What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-08-22 compared with 2023-08-23 · 129 added, 140 removed, 894 unchanged (23% of the section changed)

20 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Long-Lived Assets and Other Intangible Assets - Refer to Notes 1 and 6 in the Financial Statements

Valuation of Long-Lived Assets and Other Intangible Assets - Angelic Bakehouse and Flatout Product Lines - Refer to Notes 1 and 5 in the Financial Statements

Critical Audit Matter Description

3 unchanged sentences

If the carrying amounts are greater, then the assets are not recoverable.

The net other intangible asset balance was $4.8 million and $32.3 million at June 30, 2023 and 2022, respectively.

The long-lived asset balances, comprised of net property, plant and equipment and operating lease right of use assets, totaled $506.9 million and $479.5 million at June 30, 2023 and 2022, respectively.

Given the subjectivity in determining qualitative and quantitative impairment indicators for an asset group, management exercises significant judgment in the identification of whether impairment indicators are present.

Accordingly, auditing management's determination of whether impairment indicators exist for an asset group was challenging due to the judgment

applied in both the identification of such factors, and the evaluation of whether the factors have an impact on the recovery of the carrying value of the asset group.

Accordingly, auditing management's determination of whether impairment indicators exist for an asset group was challenging due to the judgment applied in both the identification of such factors, and the evaluation of whether the factors have an impact on the recovery of the carrying value of the asset group.

How the Critical Audit Matter Was Addressed in the Audit

106 unchanged sentences

Restructuring and impairment charges 13,657 24,969 32,285

(Gain) loss on sale of property ( 209 ) ( 123 ) 61

Gain on sale of property ( 22 ) ( 209 ) ( 123 )

Pension plan activity 416 ( 4 ) ( 548 )

32 unchanged sentences

Net income 89,586 89,586

Net pension and postretirement benefit gains, net of $ 1,164 tax effect

Net pension and postretirement benefit losses, net of $( 890 ) tax effect

( 2,919 ) ( 2,919 )

Cash dividends - common stock ($ 3.15 per share)

5 unchanged sentences

Net income 111,286 111,286

Net pension and postretirement benefit losses, net of $( 890 ) tax effect

( 2,919 ) ( 2,919 )

Net pension and postretirement benefit gains, net of $ 550 tax effect

Cash dividends - common stock ($ 3.35 per share)

27 unchanged sentences

Actual results could differ from these estimates.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

GAAP sets forth a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The three levels are as follows:

Level 1 – defined as observable inputs, such as quoted market prices in active markets.

Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 – defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

Our financial assets and liabilities subject to the three-level fair value hierarchy consist principally of cash and equivalents, accounts receivable, accounts payable and defined benefit pension plan assets.

The estimated fair value of cash and equivalents, accounts receivable and accounts payable approximates their carrying value.

See Note 10 for fair value disclosures related to our defined benefit pension plan assets.

Impairment charges for property, plant and equipment and intangible assets resulted from nonrecurring fair value measurements.

See further discussion in Note 1 and Note 5.

Cash and Equivalents

10 unchanged sentences

Our allowance for doubtful accounts was immaterial for all periods presented.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and equivalents and trade accounts receivable.

12 unchanged sentences

The estimates as to future demand used in the valuation of inventory are subject to the ongoing success of our products and may differ from actual due to factors such as changes in customer and consumer demand.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Property, Plant and Equipment

14 unchanged sentences

Depreciation expense $ 53,029 $ 46,405 $ 39,799

In 2024, we recorded an impairment charge of $ 9.0 million for certain property, plant and equipment related to Angelic Bakehouse (“Angelic”) and Flatout.

This charge resulted from our decision to exit our perimeter-of-the-store bakery product lines, which triggered impairment testing, and represents the excess of the carrying value over the fair value.

The fair value was based on actual selling prices for the real estate and manufacturing equipment at the Angelic sprouted grain bakery facility in Cudahy, Wisconsin and the Flatout flatbread facility in Saline, Michigan, which represents a Level 2 measurement within the fair value hierarchy.

The impairment charge was reflected in Restructuring and Impairment Charges and was not allocated to our two reportable segments due to its unusual nature.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

In 2022, we recorded an impairment charge of $ 7.6 million for certain property, plant and equipment related to the Bantam Bagels, LLC (“Bantam”) business.

15 unchanged sentences

It is evaluated annually at April 30, or when events or circumstances indicate potential recoverability concerns, by applying impairment testing procedures.

Other intangible assets are amortized on a straight-line basis over their estimated useful lives to Selling, General and Administrative Expenses.

We monitor the recoverability of the carrying value of our other intangible assets similar to our long-lived assets discussed above.

Carrying amounts are adjusted appropriately when determined to have been impaired.

Other intangible assets were amortized on a straight-line basis over their estimated useful lives to Selling, General and Administrative Expenses.

We monitored the recoverability of the carrying value of our other intangible assets similar to our long-lived assets discussed above.

Carrying amounts were adjusted appropriately when determined to have been impaired.

See further discussion regarding goodwill and other intangible assets in Note 5.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

We record right-of-use assets and lease liabilities based on the present value of the lease payments for operating leases and finance leases with an initial term in excess of 12 months.

11 unchanged sentences

We provide accruals for unbilled shipments from carriers utilizing historical or projected freight rates and other relevant information.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Accruals for Self-Insurance

19 unchanged sentences

As a result, we have used the available practical expedient and, consequently, do not adjust our revenues for the effects of a significant financing component.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Distribution fees billed to customers are included in Net Sales.

16 unchanged sentences

This return estimate is reviewed and updated each period and is based on historical sales and return experience.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Contract Balances

19 unchanged sentences

See further discussion and disclosure in Note 9.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Our income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid.

13 unchanged sentences

See further discussion in Note 7.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Earnings Per Share

16 unchanged sentences

Net income per common share - diluted $ 5.76 $ 4.04 $ 3.25

(1) Excludes the impact of 0.1 million, 0.3 million and 0.1 million weighted average stock-settled stock appreciation rights outstanding in 2023, 2022 and 2021, respectively, because their effect was antidilutive.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

(1) Excludes the impact of 0.1 million and 0.3 million weighted average stock-settled stock appreciation rights outstanding in 2023 and 2022, respectively, because their effect was antidilutive.

Comprehensive Income and Accumulated Other Comprehensive Loss

5 unchanged sentences

Defined Benefit Pension Plan Items:

Net gain (loss) arising during the period 1,527 ( 4,388 )

Net gain arising during the period 500 1,527

Amortization of unrecognized net loss (1)

3 unchanged sentences

Amortization of prior service credit ( 181 ) ( 181 )

Total other comprehensive income (loss), before tax 2,357 ( 3,809 )

Total tax (expense) benefit ( 550 ) 890

Other comprehensive income (loss), net of tax 1,807 ( 2,919 )

Total other comprehensive income, before tax 946 2,357

Total tax expense ( 221 ) ( 550 )

Other comprehensive income, net of tax 725 1,807

Accumulated other comprehensive loss at end of year $ ( 8,640 ) $ ( 9,365 )

2 unchanged sentences

(2) Additional disclosures for postretirement benefits are not included as they are not considered material.

Recent Accounting Standards

There are no recently issued or adopted accounting standards that will impact our consolidated financial statements.

Note 2 – Fair Value

GAAP sets forth a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The three levels are as follows:

Level 1 – defined as observable inputs, such as quoted market prices in active markets.

Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 – defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

The estimated fair value of cash and equivalents, accounts receivable and accounts payable approximates their carrying value.

See Note 11 for fair value disclosures related to our defined benefit pension plan assets.

Impairment charges for property, plant and equipment and intangible assets resulted from nonrecurring fair value measurements.

See further discussion in Note 1 and Note 6.

Bantam Contingent Consideration

Contingent consideration resulted from the earn-out associated with our October 19, 2018 acquisition of Bantam.

In general, the terms of the acquisition specified the sellers could receive an earn-out based upon a pre-determined multiple of the defined adjusted EBITDA of Bantam for the twelve months ending December 31, 2023.

The initial fair value of the contingent consideration was determined to be $ 8.0 million.

Prior to exiting the Bantam business near the end of fiscal 2022, the fair value was measured on a recurring basis using a Monte Carlo simulation that randomly changed revenue growth, forecasted adjusted EBITDA and other uncertain variables to estimate an expected value.

We recorded the present value of these amounts by applying a discount rate.

As these fair value measurements were based on significant inputs not observable in the market, they

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular amounts in thousands, except per share data)

represented Level 3 measurements within the fair value hierarchy.

Based on our fair value measurements, we recorded reductions in the fair value of Bantam’s contingent consideration of $ 3.5 million in 2022, resulting in a zero balance at March 31, 2022.

The following table represents our Level 3 fair value measurements using significant other unobservable inputs for Bantam’s contingent consideration:

Contingent consideration at beginning of year $ — $ 3,470

Change in contingent consideration included in operating income — ( 3,470 )

Contingent consideration at end of year $ — $ —

Recent Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to the disclosure requirements for reportable segments.

The new guidance requires enhanced disclosures about significant segment expenses.

Additionally, all current annual disclosures about a reportable segment’s profit or loss and assets will also be required in interim periods.

The new guidance also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) and explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

This guidance will be effective for our annual disclosures in fiscal 2025 and for our interim-period disclosures in fiscal 2026.

As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

In December 2023, the FASB issued new accounting guidance related to the disclosure requirements for income taxes.

The new guidance requires annual disclosures in the rate reconciliation table to be presented using both percentages and reporting currency amounts, and this table must include disclosure of specific categories.

Additional information will also be required for reconciling items that meet a quantitative threshold.

The new guidance also requires enhanced disclosures of income taxes paid, including the amount of income taxes paid disaggregated by federal, state and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions that exceed a quantitative threshold.

The amendments should be applied on a prospective basis, but retrospective application is permitted.

This guidance will be effective for our annual disclosures in fiscal 2026.

As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

Note 2 – Long-Term Debt

At June 30, 2023 and 2022, 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 based on consent of the issuing banks and certain other conditions.

The Facility expires on March 19, 2025 , and all outstanding amounts are then due and payable.

The Facility was amended on December 13, 2022 to reflect a change in the calculation of the variable interest rate from formulas tied to LIBOR to formulas tied to SOFR or an alternate base rate as defined in the Facility.

In the event SOFR becomes unavailable or is no longer deemed an appropriate reference rate, the Facility allows for the use of a benchmark replacement rate.

At June 30, 2023, we had an unsecured credit 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 based on consent of the issuing banks and certain other conditions.

On March 6, 2024, in the ordinary course of business, we entered into a new unsecured revolving credit facility (“New Credit Facility”), replacing the facility discussed above which was to expire in March 2025.

The material terms and covenants of the New Credit Facility are substantially similar to our previous credit facility.

The New Credit Facility provides that we may 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 based on consent of the issuing banks and certain other conditions.

The New Credit Facility expires on March 6, 2029 , and all outstanding amounts are then due and payable.

Interest is variable based upon formulas tied to SOFR or an alternate base rate defined in the New Credit Facility.

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.

Due to the nature of its terms, when we have outstanding borrowings under the New Credit Facility, they will be classified as long-term debt.

The New Credit Facility contains certain restrictive covenants, including limitations on liens, asset sales and acquisitions.

There are two principal financial covenants:

2 unchanged sentences

The interest coverage ratio is calculated by dividing Consolidated EBIT by Consolidated Interest Expense, and the leverage ratio is calculated by dividing Consolidated Net Debt by Consolidated EBITDA.

All financial terms used in the covenant calculations are defined more specifically in the Facility.

At June 30, 2023 and 2022, we had no borrowings outstanding under the Facility.

At June 30, 2023 and 2022, we had $ 2.8 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility.

All financial terms used in the covenant calculations are defined more specifically in the New Credit Facility.

At June 30, 2024 and 2023, we had no borrowings outstanding under these facilities.

At June 30, 2024 and 2023, we had $ 2.2 million and $ 2.8 million, respectively, of standby letters of credit outstanding, which reduced the amount available for borrowing under these facilities.

We paid no interest in 2024 and 2023.

4 unchanged sentences

The remaining lease terms for these operating leases range from 1 year to 10 years.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

We have finance leases with initial noncancelable lease terms in excess of one year covering the rental of various facilities and equipment.

Certain of these leases contain renewal options and some provide options to purchase during the lease term.

These leases are generally for non-manufacturing equipment used in our business and warehouse facilities.

These leases are generally for manufacturing and non-manufacturing equipment used in our business and warehouse facilities.

The remaining lease terms for these finance leases range from 1 year to 10 years.

1 unchanged sentence

As of June 30, 2024 and 2023, the weighted-average discount rate of our finance leases was 2.5 % and 1.7 %, respectively.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The components of lease expense in each of the years ended June 30 have been provided as follows:

34 unchanged sentences

2027 8,397 69

2028 5,752 69

2029 5,489 69

Thereafter 22,697 312

8 unchanged sentences

22 % of our employees are represented under various collective bargaining contracts.

The labor contract for our Bedford Heights, Ohio plant facility, which produces frozen bread products, will expire on April 30, 2024.

The labor contract for one of our Columbus, Ohio plant facilities, which produces various dressing products, will expire on March 9, 2025.

8 % of our employees are represented under this collective bargaining contract.

7 unchanged sentences

Net carrying value $ — $ 3,919

Customer Relationships ( 10 to 15 -year life)

Customer Relationships ( 10 -year life)

Gross carrying value $ — $ 287

6 unchanged sentences

Total net carrying value $ — $ 4,840

In 2023, we recorded impairment charges of $ 25.0 million related to the intangible assets of Flatout, Inc.

(“Flatout”) due to our lowered expectations for the projected sales and profitability of the Flatout business.

The tradename, customer relationships and technology / know-how intangible assets were written down to their fair values.

These impairment charges were reflected in Restructuring and Impairment Charges and were recorded in our Retail segment.

In 2024, we recorded an impairment charge of $ 4.5 million to write off the net carrying value of the intangible assets related to Angelic and Flatout based on our decision to exit our perimeter-of-the-store bakery product lines.

The impairment charge was reflected in Restructuring and Impairment Charges and was not allocated to our two reportable segments due to its unusual nature.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular amounts in thousands, except per share data)

In 2023, we recorded impairment charges of $ 25.0 million related to Flatout’s intangible assets due to our lowered expectations for the projected sales and profitability of the Flatout product lines.

The tradename, customer relationships and technology / know-how intangible assets were written down to their fair values.

These impairment charges were reflected in Restructuring and Impairment Charges and were recorded in our Retail segment.

In 2022, we recorded impairment charges of $ 13.2 million to write off the net carrying value of Bantam’s tradename, customer relationships and technology / know-how intangible assets.

2 unchanged sentences

The remaining $ 12.3 million , which resulted from our decision to explore strategic alternatives for this business, was not allocated to our two reportable segments due to its unusual nature.

In 2022, we also recorded an impairment charge of $ 8.8 million related to the tradename intangible asset of Angelic Bakehouse, Inc.

(“Angelic”), which reflected the impact of lower projected sales for Angelic’s branded Retail business.

In 2022, we also recorded an impairment charge of $ 8.8 million related to Angelic’s tradename intangible asset, which reflected the impact of lower projected sales for Angelic’s branded Retail business.

This impairment charge was reflected in Restructuring and Impairment Charges and was recorded in our Retail segment.

4 unchanged sentences

Amortization expense $ 352 $ 2,514 $ 4,437

Total annual amortization expense for each of the next five years is estimated to be as follows:

Note 6 – Liabilities

2 unchanged sentences

Operating leases 10,335 8,821

Distribution 7,515 11,862

Royalties 7,524 5,484

Distribution 7,116 7,515

Other taxes 2,868 1,984

5 unchanged sentences

Deferred compensation and accrued interest 4,501 5,261

Finance leases 2,255 4,320

Gross tax contingency reserve 802 858

Finance leases 782 2,255

Postretirement benefit liability 576 604

13 unchanged sentences

Total current provision 57,172 24,125 21,725

Deferred federal, state and local provision 7,886 1,077 3,298

Deferred federal, state and local (benefit) provision ( 10,270 ) 7,886 1,077

Total taxes based on income $ 46,902 $ 32,011 $ 22,802

10 unchanged sentences

Deferred tax assets:

Employee medical and other benefits $ 7,561 $ 6,638

Operating lease liabilities $ 12,245 $ 5,613

Section 174 research and development capitalization 11,910 4,281

Inventories 4,143 1,668

Employee medical and other benefits 8,431 7,561

Receivables 4,202 3,042

Inventories 3,688 4,143

Intangible assets 2,185 1,426

5 unchanged sentences

Operating lease right-of-use assets ( 12,474 ) ( 5,815 )

Intangible assets — ( 1,494 )

Other — ( 59 )

Total deferred tax liabilities ( 81,098 ) ( 74,991 )

Net deferred tax liability $ ( 37,276 ) $ ( 47,325 )

Prepaid federal income taxes of $ 0.8 million and $ 3.3 million were included in Other Current Assets at June 30, 2024 and 2023, respectively.

Accrued state and local income taxes of $ 0.3 million were included in Accrued Liabilities at June 30, 2024.

Prepaid state and local income taxes of $ 0.8 million were included in Other Current Assets at June 30, 2023.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular amounts in thousands, except per share data)

Prepaid federal income taxes of $ 3.3 million were included in Other Current Assets at June 30, 2023.

Prepaid state and local income taxes of $ 0.8 million and $ 1.9 million were included in Other Current Assets at June 30, 2023 and 2022, respectively.

Net cash payments for income taxes for each of the years ended June 30 were as follows:

32 unchanged sentences

Retail - The vast majority of the products we sell in the Retail segment are sold through sales personnel, food brokers and distributors in the United States.

We have placement of products in grocery produce departments through our refrigerated salad dressings, vegetable dips and fruit dips.

We also have products typically marketed in the shelf-stable section of the grocery store, which include salad dressings, slaw dressing, sauces and croutons.

We have products typically marketed in the shelf-stable section of the grocery store, which include licensed sauces and dressings, along with our own branded salad dressings and croutons.

Within the frozen food section of the grocery store, we sell yeast rolls and garlic breads.

We also have placement of products in grocery produce departments through our refrigerated salad dressings, licensed dressings, vegetable dips and fruit dips.

Foodservice - The vast majority of the products we sell in the Foodservice segment are sold through sales personnel, food brokers and distributors in the United States.

Most of the products we sell in the Foodservice segment are custom-formulated sauces, salad dressings, frozen breads and yeast rolls.

The majority of our Foodservice sales are products sold under private label to national chain restaurant accounts.

We also manufacture and sell various branded Foodservice products to distributors.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular amounts in thousands, except per share data)

Foodservice - The vast majority of the products we sell in the Foodservice segment are sold through sales personnel, food brokers and distributors in the United States.

Most of the products we sell in the Foodservice segment are custom-formulated and include salad dressings, sandwich and dipping sauces, frozen breads and yeast rolls.

The majority of our Foodservice sales are products sold under private label to restaurants.

We also manufacture and sell various branded Foodservice products to distributors.

Finally, within this segment, we sold other roll products under a temporary supply agreement resulting from the November 2018 acquisition of Omni Baking Company LLC.

The temporary supply agreement was terminated effective October 31, 2020.

As many of our products are similar between our two segments, our procurement, manufacturing, warehousing and distribution activities are substantially integrated across our operations in order to maximize efficiency and productivity.

9 unchanged sentences

Frozen breads and other 222,875 215,004 186,916

Other roll products — — 3,707

Total Foodservice net sales $ 883,335 $ 857,157 $ 761,180

4 unchanged sentences

Branded and other 190,995 180,492 172,225

Other roll products — — 3,707

Total Foodservice net sales $ 883,335 $ 857,157 $ 761,180

33 unchanged sentences

(2) All intercompany transactions have been eliminated.

(3) Reflects restructuring and impairment charges related to the Bantam business and a facility closure in 2022, which were not allocated to our two reportable segments due to their unusual nature.

(3) Reflects restructuring and impairment charges related to (i) our decision to exit our perimeter-of-the-store bakery product lines in 2024, (ii) the Bantam business in 2022 and (iii) a facility closure in 2022.

These charges were not allocated to our two reportable segments due to their unusual nature.

(4) Our Corporate Expenses include various expenses of a general corporate nature, expenditures for Project Ascent and costs related to certain divested or closed nonfood operations.

These costs have not been allocated to the Retail and Foodservice segments.

(5) Retail and Foodservice identifiable assets include those assets used in our operations and other intangible assets allocated to purchased businesses.

The decrease in Retail and Foodservice identifiable assets from June 30, 2022 to June 30, 2023 reflected a decline in intangible assets due to impairment charges and lower receivables balances due to the impact of advance customer orders in the prior year ahead of our ERP go-live, as partially offset by property additions due to a capacity expansion project.

The increase in Retail and Foodservice identifiable assets from June 30, 2021 to June 30, 2022 reflected property additions due to several capacity expansion projects, higher receivables balances due to increased sales, and higher inventory levels due to increased input costs.

(5) Retail and Foodservice identifiable assets include those assets used in our operations and other intangible assets allocated to purchased businesses, most notably goodwill.

The increase in Retail and Foodservice identifiable assets from June 30, 2023 to June 30, 2024 reflects a new operating lease right-of-use asset for a warehouse in Union City, Georgia.

The decrease in Retail and Foodservice identifiable assets from June 30, 2022 to June 30, 2023 reflects a decline in intangible assets due to impairment charges and lower receivables balances due to the impact of advance customer orders in the prior year ahead of our ERP go-live, as partially offset by property additions due to a capacity expansion project.

Corporate assets consist principally of cash and equivalents.

The increase in Corporate assets from June 30, 2022 to June 30, 2023 reflected the increase in cash and equivalents as well as prepaid income taxes.

The decrease in Corporate assets from June 30, 2021 to June 30, 2022 reflected the decline in cash and equivalents.

The increase in Corporate assets from June 30, 2023 to June 30, 2024 reflects higher cash and equivalents.

The increase in Corporate assets from June 30, 2022 to June 30, 2023 reflects the increase in cash and equivalents as well as prepaid income taxes.

(6) As discussed above, we do not present identifiable assets, payments for property additions or depreciation and amortization by reportable segment.

23 unchanged sentences

Prior to 2022, we used periodic grants of stock-settled stock appreciation rights (“SSSARs”) as a vehicle for rewarding certain employees with long-term incentives for their efforts in helping to create long-term shareholder value.

We calculated the fair value of SSSARs grants using the Black-Scholes option-pricing model.

Our policy is to issue shares upon SSSARs exercise from new shares that had been previously authorized.

In 2021, we granted SSSARs to various employees under the terms of the plan.

The following table summarizes information relating to these grants:

SSSARs granted 124

Weighted average grant date fair value per right $ 36.24

Weighted average assumptions used in fair value calculations:

Risk-free interest rate 0.51 %

Dividend yield 1.69 %

Volatility factor of the expected market price of our common stock 28.63 %

Expected life in years 4.55

For these grants, the volatility factor was estimated based on actual historical volatility of our stock for a time period equal to the term of the SSSARs.

The expected average life was determined based on historical exercise experience for this type of grant.

The SSSARs we granted generally vest over a 3 -year period whereby one-third vests on the first anniversary of the grant date, one-third vests on the second anniversary of the grant date and one-third vests on the third anniversary of the grant date.

The SSSARs we granted generally vested over a 3-year period whereby one-third vested on the first anniversary of the grant date, one-third vested on the second anniversary of the grant date and one-third vested on the third anniversary of the grant date.

At June 30, 2024, there were no unvested SSSARs outstanding.

The following table summarizes our SSSARs compensation expense and tax benefits recorded for each of the years ended June 30:

3 unchanged sentences

Intrinsic value of exercises $ 677 $ 3,873 $ 317

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The total fair values of SSSARs vested for each of the years ended June 30 were as follows:

1 unchanged sentence

Fair value of vested rights $ 1,175 $ 2,611 $ 4,095

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The following table summarizes the activity relating to SSSARs granted under the plan for the year ended June 30, 2024:

21 unchanged sentences

13 2.54 $ 153.74 13 $ 153.74

2019 $ 154.48

1 0.66 $ 154.48 1 $ 154.48

At June 30, 2023, there was $ 0.8 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of 1 year.

At June 30, 2024, there was no unrecognized compensation expense related to SSSARs.

Restricted Stock

15 unchanged sentences

Weighted average grant date fair value per award $ 165.41 $ 203.34 $ 162.15

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The restricted stock under these nonemployee director grants generally vests 1 year after the grant date.

1 unchanged sentence

Dividends earned on the stock during the vesting period will be paid to the directors at the time the stock vests.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The following table summarizes our restricted stock compensation expense and tax benefits recorded for each of the years ended June 30:

25 unchanged sentences

The following table summarizes information relating to these grants:

2024 2023 2022

Performance units granted 25 26 20

7 unchanged sentences

The assumptions used in the Monte Carlo simulation were as follows:

2024 2023 2022

Risk-free interest rate 4.60 % 3.18 % 0.41 %

2 unchanged sentences

The following table summarizes our performance units compensation expense and tax benefits recorded for each of the years ended June 30:

2024 2023 2022

Compensation expense $ 4,842 $ 2,678 $ 1,055

24 unchanged sentences

Expected long-term return on plan assets 5.00 % 5.00 % 5.00 %

In determining the long-term expected return on plan assets, we consider our related investment guidelines, our expectations of long-term rates of return by asset category, our target asset allocation weighting and historical rates of return and volatility for equity and fixed income investments.

The investment strategy for plan assets is to control and manage investment risk through diversification among asset classes, investment managers/funds and investment styles.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular amounts in thousands, except per share data)

investment guidelines have been designed to meet the intended objective that plan assets earn at least nominal returns equal to or more than the plans’ liability growth rate.

The investment strategy for plan assets is to control and manage investment risk through diversification among asset classes, investment managers/funds and investment styles.

The plans’ investment guidelines have been designed to meet the intended objective that plan assets earn at least nominal returns equal to or more than the plans’ liability growth rate.

In consideration of the current average age of the plans’ participants, the investment guidelines are based upon an investment horizon of at least 10 years.

33 unchanged sentences

Quoted market prices in active markets for identical assets are available for investments in this category.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Relevant information with respect to our pension benefits as of June 30 can be summarized as follows:

5 unchanged sentences

Benefit obligation at end of year $ 26,475 $ 27,952

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Change in plan assets

4 unchanged sentences

Fair value of plan assets at end of year $ 28,016 $ 28,776

Funded status - net prepaid (accrued) benefit cost $ 824 $ ( 1,432 )

Funded status - net prepaid benefit cost $ 1,541 $ 824

Amounts recognized in the Consolidated Balance Sheets consist of

18 unchanged sentences

We have not yet finalized our anticipated funding level for 2025, but based on initial estimates, we do not expect our 2025 contributions to our pension plans to be material.

Benefit payments estimated for future years are as follows:

2029 - 2033 $ 10,393

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular amounts in thousands, except per share data)

Benefit payments estimated for future years are as follows:

2030 - 2034 $ 9,878

Note 11 – Defined Contribution and Other Employee Plans

25 unchanged sentences

$ 215 $ 250 $ 296 No

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Under this multiemployer plan and one additional multiemployer plan, we also contribute amounts for health and welfare benefits that are defined by each plan.

10 unchanged sentences

Participants are paid out upon retirement or termination in accordance with their annual election.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The following table summarizes our liability for total deferred compensation and accrued interest at June 30:

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data