Earl Brown - Investor Relations John B. Gerlach, Jr. - Chairman, President and Chief Executive Officer John L. Boylan - Chief Financial Officer, Vice President and Treasurer

Mitchell Pinheiro - Janney Montgomery Scott LLC Sarah Lester - Sidoti & Company David Liebowitz - Burnham Securities

Good morning. My name is [An Lee] and I will be your conference facilitator today. At this time I would like to welcome everyone to the Lancaster Colony Corporation first quarter fiscal year 2009 conference call. Conducting today's call will be Jay Gerlach, Lancaster Colony Chairman and CEO, and John Boylan, Vice President, Treasurer and CFO. (Operator Instructions) And now to begin your conference, here's Earl Brown, Lancaster Colony Investor Relations.

Good morning. Let me also say thank you for joining us today for the Lancaster Colony first quarter fiscal year 2009 conference call. Now please bear with me while we take care of a few details. As with other presentations of this type, today's discussion by Jay Gerlach, Chairman and CEO, and John Boylan, Vice President, Treasurer and CFO, will contain forward-looking statements of what may happen in the future, including statements relating to Lancaster Colony's sales prospects, growth rates, expected future levels of profitability as well as the extent of share repurchases and business acquisitions to be made by the company. These forward-looking statements are based on numerous assumptions and are subject to uncertainties and risks. Accordingly, investors are cautioned not to place undue reliance on such statements. Factors that might cause Lancaster's results to differ materially from forward-looking statements include but are not limited to risks relating to the economy, competitive challenges, changes in raw materials costs, the success of new product introductions, the effect of any restructurings and other factors as are discussed from time to time in more detail in the company's filings with the SEC, including Lancaster Colony's report on Form 10-K. Please know that the cautionary statements contained in the safe harbor paragraph of today's news release also apply to this conference call. Now here is Jay Gerlach. Jay? John B. Gerlach, Jr.: Good morning and thank you for joining us. Given the volatile and challenging period we're in today, we view our first quarter results as acceptable. Excellent sales growth of almost 20% in our Specialty Foods business, including pricing that almost equaled the material cost increases, yielded operating income close to the prior year. Candle and Glass sales were off primarily due to the Glass divestiture in last year's second quarter as Candle sales were basically flat. Candle margin pressure was significant due to high wax costs, lower production levels and limited price relief. Before more specific segment comments, here are a few updates: Share repurchases during the quarter totaled 296,000 shares for $10.1 million. Fiscal year to date we have repurchased 496,000 shares for $16.9 million and have 509,000 shares remaining on our authorization. Capital expenditures for the quarter totaled $3.7 million, virtually all in the Specialty Foods segment, supporting primarily maintenance and efficiency driven projects. Our total employment at quarter end was approximately 3,400 versus 4,800 one year ago, reflecting our divestitures in the past 12 months. Turning to our Specialty Foods segment, we saw good growth in both our retail and food service channels. Our more recent product introductions - New York Brand Texas Toast Croutons, Pizzeria Dip'N Sticks and Ciabatta Cheese Rolls - all contributed to our growth. Sister Schubert's Brand Frozen Dinner Rolls and Marzetti Refrigerated Dressings also showed good sales growth. Food Service growth was helped by frozen dinner rolls, frozen pasta and salad dressings and sauces. Year-over-year material cost increases for the quarter reached approximately $20 million and we recovered roughly $18 million in pricing. Good operations, increased volume and some operating expense leverage let us get Specialty Foods operating income almost to last year's level. Included in the segment's performance was about $800,000 of plant closing costs related to our Atlanta salad dressing operation that is now consolidated into our other plans. We expect to see annual savings of $1.5 to $2 million on this consolidation. The Candle and Glassware segment sales decline was primarily due to our Glass business divestiture last November. And again, Candle sales were close to flat in the quarter. Wax cost increases had about a $2 million impact, with our aggressive pricing action of high single to double-digit not getting implemented as early in the quarter as we had planned. Lower production levels as we've pushed to reduce our inventories in the segment also unfavorably impacted our costs. We did have approximately $800,000 of added corporate expense related to the demolition cost of a closed plant site we now have for sale. With those comments, let me ask John to review our balance sheet. John L. Boylan: Thanks, Jay. Let's first review some of the more notable line items within our September 30th balance sheet. Our consolidated accounts receivable at September 30th totaled $81,773,000, which was approximately $22 million higher than at June 30th but actually $2 million less than the receivables from continuing operations as of last September. As typically occurs in the first quarter, our receivable levels are strongly influenced by seasonal sales experienced within the Glassware and Candle segment. Additionally, our Food segment balances reflected the strong year-over-year sales increases of the current year's quarter. With respect to our inventories, the September 30th total of over $125 million compared to roughly $120 million at June and, for continuing operations, $127 million last September. Our Food segment has experienced comparative increases, in part reflecting the higher sales volumes and, with respect to the year ago balances, higher costs. Non-food inventories have declined and especially so when compared to levels of a year ago. The divestiture and closure of our Glass manufacturing operation certainly contributed to the year-over-year decline; however, we've also been pleased to see a reduction in the dollar value of our Candle inventories over the last year despite higher unit costs. Our net property, plant and equipment decreased about $2 million since June 30th and has declined about $19 million since last September. The latter reduction was influenced by the prior year's sale of the glass-related manufacturing assets. Our net debt outstanding at quarter end rose to $64 million compared to about $36 million at June 30th. Seasonal borrowing needs supporting our Candle operations as well as the continuation of our share repurchases have influenced this increase. With shareholders equity in September still totaling over $352 million, we believe our balance sheet posture continues to provide us with considerable flexibility in meeting various possible cash needs be they for dividends, share repurchases or business acquisitions. Turning to cash flows for a moment, cash flows used by operating activities from continuing operations for the quarter totaled approximately $5.4 million, which compares to cash provided of $2.4 million in the year ago quarter. The lower income and relative changes in working capital components, especially the extent of increased accounts receivable resulting from this year's higher sales, contributed to the decrease. One specific component of the quarter's cash flows that you may find of interest is depreciation and amortization that totaled $5.6 million, which compares to $6.6 million recorded a year ago. As previously mentioned, other cash flows of note for the quarter included capital expenditures of $3,693,000 and share repurchases of $10,088,000. In looking toward our upcoming second quarter results, we want to remind you that the prior year's comparable quarterly results reflected income recognition of the U.S. government's remittance to us of approximately $2,533,000 under the Continued Dumping and Subsidy Offset Act. This income translated to approximately $0.05 per share after taxes. For this year we have submitted an application for another annual remittance under the Act. We currently anticipate receiving notice of the government's intentions some time in November; however, there remain a number of uncertainties associated with this program that do not allow us to estimate how much, if any, funding may be allocated to us this year. Other matters of note occurring in the prior year's second quarter included a $5.7 million charge related to the loss on sale of our glass manufacturing operation as well as a $3 million pension settlement charge. Additionally, of the $269 million in sales during last year's second quarter, over $7 million related to glass lines involved in the mid-quarter divestiture. I appreciate your attention this morning, and I'll now turn the call back to Jay. John B. Gerlach, Jr.: Thanks, John. Looking to our second quarter, we see food ingredient costs still unfavorable to last year, but to a lesser degree. While some ingredient costs have fallen noticeably in the past several weeks, our benefit is not immediate as we do have some forward buy commitments to work through. Demand is our biggest concern. While sales got off to a strong start in the first quarter, the second quarter needs good consumer sell through, particularly on key seasonal items like Sister Schubert rolls and Marzetti apple and veggie dips. We are also mindful of store traffic concerns for many of our Food Service customers. Our focus is on controlling costs across the business, watching inventory levels closely, and striving to maintain our sales growth momentum. Our newest product being introduced this quarter is our Disney branded Marzetti veggie dips, which just started shipping. Overall, sell in for our seasonal products has been good. Consumer sell through will be a key factor for Candles as our customers remain cautious in their plans and inventory levels. Our selling prices are definitely up and will help our second quarter, but so far we are seeing little sign of weakness in wax cost, even with oil's dramatic decline. We are managing inventories closely as we work to improve our turns in spite of flat sales. Capacity utilization will continue to be an issue here. Potential acquisition activity is relatively quiet, but our interest is still there for good fitting specialty foods opportunities. The state of the economy, credit and equity market conditions will guide our future share repurchases. We are generally optimistic on our outlook for the remainder of fiscal 2009 even with a stressed consumer. With that, An Lee, we're ready to take questions.

(Operator Instructions) Your first question comes from Mitchell Pinheiro - Janney Montgomery Scott LLC. Mitchell Pinheiro - Janney Montgomery Scott LLC: So, Jay, I wanted to sort of talk about what you just sort of ended with in terms of demand being your biggest concern. First, as sort of background, how did the Marzetti business do in the quarter and how did that compare to the category, the refrigerated dressings and the refrigerated dips? John B. Gerlach, Jr.: Mitch, I think if we look at kind of 52-week data on the dressing and dip category, we're seeing actually slight declines in each of those categories. Being the predominant player in the dip side of things, we've seen a slight decline in that sell through data as well. The opposite's true over on the refrigerated dressing side, where we're showing some positive comps to a category that's just slightly off. So we've actually been gaining a little share in the dressing side of things refrigerated dressing I'm talking about. Mitchell Pinheiro - Janney Montgomery Scott LLC: So this would be an area that at least one could expect to see a trade down to the lower price shelf stable, you know, the pourable side. I guess you're not seeing that even in - how about the latest data, the 4-week or 12-week? Are you seeing any kind of trade down trend? John B. Gerlach, Jr.: I'm looking at real current data, real recent 4 or 12-week data, right at the moment, Mitch, but that is where I think we see the greatest concern if we look at our most premium products, which would get us into that refrigerated dips and dressing, and we've seen retails per unit get north of $4. And with some consumer alternative, particularly on the grocery shelf for dressings, I would have to believe there's some trading down going on there. Mitchell Pinheiro - Janney Montgomery Scott LLC: I mean, we have seen, you know, as we keep on trading down these channels from casual to quick serve and from quick serve perhaps maybe to eat at home, maybe there are people that continue to want to have, you know, quality dressings and won't skimp there yet. Have you done any work on how the refrigerated category did in prior recessions? John B. Gerlach, Jr.: No, Mitch, I can't give you any specifics on that although my recollection would be in prior recessions we didn't have this kind of double whammy of ingredient costs driving much higher retails at the same point in time. So this is a little bit different. Mitchell Pinheiro - Janney Montgomery Scott LLC: And largely speaking, while you've taken - my memory - I guess you took pricing up about 3%, is that correct? John B. Gerlach, Jr.: We did 3% in July, that's right, as well as 3% last March. Mitchell Pinheiro - Janney Montgomery Scott LLC: Okay, so roughly 6% or so in the refrigerated side? John B. Gerlach, Jr.: Well, then you go - there was another 3% the previous [quarter]. Mitchell Pinheiro - Janney Montgomery Scott LLC: And is that how you get to nearly the 8%? I mean, I was reading your comments about half pricing, half volume in the overall sales mix or in the specialty sales mix, I guess. John B. Gerlach, Jr.: [7 plus] pricing flowing through on the Food Service side of the business as well, which is not necessarily fallen exactly those same timeframes and the amounts can be different as well. Mitchell Pinheiro - Janney Montgomery Scott LLC: So when I look back in terms of strategy, so you've put in place some pricing. Do you get a little more aggressive on promotion to offset any weakness or are you going to try to hold pricing and just sort of take your lumps with volume? John B. Gerlach, Jr.: Well, I think we - right at the moment our plans would not suggest any significant change in promotional expenditures, but those plans can obviously change depending on market conditions. But we're not doing that at this point and don't have plans to do that right at the moment. Mitchell Pinheiro - Janney Montgomery Scott LLC: Is there any difference between the dressings and the dips in terms of category growth rates? John B. Gerlach, Jr.: Yes, I think the dressing category is probably slightly better than the dip category at this point. Mitchell Pinheiro - Janney Montgomery Scott LLC: But both are still just slightly down on a 52-week basis? John B. Gerlach, Jr.: Yes, that's right. Mitchell Pinheiro - Janney Montgomery Scott LLC: Again on the demand side of the equation for Food Service, you've done quite well in Food Service, I guess, with new products and certainly distribution. Can you talk about some of those products and distribution a little more? John B. Gerlach, Jr.: Yes. Mitch, it's hard to give any specifics there because of all the confidentiality we have with the customers we deal with, but it does include, again, frozen bread, frozen pasta, and the dressing and sauce side of the business. I think, you know, new product, new programs in all those areas that are helping that grow. Mitchell Pinheiro - Janney Montgomery Scott LLC: So is it equally - is there an equal impact or did one of those areas have a stronger impact in this quarter? John B. Gerlach, Jr.: I don't know as I can really break that out for you, Mitch, at this point. Mitchell Pinheiro - Janney Montgomery Scott LLC: Okay, well then let me ask you this: When I look at your sales mix, how much is quick serve versus casual on the Food Service side? John B. Gerlach, Jr.: I don't have that percentage right here, Mitch, but it would be stronger to the quick serve, I think, as we've commented before, versus the casual. But I don't have an exact percentage. Mitchell Pinheiro - Janney Montgomery Scott LLC: And as it stands now in the current environment, how would you characterize sales to food service? John B. Gerlach, Jr.: What we're seeing is holding up pretty well. But, again, I think we are seeing the benefit of, again, that mix to quick serve as well as new programs and products that are helping demand, even with customers where other things might be a little bit softer. Mitchell Pinheiro - Janney Montgomery Scott LLC: So when I look at price increases on the retail side, the very first price increase, that was in March of 2008? John B. Gerlach, Jr.: Well, the first price increase goes back to July of '07, then March of '08, and then July of '08. Mitchell Pinheiro - Janney Montgomery Scott LLC: So because you do buy forward, you talked about the second quarter not having the full impact of reduced commodity costs there might be, certainly in the second half of the year. Is that fair to assume? John B. Gerlach, Jr.: I think given current commodity costs we're seeing, yes. Mitchell Pinheiro - Janney Montgomery Scott LLC: And how far out do you typically buy forward or hedge for wheat and soybean oil? John B. Gerlach, Jr.: Well, soybean oil we generally go out, it could be nine months, plus or minus a little bit. But it's kind of a declining amount of coverage the further out we go. Flour we tend to keep somewhat closer. It's probably at most points in time six months or less. Mitchell Pinheiro - Janney Montgomery Scott LLC: You had mentioned in your remarks that like the net impact of input costs after pricing was about $2 million? John L. Boylan: Right. Mitchell Pinheiro - Janney Montgomery Scott LLC: Was that the total company? John L. Boylan: No, that was just the Food segment. Mitchell Pinheiro - Janney Montgomery Scott LLC: If I sort of look at like, you know, take an 8% pricing from last year, I come up with maybe having about a $15 million contribution. And the $20 million, was that just Food as well, the $20 million commodity cost impact? In other words, I had 20 minus 15, giving me a net impact of $5 million. Am I adding both wax and food there? John L. Boylan: No, actually I think what I'd said was about $20 million of food ingredient impact and about $18 of pricing relief. Mitchell Pinheiro - Janney Montgomery Scott LLC: Right. So but when if I did $18 million of pricing on last year's sales base of $184 million or so, that would give me a - excuse me, if I did it on $184 million, I thought about half of it was pricing, 8%. That would have given me about $15 million of higher sales this year, so 15 off the 20 gives me a net impact of 5. I was just trying to understand. John L. Boylan: I think the difference, Mitch, again is pricing and timing of pricing in the Food Service part of the business. Mitchell Pinheiro - Janney Montgomery Scott LLC: And then last question is on CapEx. John, I guess you did $3.7 million in the quarter, which is a run rate below let's call it $15 million. Is that what we should be looking for for the year? John L. Boylan: I think our earlier guidance, Mitch, was for $20 million for the whole year. And I think we're going to reaffirm that, recognizing that at the moment that run rate is a little weaker than the $20 million. There are a couple of projects we're evaluating that could get us to that $20 million. So that $15 to $20 million range may not be too bad a guesstimate based upon the projects we're looking at right now, but it could get to $20 million in total.

Your next question comes from Sarah Lester - Sidoti & Company. Sarah Lester - Sidoti & Company: I had a question about the Candle segment. I think you had said Candle sales were up slightly in the quarter, about flat. I guess you'd put in a price increase, so are you seeing some volume declines there? I'm not sure if you can break out volume versus pricing or are volume sales softer this year than last year? John L. Boylan: We really didn't see a lot of pricing impact actually in the quarter. While we were moving on some significant price increases, a combination of when those got implemented coupled with some of the seasonal shipping that goes in that quarter that was based on pricing, that was already committed. That really mitigated much help from pricing in the quarter. Unit volumes are probably a little hard to comment on because there's always mix issues, but I would kind of ballpark those probably as relatively flat as well. Sarah Lester - Sidoti & Company: And so for the pricing we should start to see that in the second quarter then? John L. Boylan: That's what we're counting on, yes.

Your next question comes from David Liebowitz - Burnham Securities. David Liebowitz - Burnham Securities: Are there any special competitive pressures that are existent today that you did not see a year ago? John B. Gerlach, Jr.: David, I don't think there's anything new or different in either the Food or the Candle business at this point. David Liebowitz - Burnham Securities: And in terms of your relationships with the trade, have you put out any special promotions in the last few months? John B. Gerlach, Jr.: Nothing that I would call special. We do routine promotions, of course, in the Food business, but nothing unusual. David Liebowitz - Burnham Securities: And has your inventory in the Specialty Food area improved over a year ago at this time? John L. Boylan: Actually, David, the Food inventories have grown year-over-year in part due to higher volume and part just due to higher unit cost because of the increased commodity component. So food inventories have grown. David Liebowitz - Burnham Securities: So the turn has been pretty constant year-over-year? John L. Boylan: It's slowed down a bit, but it is not significantly different year-over-year. David Liebowitz - Burnham Securities: And lastly, as we look at the year as a whole, are there any categories you would expect to see some meaningful market share gains? John B. Gerlach, Jr.: Well, David, I think overall the frozen bread category, we continue to see good sales benefiting from some of the new product introductions that I mentioned. Yes, I would hope we would see some continued growth in share there. That'd probably be the primary place at retail right at the moment.

Your next question comes from Mitchell Pinheiro - Janney Montgomery Scott LLC. Mitchell Pinheiro - Janney Montgomery Scott LLC: When I get back to looking on the sales line for Specialty Food, your sort of comments regarding the category and sort of the cautionary statement, is the caution just something that you're seeing or just general observations that obviously we all see in the marketplace? Is there something specific in your business that you're starting to see a trend or that would cause you to pause a little bit in Specialty Food? John B. Gerlach, Jr.: Well, I think we've got to go to the latter primarily, Mitch. I thin anybody in this environment's going to be real cautionary. We're also mindful that high teens kind of revenue growth is pretty strong performance. And we have, again, had benefit of some good success on some new products that, as time moves on, you start to lose maybe some of those comparisons a little bit, that kind of stuff. I wouldn't suggest that we've got real-time data that says the consumer isn't buying today. But, again, I think anybody's got to be concerned as to where we are going with the consumer. Mitchell Pinheiro - Janney Montgomery Scott LLC: In the channels on the retail side we're seeing the down channeling from grocery down to mass down to dollar. How does that impact your business, the mix? Is that negative or do you feel you're well represented in the value channels? John B. Gerlach, Jr.: Yes, I think we are pretty well represented, Mitch. But we're also represented pretty well in the traditional supermarket channel as well. So I don't think we can really forecast what that impact may be like. We'd like to see them all certainly doing well. Michael Meltz - J.P. Morgan: You did seem to have a very good new product year over the last 12 months. Can you quantify on the Food side what percentage of sales have come from new products that may have been developed over the last year or two or however you want to define it? John L. Boylan: I can't quantify that for you right now, Mitch, but we'll see if we can follow up and get you something on that.

At this time, there are no further questions. Mr. Gerlach, are there any concluding remarks? John B. Gerlach, Jr.: Well, thank you all for joining us this morning and we'll look forward to talking about our second quarter results in late January.

This concludes today's conference call. You may now disconnect.