Lancaster Colony Corporation, an Ohio corporation, is a manufacturer and marketer of specialty food products for the retail and foodservice channels. We began our operations in 1961 as a Delaware corporation. In 1992, we reincorporated as an Ohio corporation. Our principal executive offices are located at 37 West Broad Street, Columbus,380 Polaris Parkway, Suite 400, Westerville, Ohio 4321543082 and our telephone number is 614-224-7141.

As used in this Annual Report on Form 10-K and except as the context otherwise may require, the terms “we,” “us,” “our,” “registrant,” or “the Company” mean Lancaster Colony Corporation and its consolidated subsidiaries, except where it is clear that the term only means the parent company. Unless otherwise noted, references to “year” pertain to our fiscal year which ends on June 30; for example, 20162019 refers to fiscal 2016,2019, which is the period from July 1, 20152018 to June 30, 2016.2019.

Our Internet web sitewebsite address is http://www.lancastercolony.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.Commission (the “SEC”). The information contained on our web sitewebsite or connected to it is not incorporated into this Annual Report on Form 10-K.

We operate in one business segment – “Specialty Foods.”Our financial results are presented as two reportable segments: Retail and Foodservice. Costs that are directly attributable to either Retail or Foodservice are charged directly to the appropriate segment. Costs that are deemed to be indirect, excluding corporate expenses and other unusual significant transactions, are allocated to the two reportable segments using a reasonable methodology that is consistently applied. The financial information relating to our business segmentsegments for the three years ended June 30, 2016, 20152019, 2018 and 20142017 is included in Note 10 to the consolidated financial statements, and located in Part II, Item 8 of this Annual Report on Form 10-K. Further description of theeach business segment within which we operate is provided below.

The following table presents the primary foodRetail products we manufacture and sell under our brand names:

Sales are made to retail and foodservice channels. The vast majority of the products we sell in the retail and foodservice channelsRetail segment are sold primarily through sales personnel, food brokers and distributors.distributors in the United States. We have strong placement of products in U.S. grocery produce departments through our refrigerated salad dressings, vegetable dips and fruit dips,dips. Our flatbread products and croutons. Our flatbreadsprouted grain bakery products are generally placed in the specialty bakery/deli section of the grocery store. We also have products typically marketed in the shelf-stable section of the grocery aisles involving shelf-stablestore, which include salad dressing, slaw dressing dry egg noodles and croutons. Within the frozen aislesfood section of the grocery retailers,store, we also have prominent market positions of frozensell yeast rolls, garlic breads and egg noodles. Products we sell in the foodservice channel are often custom-formulated and include salad dressings, sandwich and dipping sauces, frozen breads and yeast rolls.mini stuffed bagels.

Net sales attributable to McLane Company, Inc. (“McLane”), a wholesale distribution subsidiary of Berkshire Hathaway, Inc., totaled 19%, 18% and 18% of consolidated net sales for 2016, 2015 and 2014, respectively. Net sales attributable to Wal-Mart Stores, Inc. (“Wal-Mart”) totaled 16%, 16% and 17% of consolidated net sales for 2016, 2015 and 2014, respectively. No other customerOur top five Retail customers accounted for more than 10%56%, 55% and 54% of ourthis segment’s total net sales during these years. Although we have the leading market share in several product categories, all of the markets in which we sell food products are highly competitive in the areas of price, quality2019, 2018 and customer service.2017, respectively.

We continue to rely upon our strong retail brands, innovation expertise, geographic and channel expansion and customer relationships for future growth. Our category-leading retail brands and commitment to new product development helpshelp drive increased consumer demand in our retail channel. In the foodservice channel, we grow our business with established customers and pursue new opportunities by leveraging our culinary skills and experience to support the development of new products and menu offerings.Retail segment. Strategic acquisitions are also part of our future growth plans, with a focus on fit and value.

The following table sets forth business segment information with respect to the percentage of net sales contributed by each class of similar products that account for at least 10% of our consolidated net sales in any year from 20142017 through 2016:2019:

As of June 30, 2019, the majority of our products were manufactured and packaged at our 17 food plants located throughout the United States. Most of these plants produce products for both the Retail and Foodservice segments. Efficient and cost-effective production remains a key focus as evidenced by our lean six sigma initiative. Certain items are also manufactured and packaged by third parties located in accordance with generally accepted accounting principles was less than 1% of net sales.the United States, Canada and Europe.

Orders are generally filled in threefive to seventen days. We do not view the amount of backlog at any particular point in time as a meaningful indicator of longer-term shipments.

All of the markets in which we sell food products are highly competitive.competitive in the areas of price, quality and customer service. We face competition from a number of domestic and foreign manufacturers of various sizes and capabilities. We compete with competitor branded products, as well as an increasing presence of retailers’ store branded products. Our ability to compete depends upon a variety of factors, including the position of our branded goods within various categories, product quality, product innovation, promotional and marketing activity, pricing and our ability to service customers.

Our operations are subject to various federal, state and local environmental protection laws. Based upon available information, compliance with these laws and regulations did not have a material effect upon the level of capital expenditures, earnings or our competitive position in 20162019 and is not expected to have a material impact in 2017.2020.

As of June 30, 20162019 we had 2,7003,200 employees, 21%27% of which are represented under various collective bargaining contracts. 7% of our employees are represented under a collective bargaining contract that expired on April 30, 2016. We are currently renegotiating this contract. 9%5% of our employees are represented under a collective bargaining contract that will expire within one year. While we believe that labor relations with all our employees are satisfactory, a prolonged labor dispute or an organizing attempt could have a material adverse effect on our business and results of operations.

During 2016,2019, we obtained adequate supplies of raw materials and packaging. We rely on a variety of raw materials and packaging for the day-to-day production of our products, including soybean oil, various sweeteners, eggs, dairy-related products, flour, various films and plastic and paper packaging materials.

We purchase the majority of these materials on the open market to meet current requirements, but we also have some fixed-price contracts with terms generally one year or less. See further discussion in our “Risk Factors” section below and our contractual obligations disclosure in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”). Although the availability and price of certain of these materials are influenced by weather, disease and the level of global demand, we anticipate that future sources of supply for 2020 will generally be available and adequate for our needs.

An investment in our common stock is subject to certain risks inherent in our business. Before making an investment decision, youinvestors should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference in this Annual Report on Form 10-K.

If any of the following risks occur, our business, results of operations, financial condition and results of operationscash flows could be materially and adversely affected. If this were to happen, the value of our common stock could decline significantly.

Because we source certain products from single manufacturing sites and the underlying foodservice customersuse third party manufacturers for significant portions of our production needs for certain products, it is good, but we cannot assurepossible that we will becould experience a production disruption that results in a reduction or elimination of the availability of some of our products. If we are not able to maintain these relationships. McLane and the underlying foodservice customers are not typically committed to long-term contractual obligations with us, and they may switch to other suppliers that offer lower prices, differentiated productsobtain alternate production capability in a timely manner, or customer service that McLane and/or the underlying foodservice customers perceive to be more favorable. In addition, changes in the general business model of McLane, or the underlying foodservice customers,on favorable terms, it could have ana negative impact on our business, results of operations, financial condition and cash flows, including the potential for long-term loss of product placement with various customers.

Competitive considerations in the various product categories in which we sell are numerous and include price, product innovation, product quality, brand recognition and loyalty, effectiveness of marketing, promotional activity and the ability to identify and satisfyremain relevant to consumer preferences and trends. In order to protectmaintain our existing market share or capture increased market share among our retail and foodservice channels, we may decide to increase our spending on marketing and promotional costs, advertising and new product innovation. The success of marketing, advertising and new product innovation is subject to risks, including uncertainties about trade and consumer acceptance. As a result, any such increased expenditures we make may not maintain or enhance market share and could result in lower profitability.

Our net sales to Walmart represented 17% of consolidated net sales for the year ended June 30, 2019. Our accounts receivable balance from Walmart as of June 30, 2019 was $20.9 million. While our relationship with Walmart has been long-standing and is believed to be good, it is important to recognize that we may not be able to maintain this relationship and Walmart is not contractually obligated to purchase from us. In addition, changes in Walmart’s general business model, such as reducing the shelf space devoted to the costsbranded products we market, or devoting more shelf space to competing products, could adversely affect the profitability of our business with Walmart, even if we maintain a recall, related legal claims, the destructiongood relationship. The loss of, product inventory, lost sales due to the unavailability of product for a period of time, or a loss of customersignificant reduction in, this business could have a material adverse effect on our sales and consumer sentiment. In addition, we may also be liable if any of our products causes bodily injury or illness.

If we conduct operationsOur net sales to McLane represented 15% of consolidated net sales for the year ended June 30, 2019. Our accounts receivable balance from McLane as of June 30, 2019 was $6.9 million. McLane is a large, national distributor that sells and distributes our products to several of our foodservice national chain restaurant accounts, principally in a market channel that suffers a loss in consumer confidencethe quick service, fast casual and casual dining channels. In general, these national chain restaurants have direct relationships with us for culinary research and development, menu development and production needs, but choose to buy our products through McLane, who acts as to the safety and quality of foodtheir distributor. McLane orders our products our business could be materially affected. The food industry has recently been subject to negative publicity concerning the health implications of GMOs, obesity, trans fat, diacetyl, artificial growth hormones, and bacterial contamination, such as salmonella and listeria. Consumers may increasingly require that foods meet stricter standards than are required by applicable governmental agencies, thereby increasing the cost of manufacturing such foods and ingredients. Developments in anyon behalf of these areas, including, but not limited to, a negative perception about our formulationsnational chain restaurants, and we invoice McLane for these sales. Thus, unfavorable changes in the financial condition of McLane could cause our operating results to differ materially from expected results. Any of these events could materially reduce our sales, materially increase our costs and have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, the loss of, or significant reduction in, our business with the underlying national chain restaurants, or other disruptions, such as decreased consumer demand or stronger competition, could also have a material adverse effect on our business, results of operations, financial condition.condition and cash flows. We believe that our relationship with McLane and the underlying national chain restaurants is good, but we cannot ensure that we will be able to maintain these relationships. McLane and the underlying national chain restaurants are not typically committed to long-term contractual obligations with us, and they may switch to other suppliers that offer lower prices, differentiated products or customer service that McLane and/or the underlying national chain restaurants perceive to be more favorable. In addition, changes in the general business model of McLane, or the underlying national chain restaurants, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We rely on the success of our well-recognized brand names. Maintaining and enhancing our brand image and recognition is essential to our long-term success, and maintaining license agreements under which we market and sell certain brands is important to our business. The failure to do either could have a material adverse effect on our business, financial condition and results of operations. We seek to maintain and enhance our brands through a variety of efforts, including the delivery of quality products, extending our brands into new markets and new products and investing in marketing and advertising. The costs of maintaining and enhancing our brands, including maintaining our rights to brands under license agreements, may increase. These increased costs could have a material adverse impacteffect on our business, results of operations, financial condition and results of operations.cash flows.

In addition, we increasingly rely on electronic marketing, such as social media platforms and the use of online marketing strategies, to support and enhance our brands. This “e-commerce” marketplace is growing and evolving quickly and allows for the rapid dissemination of information regarding our brands by us and consumers. We may not be able to successfully adapt our marketing efforts to this rapidly changing marketplace, which could have a material adverse impact on our business, financial condition and results of operations. Further, negative opinions or commentary posted online regarding our brands, regardless of their underlying merits or accuracy, could diminish the value of our brands and adversely affect our business, financial condition and results of operations.

Our ability to obtain adequate and reasonably priced methods of transportation to distribute our products, including refrigerated trailers for many of our products, is a key factor to our success. A substantial portion of our products requires the use of refrigerated trailers for shipping. Delays in transportation, including weather-related delays, could have a material adverse effect on our business and results of operations. Further, higher fuel costs and increased line haul costs due to industry capacity constraints, customer delivery requirements and high fuel costsa more restrictive regulatory environment could also negatively impact our financial results. We are often required to pay fuel surcharges that fluctuate with the price of diesel fuel to third-party transporters of our products. While diesel fuel prices have trended lower over the past several quarters, our fuelproducts, and such surcharges can be substantial. Accordingly, anyAny sudden or dramatic increases in the price of diesel fuel would serve to increase our fuel surcharges and our cost of goods sold. If we were unable to pass those higher freight costs to our customers in the form of price increases, those higher costs could have a material adverse effect on our business and results of operations.

Our business operations are subject to regulation by various federal, state and local government entities and agencies. As a producer of food products for human consumption, our operations are subject to stringent production, packaging, quality, labeling and distribution standards, including regulations promulgated under the Federal Food, Drug and Cosmetic Act and the Food Safety Modernization Act. We cannot predict whether future regulation by various federal, state and local governmentalgovernment entities and agencies would adversely affect our business, and results of operations.operations, financial condition and cash flows.

In addition, our business operations and the past and present ownership and operation of our properties, including idle properties, are subject to extensive and changing federal, state and local environmental laws and regulations pertaining to the discharge of materials into the environment, the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment. Although most of our properties have been subjected to periodic environmental assessments, these assessments may be limited in scope and may not include or identify all potential environmental liabilities or risks associated with any particular property. We cannot be certain that our environmental assessments have identified all potential environmental liabilities or that we will not incur material environmental liabilities in the future.

We cannot assurebe certain that environmental issues relating to presently known matters or identified sites, or to other unknown matters or sites, will not require additional, currently unanticipated investigation, assessment or expenditures. If we do incur or discover any material environmental liabilities or potential environmental liabilities in the future, we may face significant remediation costs and find it difficult to sell or lease any affected properties.

We contributeMuch of our infrastructure and facilities have been in service for many years, which may result in a higher level of future maintenance costs and unscheduled repairs. Further, our infrastructure and facilities may need to two multiemployer pension plans under certain collective bargaining contracts that provide pension benefitsbe improved or replaced to employees and retired employees who are part of the plan. Generally, as a contributor, we are responsible for making periodic contributions to these plans. Our required contributions to these plans couldmaintain or increase however, based upon a number of factors, including our ability to renegotiate collective bargaining contracts successfully, current and futureoperational efficiency, sustain production capacity, or meet changing regulatory requirements, the performance of the pension plan’s investments, the number of participants who are entitled to receive benefits from the plan, a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates and other funding deficiencies. Anrequirements. A significant increase in our required contributions to these plansmaintenance costs and capital expenditures could have a material adverse effect onadversely affect our business, financial condition, results of operations and cash flows.

We continually evaluate acquiringthe acquisition of other businesses that would strategically fit within our operations. If we are unable to consummate, successfully integrate and grow these acquisitions and toor realize contemplated revenue growth, synergies and cost savings, our financial results could be adversely affected. In addition, we may, from time to time, divest businesses, product lines or other operations that are less of a strategic fit within our portfolio or do not meet our growth or profitability targets. As a result, our profitability may be impactedadversely affected by either gains or losses on the sales of divested assets or lost operating income or cash flows from those businesses.

We may incur asset impairment or restructuring charges related to acquired or divested assets, which may reduce our profitability and cash flows. Finally, a buyer’s inability to fulfill contractual obligations that were assigned as part of a divestiture, including those relating to customer contracts, could lead to future financial loss on our part. These potential acquisitions or divestitures present financial, managerial and operational challenges, including diversion of management attention from ongoing businesses, difficulty with integrating or separating personnel and financial and other systems, increased expenses, assumption of unknown liabilities, indemnities and potential disputes with the buyers or sellers.

Our operations and prospects depend in large part on the performance of our senior management team, several of which are long-serving employees with significant knowledge of our business model and operations. Should we not be able to find qualified replacements for any of these individuals if their services were no longer available, our ability to manage our operations or successfully execute our business strategy may be materially and adversely affected.

As of June 30, 2016,2019, Mr. Gerlach owned or controlled 30% of the outstanding shares of our common stock. Accordingly, Mr. Gerlach has significant influence on all matters submitted to a vote of the holders of our common stock, including the election of directors. Mr. Gerlach’s voting power may also may have the effect of discouraging transactions involving an actual or a potential change of control of our Company, regardless of whether a premium is offered over then-current market prices.

The interests of Mr. Gerlach may conflict with the interests of other holders of our common stock. This conflict of interest may have an adverse effect on the price of our common stock.

Certain provisions of our charter documents, including provisions limiting the ability of shareholders to raise matters at a meeting of shareholders without giving advance notice and provisions classifying our Board of Directors, may make it more difficult for a third party to acquire us or influence our Board of Directors. This may have the effect of delaying or preventing changes of control or management, which could have an adverse effect on the market price of our stock.

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

Also, our Board of Directors has the authority to issue up to 1,150,000 shares of Class B Voting Preferred Stock and 1,150,000 shares of Class C Nonvoting Preferred Stock and to determine the price, rights, preferences, privileges and restrictions of those shares without any further vote or action by the shareholders. The rights of the holders of our common stock may be subject to, and may be adversely affected by, the rights of the holders of any Class B Voting Preferred Stock and Class C Nonvoting Preferred Stock that may be issued in the future. The Company could use these rights to put in place a shareholder rights plan, or “poison pill,” that could be used in connection with a bid or proposal of acquisition for an inadequate price.

None.

We use 1.82.2 million square feet of space for our operations. Of this space, 0.50.8 million square feet are leased. These amounts exclude facilities operated by third-party service providers.

The following table summarizes our principal manufacturing locations (including aggregation of multiple facilities) that:

The following table summarizes our principal warehouses (including aggregation of multiple facilities), which are considered the principal manufacturing and warehousing operations ofused to distribute products to our Specialty Foods segment:customers:

From time to time we are a party to various legal proceedings. While we believe that the ultimate outcome of these various proceedings, individually and in the aggregate, will not have a material effect on our consolidated financial statements, litigation is always subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction prohibiting us from manufacturing or selling one or more products or could lead to us altering the manner in which we manufacture or sell one or more products, which could have a material impact on net income for the period in which the ruling occurs and future periods.

Not applicable.

Our common stock trades on The NASDAQ Global Select Market under the symbol LANC. The following table sets forth the high and low prices for Lancaster Colony Corporation common shares and the dividends paid for each quarter of 2016 and 2015. Stock prices were provided by The NASDAQ Stock Market LLC.

The number of shareholders of record as of August 4, 20161, 2019 was approximately 770.740. This is not the actual number of beneficial owners of our common stock, as shares are held in “street name” by brokers and others on behalf of individual owners. The highest and lowest prices for our common stock from July 1, 2016 to August 4, 2016 were $132.06 and $124.90.

We have increased our regular cash dividends for 5356 consecutive years. Future dividends will depend on our earnings, financial condition and other factors.

In November 2010, our Board of Directors approved a share repurchase authorization of 2,000,000 common shares, of which 1,418,1521,354,423 common shares remained authorized for future repurchases at June 30, 2016.2019. This share repurchase authorization does not have a stated expiration date. In the fourth quarter, we did not repurchase anymade the following repurchases of our common stock.stock:

Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels.

We previously manufactured and marketed candles for the food, drug and mass markets until that business was sold on January 30, 2014. TheOur financial results are presented as two reportable segments: Retail and Foodservice. Costs that are directly attributable to either Retail or Foodservice are charged directly to the appropriate segment. Costs that are deemed to be indirect, excluding corporate expenses and other unusual significant transactions, are allocated to the two reportable segments using a reasonable methodology that is consistently applied.

Over 95% of theseour products are sold in the United States. Foreign operations for 2014, previously includedand export sales have not been significant in our Glasswarethe past and Candles segment, are reported as discontinuednot expected to be significant in the future based upon existing operations.

Our business has the potential to achieve future growth in sales and outstanding capital stock of Flatout Holdings, Inc. (“Flatout”),profitability due to attributes such as:

Our goal is discussed in further detail in Note 2 to grow both Retail and Foodservice segment sales over time by:

We also 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.

Operating income increased 11% in 2019 driven by gross profit growth and the change in contingent consideration, as partially offset by the increase in SG&A expenses and restructuring and impairment charges. See discussion of operating results by segment following the discussion of “Earnings Per Share” below.

We include the tax consequences related to stock-based compensation within the computation of income tax expense. We may experience increased 16%volatility to $299.6our income tax expense and resulting net income, dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights and vesting of restricted stock awards. For 2019 and 2018, the impact of net windfall tax benefits from stock-based compensation reduced our effective tax rate by 0.8% and 0.4%, respectively.

In 2019, net sales for the Retail segment reached $656.6 million, a 1% increase from the prior-year total of $257.7$650.2 million. The increase resultedExcluding the incremental sales from higherBantam, Retail net sales reduced commodity costsimproved 0.5% as influenced by volume gains for shelf-stable dressings and sauces sold under license agreements, improved net price realization and lower freight costs.coupon expense. Notable offsets to Retail sales growth included volume declines in flatbread wraps and our decision to selectively exit some low-margin private-label business.

NetIn 2019, Retail segment operating income totaled $121.8was favorably impacted by the $17.1 million reduction in 2016, or $4.44 per diluted share, comparedthe fair value of Angelic’s contingent consideration liability. Excluding this fair value reduction, Retail segment operating income declined to $118.0 million as influenced by incremental costs, including facility upgrades, associated with the Omni operations, investments to strengthen the Retail leadership team and incremental spending to expand distribution for Bantam.

Overall, we continue to limit some of our exposure to volatile swings in food commodity costs through a structuredstrategic forward purchasing program for certain key materials such as soybean oil and flour. For a more-detailed discussion of the effect of commodity costs, see the “Impact of Inflation” section of this MD&A below. Changes in other notable recurring costs, such as marketing, transportation, and production costs and introductory costs for new products, may also impact our overall results.

We will continue to periodically reassess our allocation of capital to ensure that we maintain adequate operating flexibility while providing appropriate levels of cash returns to our shareholders.

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 June 30, 2016.2019. At June 30, 2016,2019, we had $4.7$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 June 30, 2016,2019, we were in compliance with all applicable provisions and covenants of the Facility,this facility, and we exceeded the requirements of the financial covenants by substantial margins. At June 30, 2016, we2019, there were not aware of any eventno events that would constitute a default under the Facility.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 then 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.

Cash provided by operating activities in 20162019 totaled $142.6$197.6 million, an increase of 7%23% as compared with the 20152018 total of $132.8 million, which increased 3% from the 2014 total of $129.1$160.7 million. The 20162019 increase was due to an increase inhigher net income, and depreciation and amortizationa benefit from the change in deferred income taxes as partially offset by higher working capital requirements. In general,a result of the increased levels of working capital requirements reflect higher sales volumes and the impact of our Flatout acquisition. Additionally, the changes in other current assets and accounts payable and accrued liabilities reflect the timing of estimated tax payments and the favorable taxprior-year impact of the loss on sale of discontinued operations in prior years. The increase in depreciation and amortization reflects the amortization of intangibles relating to the Flatout acquisitionTax Act, and the related depreciation on its acquired fixed assets,year-over-year change in net working capital as well as additional depreciation on recent capital expenditures. The 2015 increase in cash provided by operating activities was largely influencedoffset by the discontinued operations resulting fromreduction in the salefair value of our candle manufacturing and marketing operations, which were sold in January 2014. See Note 3 to the consolidated financial statements for further information regarding this sale.Angelic’s contingent consideration liability.

Cash used in investing activities totaled $17.4$126.9 million in 20162019 as compared to a use of $112.3$31.5 million in 2015 and a source of $8.5 million in 2014.2018. The 2016 decrease in cash used in investing activities reflects the $92.2 million paid for the acquisition of Flatout in March 2015, as well as a planned lower level of capital expenditures in 2016. The 20152019 increase in cash used in investing activities primarily reflects cash paid for the 2015October 2018 acquisition of Flatout, proceeds fromBantam and the saleNovember 2018 acquisition of our candle manufacturing and marketing operations in 2014 andOmni, as well as a higher level of capital expenditures compared to 2014.in 2019. Our 20152019 capital expenditures includedinclude a processingsubstantial investment for a capacity expansion project at our frozen dinner roll facility in Horse Cave, Kentucky dressing facility which was essentiallythat we expect to complete in mid-2020. We have recently completed a dedicated R&D center in central Ohio that will benefit both the Retail and Foodservice segments, and we are also investing in production capacity and increased automation at December 31, 2014. Capital expendituresAngelic to improve efficiencies in production. We also continue to invest in projects to expand packaging capacity and end-of-line automation for both segments. Payments for property additions totaled $16.7$70.9 million in 2016,2019 compared to $18.3$31.0 million in 2015 and $16.0 million in 2014. Based on our current plans and expectations, we believe our capital expenditures for 2017 could total approximately $20 to $22 million.2018.

The future levels of share repurchases and declared dividends are subject to the periodic review of our Board of Directors and are generally determined after an assessment is made of various factors, such as anticipated earnings levels, cash flow requirements and general business conditions.

Our ongoing business activities continue to be subject to compliance with various laws, rules and regulations as may be issued and enforced by various federal, state and local agencies. With respect to environmental matters, costs are incurred pertaining to regulatory compliance and, upon occasion, remediation. Such costs have not been, and are not anticipated to become, material.

We are contingently liable with respect to lawsuits, taxes and various other matters that routinely arise in the normal course of business. We do not have any related party transactions that materially affect our results of operations, cash flows or financial condition.

We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “Variable Interest Entities,” that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures.

We have various contractual obligations that are appropriately recorded as liabilities in our consolidated financial statements. Certain other items, such as purchasecontractual obligations are not recognized as liabilities in our consolidated financial statements. Examples of such items not recognized as liabilities in our consolidated financial statements are commitments to purchase raw materials or packaging inventory that has not yet been received as of June 30, 20162019 and future minimum lease payments for the use of property and equipment under operating lease agreements.

The following table summarizes our contractual obligations as of June 30, 20162019 (dollars in thousands):

We evaluate the adequacy of our allowances for customer deductions considering several factors including historical experience, specific trade programs and existing customer relationships. We also provide an allowance for doubtful accounts based on the aging of accounts receivable balances, historical write-off experience and on-going reviews of our trade receivables. Measurement of potential losses requires credit review of existing customer relationships, consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the economic health of customers.

Goodwill is not amortized. It is evaluated annually at April 30 by applying impairment testing procedures, as appropriate.procedures. Other intangible assets are amortized on a straight-line basis over their estimated useful lives to Selling, General and Administrative Expenses. We evaluate the future economic benefit of the recorded goodwill and other intangible assets when events or circumstances indicate potential recoverability concerns. Carrying amounts are adjusted appropriately when determined to have been impaired.

Items which could impact these forward-looking statements include, but are not limited to, those risk factors identified in Item 1A and:

We have exposure to market risks primarily from changes in raw material prices. In recent years, due to the absence of any borrowings, we have not had exposure to changes in interest rates. We also have not had exposure to market risk associated with derivative financial instruments or derivative commodity instruments as we do not utilize any such instruments.

We purchase a variety of commodities and other raw materials, such as soybean oil, flour, eggs and dairy-based materials, which we use to manufacture our products. The market prices for these commodities are subject to fluctuation based upon a number of economic factors and may become volatile at times. A recent example of such volatility occurred as we transitioned from 2015 to 2016 and the price of egg-based ingredients increased suddenly and dramatically due to a significant outbreak of avian influenza in the United States which sharply curtailed supply. While we do not use any derivative commodity instruments to hedge against commodity price risk, we do actively manage a portion of the risk through a structured forward purchasing program for certain key materials such as soybean oil and flour. This program givesIn addition, we recently implemented a procurement strategy for a portion of our egg needs through the use of grain-based pricing contracts to reduce our exposure to egg market spot prices. These programs, coupled with short-term fixed price arrangements on other significant raw materials, provide us more predictable input costs, which, mayin addition to the supply contracts with our foodservice customers that allow us to pass along price increases for commodities, help to stabilize our short-term margins during periods of significant volatility in the commodity markets.