189,100

Edward H. Jennings		26,774,699		222,576		1,189,100

The shareholders also ratified the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending June 30, 2009. This proposal was ratified by 26,857,974 shares voted for; 127,583 shares voted against; and 11,718 shares abstained.

The shareholders also approved an amendment to the articles of incorporation regarding control share acquisition provisions. This proposal was approved by 24,646,453 shares voted for; 122,050 shares voted against; 33,820 shares abstained; and 2,194,955 broker non-votes. The amended articles of incorporation is attached to this Form 10-Q as Exhibit 3.1.

The shareholders approved another amendment to the articles of incorporation eliminating certain supermajority shareholder approval requirements. This proposal was approved by 24,676,731 shares voted for; 80,646 shares voted against; 44,947 shares abstained; and 2,194,955 broker non-votes.

The shareholders approved an amendment to the code of regulations clarifying shareholder meeting authority and revising advance notice requirements for shareholder proposals. This proposal was approved by 24,901,646 shares voted for; 2,068,014 shares voted against; and 27,612 shares abstained. The amended code of regulations is attached to this Form 10-Q as Exhibit 3.2.

The shareholders approved another amendment to the code of regulations allowing for alternative proxy formats. This proposal was approved by 26,923,228 shares voted for; 53,100 shares voted against; and 20,949 shares abstained.

The shareholders approved another amendment to the code of regulations adding additional information and covenant requirements regarding director nominations by shareholders. This proposal was approved by 25,943,574 shares voted for; 1,033,877 shares voted against; and 19,824 shares abstained.

The shareholders approved another amendment to the code of regulations allowing the board of directors to adopt certain amendments to the code of regulations. This proposal was approved by 22,680,068 shares voted for; 2,102,070 shares voted against; 20,186 shares abstained; and 2,194,956 broker non-votes.

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

Date: February 9, 2009	By:	/s/ John L. 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
DECEMBER 31, 2008

INDEX TO EXHIBITS


Exhibit
Number	Description	Located at

3.1	Amended and Restated Articles of Incorporation of Lancaster Colony Corporation approved by the shareholders November 17, 2008	Filed herewith

3.2	Amended and Restated Regulations of Lancaster Colony Corporation approved by the shareholders November 17, 2008	Filed herewith

10.1*	Key Employee Severance Agreement between Lancaster Colony Corporation and John L. Boylan	Filed herewith

10.2*	Key Employee Severance Agreement between Lancaster Colony Corporation and Bruce L. Rosa	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


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

EX-3.1 2 l35390aexv3w1.htm EX-3.1 EX-3.1

Exhibit 3.1

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LANCASTER COLONY CORPORATION

FIRST: The name of the Corporation (hereinafter called the “Corporation”) is LANCASTER COLONY CORPORATION.

SECOND: The place in Ohio where the principal office of the Corporation is located is Columbus, Franklin County.

THIRD: The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be formed under the Ohio General Corporation Law, as now in effect or hereafter amended.

FOURTH: The amount of the total authorized capital stock which the Corporation shall have authority to issue is Seventy-Eight Million Fifty Thousand (78,050,000) shares, consisting of Seventy-Five Million (75,000,000) shares of Common Stock (the “Common Stock”) which are common shares without par value, Seven Hundred Fifty Thousand (750,000) shares of Class A Participating Preferred Stock (“Class A Preferred Stock”) which are preferred shares with $1.00 par value, One Million One Hundred Fifty Thousand (1,150,000) shares of Class B Voting Preferred Stock (“Class B Preferred Stock”) which are preferred shares without par value, and One Million One Hundred Fifty Thousand (1,150,000) shares of Class C Nonvoting Preferred Stock (“Class C Preferred Stock”) which are preferred shares without par value.

(A) EXPRESS TERMS OF THE COMMON STOCK.

The shares of Common Stock shall be subject to the terms of the Class A Preferred Stock, the Class B Preferred Stock and the Class C Preferred Stock (collectively, “Preferred Stock”) and the express terms of any series thereof. Each share of Common Stock shall be equal to every other share of Common Stock and the holders thereof shall be entitled to one vote for each share of Common Stock on all questions presented to the shareholders. Subject to any rights to receive dividends to which the holders of the outstanding shares of Preferred Stock may be entitled, the holders of shares of Common Stock shall be entitled to receive dividends, if and when declared, payable from time to time by the Board of Directors from funds legally available therefore.

(B) EXPRESS TERMS OF THE CLASS A PREFERRED STOCK.

(1) Dividends.

(i) The holders of record of shares of Class A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for that purpose, quarterly dividends payable in cash on the last day of each March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly

Dividend Payment Date after the first issuance of a share or fraction of a share of Class A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b), subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), paid on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction or a share of Class A Preferred Stock. In the event the Corporation shall at any time after November 18, 1991 (the “Rights Declaration Date”): (x) declare any dividend on Common Stock payable in shares of Common Stock, (y) subdivide the outstanding Common Stock, or (z) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount of dividends to which holders of shares of Class A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(ii) On or after the date of the first issuance of any share or fraction of a share of Class A Preferred Stock, no dividend on Common Stock shall be declared unless concurrently therewith a dividend or distribution is declared on the Class A Preferred Stock as provided in clause (i) of paragraph (B)(1) of this Article FOURTH and the declaration of any such dividend on the Common Stock shall be expressly conditioned upon payment or declaration of and provision for payment of a dividend on the Class A Preferred Stock. In the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Class A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(iii) Dividends shall begin to accrue and be cumulative on outstanding shares of Class A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Class A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the record date for the first Quarterly Dividend Payment Date following such date of issue, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Class A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. The Board of Directors may fix a record date for the determination of holders of shares of Class A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof.

(2) Voting Rights. The holders of shares of Class A Preferred Stock shall have the following voting rights:

(i) Each share of Class A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation.

(ii) Except as otherwise provided herein or by law, the holders of shares of Class A Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

(iii) (a) If at any time dividends on any Class A Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the currently quarterly dividend period on all shares of Class A Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, holders of Class A Preferred Stock, voting as a class, shall have the right to elect two (2) Directors.

(b) During any default period, such voting right of the holders of Class A Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (c) of this paragraph (2)(iii) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that such voting right shall not be exercised unless the holders of ten percent (10%) in number of shares of Class A Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not effect the exercise by the holders of Class A Preferred Stock of such voting right. At any meeting at which the holders of Class A Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting because of existing vacancies is less than two, the holders of the Class A Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of two Directors. After the holders of the Class A Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Class A Preferred Stock as herein provided.

(c) Unless the holders of Class A Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than ten percent of the total number of shares of Class A Preferred Stock outstanding may request, the calling of a special meeting which special meeting shall thereupon be called by the President of the Corporation. Notice of such meeting and of any annual meeting at which holders of Class A Preferred Stock are entitled to vote pursuant to this paragraph (2)(iii)(c) shall be given to each holder of record of Class A Preferred Stock by mailing a copy of such notice to him at his last address as the same

appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than ten percent of the total number of shares of Class A Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (2)(iii)(c), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

(d) In any default period, the holders of Common Stock, and other classes of stock of the Corporation, if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Class A Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (y) the Directors so elected by the holders of the Class A Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (z) any vacancy in the Board of Directors may (except as provided in this paragraph (2)(iii)(d)) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References to this paragraph (iii) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (z) of the immediately preceding sentence.

(e) Immediately upon the expiration of a default period, (x) the right of the holders of Class A Preferred Stock as a class to elect Directors shall cease, (y) the term of any directors elected by the holders of Class A Preferred Stock as a class shall terminate, and (z) the ongoing number of Directors shall be such number as may be provided for in, or pursuant to, the Articles of Incorporation or Regulations of the Corporation, irrespective of any increase made pursuant to the provisions of paragraph (2)(iii)(b) (such number being subject, however, to change thereafter in any manner provided by law or in the Articles of Incorporation or Regulations). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors, even though less than a quorum.

(3) Dissolution, Liquidation and Winding Up.

(i) In the event of a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation (hereinafter referred to as a “Liquidation”), the holders of Class A Preferred Stock shall receive an amount per share equal to the greater of (a) $7,000, or (b) 100 times the amount per share to be distributed to holders of Common Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Class A Liquidation Preference”).

(ii) In the event the Corporation shall at any time after the Rights Declaration Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding Common Stock (by reclassification or otherwise than by payment of a dividend in

Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Class A Liquidation Preference determined pursuant to paragraph (3)(i)(b) shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(4) Redemption. The shares of Class A Preferred Stock shall not be redeemable.

(5) Conversion Rights. The Class A Preferred Stock is not convertible into Common Stock or any other security of the Corporation.

(6) Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Class A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Class A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(7) Fractional Shares. Class A Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Class A Preferred Stock.

The shares of Class B Preferred Stock may be issued from time to time in one or more series. All shares of Class B Preferred Stock shall be of equal rank and shall be identical, except in respect of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share of each series shall be identical with all other shares of such series, except as to the date from which dividends are cumulative. Subject to the provisions of this paragraph (C), which provisions shall apply to all Class B Preferred Stock, the Board of Directors hereby is authorized to cause such shares to be issued in one or more series and with respect to each such series prior to the issuance thereof to fix:

(1) the designation of the series, which may be by distinguishing number, letter or title;

(2) the number of shares of the series, which number the Board of Directors may from time to time (except where otherwise provided in the creation of the series) increase or decrease (but not below the number of shares thereof then outstanding);

(3) the dividend rate of the series;

(4) the dates of payment of dividends and the dates from which dividends of the series shall be cumulative;

(5) the redemption rights and price or prices for shares of the series;

(6) sinking fund requirements, if any, for the purchase or redemption of shares of the series;

(7) the liquidation price payable on shares of the series in the event of any liquidation, dissolution or winding up of affairs of the Corporation;

(8) whether the shares of the series shall be convertible into Common Stock, and, if so, the conversion price or prices, any adjustments thereof, and all other terms and conditions upon which such conversion may be made;

(9) restrictions on the issuance of shares of any class or series; and

(10) such other terms as the Board of Directors may by law from time to time be permitted to fix or change.

The Board of Directors is authorized to adopt from time to time amendments to the Articles of Incorporation fixing or changing, with respect to each such series, the matters described in the preceding clauses (1) to (10) of this paragraph (C).

Shares of Class B Preferred Stock shall entitle the holder thereof to one vote per share of Class B Preferred Stock on all matters submitted to a vote of the shareholders of the Corporation. Except as otherwise provided herein or by law, the holders of shares of Class B Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. During any period in which dividends on the Class B Preferred Stock are cumulatively in arrears in the amount of six or more full quarterly dividends, the holders of the Class B Preferred Stock, voting together as a class with the holders of any other class or series of Preferred Stock who are similarly entitled to vote, will have the right to elect two (2) directors which two (2) directorships shall be in addition to that number of directors then determined as constituting the number of members of the Board of Directors pursuant to the Regulations of the Corporation. The approval of a majority of the outstanding shares of Class B Preferred Stock voted together as a class shall be required in order to amend the Articles of Incorporation of the Corporation to affect adversely the rights of the holders of the Class B Preferred Stock or to take any action that would result in the creation of or an increase in the number of authorized shares senior or superior with respect to dividends or upon liquidation to the Class B Preferred Stock.

(D) EXPRESS TERMS OF CLASS C PREFERRED STOCK.

The shares of Class C Preferred Stock may be issued from time to time in one or more series. All shares of Class C Preferred Stock shall be of equal rank and shall be identical, except in respect of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share of each series shall be identical with all other shares of such series, except as to the date from which dividends are cumulative. Subject to the provisions of this paragraph (D), which provisions shall apply to all Class C Preferred Stock, the Board of Directors hereby is authorized to cause such shares to be issued in one or more series and with respect to each such series prior to the issuance thereof to fix:

(1) the designation of the series, which may be by distinguishing number, letter or title;

(3) the dividend rate of the series;

(4) the dates of payment of dividends and the dates from which dividends of the series shall be cumulative;

(5) the redemption rights and price or prices for shares of the series;

(6) sinking fund requirements, if any, for the purchase or redemption of shares of the series;

(7) the liquidation price payable on shares of the series in the event of any liquidation, dissolution or winding up of affairs of the Corporation;

(9) restrictions on the issuance of shares of any class or series; and

(10) such other terms as the Board of Directors may by law from time to time be permitted to fix or change.

Shares of Class C Preferred Stock shall not be entitled to voting rights except to the extent described below. During any period in which dividends on the Class C Preferred Stock are cumulatively in arrears in the amount of six or more full quarterly dividends, the holders of the Class C Preferred Stock, voting together as a class with the holders of any other class or series of Preferred Stock who are similarly entitled to vote, will have the

right to elect two (2) directors which two (2) directorships shall be in addition to that number of directors then determined as constituting the number of members of the Board of Directors pursuant to the Regulations of the Corporation. The approval of a majority of the outstanding shares of Class C Preferred Stock voted together as a class shall be required in order to amend the Articles of Incorporation of the Corporation to affect adversely the rights of the holders of the Class C Preferred Stock or to take any action that would result in the creation of or an increase in the number of authorized shares senior or superior with respect to dividends or upon liquidation to the Class C Preferred Stock.

FIFTH: Except as otherwise provided in these Articles of Incorporation or in the Regulations, the holders of a majority of the outstanding shares are authorized to take any action which, but for this provision, would require the vote or other action of the holders of more than a majority of such shares.

SIXTH: To the extent not prohibited by law, the Board of Directors may authorize the purchase by the Corporation of shares of any class issued by it.

SEVENTH: No holder of any class of shares of the Corporation shall, as such holder, have any preemptive or preferential right to purchase or subscribe to any shares of any class of stock of the Corporation, whether now or hereafter authorized, whether unissued or in treasury, or to purchase any obligations convertible into shares of any class of stock of the Corporation, which at any time may be proposed to be issued by the Corporation or subjected to rights or options to purchase granted by the Corporation.

EIGHTH: No holder of shares of any class of the Corporation shall have the right to cumulate his voting power in the election of the Board of Directors and the right to cumulate voting described in Ohio Revised Code § 1701.55 is hereby specifically denied to the holders of shares of any class of the Corporation.

NINTH: The Corporation may create and issue, whether or not in connection with the issue and sale of any shares of stock or other securities of the Corporation, rights or options entitling the holders thereof to purchase from the Corporation any shares of its capital stock of any class or classes to the extent such shares are authorized by these Articles, such rights or options to be evidenced by or in such instrument or instruments as shall be approved by the Board of Directors. The terms upon which any such shares may be purchased upon the exercise of any such right or option, including without limitation the time or times (which may be limited or unlimited in duration) at or within which, and the price or prices at which, any such shares may be purchased, shall be such as shall be determined as set forth or incorporated by reference in a resolution adopted by the Board of Directors providing for the creation and issue of such rights or options.

TENTH: The Corporation reserves the right to amend or repeal any provision contained in these Articles of Incorporation in the manner prescribed by the Ohio General Corporation Law. However, the provisions set forth in Article EIGHTH and this Article TENTH of these Articles of Incorporation may not be altered, amended, superseded or repealed in any respect, unless such action is approved by the affirmative vote of the holders of shares representing at least 80% of the shares of the Corporation entitled to vote

for the election of directors, voting as a class. All rights conferred in these Articles of Incorporation are granted subject to the reservation set forth in this Article TENTH.

ELEVENTH: These Amended and Restated Articles of Incorporation supersede the existing Articles of Incorporation of the Corporation.

EX-3.2 3 l35390aexv3w2.htm EX-3.2 EX-3.2

Exhibit 3.2

AMENDED AND RESTATED REGULATIONS
OF
LANCASTER COLONY CORPORATION
(the “Corporation”)

ARTICLE I

MEETINGS OF SHAREHOLDERS

SECTION 1.01 ANNUAL MEETING. The annual meeting of shareholders of the Corporation shall be held each year at such time and on such business day as the directors may determine. The annual meeting shall be held at the principal office of the Corporation or at such other place within or without the State of Ohio as the directors may determine. The directors shall be elected thereat and such other business transacted as may properly be brought before the meeting.

SECTION 1.02 SPECIAL MEETING. Special meetings of the shareholders may be called at any time by the President, by the directors by action at a meeting or a majority of the directors acting without a meeting, or by shareholders holding 50% or more of the voting power of the then outstanding shares entitled to vote in an election of directors, taken together as a single class (“Voting Shares”). Such meetings may be held within or without the State of Ohio at the time and place fixed by directors (or the President if the President calls such special meeting) and for any proper purpose specified in the notice thereof.

SECTION 1.03 NOTICE OF MEETINGS. Written notice of every annual or special meeting of the shareholders stating the time, place and purposes thereof shall be given to each shareholder entitled to notice as provided by law, not less than seven nor more than ninety days before the date of the meeting. Such notice may be given by or at the direction of the Secretary of the Corporation, or such other officer as is designated by the Board of Directors, by personal delivery or by mail addressed to the shareholder at his last address as it appears on the records of the Corporation. Any shareholder may waive in writing notice of any meeting, either before or after the holding of such meeting, and, by attending any meeting without protesting the lack of proper notice, shall be deemed to have waived notice thereof.

SECTION 1.04 PERSONS BECOMING ENTITLED TO SHARES BY OPERATION OF LAW OR TRANSFER. Every person who, by operation of law, transfer or any other means whatsoever, shall become entitled to any shares, shall be bound by every notice in respect of such share or shares which prior to the entering of his name and address on the records of the Corporation shall have been duly given to the person from whom he derives his title to such shares.

SECTION 1.05 QUORUM AND ADJOURNMENTS. Except as may be otherwise required by law or by the Articles of Incorporation or these Regulations, the

holders of a majority of the Voting Shares, present in person or by proxy, shall constitute a quorum; provided, that, any annual meeting duly called, whether a quorum is present or otherwise, may be adjourned from time to time by the chairman of the meeting or by the vote of the holders of a majority of the Voting Shares represented thereat.

Except as otherwise required by law or by the Articles of Incorporation or these Regulations, if the notice of an adjourned special meeting of shareholders states that it will be held with those present constituting a quorum, then the holders of the shares of stock who are present in person or by proxy at the meeting will constitute a quorum for all purposes.

If a meeting is adjourned for more than 30 days or if after an adjournment a new record date is fixed for an adjourned meeting, then a written notice of the place, date and time of the adjourned meeting must be given to each shareholder entitled to vote at the adjourned meeting. When a meeting is otherwise adjourned to another place, date or time, notice of the adjourned meeting does not need to be given so long as the place, date and time of the adjourned meeting are announced at the meeting at which the adjournment is taken.

SECTION 1.06 ORGANIZATION OF MEETINGS. The Board of Directors will designate a chairman for each meeting of shareholders. In the absence of such a designation, the highest ranking officer of the Corporation who is present at the meeting will act as chairman of the meeting.

The chairman will call the meeting to order, act as chairman of the meeting, appoint the secretary of the meeting, an inspector or inspectors of elections for the meeting and such other functionaries as the chairman deems necessary or appropriate. Unless otherwise determined by the Board of Directors prior to the meeting, the chairman of the meeting will also determine the order of business and have the authority in his or her sole discretion to determine the rules of procedure and regulate the conduct of the meeting including, without limitation, by imposing restrictions on the persons (other than shareholders of the Corporation or their duly appointed proxies) who may attend any such shareholders’ meeting, by ascertaining whether any shareholder or his proxy may be excluded from any meeting of shareholders based upon any determination by the chairman of the meeting, in his or her sole discretion, that any such person has unduly disrupted the proceedings of the meeting, and by determining the circumstances in which any person may make a statement or ask questions at the meeting, by ruling on all procedural questions that may arise during or in connection with the meeting, and by determining whether any nomination of a director nominee or business proposed to be brought before the meeting has been properly brought before the meeting.

SECTION 1.07 CONDUCT OF BUSINESS. At an annual meeting of shareholders, only such business will be conducted or considered as is properly brought before the annual meeting. To be properly brought before an annual meeting, business must be (1) specified in the notice of the annual meeting (or any supplement thereto) in accordance with Section 1.03, (2) otherwise properly brought before the annual meeting by the chairman of the meeting or by or at the direction of the Board of Directors, or (3)

otherwise properly requested to be brought before the meeting by a shareholder of the Corporation in accordance with this Section 1.07.

For business to be properly requested by a shareholder to be brought before an annual meeting, the shareholder must (1) be a shareholder of the Corporation of record at the time of the giving of the notice for such annual meeting provided for in these Regulations and at the time of such annual meeting, (2) be entitled to vote at such meeting, and (3) have given timely notice in proper written form thereof in writing to the Secretary.

To be timely, a shareholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days before the meeting; provided, however, that in the event that less then seventy-five (75) days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the fifteenth (15^th) day following the earlier of the day on which such notice of the date of the meeting was mailed or such public disclosure was made. In no event shall the public disclosure of any postponement or adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice.

To be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter the shareholder proposes to bring before the annual meeting (1) a description in reasonable detail of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (2) the name and address, as they appear on the Corporation’s books, of the shareholder proposing such business and any Shareholder Related Person; (3) a representation that the shareholder giving the notice is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends (a) to be a holder of record of stock of the Corporation at the time of the annual meeting and (b) to appear in person or by proxy at the annual meeting to bring such business before the annual meeting; (4) the class and number of any securities of the Corporation that are owned beneficially or of record by the shareholder proposing such business and any Shareholder Related Person; (5) a description of (a) any derivative positions in any securities of the Corporation directly or indirectly held or beneficially owned by the shareholder or any Shareholder Related Person and (b) any hedging or other transaction or series of transactions, agreement, arrangement or understanding with respect to any of the Corporation’s securities entered into or made by such shareholder or any Shareholder Related Person; (6) a description of any proxy, transaction, agreement, arrangement, understanding or relationship pursuant to which such shareholder or any Shareholder Related Person has a right to vote any shares of any of the Corporation’s securities; (7) a description of all arrangements or understandings between or among any of (a) the shareholder giving the notice, (b) any Shareholder Related Person, and (c) any other person relating to the proposal of such business by such shareholder and any material interest of such shareholder or any Shareholder Related Person in such business; and (8) whether either the shareholder giving the notice or any Shareholder Related Person intends to deliver a proxy statement and form of proxy to the holders of at least the percentage of shares of the Corporation entitled to vote that is required to approve the proposal.

For purposes of this Section 1.07 and Section 2.03, a “Shareholder Related Person” of any shareholder means (1) any person controlling, directly or indirectly, or acting in

concert with, such shareholder, (2) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such shareholder, (3) any person controlling, controlled by or under common control with such Shareholder Related Person, and (4) any Person on whose behalf a notice is given.

Notwithstanding the foregoing provisions of this Section 1.07, in order to include information regarding a stockholder proposal in the Company’s proxy statement for an annual meeting of shareholders, a shareholder must also comply with all applicable requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), and the rules and regulations thereunder with respect to the matters set forth in this Section 1.07. Nothing in this Section 1.07 will be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

At a special meeting of shareholders, only such business may be conducted or considered as is properly brought before the meeting. To be properly brought before a special meeting, business must be (i) specified in the notice of the meeting (or any supplement thereto) given by or at the direction of the Secretary or such other officer as is designated by the Board of Directors pursuant to Section 1.03 or (ii) otherwise brought before the meeting by the chairman of the meeting or by or at the direction of a majority of the whole Board.

The determination of whether any business sought to be brought before any annual or special meeting of the shareholders is properly brought before such meeting in accordance with this Section 1.07 will be made by the chairman of the meeting. If the chairman of the meeting determines that any business is not properly brought before such meeting, he or she will so declare to the meeting and any such business will not be conducted or considered.

SECTION 1.08 PROXIES AND VOTING AT MEETINGS. Every shareholder entitled to vote at any meeting of shareholders may vote in person or by proxy. Proxies may be in any form permitted by Chapter 1701 of the Ohio Revised Code or any successor provision thereto; provided that the Board of Directors may establish specific rules for the verification of proxies as may be necessary or appropriate to ensure an accurate count of votes.

Voting for the election of directors must be by stock vote. Except as otherwise required by law or by the Articles of Incorporation or these Regulations, all other voting may be by voice vote without regard to stock. However, a stock vote must be taken if it is demanded by a shareholder entitled to vote or by his or her proxy.

Except as otherwise required by law, stock votes need not be taken by written ballot. Every stock vote must be counted by the inspector or inspectors of election for the meeting.

Except as otherwise required or provided for by law or by Articles of Incorporation or these Regulations, (1) each shareholder will have one vote for each share of stock

entitled to vote which is registered in his name on the record date for the meeting, and (2) all elections or voting will be determined by a plurality of votes cast.

SECTION 1.09 SHAREHOLDERS’ LIST. A complete list of shareholders entitled to vote will be prepared for each meeting of shareholders. The shareholders’ list will be arranged alphabetically for each class of stock and will set forth the name and address of each shareholder and the number of shares registered in his name.

The shareholders’ list must be available throughout the meeting at the place of the meeting and may be examined by any shareholder or his proxy present at the meeting for any purpose relevant to the meeting.

The shareholders’ list will presumptively determine the identity of shareholders entitled to vote at the meeting and the number of shares held by each of them.

SECTION 1.10 WRITTEN CONSENT IN LIEU OF MEETING OF SHAREHOLDERS. Actions by shareholders, including but not limited to any action adopting, amending or repealing these Regulations or any new Regulations, may be taken only at meetings of shareholders. Actions may not be taken by a consent in writing setting forth the action to be taken and signed by shareholders.

ARTICLE II

DIRECTORS

SECTION 2.01 POWERS. Except as otherwise required or provided for by law or by the Articles of Incorporation or these Regulations, the Board of Directors may exercise all powers and do all acts and things that may be exercised or done by the Corporation.

SECTION 2.02 NUMBER. The number of directors may be determined by the vote of the holders of a majority of the Voting Shares represented at any annual meeting or special meeting called for the purpose of electing directors or by resolution adopted by affirmative vote of a majority of the directors then in office; provided that the number of directors shall in no event be fewer than six (6) nor more than twelve (12). When so fixed, such number shall continue to be the authorized number of directors until changed by the shareholders or directors.

SECTION 2.03 NOMINATION. Except as may be otherwise provided in the Articles of Incorporation or any designation of terms of the Corporation’s preferred stock Designation, only persons who are nominated in accordance with this Section 2.03 will be eligible for election as Directors of the Corporation.

Nominations of persons for election as directors of the Corporation may be made at an annual meeting of shareholders only (1) by or at the direction of the Board of Directors or a committee thereof or (2) by a shareholder who (a) is a shareholder of record at the time of giving of notice provided for in this Section 2.03 and at the time of such annual meeting, (b) is entitled to vote for the election of directors at such meeting, (c) makes the

nomination pursuant to timely notice in proper written form to the Secretary, and (d) otherwise complies with the procedures set forth in this Section 2.03.

To be in proper written form, such shareholder’s notice of a nomination must set forth or include: (1) the name and address, as they appear on the Corporation’s books, of the shareholder giving the notice and any Shareholder Related Person; (2) a representation that the shareholder giving the notice is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends (a) to be a holder of record of stock of the Corporation at the time of the annual meeting and (b) to appear in person or by proxy at the annual meeting to nominate the person or persons specified in the notice; (3) the class and number of any securities of the Corporation owned beneficially or of record by the shareholder giving the notice and by any Shareholder Related Person; (4) a description of (a) any derivative positions in any securities of the Corporation directly or indirectly held or beneficially owned by the shareholder or any Shareholder Related Person and (b) any hedging or other transaction or series of transactions, agreement, arrangement or understanding with respect to any of the Corporation’s securities entered into or made by such shareholder or any Shareholder Related Person; (5) a description of any proxy, transaction, agreement, arrangement, understanding or relationship pursuant to which such shareholder or any Shareholder Related Person has a right to vote any shares of any of the Corporation’s securities; (6) a description of all arrangements or understandings between or among any of (a) the shareholder giving the notice, (b) any Shareholder Related Person, and (c) each nominee; (7) all information regarding each nominee proposed by the shareholder giving the notice that would be required to be included in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, including the signed consent of each nominee to be named as a nominee and to serve as a director of the Corporation if so elected; (8) with respect to each nominee proposed by the shareholder giving the notice, a Nominee Questionnaire and a Nominee Representation and Agreement, each completed and signed by the nominee; and (9) whether either such shareholder or, beneficial owner or Shareholder Related Person intends to deliver a proxy statement and form of proxy to the holders of at least the percentage of shares of the Corporation entitled to vote that is required to elect such nominee or nominees.

For purposes of this Section 2.03, (1) a “Nominee Questionnaire” means a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (in

the form provided by the Secretary upon written request) and (2) a “Nominee Representation and Agreement” means a written representation and agreement (in the form provided by the Secretary upon written request) that such person (a) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with the provisions of these Regulations and all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

Nominations of persons for election as directors of the Corporation may be made at a special meeting of shareholders only if properly brought before the meeting. To be properly brought before a special meeting, the nomination must be (i) specified in the notice of the meeting (or any supplement thereto) given by or at the direction of the Secretary or such other officer as is designated by the Board of Directors pursuant to Section 1.03 or (ii) made by the chairman of the meeting or by or at the direction of a majority of the whole Board.

Notwithstanding the foregoing provisions of this Section 2.03, a shareholder must also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.03.

The chairman of any annual meeting may, if the facts warrant, determine that a nomination was not made in accordance with this Section 2.03, and if he or she should so determine, he or she will so declare to the meeting, and the defective nomination will be disregarded.

SECTION 2.04 CLASSIFICATION, TERM OF OFFICE AND ELECTION OF DIRECTORS. If the number of director determined in accordance with the provisions of Section 2.02 of these Regulations is nine (9) or more, then the director will be classified into three classes, “Class 1,” “Class 2” and “Class 3,” respectively. If the number of directors determined in accordance with the provisions of Section 2.02 of these Regulations is six (6) or more but less than nine (9), then the directors will be classified into two classes, designated “Class 1” and “Class 2,” respectively. The number of directors constituting each class will, as nearly as possible, be equal. However, if the number of directors constituting the whole Board of Directors is not evenly divisible by the number of classes of directors, then the number of directors constituting each class will be such that (1) the difference between the number of directors constituting each class is not

greater than one, (2) the number of Class 3 directors, if any, is greater than or equal to the number of Class 2 directors and the number of Class 1 directors, and (3) the number of Class 2 directors is greater than or equal to the number of Class 1 directors. Initially, (1) the term of office of each Class 1 director will expire at the annual meeting in 1992, (2) the term of office of each Class 2 director will expire at the annual meeting in 1993, and (3) the term of office of each Class 3 director will expire at the annual meeting in 1994. Thereafter, the successors to the directors of each class will hold office for terms of three years so that the term of office of one class of directors will expire at each annual meeting. Each director will hold office for the term for which he or she is elected or appointed and until his or her successor is elected and qualified or until his or her earlier death, resignation, disqualification or removal. Election of directors shall be by ballot whenever requested by any person entitled to vote at the meeting but unless so requested such election may be conducted in any way approved at such meeting.

SECTION 2.05 INCREASE OR DECREASE IN THE NUMBER OF DIRECTORS. Whenever the number of directors constituting the whole Board of Directors is increased between annual meetings, a majority of the directors then in office may appoint the new director or directors. The term of office of such new director or directors will be for the balance of the terms of the directors of the class to which such new director is appointed and until his or her successor is elected and qualified or until his or her earlier death, resignation, disqualification or removal.

Any decrease in the number of directors constituting the whole Board of Directors will not become effective until the expiration of the term or terms of the directors of each class affected by the decrease. However, a decrease in the number of directors constituting the whole Board of Directors may become effective at any time to the extent that there are vacancies on the Board of Directors which are being eliminated by the decrease.

SECTION 2.06 VACANCY. Whenever any vacancy shall occur among the directors, the remaining directors shall constitute the directors of the Corporation until such vacancy is filled or until the number of directors is changed pursuant to Section 2.02 hereof. Except in cases where a director is removed as provided by law and these Regulations, and his successor is elected by the shareholders, the remaining directors may, by a vote of a majority of their number, fill any vacancy for the unexpired term.

If any directors resign effective as of a future date, then a majority of the remaining directors, including the resigning directors may appoint a successor. The term of office of the successor will be the unexpired term of the director he or she succeeds and until his or her successor is elected or qualified.

SECTION 2.07 REMOVAL OF A DIRECTOR. A director may be removed by holders of a majority of the shares then entitled to vote for the election of directors, but only for cause.

Except as otherwise required or provided for by law, cause to remove a director will be construed to exist only if the director whose removal is proposed (1) has been convicted of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal, or (2) has been adjudged by a court of competent jurisdiction to be liable for

negligence or misconduct in the performance of his duty to the corporation in a matter of substantial importance to the corporation and such adjudication is no longer subject to direct appeal.

SECTION 2.08 QUORUM AND ADJUSTMENTS. One third of the directors constituting the whole Board of Directors, but not less than two directors, shall constitute a quorum; provided, that, any meeting duly called, whether a quorum is present or otherwise, may, by vote of a majority of the directors present, adjourn from time to time and place to place within or without the State of Ohio, in which case no further notice of the adjourned meeting need be given. At any meeting at which a quorum is present, all questions and business shall be determined by the affirmative vote of not less than a majority of the directors present, except as otherwise provided in the Articles of Incorporation or these Regulations or as otherwise authorized by law.

SECTION 2.09 ORGANIZATION MEETING. Immediately after each annual meeting of the shareholders at which directors are elected, or each special meeting held in lieu thereof, the directors, including those newly elected, if a quorum of all such directors is present, shall hold an organization meeting for the purpose of electing officers and transacting any other business. Notice of such meeting need not be given. If for any reason such organization meeting is not held at such time, a special meeting for such purpose shall be held as soon thereafter as practicable.

SECTION 2.10 REGULAR MEETINGS. Regular meetings of the directors may be held at such times and places within or without the State of Ohio as may be provided for in by-laws or resolutions adopted by the directors and upon such notice, if any, as shall be so provided for.

SECTION 2.11 SPECIAL MEETINGS. Special meetings of the directors may be held at any time within or without the State of Ohio upon call by the President, or by one-third of the directors then in office. Written notice of each such meeting shall be given to each director by personal delivery or by mail, cablegram or telegram not less than one day prior to such meeting or such shorter notice as the directors shall deem necessary and warranted under the circumstances. Any directors may waive in writing notice of any meeting, and, by attending any meeting without protesting the lack of proper notice, shall be deemed to have waived notice thereof. Unless otherwise limited in the notice thereof, any business may be transacted at any organization, regular or special meeting.

SECTION 2.12 PARTICIPATION IN MEETINGS BY TELEPHONE. Members of the Board of Directors or of any committee of the Board of Directors may participate in a meeting of the Board of Directors or committee of the Board of Directors by means of telephone or similar communications equipment that enables all persons participating in the meeting to hear each other. Such participation constitutes presence in person at such meeting.

SECTION 2.13 COMPENSATION. Directors shall receive such compensation and expense reimbursement for attendance at each meeting of the Board of Directors or of any Committee thereof and/or such salary as may be determined from time to time by the Board of Directors. Nothing herein contained shall be construed to preclude

any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE III

COMMITTEES

SECTION 3.01 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may establish one or more committees of the Board of Directors to consist of not less than three directors. The committees of the Board of Directors will have the powers and duties properly delegated to them by the Board of Directors. Without limiting the foregoing, the Board of Directors may empower a committee of the Board of Directors to declare a dividend or authorize an issuance of stock. However, all powers and duties delegated to each committee of the Board of Directors must be specified in a resolution of the Board of Directors.

The Board of Directors will appoint the directors who will be members of each committee. The Board of Directors may also appoint alternative members to replace any absent or disqualified member of any committee. All committee members may be removed or replaced by the Board of Directors at any time.

SECTION 3.02 CONDUCT OF BUSINESS. Except as otherwise required by law or by the Articles of Incorporation or these Regulations, each committee may determine the procedural rules for meeting and conducting its business. However, (1) adequate provision will be made for notice to members of all meetings; (2) one-third of the members will constitute a quorum; (3) all matters will be determined by a majority vote of the members present; and (4) action may be taken by any committee without a meeting if all members of the committee consent in writing and the writing or writings are filed with the minutes of the proceedings of such committee.

ARTICLE IV

OFFICERS

SECTION 4.01 ELECTION. The elected officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers including a Chairman of the Board as may from time to time be appointed by the Board of Directors. All officers of the Corporation whose authority is derived directly from the provisions of this Article IV shall be elected and the compensation of all such officers may be fixed by the Board of Directors or by the President (except for the compensation of the President) or by a committee duly empowered pursuant to Section 3.01 of these Regulations to fix compensation. Any officer may, but no officer except the President and the Chairman of the Board, if any, must, be chosen from among the Board of Directors. The officers of the Corporation shall have the authority, perform the duties and exercise the powers in the management of the Corporation usually incident to the offices held by them respectively, and/or such other authority, duties and powers as may be assigned to them from time to time by the Board of Directors.

SECTION 4.02 TERM. The officers of the Corporation shall be elected annually at the organization meeting of the Board of Directors and shall hold office until the next organization meeting of the Board of Directors or for such shorter periods as may be designated by the Board of Directors. Any officer may be removed at any time, with or without cause, by the Board of Directors. A vacancy in any office, however created, may be filled by the Board of Directors at any regular or special meeting.

SECTION 4.03 PRESIDENT. The President shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall have the authority, perform the duties and exercise the powers usually incident to the office of President and/or assigned to him or her by the Board of Directors.

SECTION 4.04 CHAIRMAN OF THE BOARD. The Chairman of the Board, if any, shall have the authority, perform the duties and exercise the power usually incident to the office of Chairman of the Board and/or assigned to him or her by the Board of Directors or the President.

SECTION 4.05 VICE PRESIDENT. Each Vice President of the Corporation shall have the authority, perform the duties and exercise the powers usually incident to the office of Vice President and/or assigned to him or her from time to time by the Board of Directors or the President.

SECTION 4.06 SECRETARY. The Secretary of the Corporation shall have the authority, perform the duties, and exercise the powers usually incident to the office of the Secretary of the Corporation and/or assigned to him or her from time to time by the Board of Directors or the President. The Secretary of the Corporation shall record the proceedings of the meetings of the shareholders and of the directors in a minute book maintained for such purpose.

SECTION 4.07 TREASURER. The Treasurer of the Corporation shall have the authority, perform the duties and exercise the powers usually incident to the office of Treasurer of the Corporation and/or assigned to him or her from time to time by the Board of Directors or the President.

SECTION 4.08 DELEGATION OF AUTHORITY. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision of these Regulations.

SECTION 4.09 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless otherwise directed by the Board of Directors, the President will have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of shareholders of or with respect to any action of shareholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other Corporation.

ARTICLE V

INDEMNIFICATION OF DIRECTORS AND OFFICERS

SECTION 5.01 INDEMNIFICATION. The Corporation shall indemnify any director or officer, any former director or officer of the Corporation and any person who is or has served at the request of the Corporation as a director, officer or trustee of another corporation, partnership, joint venture, trust or other enterprise (and his or her heirs, executors and administrators) against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her by reason of the fact that he or she is or was such director, officer or trustee in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full extent according to the procedures and requirements set forth in the Ohio General Corporation Law as the same may be in effect from time to time. The indemnification provided for herein shall not be deemed to restrict the right of the Corporation to (i) indemnify employees, agents and others as permitted by law, (ii) purchase and maintain insurance or provide similar protection on behalf of directors, officers or such other persons against liabilities assessed against them or expenses incurred by them arising out of their service to the Corporation as contemplated herein, and (iii) enter into agreements with such directors, officers, employees, agents or others indemnifying them against any and all liabilities (or such lesser indemnification as may be provided in such agreements) assessed against them or incurred by them arising out of their service to the Corporation as contemplated herein.

ARTICLE VI

CAPITAL STOCK

SECTION 6.01 STOCK CERTIFICATES. Shares of stock in the Corporation may be certificated or uncertificated as provided by the Ohio general corporation law, provided that every holder of stock in the Corporation shall be entitled to certificates signed by the President or a Vice President and by a second officer who may be the Treasurer, an Assistant Treasurer, the Secretary, or an Assistant Secretary of the Corporation, certifying the number of shares evidenced thereby. The signatures of the officers of the Corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or by a registrar other than the Corporation itself or its employee. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. Each certificate shall set forth additional material as is required by law.

SECTION 6.02 TRANSFERS. The shares of stock of the Corporation shall be transferable in the manner prescribed by laws of the State of Ohio. Transfers of stock shall be made on the share transfer books of the Corporation only by the person named in the certificate or by an attorney lawfully constituted in writing and upon the surrender of the certificate therefore, which shall be canceled when the new certificate shall be issued.

SECTION 6.03 REGISTERED HOLDERS. The Corporation shall be entitled to treat and shall be protected in treating the persons in whose names shares or any warrants, rights or options are registered on the record of shareholders, warrant holders, right holders or options holders, as the case may be, as the owners thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, any such share, warrant, right or option on the part of any other person, whether or not the Corporation shall have notice thereof.

SECTION 6.04 NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation and any transfer agent and/or registrar against any claim that may be made against it or them on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. A new certificate may be issued without requiring any bond when it is proper to do so.

ARTICLE VII

MISCELLANEOUS

SECTION 7.01 PROVISION ARTICLES OF INCORPORATION. These Regulations are at all times subject to the provisions of the Articles of Incorporation of the Corporation as the same may be in effect from time to time.

SECTION 7.02 RECORD DATES. For any lawful purpose, including, without limitation, the determination of the shareholders who are entitled to: (i) receive notice of or to vote at a meeting of shareholders; (ii) receive payment of any dividend or distribution; (iii) receive or exercise rights of purchase of or subscription for, or exchange or conversion of, shares or other securities, subject to contract rights with respect thereto; or (iv) participate in the execution of written consents, waivers, or releases, the directors may fix a record date, which shall not be a date earlier than the date on which the record date is fixed and, in the cases provided for in clauses (i), (ii) and (iii) above, shall not be more than sixty (60) nor fewer than ten (10) days preceding the date of the meeting of the shareholders, or the date fixed for the payment of any dividend or distribution, or the date fixed for the receipt or the exercise of rights, as the case may be, unless the Articles of Incorporation specify a shorter or a longer period for such purpose.

SECTION 7.03 AMENDMENTS. These Regulations may be altered, changed or amended in any respect or superseded by new Regulations in whole or in part, either (i) by the affirmative vote of a majority of the holders of the stock entitled to vote for the election of directors voting as a single class, or (ii) to the extent permitted by Chapter 1701 of the Ohio Revised Code or any successor provision thereto, by the Board of Directors, except that the provisions of Sections 1.02, 1.06, 2.02, 2.03, 2.04, 2.07 and this Section 7.03 may not be altered, changed or amended in any respect, or superseded by new Regulations in whole or in part except by the affirmative vote of the holders of 80% of stock entitled to vote for the election of directors, voting as a single class.

SECTION 7.04 FISCAL YEAR. The fiscal year of the Corporation shall be as fixed by the Board of Directors.

These Amended and Restated Regulations supersede the existing Regulations of the Company.

EX-10.1 4 l35390aexv10w1.htm EX-10.1 EX-10.1

Exhibit 10.1


	John L. Boylan

		Name of Key Employee

	December 3, 2008

		Date of Agreement

LANCASTER COLONY CORPORATION

Amended and Restated Key Employee Severance Agreement

This Amended and Restated Key Employee Severance Agreement (“Agreement) is entered into as of the date set forth above between Lancaster Colony Corporation (“LCC”) and the undersigned key employee of LCC named above (“Key Employee”).

1. Severance Benefits. In the event there is a Termination of Employment of the Key Employee within one (1) year following a Change in Control (i) by LCC other than for Cause, or (ii) by the Key Employee for Good Reason, the Key Employee shall be entitled to and shall be paid and provided the following severance benefits by LCC:

(a) Unpaid Base Salary. The amount of any unpaid base salary of the Key Employee accruing through the date of Termination of Employment, determined at the base salary rate in effect for the Key Employee at such date, shall be paid to the Key Employee in cash by LCC within thirty (30) days following the date of Termination of Employment (provided that if such thirty-(30-) day period begins in one calendar year and ends in another, the Key Employee shall not have the right to designate the calendar year of payment).

(b) Severance Compensation. An amount equal to the lesser of (i) the sum of (y) the Key Employee’s highest annual salary paid within the three full fiscal years prior to the date of termination of employment, plus (z) the Key Employee’s highest total annual bonus paid within the three full fiscal years prior to the date of Termination of Employment, or (ii) an amount equal to twice the Key Employee’s annual compensation (salary plus bonus) paid for the full fiscal year immediately preceding the date of Termination of Employment, shall be paid to the Key Employee in cash by LCC within thirty (30) days following the date of termination of Employment (provided that if such thirty-(30-) day period begins in one calendar year and ends in another, the Key Employee shall not have the right to designate the calendar year of payment).

(c) Continuation of Benefits. In addition to the foregoing cash payments, the Key Employee shall be entitled to continued coverage under such of LCC’s health, disability and life insurance plans in which the Key Employee participated on the date of Termination of Employment, on the same basis as in effect on such date of Termination of Employment (including required employee contributions, if any), for a period of one year following the date of Termination of Employment.

2. Definitions. As used herein, the following terms shall have the meanings set forth below.

“Cause” means the willful engaging by the Key Employee in malfeasance or felonious conduct which in any material respect impairs the reputation, good will or business position of LCC or involves misappropriation of LCC’s funds or other assets.

“Change in Control” means a change in control of LCC of a nature that would be required to be reported in response to Item 1.01(a) or Item 5.01 of LCC’s Current Report on Form 8-K pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); provided that, without limitation, such a Change in Control shall be deemed to have occurred at such time as (i) any “person” within the meaning of Section 14(d) of the Exchange Act, other than LCC; a subsidiary of LCC; John B. Gerlach, Jr. or any of their “affiliates” or “associates” (as such terms are defined in Rule 12b-2 under the Exchange Act); or any employee benefit plan sponsored by LCC, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of thirty percent (30%) or more of the common stock of LCC or otherwise controls more than thirty percent (30%) of the outstanding shares entitled to vote or (ii) individuals who constitute the Board of Directors of LCC as of the date hereof (the “Incumbent Board”) or who are successor members to such Incumbent Board members and whose appointment or nomination for election was approved by action of at least three-fourths of (y) of such Incumbent Board (“Approved Successors”) or (z) by a board whose members can trace their status as such to appointment or nomination for election which was approved by at least three-fourths of Incumbent Board members or Approved Successors cease for any reason to constitute at least a majority thereof; but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Incumbent Board (including Approved Successors).

“Code” means the Internal Revenue Code of 1986, as amended.

“Good Reason” means a material diminution of the Key Employee’s base salary, (ii) a material diminution in the Key Employee’s authority, duties or responsibilities, (iii) a material change in geographic location at which the Key Employee must perform services for LCC, or (iv) any other action or inaction that constitutes a material breach of the terms of a written agreement between LCC and the Key Employee; provided, however, that an event shall not constitute “Good Reason” unless, within ninety (90) days of the initial existence of an event, the Key Employee gives LCC at least thirty (30) days’ prior written notice of such event setting forth a description of the circumstances constituting Good Reason and LCC fails to cure such within the thirty (30)-day period following LCC’s receipt of such written notice.

“Section 409A” means Code Section 409A and all United States Department of Treasury and Internal Revenue Service regulations, guidance, and other interpretative authority thereunder.

“Termination of Employment” means a termination of the Key Employee’s employment with LCC that constitutes a “separation from service” as defined in Section 409A.

3. Disputes. If a dispute arises regarding a termination of the Key Employee’s employment with LCC or the interpretation or enforcement of this Agreement and the Key Employee obtains a final judgment in the Key Employee’s favor by a court of competent jurisdiction or the Key Employee’s claim is settled by LCC prior to the rendering of a judgment by such a court, all reasonable legal fees and expenses incurred by the Key Employee in contesting or disputing any such termination or seeking to obtain or enforce any right, compensation, or benefit provided for in this Agreement, or in otherwise pursuing the Key Employee’s claim, shall be paid by LCC to the fullest extent permitted by law.

4. No Mitigation or Reduction of Benefits. The Key Employee is not required to mitigate the amount of any benefits to be paid by LCC pursuant to this Agreement by seeking other employment or otherwise, nor shall the amount of any benefits provided for in this Agreement be reduced by any compensation earned by the Key Employee as the result of employment by another employer after Termination of Employment.

5. No Employment Rights or Obligations Established. This Agreement does not establish any rights on the part of the Key Employee to continued employment by LCC, nor does it establish any obligations on the part of the Key Employee to continue the Key Employee’s employment with LCC, it being understood and agreed that this Agreement relates solely to certain benefits to be provided to the Key Employee in the event of Termination of Employment under certain circumstances as provided herein.

6. Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto.

7. Other Agreements. This Agreement does not supersede or affect in any way, nor is it affected in any way by, any other existing agreement, written or oral, between LCC and the Key Employee; provided, however, this Agreement supersedes and replaces the Key Employee Severance Agreement between LCC and the Key Employee. Further, no future agreement between LCC and the Key Employee shall supersede or affect this Agreement, nor shall this Agreement affect such future agreement, unless such future agreement specifically so provides and is executed by both LCC and the Key Employee.

8. Successors and Assigns. This Agreement is personal to the Key Employee and may not be assigned by him otherwise than by will or the laws of descent and distribution. This Agreement shall be binding upon, inure to the benefit of and be enforceable by and against LCC and its successors and assigns.

9. Governing Law. This agreement is made and is expected to be performed in Ohio, and the various terms, provisions, covenants and agreements, and the performance thereof, shall be construed, interpreted and enforced under and with reference to the laws of the State of Ohio.

10. Section 409A Compliance. To the extent applicable, LCC and the Key Employee intend that this Agreement comply with Section 409A and that should any provision be found not in compliance with Section 409A, the parties hereby agree to execute any and all amendments to this Agreement deemed necessary and required by legal counsel for LCC to achieve compliance with Section 409A. In no event shall any payment required to be made pursuant to this Agreement that is nonqualified deferred compensation within the meaning of Section 409A be made to the Key Employee unless the Key Employee has incurred a Termination of Employment. In the event the Key Employee is a “specified employee” (as defined in Section 409A) so that payments of nonqualified deferred compensation cannot commence under Section 409A until the lapse of six (6) months after a Termination of Employment, then (i) any such payments of nonqualified deferred compensation that are required to be paid in a single lump sum shall not be made until the date which is six (6) months and one (1) day after the Key Employee’s Termination of Employment, and (ii) the first six (6) months of any such payments of nonqualified deferred compensation that are required to be paid in installments shall be paid on the date which is six (6) months and one (1) day following the Key Employee’s Termination of Employment (and all remaining installment payments shall be made as would ordinarily have been made under the provisions of this Agreement).

IN WITNESS WHEREOF, this Agreement is executed by the parties effective the date first set forth above.


LCC:

		Key Employee:

LANCASTER COLONY CORPORATION

By:	/s/ John B. Gerlach, Jr.

	(Signature)

		/s/ John L. Boylan

		(Signature)

John B. Gerlach, Jr., Chairman, CEO & President		John L. Boylan

	(Name and Title)	(Name)

EX-10.2 5 l35390aexv10w2.htm EX-10.2 EX-10.2

Exhibit 10.2


	Bruce L. Rosa

		Name of Key Employee

	December 3, 2008

		Date of Agreement

LANCASTER COLONY CORPORATION

Amended and Restated Key Employee Severance Agreement

2. Definitions. As used herein, the following terms shall have the meanings set forth below.

“Code” means the Internal Revenue Code of 1986, as amended.

“Section 409A” means Code Section 409A and all United States Department of Treasury and Internal Revenue Service regulations, guidance, and other interpretative authority thereunder.

“Termination of Employment” means a termination of the Key Employee’s employment with LCC that constitutes a “separation from service” as defined in Section 409A.

such a court, all reasonable legal fees and expenses incurred by the Key Employee in contesting or disputing any such termination or seeking to obtain or enforce any right, compensation, or benefit provided for in this Agreement, or in otherwise pursuing the Key Employee’s claim, shall be paid by LCC to the fullest extent permitted by law.

6. Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto.

months and one (1) day following the Key Employee’s Termination of Employment (and all remaining installment payments shall be made as would ordinarily have been made under the provisions of this Agreement).

IN WITNESS WHEREOF, this Agreement is executed by the parties effective the date first set forth above.


LCC:

		Key Employee:

LANCASTER COLONY CORPORATION

By:	/s/ John B. Gerlach, Jr.

	(Signature)

		/s/ Bruce L. Rosa

		(Signature)

John B. Gerlach, Jr., Chairman, CEO & President		Bruce L. Rosa

	(Name and Title)	(Name)

EX-31.1 6 l35390aexv31w1.htm EX-31.1 EX-31.1

Exhibit 31.1

Certification by Chief Executive Officer

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

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

	2.		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;

	3.		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;

	4.		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: February 9, 2009	By:	/s/ John B. Gerlach, Jr.
		John B. Gerlach, Jr.
		Chief Executive Officer

EX-31.2 7 l35390aexv31w2.htm EX-31.2 EX-31.2

Exhibit 31.2

Certification by Chief Financial Officer

I, John L. Boylan, certify that:

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

	2.		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;

	3.		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;

	4.		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

	(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: February 9, 2009	By:	/s/ John L. Boylan
		John L. Boylan
		Chief Financial Officer

EX-32 8 l35390aexv32.htm EX-32 EX-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 December 31, 2008, 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


		February 9, 2009


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


		February 9, 2009

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