UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549  
 
Form 10-Q
 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
or  
¨
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
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
37 West Broad Street
Columbus, Ohio
 
43215
(Address of principal executive offices)
 
(Zip Code)
 
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   ý     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ý     No   ¨
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
 
ý
Accelerated filer
 
¨
Non-accelerated filer
 
o   (Do not check if a smaller reporting company)
Smaller Reporting Company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes   ¨     No   ý
As of October 20, 2016 , there were 27,423,599 shares of Common Stock, without par value, outstanding.




LANCASTER COLONY CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 

2



PART I – FINANCIAL INFORMATION
 
Item 1. Condensed Consolidated Financial Statements
LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except share data)
September 30, 
 2016
 
June 30, 
 2016
ASSETS
Current Assets:
 
 
 
Cash and equivalents
$
145,747

 
$
118,080

Receivables (less allowance for doubtful accounts, September-$90; June-$125)
70,691

 
66,006

Inventories:
 
 
 
Raw materials
31,659

 
26,153

Finished goods
58,106

 
49,944

Total inventories
89,765

 
76,097

Other current assets
4,071

 
7,644

Total current assets
310,274

 
267,827

Property, Plant and Equipment:
 
 
 
Land, buildings and improvements
117,596

 
116,858

Machinery and equipment
265,741

 
263,336

Total cost
383,337

 
380,194

Less accumulated depreciation
215,458

 
210,599

Property, plant and equipment-net
167,879

 
169,595

Other Assets:
 
 
 
Goodwill
143,788

 
143,788

Other intangible assets-net
44,175

 
44,866

Other noncurrent assets
8,252

 
8,656

Total
$
674,368

 
$
634,732

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
 
 
 
Accounts payable
$
41,540

 
$
39,931

Accrued liabilities
51,242

 
33,072

Total current liabilities
92,782

 
73,003

Other Noncurrent Liabilities
26,794

 
26,698

Deferred Income Taxes
20,287

 
21,433

Commitments and Contingencies

 

Shareholders’ Equity:
 
 
 
Preferred stock-authorized 3,050,000 shares; outstanding-none

 

Common stock-authorized 75,000,000 shares; outstanding-September-27,423,599 shares; June-27,423,550 shares
111,824

 
110,677

Retained earnings
1,170,027

 
1,150,337

Accumulated other comprehensive loss
(11,272
)
 
(11,350
)
Common stock in treasury, at cost
(736,074
)
 
(736,066
)
Total shareholders’ equity
534,505

 
513,598

Total
$
674,368

 
$
634,732

See accompanying notes to condensed consolidated financial statements.

3



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 
 
Three Months Ended 
 September 30,
(Amounts in thousands, except per share data)
2016
 
2015
Net Sales
$
291,361

 
$
294,085

Cost of Sales
210,727

 
226,118

Gross Profit
80,634

 
67,967

Selling, General and Administrative Expenses
29,880

 
26,079

Operating Income
50,754

 
41,888

Other, Net
87

 
122

Income Before Income Taxes
50,841

 
42,010

Taxes Based on Income
17,441

 
14,382

Net Income
$
33,400

 
$
27,628

Net Income Per Common Share:
 
 
 
Basic and diluted
$
1.22

 
$
1.01

 
 
 
 
Cash Dividends Per Common Share
$
0.50

 
$
0.46

 
 
 
 
Weighted Average Common Shares Outstanding:
 
 
 
Basic
27,363

 
27,319

Diluted
27,430

 
27,344

See accompanying notes to condensed consolidated financial statements.


4



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 
 
Three Months Ended 
 September 30,
(Amounts in thousands)
2016
 
2015
Net Income
$
33,400

 
$
27,628

Other Comprehensive Income:
 
 
 
Defined Benefit Pension and Postretirement Benefit Plans:
 
 
 
Amortization of loss, before tax
170

 
131

Amortization of prior service credit, before tax
(45
)
 
(1
)
Total Other Comprehensive Income, Before Tax
125

 
130

Tax Attributes of Items in Other Comprehensive Income:
 
 
 
Amortization of loss, tax
(63
)
 
(49
)
Amortization of prior service credit, tax
16

 
—

Total Tax Expense
(47
)
 
(49
)
Other Comprehensive Income, Net of Tax
78

 
81

Comprehensive Income
$
33,478

 
$
27,709

See accompanying notes to condensed consolidated financial statements.


5



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 
Three Months Ended 
 September 30,
(Amounts in thousands)
2016
 
2015
Cash Flows From Operating Activities:
 
 
 
Net income
$
33,400

 
$
27,628

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
5,986

 
6,039

Deferred income taxes and other noncash changes
(746
)
 
(791
)
Stock-based compensation expense
1,145

 
785

Excess tax benefit from stock-based compensation
(64
)
 
(186
)
Pension plan activity
(61
)
 
(74
)
Changes in operating assets and liabilities:
 
 
 
Receivables
(4,679
)
 
(11,633
)
Inventories
(13,668
)
 
(12,256
)
Other current assets
3,573

 
2,587

Accounts payable and accrued liabilities
20,487

 
21,212

Net cash provided by operating activities
45,373

 
33,311

Cash Flows From Investing Activities:
 
 
 
Cash paid for acquisition, net of cash acquired
—

 
(12
)
Payments for property additions
(4,144
)
 
(3,360
)
Other-net
92

 
(331
)
Net cash used in investing activities
(4,052
)
 
(3,703
)
Cash Flows From Financing Activities:
 
 
 
Payment of dividends
(13,710
)
 
(12,586
)
Purchase of treasury stock
(8
)
 
—

Excess tax benefit from stock-based compensation
64

 
186

Net cash used in financing activities
(13,654
)
 
(12,400
)
Net change in cash and equivalents
27,667

 
17,208

Cash and equivalents at beginning of year
118,080

 
182,202

Cash and equivalents at end of period
$
145,747

 
$
199,410

Supplemental Disclosure of Operating Cash Flows:
 
 
 
Cash paid during the period for income taxes
$
470

 
$
2,237

See accompanying notes to condensed consolidated financial statements.


6



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share data)
Note 1 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Lancaster Colony Corporation and our wholly-owned subsidiaries, collectively referred to as “we,” “us,” “our,” “registrant” or the “Company” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and SEC Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the interim condensed 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 condensed consolidated financial statements are considered to be of a normal recurring nature. Intercompany transactions and accounts have been eliminated in consolidation. 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 2016 Annual Report on Form 10-K. Unless otherwise noted, the term “year” and references to a particular year pertain to our fiscal year, which begins on July 1 and ends on June 30; for example, 2017 refers to fiscal 2017 , which is the period from July 1, 2016 to June 30, 2017 .
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation, except for those acquired as part of a business combination, which are stated at fair value at the time of purchase. Purchases of property, plant and equipment included in Accounts Payable and excluded from the property additions and the change in accounts payable in the Condensed Consolidated Statements of Cash Flows were as follows:  
 
September 30,
 
2016
 
2015
Construction in progress in Accounts Payable
$
154

 
$
616

Accrued Distribution
Accrued distribution costs included in Accrued Liabilities were $6.0 million and $4.5 million at September 30, 2016 and June 30, 2016 , respectively.
Earnings Per Share
Earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock and common stock equivalents (restricted stock and stock-settled stock appreciation rights) outstanding during each period. Unvested shares of restricted stock granted to employees are considered participating securities since employees receive nonforfeitable dividends prior to vesting and, therefore, are included in the earnings allocation in computing EPS under the two-class method. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing income available to common shareholders by the diluted weighted average number of common shares outstanding during the period, which includes the dilutive potential common shares associated with nonparticipating restricted stock and stock-settled stock appreciation rights.


7

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


Basic and diluted net income per common share were calculated as follows:
 
Three Months Ended 
 September 30,
 
2016
 
2015
Net income
$
33,400

 
$
27,628

Net income available to participating securities
(66
)
 
(35
)
Net income available to common shareholders
$
33,334

 
$
27,593

 
 
 
 
Weighted average common shares outstanding – basic
27,363

 
27,319

Incremental share effect from:
 
 
 
Nonparticipating restricted stock
5

 
5

Stock-settled stock appreciation rights
62

 
20

Weighted average common shares outstanding – diluted
27,430

 
27,344

 
 
 
 
Net income per common share – basic and diluted
$
1.22

 
$
1.01

Accumulated Other Comprehensive Loss
The following table presents the amounts reclassified out of accumulated other comprehensive loss by component:
 
Three Months Ended 
 September 30,
 
2016
 
2015
Accumulated other comprehensive loss at beginning of period
$
(11,350
)
 
$
(10,057
)
Defined Benefit Pension Plan Items:
 
 
 
Amortization of unrecognized net loss
179

 
135

Postretirement Benefit Plan Items:
 
 
 
Amortization of unrecognized net gain
(9
)
 
(4
)
Amortization of prior service credit
(45
)
 
(1
)
Total other comprehensive income, before tax
125

 
130

Total tax expense
(47
)
 
(49
)
Other comprehensive income, net of tax
78

 
81

Accumulated other comprehensive loss at end of period
$
(11,272
)
 
$
(9,976
)
Significant Accounting Policies
There were no changes to our Significant Accounting Policies from those disclosed in our 2016 Annual Report on Form 10-K.
Recently Issued Accounting Standards
In March 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance to simplify the accounting for stock-based compensation. The amendments include changes to the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance will be effective for us in fiscal 2018 including interim periods. The transition method that will be applied on adoption varies for each of the amendments. We are currently evaluating the impact of this guidance.
In May 2014, the FASB issued new accounting guidance for the recognition of revenue under the principle: “Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The guidance will be effective for us in fiscal 2019 including interim periods and will require either retrospective application to each prior period presented or retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. The FASB issued subsequent clarifications of this new accounting guidance in 2016. We are currently evaluating the impact of this guidance.

8

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


In February 2016, the FASB issued new accounting guidance to require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The updated guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease). Both lease classifications require the lessee to record a right-of-use asset and a lease liability based upon the present value of the lease payments. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the consolidated financial statements. The guidance will be effective for us in fiscal 2020 including interim periods using a modified retrospective approach. We are currently evaluating the impact of this guidance.
Recently Adopted Accounting Standards
In July 2015, the FASB issued new accounting guidance which requires entities to measure most inventory “at the lower of cost or net realizable value,” thereby simplifying current guidance. Under current guidance an entity must measure inventory at the lower of cost or market, where market is defined as one of three different measures, one of which is net realizable value. We adopted this guidance effective July 1, 2016 on a prospective basis, and it did not have a material impact on our condensed consolidated financial statements.
In August 2016, the FASB issued new accounting guidance to reduce diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. Current guidance is either unclear or does not include specific requirements for the classification of these transactions. The majority of the new provisions are not currently applicable to us, and those that are applicable are consistent with our current practice. The guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 using a retrospective transition method for all periods presented. Early adoption is permitted provided that all amendments are adopted in the same period. We adopted this guidance effective July 1, 2016, and it did not have an impact on our Condensed Consolidated Statements of Cash Flows.
Note 2 – Long-Term Debt
At September 30, 2016 and June 30, 2016 , we had an unsecured credit facility (“Facility”) under which we could borrow, on a revolving credit basis, up to a maximum of $150 million at any one time, with potential to expand the total credit availability to $225 million subject to us obtaining consent of the issuing banks and certain other conditions. The Facility expires on April 8, 2021 , and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR or an alternative base rate defined in the Facility, at our option. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt.
At September 30, 2016 and June 30, 2016 , we had no borrowings outstanding under the Facility. At September 30, 2016 , we had $5.1 million of standby letters of credit outstanding, which reduced the amount available for borrowing on the Facility. We paid no interest for the three months ended September 30, 2016 and 2015 .
The Facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions. There are two principal financial covenants: an interest expense test that requires us to maintain an interest coverage ratio not less than 2.5 to 1 at the end of each fiscal quarter; and an indebtedness test that requires us to maintain a consolidated leverage ratio not greater than 3 to 1 at all times. The interest coverage ratio is calculated by dividing Consolidated EBIT by Consolidated Interest Expense, and the leverage ratio is calculated by dividing Consolidated Debt by Consolidated EBITDA. All financial terms used in the covenant calculations are defined more specifically in the Facility.
Note 3 – Commitments and Contingencies
At September 30, 2016 , we were a party to various claims and litigation matters arising in the ordinary course of business. Such matters did not have a material effect on the current-year results of operations and, in our opinion, their ultimate disposition will not have a material effect on our consolidated financial statements.
Note 4 – Goodwill and Other Intangible Assets
Goodwill attributable to the Specialty Foods segment was $143.8 million at September 30, 2016 and June 30, 2016 .
 
 

9

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


The following table summarizes our identifiable other intangible assets, all included in the Specialty Foods segment:
 
September 30, 
 2016
 
June 30, 
 2016
Tradename (30-year life)
 
 
 
Gross carrying value
$
34,500

 
$
34,500

Accumulated amortization
(1,773
)
 
(1,485
)
Net carrying value
$
32,727

 
$
33,015

Trademarks (40-year life)
 
 
 
Gross carrying value
$
370

 
$
370

Accumulated amortization
(235
)
 
(232
)
Net carrying value
$
135

 
$
138

Customer Relationships (10 to 15-year life)
 
 
 
Gross carrying value
$
13,920

 
$
13,920

Accumulated amortization
(6,321
)
 
(6,048
)
Net carrying value
$
7,599

 
$
7,872

Technology / Know-how (10-year life)
 
 
 
Gross carrying value
$
3,900

 
$
3,900

Accumulated amortization
(601
)
 
(504
)
Net carrying value
$
3,299

 
$
3,396

Non-compete Agreements (5-year life)
 
 
 
Gross carrying value
$
600

 
$
600

Accumulated amortization
(185
)
 
(155
)
Net carrying value
$
415

 
$
445

Total net carrying value
$
44,175

 
$
44,866

Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:
 
Three Months Ended 
 September 30,
 
2016
 
2015
Amortization expense
$
691

 
$
746

Total annual amortization expense for each of the next five years is estimated to be as follows:
 
 
2018
$
2,764

2019
$
2,764

2020
$
2,729

2021
$
2,644

2022
$
2,594

Note 5 – Income Taxes
Accrued federal income taxes of $12.5 million and accrued state and local income taxes of $1.0 million were included in Accrued Liabilities at September 30, 2016 . Prepaid federal income taxes of $4.3 million and prepaid state and local income taxes of $0.5 million were included in Other Current Assets at June 30, 2016 .

10

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


Note 6 – Business Segment Information
The September 30, 2016 identifiable assets by reportable segment are generally consistent with that of June 30, 2016 . The following summary of financial information is consistent with the basis of segmentation and measurement of segment profit or loss presented in our June 30, 2016 consolidated financial statements:
 
Three Months Ended 
 September 30,
 
2016
 
2015
Net Sales
$
291,361

 
$
294,085

Operating Income
 
 
 
Specialty Foods
$
54,825

 
$
44,961

Corporate Expenses
(4,071
)
 
(3,073
)
Total
$
50,754

 
$
41,888

Note 7 – Stock-Based Compensation
There have been no changes to our stock-based compensation plans from those disclosed in our 2016 Annual Report on Form 10-K.
Our stock-settled stock appreciation rights (“SSSARs”) compensation expense was $0.5 million and $0.3 million for the three months ended September 30, 2016 and 2015 , respectively. At September 30, 2016 , there was $2.6 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of 2 years .
Our restricted stock compensation expense was $0.6 million and $0.4 million for the three months ended September 30, 2016 and 2015 , respectively. At September 30, 2016 , there was $2.9 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of 2 years .

11




Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2017 refers to fiscal 2017 , which is the period from July 1, 2016 to June 30, 2017 .
The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto, all included elsewhere in this report. The forward-looking statements in this section and other parts of this report involve risks, uncertainties and other factors, 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 due to these factors. For more information, see the section below entitled “Forward-Looking Statements.”
OVERVIEW
Business Overview
Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels.
Part of our future growth may result from acquisitions. We continue to review potential acquisitions that we believe will complement our existing product lines, enhance our profitability and/or offer good expansion opportunities in a manner that fits our overall strategic goals.
Our operations are organized into one reportable segment: “Specialty Foods.” Our sales are predominately domestic.
Our business has the potential to achieve future growth in sales and profitability due to attributes such as:
•
leading retail market positions in several product categories with a high-quality perception;
•
recognized innovation in retail products;
•
a broad customer base in both retail and foodservice accounts;
•
well-regarded culinary expertise among foodservice customers;
•
recognized leadership in foodservice product development;
•
experience in integrating complementary business acquisitions; and
•
historically strong cash flow generation that supports growth opportunities.
Our goal is to grow both retail and foodservice sales over time by:
•
leveraging the strength of our retail brands to increase current product sales;
•
introducing new retail products and expanding distribution;
•
growing our foodservice sales through the strength of our reputation in product development and quality; and
•
pursuing acquisitions that meet our strategic criteria.
We have made substantial capital investments to support our existing food operations and future growth opportunities. For example, in 2015 we completed a significant processing capacity expansion at our Horse Cave, Kentucky dressing facility to help meet demand for our dressing products. Based on our current plans and expectations, we believe our capital expenditures for 2017 could total approximately $20 to $22 million . We anticipate we will be able to fund all of our capital needs in 2017 with cash generated from operations.
RESULTS OF CONSOLIDATED OPERATIONS
Net Sales and Gross Profit
 
Three Months Ended 
 September 30,
 
 
 
 
(Dollars in thousands)
2016
 
2015
 
Change
Net Sales
$
291,361

 
$
294,085

 
$
(2,724
)
 
(1
)%
Gross Profit
$
80,634

 
$
67,967

 
$
12,667

 
19
 %
Gross Margin
27.7
%
 
23.1
%
 
 
 
 
Net sales for the three months ended September 30, 2016 decreased 1% as an increase in retail net sales was more than offset by a decline in foodservice net sales. Our overall sales volume, as measured by pounds shipped, decreased by less than 1% for the three months ended September 30, 2016 . Pricing had a net deflationary impact of less than 1% of net sales for the quarter.
Retail net sales increased 3% during the three months ended September 30, 2016 due to higher sales of certain product lines including Olive Garden ® retail dressings, Marzetti ® caramel apple dips, New York BRAND ® Bakery frozen garlic bread

12



products and Sister Schubert’s ® frozen dinner rolls. Higher coupon expenses and increased placement costs combined to limit the retail sales growth. Foodservice net sales declined 5% for the quarter as influenced by our targeted customer rationalization efforts that began in the third quarter of last year. Also contributing to the foodservice sales decline were deflationary pricing from lower egg costs and weakness in limited time offer promotional programs with national chain restaurants.
Gross margin improved for the three months ended September 30, 2016 due to the influence of overall lower raw-material costs, primarily for eggs, but also for soybean oil, flour, honey and resin packaging. Margins also benefited from a more favorable sales mix and lower freight costs. Excluding any pricing actions, total raw-material costs positively affected our gross margins by 4% of net sales for the quarter.
Selling, General and Administrative Expenses
 
Three Months Ended 
 September 30,
 
 
 
 
(Dollars in thousands)
2016
 
2015
 
Change
SG&A Expenses
$
29,880

 
$
26,079

 
$
3,801

 
15
%
SG&A Expenses as a Percentage of Net Sales
10.3
%
 
8.9
%
 
 
 
 
Selling, general and administrative expenses increased 15% for the three months ended September 30, 2016 and were higher as a percentage of net sales for the comparative first quarter periods. The increase in these costs reflects the influence of higher levels of investment in marketing and promotions for our key retail product lines and new product introductions. Higher corporate expenses within SG&A largely reflect costs related to closed business operations.
Operating Income
The foregoing factors contributed to consolidated operating income totaling $50.8 million for the three months ended September 30, 2016 . Our operating income can be summarized as follows:
 
Three Months Ended 
 September 30,
 
 
 
 
(Dollars in thousands)
2016
 
2015
 
Change
Operating Income
 
 
 
 
 
 
 
Specialty Foods
$
54,825

 
$
44,961

 
$
9,864

 
22
%
Corporate Expenses
(4,071
)
 
(3,073
)
 
(998
)
 
32
%
Total
$
50,754

 
$
41,888

 
$
8,866

 
21
%
Operating Income as a Percentage of Net Sales
 
 
 
 
 
 
 
Specialty Foods
18.8
%
 
15.3
%
 
 
 
 
Total
17.4
%
 
14.2
%
 
 
 
 
Looking forward, we are entering what is typically our strongest sales quarter due to the holiday impact. We expect volume-driven growth in our retail sales channel for the balance of 2017 with support from recent and upcoming new product introductions along with increased sales from Flatout. In our foodservice channel, we expect volume-driven growth from continuing customers will continue to be largely offset by the influence of deflationary pricing (due to lower commodity costs, particularly eggs) and the impact of our customer rationalization initiative that was implemented beginning in the third quarter of 2016. Based on current market conditions, we foresee modestly favorable material cost comparisons continuing through the second quarter, due mainly to the impact of lower egg costs and continued favorable trends in certain other key commodities. However, in the second half of 2017, we anticipate an overall more neutral cost environment for ingredients.
Income Before Income Taxes
As impacted by the factors discussed above, income before income taxes for the three months ended September 30, 2016 increased by $8.8 million to $50.8 million from the prior-year total of $42.0 million .
Taxes Based on Income
Our effective tax rate was 34.3% and 34.2% for the three months ended September 30, 2016 and 2015 , respectively. Given the nature of our operations (predominately U.S. based for both sales and manufacturing), our effective tax rates typically stay within a fairly narrow range.

13



Net Income
First quarter net income for 2017 of $33.4 million increased from the preceding year’s net income for the quarter of $27.6 million , as influenced by the factors noted above. Diluted weighted average common shares outstanding have remained relatively stable. As a result, and due to the change in net income for each year, net income per share for the first quarter of 2017 totaled $1.22 per diluted share, as compared to net income of $1.01 per diluted share in the prior year.
FINANCIAL CONDITION
For the three months ended September 30, 2016 , net cash provided by operating activities totaled $45.4 million , as compared to $33.3 million in the prior-year period. The increase was due to an increase in net income and lower working capital requirements, primarily in accounts receivable, which can vary depending on the timing of monthly sales.
Cash used in investing activities for the three months ended September 30, 2016 was $4.1 million , as compared to $3.7 million in the prior year. This increase reflects a slightly higher level of capital expenditures in 2017 .
Cash used in financing activities for the three months ended September 30, 2016 of $13.7 million increased from the prior-year total of $12.4 million . This increase was due to higher dividend payments. The share repurchases in the three months ended September 30, 2016 were for shares repurchased in satisfaction of tax withholding obligations arising from the vesting of restricted stock granted to employees. At September 30, 2016 , 1,418,088 shares remained authorized for future buyback under the existing share repurchase program.
Under our unsecured revolving credit facility (“Facility”), we may borrow up to a maximum of $150 million at any one time. We had no borrowings outstanding under the Facility at September 30, 2016 . At September 30, 2016 , we had $5.1 million of standby letters of credit outstanding, which reduced the amount available for borrowing on the Facility. The Facility expires in April 2021, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR or an alternative base rate defined in the Facility, at our option. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt.
The Facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At September 30, 2016 , we were in compliance with all applicable provisions and covenants of this facility, and we exceeded the requirements of the financial covenants by substantial margins. At September 30, 2016 , we were not aware of any event that would constitute a default under this facility.
We currently expect to remain in compliance with the Facility’s covenants for the foreseeable future. However, a default under the Facility could accelerate the repayment of any outstanding indebtedness and limit our access to $75 million of additional credit available under the Facility. Such an event could require a reduction in or curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise impact our ability to meet our obligations when due.
We believe that cash provided by operating activities and our existing balances in cash and equivalents, in addition to that available under the Facility, should be adequate to meet our cash requirements through 2017 . If we were to borrow outside of the Facility under current market terms, our average interest rate may increase significantly and have an adverse effect on our results of operations.
CONTRACTUAL OBLIGATIONS
We have various contractual obligations that are appropriately recorded as liabilities in our condensed consolidated financial statements. Certain other items, such as purchase obligations, are not recognized as liabilities in our condensed consolidated financial statements. Examples of items not recognized as liabilities in our condensed consolidated financial statements are commitments to purchase raw materials or packaging inventory that has not yet been received as of September 30, 2016 and future minimum lease payments for the use of property and equipment under operating lease agreements. Aside from expected changes in raw-material needs due to changes in product demand and the impact of commodity prices, there have been no significant changes to the contractual obligations disclosed in our 2016 Annual Report on Form 10-K.
CRITICAL ACCOUNTING POLICIES
There have been no changes in critical accounting policies from those policies disclosed in our 2016 Annual Report on Form 10-K.

14



RECENT ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements and their impact on our consolidated financial statements are disclosed in Note 1 to the condensed consolidated financial statements.
FORWARD-LOOKING STATEMENTS
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This Quarterly Report on Form 10-Q contains various “forward-looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control including, without limitation, the specific influences outlined below. Management believes these forward-looking statements to be reasonable; however, one 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, except as required by law.
Items which could impact these forward-looking statements include, but are not limited to:
•
price and product competition;
•
the impact of any regulatory matters affecting our food business, including any required labeling changes and their impact on consumer demand;
•
the potential for loss of larger programs or key customer relationships;
•
fluctuations in the cost and availability of ingredients and packaging;
•
the reaction of customers or consumers to the effect of price increases we may implement;
•
the effect of consolidation of customers within key market channels;
•
the success and cost of new product development efforts;
•
the lack of market acceptance of new products;
•
the possible occurrence of product recalls or other defective or mislabeled product costs;
•
changes in demand for our products, which may result from loss of brand reputation or customer goodwill;
•
maintenance of competitive position with respect to other manufacturers;
•
adverse changes in freight, energy or other costs of producing, distributing or transporting our products;
•
capacity constraints that may affect our ability to meet demand or may increase our costs;
•
dependence on contract manufacturers;
•
efficiencies in plant operations;
•
stability of labor relations, including the impact of our current contract negotiations with a collective bargaining unit;
•
the outcome of any litigation or arbitration;
•
the impact of fluctuations in our pension plan asset values on funding levels, contributions required and benefit costs;
•
the extent to which future business acquisitions are completed and acceptably integrated;
•
dependence on key personnel and changes in key personnel;
•
changes in estimates in critical accounting judgments; and
•
certain other factors, including the information disclosed in our discussion of risk factors under Item 1A of our 2016 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our market risks have not changed materially from those disclosed in our 2016 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 September 30, 2016 to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is 1) recorded, processed,

15



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.

16




PART II – OTHER INFORMATION
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed under Item 1A in our 2016 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) In November 2010, our Board of Directors approved a share repurchase authorization of 2,000,000 shares, of which 1,418,088 shares remained authorized for future repurchases at September 30, 2016 . This share repurchase authorization does not have a stated expiration date. In the first quarter, we made the following repurchases of our common stock:
Period
Total
Number of
Shares
Purchased
 
Average
Price Paid
Per Share
 
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans
 
Maximum
Number of
Shares that
May Yet be
Purchased
Under the
Plans
July 1-31, 2016
—

 
$
—

 
—

 
1,418,152

August 1-31, 2016 (1)
64

 
$
133.13

 
64

 
1,418,088

September 1-30, 2016
—

 
$
—

 
—

 
1,418,088

Total
64

 
$
133.13

 
64

 
1,418,088

(1) Represents shares that were repurchased in satisfaction of tax withholding obligations arising from the vesting of restricted stock granted to employees under the Lancaster Colony Corporation Amended and Restated 2005 Stock Plan.
Item 5. Other Information
Adoption of Revised Form of Change in Control Agreement
On October 27, 2016, we adopted a revised form of our Change in Control Agreement (the “Revised Agreement”). The Revised Agreement is substantially the same as our prior form of Change in Control Agreement (the “Prior Agreement”).
The Revised Agreement replaces the Prior Agreement and was adopted in order to conform all change in control agreements entered into by our executive officers to the same form.
The following description of the Revised Agreement is a summary of its material terms and does not purport to be complete, and is qualified in its entirety by reference to the Revised Agreement, which is attached hereto as Exhibit 10.1.
In the event the executive’s employment is terminated on or within 12 months following a change in control (as defined in the Revised Agreement), either (A) by us without cause (as defined in the Revised Agreement), or (B) by the executive for good reason (as defined in the Revised Agreement), the executive would be entitled to a lump sum severance payment equal to the sum of: (i) accrued and unpaid salary, accrued and unpaid bonus from any prior completed fiscal year, and a pro-rated portion of the executive’s bonus for the current fiscal year; (ii) [___] times (the “Payment Multiple”) the sum of (x) the executive’s base salary; plus (y) the executive’s target level bonus for the current fiscal year; (iii) the sum of (x) the executive’s unvested 401(k) balance; plus (y) two times the aggregate matching contributions payable by us into the executive’s 401(k) account for the last completed calendar year; and (iv) continued health, dental, long-term disability and life insurance coverage for two years following the executive’s date of termination.
Notwithstanding the foregoing, the Revised Agreement provides that the executive’s change in control payments thereunder would be reduced by the minimum amount necessary to avoid penalties under Section 4999 of the Internal Revenue Code.
Replacement Change in Control Agreement with David A. Ciesinski
On October 27, 2016, we entered into a replacement change in control agreement on substantially the same form as the Revised Agreement with David A. Ciesinski, our President and Chief Operating Officer and President of our wholly-owned subsidiary, T. Marzetti Company. Mr. Ciesinski’s Payment Multiple under his replacement change in control agreement is three, the same as was in his prior change in control agreement dated April 18, 2016. Mr. Ciesinski’s new change in control agreement replaces his prior change in control agreement and provides substantially the same benefits.
Amendment to Employment Agreement of David A. Ciesinski
On October 27, 2016, we entered into an amendment to the employment agreement, dated as of April 18, 2016, between Mr. Ciesinski and us (the “Amendment”). The Amendment, which is attached hereto as Exhibit 10.2, clarifies that nothing in

17



the employment agreement or the general release attached thereto will prohibit Mr. Ciesinski from filing a charge or complaint with, communicating with, or receiving an award for information from any governmental agency (as defined in the Amendment).
Change in Control Agreement with Douglas A. Fell
On October 27, 2016, we entered into a change in control agreement on substantially the same form as the Revised Agreement with Douglas A. Fell, our Chief Financial Officer, Treasurer, Vice President and Assistant Secretary. Mr. Fell’s Payment Multiple under his change in control agreement is two.
Item 6. Exhibits
See Index to Exhibits following Signatures.


18



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:
October 31, 2016
 
By:
 
/s/ JOHN B. GERLACH, JR.
 
 
 
 
 
John B. Gerlach, Jr.
 
 
 
 
 
Chairman, Chief Executive Officer
 
 
 
 
 
and Director
 
 
 
 
 
(Principal Executive Officer)
 
 
 
 
 
 
Date:
October 31, 2016
 
By:
 
/s/ DOUGLAS A. FELL
 
 
 
 
 
Douglas A. Fell
 
 
 
 
 
Treasurer, Vice President,
 
 
 
 
 
Assistant Secretary and
 
 
 
 
 
Chief Financial Officer
 
 
 
 
 
(Principal Financial and Accounting Officer)


19



LANCASTER COLONY CORPORATION AND SUBSIDIARIES
FORM 10-Q
SEPTEMBER 30, 2016
INDEX TO EXHIBITS
 
 
 
 
 
 
Exhibit
Number
  
Description
  
Located at
 
 
 
 
 
10.1*
 
Lancaster Colony Corporation Form of Change in Control Agreement
 
Filed herewith
 
 
 
 
 
10.2*
 
First Amendment to Employment Agreement, dated October 27, 2016, between Lancaster Colony Corporation and David A. Ciesinski
 
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
  
Furnished herewith
 
 
 
 
101.INS
  
XBRL Instance Document
  
Filed herewith
 
 
 
 
101.SCH
  
XBRL Taxonomy Extension Schema Document
  
Filed herewith
 
 
 
 
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase Document
  
Filed herewith
 
 
 
 
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase Document
  
Filed herewith
 
 
 
 
101.LAB
  
XBRL Taxonomy Extension Label Linkbase Document
  
Filed herewith
 
 
 
 
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase Document
  
Filed herewith
 
 
 
 
 
*Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.

20


 
 
 
 
Exhibit 10.1
LANCASTER COLONY CORPORATION
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this “ Agreement ”) is entered into as of [___________], 20[__] (the “ Effective Date ”), by and between Lancaster Colony Corporation, an Ohio corporation (together with its subsidiaries, the “ Company ”), and [___________] (the “ Executive ”).
RECITALS
WHEREAS, the Executive is a senior executive of the Company and has made and is expected to continue to make major contributions to the short- and long-term profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly held companies, the possibility of a Change in Control (as hereinafter defined) exists;
WHEREAS, the Company desires to assure itself of both present and future continuity of management and desires to establish certain severance benefits for certain executives, applicable in the event of a Change in Control;
WHEREAS, the Company desires to provide additional inducement for the Executive to continue to remain in the employ of the Company; and
WHEREAS, the Compensation Committee of the Board has authorized the Company to enter into this Agreement.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, including the mutual covenants set forth herein, the parties hereto agree to enter into this Agreement as follows:
1. Definitions . The following terms shall have the following meanings for purposes of this Agreement.
“ Affiliate ” means any entity controlled by, controlling or under common control with, a person or entity.
“ Annual Pay ” means the sum of (a) an amount equal to the annual base salary rate payable to the Executive by the Company at the time of termination of his or her employment plus (b) an amount equal to the targeted bonus established for the Executive for the Company’s fiscal year in which the Executive’s termination of employment occurs, but in either case, without giving effect to any reduction therein occurring after a Change in Control.
“ Board ” means the board of directors of the Company.
“ Cause ” means the Executive’s (a) willful and intentional material breach of this Agreement, (b) willful and intentional misconduct or gross negligence in the performance of, or willful neglect of, the Executive’s duties, which has caused material injury (monetary or otherwise) to the Company, (c) material breach of the Company’s Code of Ethics, or (d) conviction of, or plea of nolo contendere to, a felony; provided, however, that no act or omission shall constitute “Cause” for purposes of this Agreement unless the Board, the Chairman of the Board or the Lead Independent Director provides to the Executive (i) written notice clearly and fully describing the particular acts or omissions which the Board, the Chairman of the Board or the Lead Independent Director reasonably believes in good faith constitutes “Cause” and (ii) an opportunity, within thirty (30) days following his or her receipt of such notice, to meet in person with the Board, the Chairman of the Board or the Lead Independent Director to explain or defend the alleged acts or omissions relied upon by the Board and, to the extent practicable, to cure such acts or omissions. Further, no act or omission shall be considered as “willful” or “intentional” if the Executive reasonably believed such acts or omissions were in the best interests of the Company.
“ Change in Control ” means the first occurrence of any of the following events after the Effective Date:
(a) any person, entity or “group” (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “ Act ”)), other than the Company, a wholly-owned subsidiary of the Company, any employee benefit plan of the Company or

1




any wholly-owned subsidiary of the Company, or any person, group or entity controlled by or under common control with John B. Gerlach Jr., becomes a “beneficial owner” (as defined in Rule 13d-3 under the Act), of 30% or more of the combined voting power of the Company’s then outstanding voting securities;
(b) the persons who, as of the Effective Date, are serving as the members of the Board (the “ Incumbent Directors ”) shall cease for any reason to constitute at least a majority of the Board (or the board of directors of any successor to the Company), provided that any director elected to the Board, or nominated for election, by at least two-thirds of the Incumbent Directors then still in office shall be deemed to be an Incumbent Director for purposes of this clause (b);
(c) the Company consummates a merger or consolidation with any other corporation, and as a result of which (i) persons who were shareholders of the Company immediately prior to such merger or consolidation, do not, immediately thereafter, own, directly or indirectly and in substantially the same proportions as their ownership of the stock of the Company immediately prior to the merger or consolidation, more than 50% of the combined voting power of the voting securities entitled to vote generally in the election of directors of (x) the Company or the surviving entity or (y) an entity that, directly or indirectly, owns more than 50% of the combined voting power entitled to vote generally in the election of directors of the entity described in subclause (x), and (ii), within the twelve-month period after such consummation of the merger or consolidation, the members of the Board as of the consummation of such merger or consolidation cease to constitute a majority of the board of directors of the Company or the surviving entity (or the entity that, directly or indirectly, owns more than 50% of the combined voting power entitled to vote generally in the election of directors of the Company or such surviving entity); or
(d) the shareholders of the Company approve and the Company consummates a sale, transfer or other disposition of all or substantially all of the assets of the Company, and immediately after such sale, transfer or disposition, the persons who were shareholders of the Company immediately prior to such sale, transfer or disposition do not own, directly or indirectly and in substantially the same proportions as their ownership of the stock of the Company immediately prior to the sale, transfer or disposition, more than 50% of the combined voting power of the voting securities entitled to vote generally in the election of directors of (x) the entity or entities to which such assets are sold or transferred or (y) an entity that, directly or indirectly, owns more than 50% of the combined voting power entitled to vote generally in the election of directors of the entities described in subclause (x).
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Confidential Information ” means all information, whether oral or written, previously or hereafter developed, acquired or used by the Company or its subsidiaries and relating to the business of the Company and its subsidiaries that is not generally known to others in the Company’s area of business, including without limitation trade secrets, methods or practices developed by the Company or any of its subsidiaries, financial results or plans, customer or client lists, personnel information, information relating to negotiations with clients or prospective clients, proprietary software, databases, programming or data transmission methods, or copyrighted materials (including without limitation, brochures, layouts, letters, art work, copy, photographs or illustrations). It is expressly understood that the foregoing list shall be illustrative only and is not intended to be an exclusive or exhaustive list of “Confidential Information.”
“ Good Reason ” means any of the following events occurring, without the Executive’s prior written consent specifically referring to this Agreement, within 12 months after a Change in Control:
(a) (i) any material reduction in the amount of the Executive’s Annual Pay, (ii) any material reduction in the amount of Executive’s other incentive compensation opportunities, or (iii) any significant reduction in the aggregate value of the Executive’s benefits as in effect from time to time unless such reduction under this clause (iii) is pursuant to a general change in benefits applicable to all similarly situated employees of the Company and its Affiliates;
(b) any material adverse change in the nature or status of the Executive’s title, duties or responsibilities (including reporting responsibilities);
(c) relocation of the Executive’s principal place of employment to a location that is more than 50 miles from the Executive’s place of employment immediately prior to the Change in Control; or
(d) failure by the Company to obtain the assumption agreement referred to in Section 7 of this Agreement prior to the effectiveness of any succession referred to therein, unless the purchaser, successor or assignee referred to therein is bound to perform this Agreement by operation of law.
In order for a termination by the Executive to constitute a termination for Good Reason, (i) the Executive must notify the Company of the circumstances claimed to constitute Good Reason in writing not later than the 60th day after it has arisen or occurred, (ii) the Company must not have cured such circumstances within 30 days of receipt of the notice and (iii) the Executive must actually terminate employment both (x) on or before the 12 th month anniversary of the Change in Control; and (y) within 30 days after the expiration of such cure period.

2




“ Termination Pay ” means a payment required to be made by the Company to the Executive pursuant to Section 2(a) (ii) or Section 2(b) hereof.
2. Benefits.
(a) Involuntary or Constructive Termination . In the event that the Executive’s employment with the Company or its successor is terminated on or within 12 months following a Change in Control (x) by the Company or its successor without Cause or (y) by the Executive for Good Reason, the Executive shall be entitled to the following payments and other benefits (subject to reduction by the Company, in its sole discretion, in accordance with Section 3):
(i) The Company shall pay to the Executive a cash payment in an amount equal to the sum of (A) the Executive’s accrued and unpaid base salary and accrued and unused vacation as of his or her date of termination of employment, as required by law, plus (B) his or her accrued and unpaid bonus, if any, for the Company’s prior fiscal year, plus (C) an amount equal to the greater of the following, paid on a pro rata basis for the portion of the year between July 1 and the date of the Executive’s termination of employment: (x) Executive’s target level bonus (based on the number of days employed during the fiscal year prior to such termination), or (y) the actual bonus to which the Executive would be entitled in the year of employment termination, if calculable at the date of termination, plus (D) reimbursement for all unreimbursed expenses reasonably and necessarily incurred by the Executive (in accordance with Company policy). This amount shall be paid within five (5) business days of the date of the Executive’s termination of employment.
(ii) The Company shall pay to the Executive a cash payment in an amount equal to [_____] times the Executive’s Annual Pay. This amount shall be paid by the Company within fifteen days after the date of termination, subject to Section 2(d) hereof.
(iii) The Company shall pay to the Executive a cash lump payment in an amount equal to the sum of (A) the Executive’s unvested account balance under the Company’s 401(k) plan, if any, and (B) two times the amount of the aggregate matching contributions payable in respect of the Executive’s contributions into the Executive’s 401(k) account for the last completed calendar year (which, for this purpose, shall be annualized if the Executive was not eligible to participate in such 401(k) plan for the entire calendar year). This amount shall be paid within 60 days after the date of the Executive’s termination of employment.
(iv) The Executive and his or her eligible dependents shall be entitled for a period of two years following his or her date of termination of employment to continued coverage, on the same basis as similarly situated active employees, under the Company’s group health, dental, long-term disability and life insurance plans as in effect from time to time (but not any other welfare benefit plans or any retirement plans); provided that coverage under any particular benefit plan shall expire with respect to the period after the Executive becomes covered under another employer’s plan providing for a similar type of benefit. In the event the Company is unable to provide such coverage on account of any limitations under the terms of any applicable contract with an insurance carrier or third party administrator, the Company shall pay the Executive an amount equal to the cost to the Company of providing such coverage within 60 days after the date of the Executive’s termination of employment. To the extent that Company’s group health or dental benefits are self-insured, then in addition to any other limitation provided here, the period of coverage provided by this Section 2(a)(iv) under the self-insured health or dental plan shall not exceed the period of time during which the Executive would be entitled to receive continuation coverage under a group health plan under section 4980B (COBRA) if the Executive had elected such coverage and paid such premiums. To the extent that the immediately preceding sentence applies, the Company shall pay the Executive an amount equal to the cost of such COBRA coverage for a period equal to the excess of (i) 24 months minus (ii) the number of months of COBRA coverage initially available to the Executive, as determined in good faith by the Company, with such payment to be made within 60 days after the date of the Executive’s termination of employment.
(b) Treatment of Equity Following a Change in Control . All of the Executive’s outstanding equity awards issued under the Company’s 2015 Omnibus Incentive Plan, as amended, or other plan shall be governed by the terms and conditions of the plan and the applicable award agreements issued to the Executive thereunder.
(c) No Duplication; Other Severance Pay . There shall be no duplication of severance pay in any manner. In this regard, the Executive shall not be entitled to Termination Pay hereunder for more than one position with the Company and its Affiliates. If the Executive is entitled to any notice or payment in lieu of any notice of termination of employment required by Federal, state or local law, including but not limited to the Worker Adjustment and Retraining Notification Act, the severance compensation to which the Executive would otherwise be entitled under this Agreement shall be reduced by the amount of any such payment in lieu of notice. The Executive shall not be entitled to any severance or termination payments (but excluding retirement and similar benefits) under any other plan, program, arrangement or agreement (other than any stock award or stock option agreements) with the Company or any of its Affiliates. Except as set forth in the immediately preceding sentence, the foregoing payments and benefits shall be in addition to and not in lieu of any payments or benefits to which the Executive and his or her dependents may otherwise be entitled to under the Company’s compensation and employee benefit plans. Subject to subparagraph (a)(iii) of the

3




definition of Good Reason, nothing herein shall be deemed to restrict the right of the Company from amending or terminating any such plan in a manner generally applicable to similarly situated active employees of the Company and its Affiliates, in which event the Executive shall be entitled to participate on the same basis (including payment of applicable contributions) as similarly situated active executives of the Company and its Affiliates.
(d) Mutual Release . Termination Pay shall be conditioned upon the execution by the Executive and the Company (or its successor) of a valid mutual release in the form attached hereto as Exhibit A , pursuant to which the Executive shall release the Company, to the maximum extent permitted by law, from any and all claims the Executive may have against the Company that relate to or arise out of the employment or termination of employment of the Executive, except such claims arising under this Agreement, any employee benefit plan, or any other written plan or agreement (a “ Release ”). The full amount of Termination Pay shall be paid in a lump sum in cash to the Executive within sixty (60) days after the date of the Executive’s termination of employment if and only if the Executive has properly executed, delivered to the Company, and not revoked, a Release, provided that if the period within which the Release could become irrevocable overlaps two calendar years, the Termination Pay shall be paid on the earliest date in the later of such calendar years after which such Release has become irrevocable. In addition, if the Executive shall timely deliver (and shall not have revoked) the Release, the Company shall simultaneously with the payment of Termination Pay execute a release of all claims it may have against the Executive arising out of the Executive’s employment, other than claims arising after the date of entering into such release. Neither the Release nor the Company’s release shall limit any obligation either party may have to the other party that arises after the date of such Release or release, including payments due from the Company to Executive under this Agreement or any other agreement with the Company or Executive’s post-termination restrictive covenants under this Agreement, any employment agreement or any other agreement with the Company.
(e) No Duty to Mitigate Benefits . The Executive shall not be required to mitigate the amount of any benefits to be paid by Company pursuant to this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefits provided for in this Agreement be reduced by any compensation earned by the Executive as the result of employment by another employer after termination of employment with Company.
3. Excise Taxes.
(a) If the Company’s Consulting Firm (defined below) determines that (i) the termination benefits payable to the Executive pursuant to this Agreement would subject the Executive to an excise tax under Section 4999 of the Code, and (ii) the net amount that the Executive would realize from such benefits on an after-tax basis (after taking into account all federal, state and local income and other taxes payable by the Executive and the amount of any excise tax payable by the Executive under Section 4999 of the Code) would be greater if the benefits payable hereunder were limited, then the benefits payable hereunder shall be limited such that the Executive’s net payment received on an after-tax basis is $1 less than the amount at which the payment would be subjected to the excise tax under Section 4999 of the Code. For this purpose, the Executive shall be deemed to be in the highest marginal rate of federal, state, and local taxes. Any reduction in the amount of benefits payable hereunder shall be debited, in order from the amounts payable under Section 2(a)(ii), then 2(a)(iii), then 2(a)(iv) and then under any equity awards that vested or became payable under the Company’s 2015 Omnibus Incentive Plan (or any successor thereto).
(b) All determinations required to be made under this Section 3, including any reductions to Payments required by Section 3(a), and the assumptions to be utilized in arriving at such determinations, shall be made by such certified public accounting firm in the business of performing such calculations as may be designated by the Company prior to the date of the Change in Control and reasonably acceptable to the Executive (the “ Consulting Firm ”), which shall provide detailed supporting calculations both to the Company and the Executive. All fees and expenses of the Consulting Firm shall be borne solely by the Company. For purposes of all present value determinations required to be made under this Section 3, the Company and the Executive elect to use the applicable federal rate that is in effect on the Effective Date pursuant to Treasury Regulations Section 1-280G, Q&A-32.

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4. Certain Covenants by the Executive.
(a) Protection of Confidential Information . The Executive agrees that he or she will not at any time during or following his or her employment by the Company, without the Company’s prior written consent except as may be required for Executive to discharge his employment duties to the Company, divulge any Confidential Information to any other person or entity or use any Confidential Information for his or her own benefit. Upon termination of employment, for any reason whatsoever, regardless of whether either party may be at fault, the Executive will return to the Company all physical Confidential Information in the Executive’s possession.
(b) Nondisclosure of Agreement . The Executive agrees, at all times during his or her employment by the Company, not to disclose or discuss in any manner (whether to individuals inside or outside the Company), the existence or terms of, this Agreement without the prior written consent of the Company, except to the extent required by law.
(c) Nondisparagement . The Executive and the Company agree that, whether or not the Executive remains employed by the Company, neither the Executive nor the Company will make or authorize any public statement, whether orally or in writing, that disparages the other party hereto with respect to such other party’s business interests or practices; provided, that neither party shall be restricted in connection with statements made in context of any litigation, arbitration or similar proceeding involving the other party hereto.
(d) Extent of Restrictions . The Executive acknowledges that he has given careful consideration to the restraints imposed by this Section 4 and he fully agrees that the restrictions contained in this Section 4 correctly set forth the understanding of the parties at the time this Agreement is entered into, are reasonable and necessary to protect the legitimate interests of the Company, and that any violation will cause substantial injury to the Company. In the event of any such violation, the Company shall be entitled, in addition to any other remedy, to preliminary or permanent injunctive relief. If any court having jurisdiction shall find that any part of the restrictions set forth in this Agreement are unreasonable in any respect, it is the intent of the parties that the restrictions set forth herein shall not be terminated, but that this Agreement shall remain in full force and effect to the extent (as to time periods and other relevant factors) that the court shall find reasonable.
(e) Effect on Prior Covenants . The provisions of this Section 4 are not intended to override, supersede, reduce, modify or affect in any manner any other agreement between the Executive, the Company or any of its Affiliates, including any confidentiality, nondisclosure, noncompetition, or nondisparagement agreement between the Executive, the Company or any of its Affiliates. Any such covenant or agreement shall remain in full force and effect in accordance with its terms. The Company will be entitled to injunctive and other relief to prevent or enjoin any violation of the provisions of this Agreement.
(f) Protected Rights . Notwithstanding anything to the contrary in this Agreement, Executive understands that nothing contained in this Agreement limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Agreement does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Executive’s right to receive an award for information provided to any Government Agencies.
(g) Acknowledgement . The Executive acknowledges that (i) this Agreement is executed for the protection of trade secrets under Ohio law, and is intended to protect the confidential information and trade secrets of the Company, and (ii) he is an executive or management personnel within the meaning of the applicable state law.
5. Tax Withholding . All payments to the Executive under this Agreement will be subject to the withholding of all applicable employment and income taxes.
6. Severability . In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
7. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company. The Company will require any successor to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place. This Agreement is personal to the Executive and may not be assigned by him otherwise than by will or the laws of descent and distribution.

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8. Entire Agreement . By executing this Agreement, the Executive agrees that any and all agreements executed between the Company (or any subsidiary of the Company or any predecessor of the Company or any subsidiary of the Company) and the Executive prior to the date hereof regarding benefits resulting from a Change in Control are hereby nullified and cancelled in their entirety, and this Agreement shall substitute for and fully replace any such prior agreements. This Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof. This Agreement may not be modified in any manner except by a written instrument signed by both the Company and the Executive. Notwithstanding the foregoing, nothing in this Agreement adversely modifies or affects the terms of any written or electronic agreement entered into by the Company and the Executive setting forth the terms and provisions applicable to any equity-based incentive award granted to the Executive pursuant to any equity plan sponsored or maintained by the Company.
9. Section 409A . This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. The payments to the Executive pursuant to this Agreement are also intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for this purpose each payment shall constitute a “separately identified” amount within the meaning of Treasury Regulation §1.409A-2(b)(2). In the event the terms of this Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“ 409A Penalties ”), the Company and the Executive shall cooperate diligently to amend the terms of this Agreement to avoid such 409A Penalties, to the extent possible; provided that in no event shall the Company be responsible for any 409A Penalties that arise in connection with any amounts payable under this Agreement. To the extent any amounts under this Agreement are payable by reference to the Executive’s “termination of employment,” such term shall be deemed to refer to the Executive’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, if the Executive is a “specified employee,” as defined in Section 409A of the Code, as of the date of the Executive’s separation from service, then to the extent any amount payable to the Executive (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Executive’s separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of the Executive’s separation from service, such payment shall be delayed until the earlier to occur of (a) the first business day following the six-month anniversary of the separation from service and (b) the date of the Executive’s death. Any reimbursement or advancement payable to the Executive pursuant to this Agreement or otherwise shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within 30 days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement or otherwise shall not be subject to liquidation or exchange for any other benefit.
10. Notices . Any notice required under this Agreement shall be in writing and shall be delivered by certified mail return receipt requested to each of the parties as follows:
To the Executive:
At the most recent address on the payroll records of the Company.
To the Company:
Lancaster Colony Corporation
37 W. Broad St.
Columbus, Ohio 43215
Attn.: General Counsel (or, if from the General Counsel, the Chief Executive Officer)
Tel.: 614-224-7141
Fax: 614-469-8219
11. Governing Law . The provisions of this Agreement shall be construed in accordance of the laws of the State of Ohio, except to the extent preempted by ERISA or other federal laws, as applicable, without reference to the conflicts of laws provisions thereof.
12. Recoupment. Any and all benefits payable hereunder shall be subject to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any other law of similar effect for recovery of incentive-based compensation previously paid, the rules and regulations of the United States Securities and Exchange Commission thereunder, and any clawback, forfeiture,

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or recoupment policies adopted by the Company thereunder, whether or not such policies are approved before or after the Effective Date.
13. Disputes. If a dispute arises regarding a termination of the Executive’s employment with the Company or the interpretation or enforcement of this Agreement, and the Executive obtains a final judgment in the Executive’s favor by a court of competent jurisdiction or the Executive’s claim is settled by the Company prior to the rendering of a judgment by such a court, all reasonable legal fees and expenses incurred by the Executive 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 Executive’s claim, shall be paid by the Company to the fullest extent permitted by law.
14. Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto.
15. 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 the Company and the Executive. Further, no future agreement between the Company and the Executive shall supersede or affect this Agreement, nor shall this Agreement affect such future agreement, unless such future agreement specifically so provides by reference to this Agreement as being superseded and is executed by both the Company and the Executive.
IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the date and year first above written.

 
 
 
 
 
 
 
 
Lancaster Colony Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[_____________________]
 
 
 
 
[_____________________]
 
 
 
 
 
 
 
 
 
Executive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[_____________________]
 





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EXHIBIT A

GENERAL RELEASE - MUTUAL

This General Release (“ Release ”) is entered into between Lancaster Colony Corporation (the “ Company ”) and [__________] (“ Executive ”) (collectively, the “ Parties ”) as follows:

On _____________, Executive’s employment with the Company and all affiliates terminated (“ Separation Date ”). In consideration of the $[__________] severance payment and other benefits required by Section 2 of the Change in Control Agreement, dated as of [_______] between the Parties, the Parties agree as follows:

1. Release of Claims by Executive . Executive, on Executive’s own behalf, and on behalf of Executive’s family members, heirs, executors, administrators, successors, assigns, attorneys, and other personal representatives of whatever kind, RELEASES, REMISES, AND FOREVER DISCHARGES the Company, its predecessors, successors, and assigns, as well as the past, present, and future parent, subsidiary, and affiliated companies and divisions of the Company, its predecessors, successors, and assigns (collectively, the “ Released Companies ”), as well all past, present, and future owners, officers, directors, shareholders, members, managers, partners, employees, agents, independent contractors, attorneys, insurers, third-party administrators, benefit plans, and any other representative of whatever kind or nature (individually and in their official capacities) of the Released Companies (all released entities and individuals in this Section 1 are collectively referred to as the “ Company Released Parties ”) from any action, claim, obligation, damages, cost, or expense that Executive has or may have had against any of them, whether known or unknown, based upon acts or omissions occurring on or before the moment Executive executes this Release, including but not limited to claims arising directly or indirectly from Executive’s employment with, or separation of employment from, any of the Released Companies.

This Release in Section 1 covers all possible claims that are waivable by law, including but not limited to all claims that could be asserted in contract, in tort, under any state common law, under federal common law, under any state constitution, under the federal Constitution, or under any federal statute, state statute, local ordinance, or under any federal, state, or local regulation. This specifically includes, without limitation, claims arising under any Ohio anti-discrimination laws or regulations, as amended; Title VII of the Civil Rights Act of 1964, as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Equal Pay Act of 1963, as amended; the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefit Protection Act of 1990, as amended; the Americans with Disabilities Act of 1990, as amended; the Rehabilitation Act of 1973, as amended; the Genetic Information Non-Discrimination Act of 2008, as amended; the Family and Medical Leave Act of 1993, as amended; the Occupational Safety and Health Act of 1970, as amended; the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended; the Fair Credit Reporting Act of 1970, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended; the Employee Polygraph Protection Act of 1988, as amended; the Immigration Reform Control Act of 1986, as amended; the National Labor Relations Act of 1935, as amended; the Railway Labor Act of 1926, as amended; the Sarbanes-Oxley Act of 2002, as amended; and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended. The above provisions of this Section 1 to the contrary notwithstanding, Executive does not release or waive any claim under this Release (i) which, by law, cannot be released through a Release such as this, such as any challenge by Executive on whether Executive knowingly and voluntarily executed this Release’s waiver of any federal age discrimination claims consistent with the requirements of federal law, (ii) for indemnification pursuant to any employment agreement, if any, or otherwise, and for coverage as an insured pursuant to any directors and officers liability that insures Executive immediately prior to the Separation Date, (iii) in his capacity as a stockholder of the Company, (iv) for any accrued and vested benefit under any employee benefit plan in which he is a participant immediately prior to the Separation Date, (v) for enforcement of this Release or (vi) that are based, in whole or in part, on acts or omissions that occur after Executive executes this Release.

Notwithstanding anything to the contrary in this Release, nothing contained in this Release limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Release does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Release does not limit Executive’s right to receive an award for information provided to any Government Agencies.

2. Third-Party Beneficiaries . Each of the Company Released Parties, and each of the Executive Released Parties (as defined below in Section 5), are expressly intended to be a third-party beneficiary to this Release.


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3. Knowing and Voluntary Age Waiver under Federal Law . The general release contained in Section 1 of this Release waives any claims, known or unknown, that Executive has or may have had against the Company Released Parties for any alleged age discrimination under federal law. In accordance with the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act of 1990, Executive is specifically advised that Executive has the following rights in connection with whether Executive knowingly and voluntarily agrees to waive any alleged federal age discrimination claim and be bound by this Release:

a. Time to Consider the Release . Executive has twenty-one calendar (21) days in which to consider whether to sign this Release. Executive may take all twenty-one (21) days to consider, or Executive may take less than twenty-one (21) days to consider, if Executive so chooses (“ Consideration Period ”). The Parties agree that any changes to this Release, whether material or immaterial, do not restart the twenty-one (21) day period.

b. Consultation with Attorney . Executive is specifically advised by this writing to consult an attorney of Executive’s choice. Executive is further advised that one of the purposes of this consultation is to ensure that Executive understands all of the terms of this Release and understands the rights Executive is waiving by signing this Release.

c. Ability to Revoke the Release Even After Signing . If, before the expiration of the twenty-one (21) calendar day period, Executive signs the Release, Executive will have seven (7) calendar days in which to revoke Executive’s signature (the “ Revocation Period ”). If, after the Revocation Period, Executive has not revoked Executive’s signature, then the Release becomes effective and the Parties are bound by the Release’s terms (the “ Effective Date ”). If, prior to the expiration of the Revocation Period, Executive decides to revoke Executive’s signature, Executive (either Executive or Executive’s attorneys) must send a registered letter or e-mail to: [Insert Contact Person with Contact Information]. To be effective, this notice of revocation must be received by [Insert Contact Person] before the close of business on the seventh (7th) day after Executive signs this Release. If Executive revokes Executive’s signature, then Executive is not entitled to any of the consideration offered by the Company to Executive in exchange for this Release.

d. Knowing and Voluntary . Executive agrees that by signing this Release, Executive is acknowledging (a) that Executive fully and completely understands and accepts the terms of this Release including without limitation those contained in this Section 3, (b) that Executive is receiving a valuable benefit to which Executive is not already entitled, (c) that this Release is written in plain language and in a manner calculated to be understood by Executive; and (d) that Executive enters into the Release freely, voluntarily, and of Executive’s own accord.

e. No Condition Precedent . Consistent with 29 C.F.R. § 1625.23, nothing in this Release should be interpreted by Executive as imposing any condition precedent, any penalty, or any other limitation adversely affecting Executive’s right to challenge whether Executive knowingly and voluntarily agreed to waive any alleged federal age discrimination claim and be bound by this Release.

4. Warranties by Executive . Executive makes the following representations and warranties, which Executive agrees are material terms of this Release, and Executive acknowledges that the Company would not have entered into this Release but for these representations and warranties:

a. No Pending Disputes . Executive represents and warrants that Executive has no pending charges, claims, suits, arbitrations, complaints, or grievances against any of the Company Released Parties with any federal, state, local or other governmental agency, or in any court of law, or before any arbitration association, and has not suffered any work-related injury or illness within two years prior to the effective date of this Release that was not reported to the Company prior to the Separation Date. Executive also acknowledges and agrees that Executive has been fully and properly paid for all hours worked, has received all leave under the Family and Medical Leave Act of 1993, as amended (FMLA), to which Executive may have been entitled, is not aware of any facts or circumstances constituting a violation of the FMLA, as amended; a violation of the Fair Labor Standards Act of 1938, as amended; or a violation of any Ohio wage and hour law.

b. No Assignment . Executive represents and warrants that Executive has not assigned, subrogated, sold, transferred, or conveyed to anyone any action, claim, obligation, damages, cost, or expense (including without limitation attorneys’ fees) that Executive, or Executive’s family members, heirs, executors, administrators, successors, assigns, attorneys, and other personal representatives has or may have had against any of the Company Released Parties. Employee agrees to indemnify the Company Released Parties for any liability and attorneys’ fees incurred as a result of any such claims brought against a Released Party.


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c. No Breach During Consideration and Revocation Periods . Executive represents and warrants that Executive, during either the Consideration Period or the Revocation Period, has not and will not engage in any conduct that would constitute a breach of this Release (the “ Prohibited Conduct ”). Executive agrees that if Executive does engage in any Prohibited Conduct, and the Release nevertheless becomes effective, then every instance of Prohibited Conduct shall constitute a breach of this Release upon the Release becoming effective and the Company shall be entitled to liquidated damages in the amount of One Thousand Dollars ($1,000) per instance of Prohibited Conduct. Executive further agrees that, as a result of any Prohibited Conduct, the Company will suffer actual damages in an amount that would be difficult if not impossible to determine and that the liquidated damages set forth in this Section represent the damages fairly estimated by the Parties to result from any Prohibited Conduct by Executive and do not constitute a penalty. Furthermore, Executive agrees that the imposition of liquidated damages does not demonstrate or imply that the Company would not suffer irreparable harm due to any Prohibited Conduct and does not render improper the award of injunctive relief. This Section 4(c) does not apply to any challenge by Executive on whether Executive knowingly and voluntarily executed this Release’s waiver of any federal age discrimination claims consistent with the requirements of federal law.

5. Release of Claims by the Company . The Company, on behalf of itself and on behalf of the Released Companies, RELEASES, REMISES, AND FOREVER DISCHARGES Executive, and Executive’s family members, heirs, executors, administrators, successors, assigns, attorneys, and other personal representatives of whatever kind (all released entities and individuals in this Section 5 are collectively referred to as the “ Executive Released Parties ”) from any action, claim, obligation, damages, cost, or expense that the Released Companies have or may have had against any of them, whether known or unknown, based upon acts or omissions occurring on or before the moment the Company executes this Release, including but not limited to claims arising directly or indirectly from Executive’s employment with, or separation of employment from, any of the Released Companies.

This Release in Section 5 covers all possible claims that are waivable by law, including but not limited to all claims that could be asserted in contract, in tort, under any state common law, under federal common law, under any state constitution, under the federal Constitution, or under any federal statute, state statute, local ordinance, or under any federal, state, or local regulation. The above provisions of this Section 5 to the contrary notwithstanding, the Released Companies do not release or waive any claim under this Release (i) which, by law, cannot be released through a Release such as this; (ii) for Executive’s misappropriation of trade secrets, or for the commission by one or more of the Executive Released Parties of any act or omission arising out of or relating to unfair competition against the Released Companies; (iii) for any claim against any of the Executive Released Parties arising out of or relating to the intellectual property of the Company; (iv) for enforcement of this Release; or (v) that are based, in whole or in part, on acts or omissions that occur after the Company executes this Release.

6. Warranties by the Company . The Company makes the following representations and warranties, which the Company agrees are material terms of this Release, and the Company acknowledges that Executive would not have entered into this Release but for these representations and warranties:

a. No Pending Disputes . The Company represents and warrants that the Released Companies have no pending charges, claims, suits, arbitrations, complaints, or grievances against any of the Executive Released Parties with any federal, state, local or other governmental agency, or in any court of law, or before any arbitration association.

b. No Assignment . The Company represents and warrants that the Released Companies have not assigned, subrogated, sold, transferred, or conveyed to anyone any action, claim, obligation, damages, cost, or expense (including without limitation attorneys’ fees) that the Released Companies have or may have had against any of the Executive Released Parties. The Company agrees to indemnify the Executive Released Parties for any liability and attorneys’ fees incurred as a result of any such claims brought against any of the Executive Released Parties.

7. Confidentiality . Subject to the last paragraph of Section 1, to the extent not required to be disclosed by law or applicable regulation by the Company or Executive, the existence of this Release, its terms, and its negotiation shall remain strictly confidential and shall not be disclosed in any manner by Executive to any third party other than Executive’s attorney, tax advisor, or spouse, provided any such person is made aware of and agrees to the terms of this Section. However, this Release may be used as evidence in any proceeding in which one of the Parties alleges a breach of this Release, seeks a declaratory judgment on the obligations contained in this Release, or asserts claims inconsistent with the terms of this Release.

8. No Admission of Liability . The Parties agree that nothing contained in this Release, and no actions undertaken by the Parties with respect to this Release, shall ever be treated as, or claimed or construed to be, an admission by any of the Parties of any fault, wrongdoing, liability, injury, or damages by them.


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9. Breach . If any of the Company Released Parties are, in their sole and absolute judgment, compelled to bring a cause of action against Executive to enforce or remedy any breach, attempted breach, or threatened breach of this Release, then Executive agrees to reimburse the affected Company Released Parties for their reasonable attorneys’ fees and other reasonable expenses incurred in connection with the investigation, successful prosecution (whether by court order, verdict, or otherwise), or settlement of such cause of action in addition to any damages or other legal or equitable remedies obtained by the affected Company Released Parties. However, consistent with the requirements of federal law, the affected Company Released Parties shall not be entitled to recover damages, costs, or attorneys’ fees, or impose any other penalty against Executive under this Release, based upon any challenge by Executive of whether Executive knowingly and voluntarily consented to the federal age discrimination waiver in this Release.

10. No Waiver . Any non-enforcement, or delay in enforcement, of any provision of this Release by the Company will not operate or be construed as a waiver of the Company’s right to strictly enforce this Release to its fullest extent in the future. Furthermore, the provisions of this Release may not be waived except in a written document signed by both Executive and a duly-authorized officer of the Company with actual authority to execute such a document.

11. Choice of Law and Venue . This Release shall, in all respects, be interpreted and enforced in accordance with the laws of the State of Ohio without regard to the principles of the conflicts of law. Any action or suit for breach, attempted breach, or threatened breach of this Release, or any action for a declaratory judgment on the obligations contained in this Release, shall be brought in the state or federal courts located in Franklin County, Ohio. Executive expressly consents to this exclusive venue and expressly concedes that these courts shall have personal jurisdiction over Executive.

12. Entire Agreement . This Release constitutes the entire agreement between the Parties relating to the subject matter of this Release and supersedes all prior agreements and understandings between the Parties, whether written or oral, except that this Release does not supersede [Insert Any Non-Compete or Other Agreements that Will Remain in Effect].

13. Assignment . The Company shall have the right to assign this Release to any successors or assigns, including through operation of law, and all covenants, terms and conditions shall transfer to and be enforceable by those successors or assigns. Executive may not assign this Release.

14. Amendment . This Release may not be modified or amended in any way except in a writing signed by both Executive and a duly-authorized executive of the Company with actual authority to execute such a document.

15. Severability . If any provision of this Release is found by any court of competent jurisdiction to be illegal, void, or otherwise unenforceable, then the remaining provisions of this Release will remain in effect and shall be fully enforced.

16. Counterparts . This Release may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A faxed or e-mailed copy of a Party’s signature shall constitute an original signature.

BY SIGNING BELOW, EXECUTIVE ACKNOWLEDGES THAT EMPLOYEE HAS READ, CAREFULLY CONSIDERED, AND KNOWINGLY AND VOLUNTARILY AGREES TO BE BOUND BY ALL TERMS CONTAINED IN THIS RELEASE.
THE COMPANY:
 
EXECUTIVE:
 
 
 
LANCASTER COLONY CORPORATION
 
[_____________________]
 
 
 
Signature
 
Signature
 
 
 
Printed Name
 
Printed Name
 
 
 
Title
 
Date
 
 
 
Date
 
 

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Exhibit 10.2
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement is entered into as of October 27, 2016 (the “ Amendment ”) by Lancaster Colony Corporation, an Ohio corporation (the “ Company ”), and David A. Ciesinski (the “ Executive ”) (collectively, the “ Parties ”).
WHEREAS, the Parties have entered into an Employment Agreement, dated April 18, 2016 (the “ Existing Agreement ”); and
WHEREAS, the Parties hereto desire to amend the Existing Agreement to reflect the terms, and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Definitions . Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Existing Agreement.
2. Amendments to the Existing Agreement . Notwithstanding anything to the contrary in the Existing Agreement or the General Release attached as Exhibit A thereto (the “ General Release ”), Executive understands that nothing contained in the Existing Agreement or the General Release limits Executive’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Agreement does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. The Existing Agreement and the General Release do not limit Executive’s right to receive an award for information provided to any Government Agencies.
3. Date of Effectiveness; Limited Effect . This Amendment will be deemed effective as of the date of the Existing Agreement (the “ Effective Date ”). Except as expressly provided in this Amendment, all of the terms and provisions of the Existing Agreement are and will remain in full force and effect and are hereby ratified and confirmed by the Parties. Without limiting the generality of the foregoing, the amendments contained herein will not be construed as an amendment to or waiver of any other provision of the Existing Agreement or as a waiver of or consent to any further or future action on the part of either Party that would require the waiver or consent of the other Party. On and after Each reference in the Existing Agreement to “this Agreement,” “the Agreement,” “hereunder,” “hereof,” “herein” or words of like import, and each reference to the Existing Agreement in any other agreements, documents or instruments executed and delivered pursuant to, or in connection with, the Existing Agreement will mean and be a reference to the Existing Agreement as amended by this Amendment.
4. Miscellaneous .
(a) This Amendment is governed by, and construed in accordance with, the laws of the State of Ohio, without regard to the conflict of laws provisions of such State.
(b) This Amendment shall inure to the benefit of and be binding upon each of the Parties and each of their respective permitted successors and permitted assigns.
(c) The headings in this Amendment are for reference only and do not affect the interpretation of this Amendment.
(d) This Amendment may be executed in counterparts, each of which is deemed an original, but all of which constitutes one and the same agreement. Delivery of an executed counterpart of this Amendment electronically or by facsimile shall be effective as delivery of an original executed counterpart of this Amendment.

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(e) This Amendment constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
[signature page follows]


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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.

 
 
 
LANCASTER COLONY CORPORATION
 
 
 
 
 
 
 
 
By
/s/ John B. Gerlach, Jr.
 
 
 
 
 
 
 
 
Name: John B. Gerlach, Jr.
 
 
 
Title: Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
EXECUTIVE
 
 
 
 
 
 
 
 
/s/ David A. Ciesinski
 
 
 
David A. Ciesinski


3



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
5.
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:
October 31, 2016
 
By:
 
/s/ JOHN B. GERLACH, JR.
 
 
 
 
 
John B. Gerlach, Jr.
 
 
 
 
 
Chief Executive Officer




Exhibit 31.2
Certification by Chief Financial Officer
I, Douglas A. Fell, 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
5.
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:
October 31, 2016
 
By:
 
/s/ DOUGLAS A. FELL
 
 
 
 
 
Douglas A. Fell
 
 
 
 
 
Chief Financial Officer




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 September 30, 2016 , 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 Douglas A. Fell, 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
 
October 31, 2016
 
 
By:
 
/s/ DOUGLAS A. FELL
 
 
Douglas A. Fell
 
 
Chief Financial Officer
 
October 31, 2016



The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.