UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCD.C. 20549



Form	10-Q

(Mark One)



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2019~~2020



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-04065




Lancaster Colony Corporation
(Exact name of registrant as specified in its charter)



Ohio		13-1955943
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

380 Polaris Parkway	Suite 400
Westerville	Ohio	43082
(Address of principal executive offices)		(Zip Code)



~~614-224-7141~~(614)	224-7141
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨☐ No ý

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, without par value	LANC	NASDAQ Global Select Market

As of April ~~18, 2019,~~17, 2020, there were approximately ~~27,505,000~~27,516,000 shares of Common Stock, without par value, outstanding.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS





PART I – FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets – March 31, ~~2019~~2020 and June 30, ~~2018~~2019	3

	Condensed Consolidated Statements of Income – Three and Nine Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	4

	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	5

	Condensed Consolidated Statements of Cash Flows – Nine Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	6

	Condensed Consolidated Statements of Shareholders’ Equity – Nine Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

~~Item 4.~~	~~Controls and Procedures~~	26

~~PART II – OTHER INFORMATION~~		27

Item ~~1A.~~4.	~~Risk Factors~~Controls and Procedures	27

PART II – OTHER INFORMATION		28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2728

Item 5.	Other Information	29

Item 6.	Exhibits	2729

SIGNATURES		2830

INDEX TO EXHIBITS		2931

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(Amounts in thousands, except share data)	March 31, 2019			June 30, 2018			March 31, 2020			June 30, 2019
ASSETS
Current Assets:
Cash and equivalents	$	187,389		$	205,752		$	177,798		$	196,288
Receivables	81,156			72,960			87,649			75,691
Inventories:
Raw materials	36,407			32,673			40,108			30,647
Finished goods	56,713			58,188			56,151			55,425
Total inventories	93,120			90,861			96,259			86,072
Other current assets	5,640			9,304			20,269			10,518
Total current assets	367,305			378,877			381,975			368,569
Property, Plant and Equipment:
Land, buildings and improvements	147,497			132,318			181,671			163,094
Machinery and equipment	326,061			293,409			389,200			340,232
Total cost	473,558			425,727			570,871			503,326
Less accumulated depreciation	249,060			234,914			274,436			256,282
Property, plant and equipment-net	224,498			190,813			296,435			247,044
Other Assets:
Goodwill	210,429			168,030			208,371			208,371
Other intangible assets-net	71,551			56,176			66,460			70,277
Operating lease right-of-use assets							24,469			—
Other noncurrent assets	12,502			10,595			15,342			11,138
Total	$	886,285		$	804,491		$	993,052		$	905,399
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	70,390		$	57,978		$	90,818		$	76,670
Accrued liabilities	38,407			35,789			46,328			43,036
Total current liabilities	108,797			93,767			137,146			119,706
Noncurrent Operating Lease Liabilities							19,292			—
Other Noncurrent Liabilities	42,464			41,638			31,306			35,938
Deferred Income Taxes	20,016			16,804			32,024			22,882
Commitments and Contingencies
Shareholders’ Equity:
Preferred stock-authorized 3,050,000 shares; outstanding-none
Common stock-authorized 75,000,000 shares; outstanding-March-27,504,669 shares; June-27,487,989 shares	121,565			119,232
Common stock-authorized 75,000,000 shares; outstanding-March-27,515,651 shares; June-27,491,497 shares							124,221			122,844
Retained earnings	1,344,638			1,279,343			1,409,994			1,359,782
Accumulated other comprehensive loss	(8,129		)	(8,259		)	(10,099		)	(10,308		)
Common stock in treasury, at cost	(743,066		)	(738,034		)	(750,832		)	(745,445		)
Total shareholders’ equity	715,008			652,282			773,284			726,873
Total	$	886,285		$	804,491		$	993,052		$	905,399

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
(Amounts in thousands, except per share data)	2019		2018		2019			2018		2020		2019		2020		2019
Net Sales	$	317,882	$	296,174	$	984,117		$	914,755	$	321,363	$	317,882	$	1,013,534	$	984,117
Cost of Sales	242,485		228,263		736,129			687,430		244,401		242,485		744,575		736,129
Gross Profit	75,397		67,911		247,988			227,325		76,962		75,397		268,959		247,988
Selling, General and Administrative Expenses	37,981		29,875		109,902			97,005		46,907		37,981		132,109		109,902
Change in Contingent Consideration	88		521		(9,517		)	1,514		65		88		192		(9,517		)
Restructuring and Impairment Charges										—		—		886		—
Operating Income	37,328		37,515		147,603			128,806		29,990		37,328		135,772		147,603
Other, Net	1,329		525		3,682			1,595		727		1,329		3,031		3,682
Income Before Income Taxes	38,657		38,040		151,285			130,401		30,717		38,657		138,803		151,285
Taxes Based on Income	8,053		10,419		33,746			27,474		8,288		8,053		32,205		33,746
Net Income	$	30,604	$	27,621	$	117,539		$	102,927	$	22,429	$	30,604	$	106,598	$	117,539
Net Income Per Common Share:
Basic	$	1.11	$	1.01	$	4.28		$	3.75	$	0.82	$	1.11	$	3.88	$	4.28
Diluted	$	1.11	$	1.00	$	4.26		$	3.74	$	0.81	$	1.11	$	3.87	$	4.26

Weighted Average Common Shares Outstanding:
Basic	27,448		27,405		27,436			27,399		27,457		27,448		27,447		27,436
Diluted	27,549		27,458		27,543			27,456		27,501		27,549		27,502		27,543

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended March 31,						Nine Months Ended March 31,						Three Months Ended March 31,						Nine Months Ended March 31,
(Amounts in thousands)	2019			2018			2019			2018			2020			2019			2020			2019
Net Income	$	30,604		$	27,621		$	117,539		$	102,927		$	22,429		$	30,604		$	106,598		$	117,539
Other Comprehensive Income:
Defined Benefit Pension and Postretirement Benefit Plans:
Amortization of loss, before tax	102			134			307			402			136			102			409			307
Amortization of prior service credit, before tax	(46		)	(45		)	(137		)	(136		)	(45		)	(46		)	(136		)	(137		)
Total Other Comprehensive Income, Before Tax	56			89			170			266			91			56			273			170
Tax Attributes of Items in Other Comprehensive Income:
Amortization of loss, tax	(24		)	(41		)	(72		)	(140		)	(31		)	(24		)	(95		)	(72		)
Amortization of prior service credit, tax	11			14			32			47			10			11			31			32
Total Tax Expense	(13		)	(27		)	(40		)	(93		)	(21		)	(13		)	(64		)	(40		)
Other Comprehensive Income, Net of Tax	43			62			130			173			70			43			209			130
Comprehensive Income	$	30,647		$	27,683		$	117,669		$	103,100		$	22,499		$	30,647		$	106,807		$	117,669

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended March 31,						Nine Months Ended March 31,
(Amounts in thousands)	2019			2018			2020			2019
Cash Flows From Operating Activities:
Net income	$	117,539		$	102,927		$	106,598		$	117,539
Adjustments to reconcile net income to net cash provided by operating activities:
Impacts of noncash items:
Depreciation and amortization	22,677			19,899			27,672			22,677
Change in contingent consideration	(9,517		)	1,514			192			(9,517		)
Deferred income taxes and other changes	3,910			(8,633		)	9,625			3,910
Stock-based compensation expense	4,542			3,484			4,337			4,542
Restructuring and impairment charges							(268		)	—
Pension plan activity	(602		)	(362		)	(458		)	(602		)
Changes in operating assets and liabilities:
Receivables	(6,220		)	(6,828		)	(11,958		)	(6,220		)
Inventories	(766		)	(11,738		)	(10,187		)	(766		)
Other current assets	3,080			(303		)	(15,590		)	3,080
Accounts payable and accrued liabilities	8,780			16,879			9,175			8,780
Net cash provided by operating activities	143,423			116,839			119,138			143,423
Cash Flows From Investing Activities:
Payments for property additions							(72,006		)	(43,966		)
Cash paid for acquisitions, net of cash acquired	(57,540		)	(318		)	—			(57,540		)
Payments for property additions	(43,966		)	(22,561		)
Other-net	(592		)	(36		)	(389		)	(592		)
Net cash used in investing activities	(102,098		)	(22,915		)	(72,395		)	(102,098		)
Cash Flows From Financing Activities:
Payment of dividends	(52,244		)	(48,044		)	(56,386		)	(52,244		)
Purchase of treasury stock	(5,032		)	(1,102		)	(5,387		)	(5,032		)
Tax withholdings for stock-based compensation	(2,209		)	(552		)	(2,960		)	(2,209		)
Other-net	(203		)	—			(500		)	(203		)
Net cash used in financing activities	(59,688		)	(49,698		)	(65,233		)	(59,688		)
Net change in cash and equivalents	(18,363		)	44,226			(18,490		)	(18,363		)
Cash and equivalents at beginning of year	205,752			143,104			196,288			205,752
Cash and equivalents at end of period	$	187,389		$	187,330		$	177,798		$	187,389
Supplemental Disclosure of Operating Cash Flows:
Net cash payments for income taxes	$	25,373		$	37,196		$	30,355		$	25,373

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)


	Nine Months Ended March 31, 2019																	Nine Months Ended March 31, 2020
(Amounts in thousands, except per share data)	Common Stock Outstanding					Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity			Common Stock Outstanding					Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
	Shares		Amount															Shares		Amount
Balance, June 30, 2018	27,488		$	119,232		$	1,279,343		$	(8,259	)	$	(738,034	)	$	652,282
Balance, June 30, 2019																		27,491		$	122,844		$	1,359,782		$	(10,308	)	$	(745,445	)	$	726,873
Net income						39,028									39,028								40,745									40,745
Net pension and postretirement benefit gains, net of $13 tax effect									44						44
Cash dividends - common stock ($0.60 per share)						(16,495		)							(16,495		)
Purchase of treasury stock	(10	)										(1,593		)	(1,593		)
Stock-based plans	12		(778		)										(778		)
Stock-based compensation expense			1,531												1,531
Balance, September 30, 2018	27,490		119,985			1,301,876			(8,215		)	(739,627		)	674,019
Net income						47,907									47,907
Net pension and postretirement benefit gains, net of $14 tax effect									43						43
Net pension and postretirement benefit gains, net of $21 tax effect																										70						70
Cash dividends - common stock ($0.65 per share)						(17,875		)							(17,875		)						(17,869		)							(17,869		)
Purchase of treasury stock	(1	)										(166		)	(166		)	(10	)										(1,465		)	(1,465		)
Stock-based plans	16		(988		)										(988		)	4		(125		)										(125		)
Stock-based compensation expense			1,831												1,831					1,436												1,436
Balance, December 31, 2018	27,505		120,828			1,331,908			(8,172		)	(739,793		)	704,771
Balance, September 30, 2019																		27,485		$	124,155		$	1,382,658		$	(10,238	)	$	(746,910	)	$	749,665
Net income						30,604									30,604								43,424									43,424
Net pension and postretirement benefit gains, net of $13 tax effect									43						43
Cash dividends - common stock ($0.65 per share)						(17,874		)							(17,874		)
Net pension and postretirement benefit gains, net of $22 tax effect																										69						69
Cash dividends - common stock ($0.70 per share)																							(19,245		)							(19,245		)
Purchase of treasury stock	(21	)										(3,273		)	(3,273		)	—											(7		)	(7		)
Stock-based plans	21		(443		)										(443		)	26		(2,571		)										(2,571		)
Stock-based compensation expense			1,180												1,180					1,423												1,423
Balance, March 31, 2019	27,505		$	121,565		$	1,344,638		$	(8,129	)	$	(743,066	)	$	715,008
Balance, December 31, 2019																		27,511		$	123,007		$	1,406,837		$	(10,169	)	$	(746,917	)	$	772,758
Net income																							22,429									22,429
Net pension and postretirement benefit gains, net of $21 tax effect																										70						70
Cash dividends - common stock ($0.70 per share)																							(19,272		)							(19,272		)
Purchase of treasury stock																		(28	)										(3,915		)	(3,915		)
Stock-based plans																		33		(264		)										(264		)
Stock-based compensation expense																				1,478												1,478
Balance, March 31, 2020																		27,516		$	124,221		$	1,409,994		$	(10,099	)	$	(750,832	)	$	773,284

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (continued)

(UNAUDITED)


	Nine Months Ended March 31, 2018																	Nine Months Ended March 31, 2019
(Amounts in thousands, except per share data)	Common Stock Outstanding					Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity			Common Stock Outstanding					Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Shareholders’ Equity
	Shares		Amount															Shares		Amount
Balance, June 30, 2017	27,448		$	115,174		$	1,206,671		$	(8,936	)	$	(736,932	)	$	575,977
Balance, June 30, 2018																		27,488		$	119,232		$	1,279,343		$	(8,259	)	$	(738,034	)	$	652,282
Net income						29,386									29,386								39,028									39,028
Net pension and postretirement benefit gains, net of $33 tax effect									56						56
Cash dividends - common stock ($0.55 per share)						(15,092		)							(15,092		)
Purchase of treasury stock	(7	)										(849		)	(849		)
Stock-based plans	1		(95		)										(95		)
Stock-based compensation expense			1,163												1,163
Balance, September 30, 2017	27,442		116,242			1,220,965			(8,880		)	(737,781		)	590,546
Net income						45,920									45,920
Net pension and postretirement benefit gains, net of $33 tax effect									55						55
Net pension and postretirement benefit gains, net of $13 tax effect																										44						44
Cash dividends - common stock ($0.60 per share)						(16,469		)							(16,469		)						(16,495		)							(16,495		)
Purchase of treasury stock	—											(4		)	(4		)	(10	)										(1,593		)	(1,593		)
Stock-based plans	9		(189		)										(189		)	12		(778		)										(778		)
Stock-based compensation expense			1,150												1,150					1,531												1,531
Balance, December 31, 2017	27,451		117,203			1,250,416			(8,825		)	(737,785		)	621,009
Balance, September 30, 2018																		27,490		$	119,985		$	1,301,876		$	(8,215	)	$	(739,627	)	$	674,019
Net income						27,621									27,621								47,907									47,907
Net pension and postretirement benefit gains, net of $27 tax effect									62						62
Tax Cuts and Jobs Act of 2017, Reclassification from accumulated other comprehensive loss to retained earnings						1,889			(1,889		)				—
Cash dividends - common stock ($0.60 per share)						(16,483		)							(16,483		)
Net pension and postretirement benefit gains, net of $14 tax effect																										43						43
Cash dividends - common stock ($0.65 per share)																							(17,875		)							(17,875		)
Purchase of treasury stock	(2	)										(249		)	(249		)	(1	)										(166		)	(166		)
Stock-based plans	29		(268		)										(268		)	16		(988		)										(988		)
Stock-based compensation expense			1,171												1,171					1,831												1,831
Balance, March 31, 2018	27,478		$	118,106		$	1,263,443		$	(10,652	)	$	(738,034	)	$	632,863
Balance, December 31, 2018																		27,505		$	120,828		$	1,331,908		$	(8,172	)	$	(739,793	)	$	704,771
Net income																							30,604									30,604
Net pension and postretirement benefit gains, net of $13 tax effect																										43						43
Cash dividends - common stock ($0.65 per share)																							(17,874		)							(17,874		)
Purchase of treasury stock																		(21	)										(3,273		)	(3,273		)
Stock-based plans																		21		(443		)										(443		)
Stock-based compensation expense																				1,180												1,180
Balance, March 31, 2019																		27,505		$	121,565		$	1,344,638		$	(8,129	)	$	(743,066	)	$	715,008

See accompanying notes to condensed consolidated financial statements.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Lancaster Colony Corporation and our wholly-owned subsidiaries, collectively referred to as “we,” “us,” “our,” “registrant” or the “Company” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and SEC Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the results of operations and financial position for such periods. All such adjustments reflected in the interim condensed consolidated financial statements are considered to be of a normal recurring nature. Intercompany transactions and accounts have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our ~~2018~~2019 Annual Report on Form 10-K. Unless otherwise noted, the term “year” and references to a particular year pertain to our fiscal year, which begins on July 1 and ends on June 30; for example, ~~2019~~2020 refers to fiscal ~~2019~~2020, which is the period from July 1, ~~2018~~2019 to June 30, ~~2019~~2020.

Deferred Software Costs

We capitalize certain costs related to hosting arrangements that are service contracts (cloud computing arrangements). For the nine months ended March 31, 2020, we capitalized $6.6 million of deferred software costs related to cloud computing arrangements, primarily for amounts related to our new enterprise resource planning system.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, except for those acquired as part of a business combination, which are recorded at fair value at the time of purchase. We use the straight-line method of computing depreciation for financial reporting purposes based on the estimated useful lives of the corresponding assets. Purchases of property, plant and equipment included in Accounts Payable and excluded from the property additions and the change in accounts payable in the Condensed Consolidated Statements of Cash Flows were as follows:



	March 31,
	2020		2019
Construction in progress in Accounts Payable	$	8,532	$	3,131

March 31,
2019 2018
Construction in progress in Accounts Payable $ 3,131
$ 1,279

Earnings Per Share

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

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Basic and diluted net income per common share were calculated as follows:



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Net income	$	22,429		$	30,604		$	106,598		$	117,539
Net income available to participating securities	(48		)	(52		)	(216		)	(212		)
Net income available to common shareholders	$	22,381		$	30,552		$	106,382		$	117,327

Weighted average common shares outstanding – basic	27,457			27,448			27,447			27,436
Incremental share effect from:
Nonparticipating restricted stock	1			1			2			3
Stock-settled stock appreciation rights	43			100			53			104
Weighted average common shares outstanding – diluted	27,501			27,549			27,502			27,543

Net income per common share – basic	$	0.82		$	1.11		$	3.88		$	4.28
Net income per common share – diluted	$	0.81		$	1.11		$	3.87		$	4.26

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Net income $ 30,604
$ 27,621
$ 117,539
$ 102,927
Net income available to participating securities (52 ) (58 ) (212 ) (206 )
Net income available to common shareholders $ 30,552
$ 27,563
$ 117,327
$ 102,721

Weighted average common shares outstanding – basic 27,448
27,405
27,436
27,399
Incremental share effect from:
Nonparticipating restricted stock 1
2
3
3
Stock-settled stock appreciation rights 100
51
104
54
Weighted average common shares outstanding – diluted 27,549
27,458
27,543
27,456

Net income per common share – basic $ 1.11
$ 1.01
$ 4.28
$ 3.75
Net income per common share – diluted $ 1.11
$ 1.00
$ 4.26
$ 3.74

Accumulated Other Comprehensive Loss

The following table presents the amounts reclassified out of accumulated other comprehensive loss by component:



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Accumulated other comprehensive loss at beginning of period	$	(10,169	)	$	(8,172	)	$	(10,308	)	$	(8,259	)
Defined Benefit Pension Plan Items:
Amortization of unrecognized net loss	143			111			429			335
Postretirement Benefit Plan Items:
Amortization of unrecognized net gain	(7		)	(9		)	(20		)	(28		)
Amortization of prior service credit	(45		)	(46		)	(136		)	(137		)
Total other comprehensive income, before tax	91			56			273			170
Total tax expense	(21		)	(13		)	(64		)	(40		)
Other comprehensive income, net of tax	70			43			209			130
Accumulated other comprehensive loss at end of period	$	(10,099	)	$	(8,129	)	$	(10,099	)	$	(8,129	)

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Accumulated other comprehensive loss at beginning of period $ (8,172 ) $ (8,825 ) $ (8,259 ) $ (8,936 )
Defined Benefit Pension Plan Items:
Amortization of unrecognized net loss 111
143
335
429
Postretirement Benefit Plan Items:
Amortization of unrecognized net gain (9 ) (9 ) (28 ) (27 )
Amortization of prior service credit (46 ) (45 ) (137 ) (136 )
Total other comprehensive income, before tax 56
89
170
266
Total tax expense (13 ) (27 ) (40 ) (93 )
Other comprehensive income, net of tax 43
62
130
173
Tax Cuts and Jobs Act of 2017, Reclassification from accumulated other comprehensive loss to retained earnings —
(1,889 ) —
(1,889 )
Accumulated other comprehensive loss at end of period $ (8,129 ) $ (10,652 ) $ (8,129 ) $ (10,652 )

Significant Accounting Policies

There were no changes to our Significant Accounting Policies from those disclosed in our ~~2018~~2019 Annual Report on Form 10-K. ~~See~~However, see expanded disclosure of ~~revenue recognition~~lease accounting policies in Note 3.5 due to the adoption of new lease accounting guidance.

Recently Issued Accounting Standards

In ~~February 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to the disclosure requirements for fair value measurements. The guidance removes, modifies and adds disclosures related to fair value. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance will be effective for us in fiscal 2021, including interim periods. As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Recently Adopted Accounting Standards

In February 2016, the FASB issued new accounting guidance to require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months and issued subsequent clarifications of this new guidance. This guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease). Both lease classifications require the lessee to record a right-of-use asset and a lease liability based upon the present value of the lease payments. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the consolidated financial statements. ~~The guidance will be effective for us in fiscal 2020, including interim periods.~~ In July 2018, the FASB issued guidance that allows for an alternate transition method whereby companies can

~~LANCASTER COLONY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than restating comparative periods. We expect to elect this alternate transition method. While the adoption of this guidance will result in a significant increase in the balances of right-of-use assets and lease liabilities on our Consolidated Balance Sheet, we do not expect the adoption to impact our results of operations or cash flows. We are currently assessing the impact that this standard will have on our accounting policies, processes, system requirements, internal controls and disclosures. We have completed an initial review of our leases and have implemented lease accounting software, and we are preparing to calculate the adoption impact on our financial statements.

In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for fair value measurements. The guidance removes, modifies and adds disclosures related to fair value. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance will be effective for us in fiscal 2021, including interim periods. As the guidance only relates to disclosures, there will be no impact on our financial position or results of operations.

~~Recently Adopted Accounting Standards~~

In May 2014, the FASB issued new accounting guidance for the recognition of revenue and issued subsequent clarifications of this new guidance in 2016 and 2017. The core principle of the new guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This model is based on a control approach. We completed a review of customer contracts and evaluated the impact of the new standard on certain common practices employed by us. We also finalized our assessment of the impact on our accounting policies, processes, system requirements, internal controls and disclosures using internal resources and the assistance of a qualified third party expert. We adopted the new guidance on July 1, ~~2018~~2019 using ~~a modified retrospective approach; however,~~this alternate transition method, but we did not record a cumulative-effect adjustment from initially applying the ~~standard as~~standard. We elected the package of practical expedients that permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of 12 months or less from our Consolidated Balance Sheets. We have completed the implementation of a lease accounting system to enable the preparation of financial information and have implemented relevant accounting policies and internal controls surrounding the lease accounting process. As a result of adoption, we recognized a lease liability and right-of-use asset of $33.5 million and $31.7 million, respectively. The right-of-use asset balance reflects the reclassification of deferred rent and prepaid rent against the initial asset. The adoption did not ~~have a material~~ impact on our ~~financial position or~~ results of ~~operations.~~operations or cash flows. See additional ~~revenue recognition~~lease disclosures in Note 3.5.

In March 2017, the FASB issued new accounting guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost by disaggregating the service cost component from the other components of net periodic benefit cost. The amendments require an employer to present service cost in the same line item(s) as compensation costs for the pertinent employees whereas the other components of net periodic benefit cost must be reported separately from service cost and outside of income from operations. The amendments also allow only the service cost component to be eligible for capitalization. The amendments require retrospective application for the income statement presentation provisions and prospective application for the capitalization of the service cost component. However, as a result of prior years’ restructuring activities, we no longer have any active employees continuing to accrue service cost. Therefore, the service cost provisions are not applicable to us. We adopted the new guidance on July 1, 2018, and this adoption resulted in changes in classification on the income statement for all periods presented. The changes were not material.

In August 2018, the FASB issued new accounting guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and postimplementation stages are expensed as the activities are performed. The guidance also requires such capitalized implementation costs to be expensed over the term of the hosting arrangement and advises on related presentation within the statement of financial position, the statement of income and statement of cash flows. The guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2019 on a prospective basis. The adoption resulted in a change in accounting principle, to capitalize certain costs instead of expensing them immediately. The costs capitalized under this new guidance were not material to our condensed consolidated financial statements.

In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for defined benefit plans. The guidance removes, adds and clarifies disclosure requirements related to defined benefit pension or other postretirement plans. The guidance will be effective for fiscal years ending after December 15, 2020 and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2019. As the guidance only relates to disclosures, there was no impact on our financial position or results of operations. Changes to our annual disclosures for defined benefit pension plans will be included in our 2019 Annual Report on Form 10-K.

~~LANCASTER COLONY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

Note 2 – Acquisitions

Omni Baking Company LLC

On November 16, 2018, we acquired substantially all of the assets of Omni Baking Company LLC (“Omni”). Omni has been a long-time supplier of products to our frozen garlic bread operations and is based in Vineland, New Jersey. The purchase price of $22.3 million, which includes the post-closing working capital adjustment, was funded with cash on hand. Omni’s results of operations are allocated between our Retail and Foodservice segments in a manner consistent with our current segment allocations. These results have been included in our condensed consolidated financial statements from the date of acquisition.

Bantam Bagels, LLC

On October 19, 2018, we acquired all the assets of Bantam Bagels, LLC (“Bantam”). Bantam, a producer and marketer of frozen mini stuffed bagels and ~~mini stuffed pancakes~~other frozen bread products sold to both the retail and foodservice channels, is based in New York, New York. The base purchase price of $33.1 million, which includes the post-closing working capital adjustment, was funded with cash on hand. This purchase price excludes contingent consideration relating to an additional earn-out payment which is tied to performance-based conditions. In general, the terms of the acquisition specify that the sellers will 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. We are unable to provide a range for the amount of this earn-out because it is based on the future adjusted EBITDA of Bantam, and the earn-out does not contain a minimum or maximum value. See further discussion of the earn-out in Note 4.3. Bantam’s results of operations are allocated between our Retail and Foodservice segments in a manner consistent with our current segment allocations. These results have been included in our condensed consolidated financial statements from the date of acquisition. ~~This acquisition is not significant to our financial position or results of operations.~~

The following table summarizes the consideration related to the acquisition and the purchase price allocation based on the fair value of the net assets acquired. The initial fair value of the contingent consideration is a noncash investing activity.

Consideration
Cash paid for acquisition $ 33,111
Contingent consideration - fair value of earn-out at date of closing 8,000
Fair value of total consideration $ 41,111

Purchase Price Allocation
Receivables $ 1,937
Inventories 684
Other current assets 95
Machinery and equipment 1,896
Goodwill (tax deductible) 20,677
Other intangible assets 18,700
Current liabilities (2,256 )
Other noncurrent liabilities (622 )
Net assets acquired $ 41,111

~~Further adjustments are not expected to the allocation above.~~

The goodwill recognized above arose because the purchase price for Bantam reflects a number of factors including the future earnings and cash flow potential of Bantam, as well as the impact of the inclusion of the initial fair value of the earn-out associated with the acquisition. Bantam is a fast growing, on-trend business with distribution in traditional grocery, club stores, e-commerce and foodservice. Notably, in the foodservice channel, Bantam Bagels^® ~~bagel bites are available at corporate-owned Starbucks~~^® ~~cafes nationwide. Bantam also provides innovation opportunities within and beyond our present product lines. A small amount of goodwill also resulted from the workforce acquired with Bantam.~~

We have determined values and lives of the other intangible assets listed in the allocation above as: $12.8 million for the tradename with a 20-year life; $3.3 million for the customer relationships with a 10-year life and $2.6 million for the technology / know-how with a 10-year life.

~~Pro forma results of operations have not been presented herein as the acquisition was not material to our results of operations.~~

~~LANCASTER COLONY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~Omni Baking Company LLC~~

On November 16, 2018, we acquired all the assets of Omni Baking Company LLC (“Omni”). Omni has been a long-time supplier of products to our frozen garlic bread operations and is based in Vineland, New Jersey. The purchase price of $24.4 million, which is subject to post-closing adjustments, was funded with cash on hand. Omni’s results of operations are allocated between our Retail and Foodservice segments in a manner consistent with our current segment allocations. These results have been included in our condensed consolidated financial statements from the date of acquisition. This acquisition is not significant to our financial position or results of operations.

~~The following table summarizes the preliminary purchase price allocation based on the fair value of the net assets acquired.~~

Preliminary Purchase Price Allocation
Inventories $ 809
Other current assets 180
Machinery and equipment 4,777
Goodwill (tax deductible) 21,722
Current liabilities (3,059 )
Net assets acquired $ 24,429

Further adjustments may occur to the allocation above as certain aspects of the transaction are finalized during the measurement period, including the post-closing working capital adjustment. In addition to the machinery and equipment acquired, we also assumed an operating lease for Omni’s production facility with future minimum rental commitments totaling $7.2 million as of the date of acquisition. This lease continues through December 2026.

The goodwill recognized above arose because the purchase price for Omni reflects a number of factors including the production capabilities of the leased facility and the ability to expand production in the future. Goodwill also resulted from the workforce acquired with Omni. Due to the transitional nature of the foodservice operations, which are related to an interim supply agreement, no goodwill was allocated to the Foodservice segment.

~~Due to the unique nature of this acquisition, we did not identify any intangible assets apart from goodwill.~~

~~Pro forma results of operations have not been presented herein as the acquisition was not material to our results of operations.~~

Note 3 ~~– Revenue Recognition~~

We adopted the new revenue recognition guidance on July 1, 2018 using a modified retrospective approach; however, we did not record a cumulative-effect adjustment from initially applying the standard as the adoption did not have a material impact on our financial position or results of operations. We completed a review of customer contracts and evaluated the impact of the new standard on certain common practices employed by us. We also finalized our assessment of the impact on our accounting policies, processes, system requirements, internal controls and disclosures using internal resources and the assistance of a qualified third party expert.

~~When Performance Obligations Are Satisfied~~

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The singular performance obligation of our customer contracts is determined by each individual purchase order and the respective food products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our customers when the product is delivered to or picked up by our customers based upon applicable shipping terms, as our customers can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time. The performance obligations in our customer contracts are generally satisfied within 30 days. As such, we have not disclosed the transaction price allocated to remaining performance obligations as of March 31, 2019.

~~LANCASTER COLONY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~Significant Payment Terms~~

In general, within our customer contracts, the purchase order identifies the product, quantity, price, pick-up allowances, payment terms and final delivery terms. Payment terms usually include early pay discounts. We grant payment terms consistent with industry standards. Although some payment terms may be more extended, presently the majority of our payment terms are less than 60 days. 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.

~~Shipping~~

All shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in our cost of sales; this includes shipping and handling costs incurred after control over a product has transferred to a customer, as we have chosen to use the available practical expedient to account for these costs within our cost of sales.

~~Variable Consideration~~

In addition to fixed contract consideration, our contracts include some form of variable consideration, including sales discounts, returns, trade promotions and certain other sales and consumer incentives, including rebates and coupon redemptions. In general, variable consideration is treated as a reduction in revenue when the related revenue is recognized. Depending on the specific type of variable consideration, we use either the expected value or most likely amount method to determine the variable consideration. We believe there will be no significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. We review and update our estimates and related accruals of variable consideration each period based on historical experience and any recent changes in the market.

~~Warranties & Returns~~

We provide all customers with a standard or assurance type warranty. Either stated or implied, we provide assurance the related products will comply with all agreed-upon specifications and other warranties provided under the law. No services beyond an assurance warranty are provided to our customers.

We do not grant a general right of return. However, customers may return defective or non-conforming products. Customer remedies may include either a cash refund or an exchange of the product. As a result, the right of return and related refund liability is estimated and recorded as a reduction in revenue. This return estimate is reviewed and updated each period and is based on historical sales and return experience.

~~Contract Balances~~

~~We do not have deferred revenue or unbilled receivable balances and thus do not have any related contract asset and liability balances as of March 31, 2019.~~

~~Contract Costs~~

We have identified sales commissions as an incremental cost incurred to obtain a customer contract. These costs are required to be capitalized under the new revenue recognition standard. We have chosen to use the available practical expedient to continue to expense these costs as incurred as the amortization period for such costs is one year or less. We do not incur significant fulfillment costs related to customer contracts which would require capitalization.

~~Disaggregation of Revenue~~

~~See Note 9 for disaggregation of our net sales by class of similar product and type of customer.~~

~~Note 4~~ – Fair Value

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.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

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

Our contingent consideration, which resulted from the earn-outs associated with our acquisitions of Bantam and Angelic Bakehouse, Inc. (“Angelic”), is measured at fair value on a recurring basis and is included in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The following table summarizes our contingent consideration:



	Fair Value Measurements at March 31, 2020
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	9,092	$	9,092
Contingent consideration - Angelic	—		—		—		—
Total contingent consideration	$	—	$	—	$	9,092	$	9,092

	Fair Value Measurements at June 30, 2019
	Level 1		Level 2		Level 3		Total
Contingent consideration - Bantam	$	—	$	—	$	8,900	$	8,900
Contingent consideration - Angelic	—		—		—		—
Total contingent consideration	$	—	$	—	$	8,900	$	8,900

Fair Value Measurements at March 31, 2019
Level 1 Level 2 Level 3 Total
Contingent consideration - Bantam $ —
$ —
$ 8,183
$ 8,183
Contingent consideration - Angelic —
—
7,380
7,380
Total contingent consideration $ —
$ —
$ 15,563
$ 15,563

Fair Value Measurements at June 30, 2018
Level 1 Level 2 Level 3 Total
Contingent consideration - Bantam $ —
$ —
$ —
$ —
Contingent consideration - Angelic —
—
17,080
17,080
Total contingent consideration $ —
$ —
$ 17,080
$ 17,080

Bantam Contingent Consideration

This contingent consideration resulted from the earn-out associated with our October 19, 2018 acquisition of Bantam. In general, the terms of the acquisition specify the sellers will 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, which ~~includes~~included a refinement to the purchase price allocation in the ~~current~~prior-year third quarter related to a change in assumptions. The fair value is measured on a recurring basis using a Monte Carlo simulation that randomly changes revenue growth, forecasted adjusted EBITDA and other uncertain variables to estimate an expected value. ~~This~~We record the present value of this amount by applying a discount rate. As this fair value measurement is based on significant inputs not observable in the market, ~~and thus~~it represents a Level 3 measurement within the fair value hierarchy.

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



	Three Months Ended March 31,					Nine Months Ended March 31,
	2020		2019			2020		2019
Contingent consideration at beginning of period	$	9,027	$	8,995		$	8,900	$	—
Initial fair value - (reductions)/additions	—		(900		)	—		8,000
Change in contingent consideration included in operating income	65		88			192		183
Contingent consideration at end of period	$	9,092	$	8,183		$	9,092	$	8,183

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Contingent consideration at beginning of period $ 8,995
$ —
$ —
$ —
Initial fair value - (reductions)/additions (900 ) —
8,000
—
Change in contingent consideration included in operating income 88
—
183
—
Contingent consideration at end of period $ 8,183
$ —
$ 8,183
$ —

Angelic Contingent Consideration

This contingent consideration resulted from the earn-out associated with our November 17, 2016 acquisition of Angelic. In general, the terms of the acquisition specify the sellers will receive an earn-out based upon a pre-determined multiple of the defined adjusted EBITDA of Angelic for fiscal 2021. The initial fair value of the contingent consideration was determined to be $13.9 million. The fair value is measured on a recurring basis using a present value approach, which incorporates factors such as ~~business risks~~revenue growth and ~~projections,~~forecasted adjusted EBITDA, to estimate an expected value. ~~This~~We record the present value of this amount by applying a discount rate. As this fair value measurement is based on significant inputs not observable in the market, ~~and thus~~it represents a Level 3 measurement within the fair value hierarchy. Our ~~December 31, 2018~~2019 fair value ~~measurement~~measurements resulted in a $9.7 million reduction in the fair value of Angelic’s contingent consideration in the second quarter ended December 31, 2018 and a $7.4 million reduction in the fourth quarter ended June 30, 2019 based on ~~a change~~changes in Angelic’s forecasted adjusted EBITDA for fiscal 2021. ~~This adjustment was~~These adjustments were recorded in our Retail segment.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

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



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Contingent consideration at beginning of period	$	—	$	7,380	$	—	$	17,080
Change in contingent consideration included in operating income	—		—		—		(9,700		)
Contingent consideration at end of period	$	—	$	7,380	$	—	$	7,380

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Contingent consideration at beginning of period $ 7,380
$ 16,021
$ 17,080
$ 15,028
Change in contingent consideration included in operating income —
521
(9,700 ) 1,514
Contingent consideration at end of period $ 7,380
$ 16,542
$ 7,380
$ 16,542

Note 54 – Long-Term Debt

At ~~March 31, 2019 and~~ June 30, ~~2018,~~2019, we had an unsecured credit facility ~~(“Facility”)~~ under which we could borrow, on a revolving credit basis, up to a maximum of $150 million at any one time, with potential to expand the total credit availability to $225 million subject to us obtaining consent of the issuing banks and certain other conditions.

On March 19, 2020, 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 April 2021. 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 ~~April 8, 2021,~~March 19, 2025, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to LIBOR or an ~~alternative~~alternate base rate defined in the New Credit Facility. In the event that LIBOR becomes unavailable or is no longer deemed an appropriate reference rate, the New Credit Facility ~~at our option.~~allows for the use of a benchmark replacement rate. 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 New Credit Facility, they will be classified as long-term debt.

At March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, we had no0 borrowings outstanding under ~~the Facility.~~these facilities. At March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, we had $2.8 million and $5.1 million, respectively, of standby letters of credit outstanding, which reduced the amount available for borrowing ~~on the Facility.~~under these facilities. We paid no0 interest for the three and nine months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

The New Credit Facility contains certain restrictive covenants, including limitations on indebtedness, asset sales and acquisitions. There are two principal financial covenants: an interest expense test that requires us to maintain an interest coverage ratio not less than 2.5 to 1 at the end of each fiscal quarter; and an indebtedness test that requires us to maintain a consolidated leverage ratio not greater than 33.5 to 1, ~~at all times.~~subject to certain exceptions. 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 New Credit Facility.

Note 5 – Leases

General Lease Description

We have operating 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. Our operating leases include leases for real estate for some of our office and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these operating leases range from 1 year to 8 years.

We have finance leases with initial noncancelable lease terms in excess of one year covering the rental of various equipment. These leases are generally for manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these finance leases range from 3 years to 4 years.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Significant Assumptions and Judgments

Contract Contains a Lease

In evaluating our contracts to determine whether a contract is or contains a lease, we considered the following:

Whether explicitly or implicitly identified assets have been deployed in the contract; and

Whether we obtain substantially all of the economic benefits from the use of that underlying asset, and we can direct how and for what purpose the asset is used during the term of the contract.

Allocation of Consideration

In determining how to allocate consideration between lease and non-lease components in a contract that was deemed to contain a lease, we used judgment and consistent application of assumptions to reasonably allocate the consideration.

Options to Extend or Terminate Leases

We have leases which contain options to extend or terminate the leases. On a lease-by-lease basis, we have determined if the extension should be considered reasonably certain to be exercised and thus a right-of-use asset and a lease liability should be recorded.

Discount Rate

The discount rate for leases, if not explicitly stated in the lease, is the incremental borrowing rate, which is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

We used a discount rate to calculate the present value of the lease liability at the date of adoption. In the development of the discount rate, we considered our internal borrowing rate, treasury security rates, collateral and credit risk specific to us, and our lease portfolio characteristics.

As of March 31, 2020, the weighted-average discount rate of our operating and finance leases was 3.0% and 4.1%, respectively.

Practical Expedients and Accounting Policy Elections

We elected the package of practical expedients that permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of 12 months or less from our Consolidated Balance Sheets.

Amounts Recognized in the Financial Statements

The components of lease expense were as follows:



	Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020
Operating lease cost in Cost of Sales and Selling, General and Administrative Expenses	$	2,379	$	6,520
Finance lease cost:
Amortization of assets in Cost of Sales	$	83	$	251
Interest on lease liabilities in Other, Net	18		57
Total finance lease cost	$	101	$	308
Short-term lease cost in Cost of Sales and Selling, General and Administrative Expenses	361		1,785
Total net lease cost	$	2,841	$	8,613

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

Supplemental balance sheet information related to leases is as follows:



	March 31, 2020
Operating Leases
Operating Lease Right-Of-Use Assets	$	24,469

Current operating lease liabilities in Accrued Liabilities	$	6,903
Noncurrent Operating Lease Liabilities	19,292
Total operating lease liabilities	$	26,195

Finance Leases
Finance lease right-of-use assets in Property, Plant and Equipment-Net	$	1,799

Current finance lease liabilities in Accrued Liabilities	$	446
Noncurrent finance lease liabilities in Other Noncurrent Liabilities	1,183
Total finance lease liabilities	$	1,629

Supplemental cash flow information related to leases is as follows:



	Nine Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,675
Operating cash flows from finance leases	$	57
Financing cash flows from finance leases	$	322

Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets	$	4,867
Supplemental noncash information on lease liabilities removed due to purchase of leased asset	$	5,765

As of March 31, 2020, the maturities of lease liabilities were as follows:



	Operating Leases			Finance Leases
Three months ending June 30, 2020	$	2,220		$	126
2021	6,961			505
2022	5,917			505
2023	4,631			493
2024	3,768			121
Thereafter	4,694			—
Total minimum payments	$	28,191		$	1,750
Less amount representing interest	(1,996		)	(121		)
Present value of lease obligations	$	26,195		$	1,629

As of March 31, 2020, the weighted-average remaining term of our operating and finance leases was 4.8 years and 3.5 years, respectively.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

As previously disclosed in our 2019 Annual Report on Form 10-K and under the previous lease accounting standard (Topic 840), as of June 30, 2019, future minimum lease payments under noncancelable leases with initial lease terms in excess of one year were as follows:



	Operating Leases		Capital Leases
2020	$	8,261	$	505
2021	7,136		505
2022	6,345		505
2023	4,992		493
2024	4,619		121
Thereafter	6,901		—
Total minimum payments	$	38,254	$	2,129
Less amount representing interest			(178		)
Present value of capital lease obligations			$	1,951

Note 6 – ~~Commitments and~~ Contingencies

At March 31, ~~2019~~2020, we were a party to various claims and litigation matters arising in the ordinary course of business. Such matters did not have a material effect on the current-year results of operations and, in our opinion, their ultimate disposition will not have a material effect on our consolidated financial statements.

A novel strain of coronavirus (“COVID-19”) was first identified in Wuhan, China in December 2019. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. In the U.S., state and local governments recommended or mandated actions to slow the transmission of COVID-19. We ~~have a significant commitment~~continue to monitor the rapidly evolving situation and guidance from authorities, including federal, state and local public health departments. We reviewed the carrying value of ~~approximately $40 million~~our assets as of March 31, 2020 and recorded additional reserves for inventory and receivables related to ~~a capacity expansion project at~~the impact of COVID-19 on our ~~frozen dinner roll facility in Horse Cave, Kentucky.~~Foodservice segment. The future impact of COVID-19 on our results of operations, financial condition, and cash flows are contingent upon the duration and severity of the outbreak.

~~With our~~Our acquisitions of Angelic and Bantam ~~we have~~included provisions for contingent ~~liabilities recorded~~consideration for the earn-outs associated with these transactions. See further discussion in Note 4.3.

Note 7 – Goodwill and Other Intangible Assets

Goodwill attributable to the Retail and Foodservice segments was ~~$159.5~~$157.4 million and $51.0 million, respectively, at March 31, ~~2019 compared to $119.3 million~~2020 and ~~$48.7 million, respectively, at~~ June 30, ~~2018. The increase in goodwill is the result of the acquisitions of Bantam in October 2018 and Omni in November 2018. See further discussion in Note 2.~~

~~The following table is a rollforward of goodwill by reportable segment from June 30, 2018 to March 31, 2019:~~2019.

Retail Foodservice Total
Goodwill at beginning of year $ 119,301
$ 48,729
$ 168,030
Goodwill acquired during the period - Bantam 18,431
2,246
20,677
Goodwill acquired during the period - Omni 21,722
—
21,722
Goodwill at end of period $ 159,454
$ 50,975
$ 210,429

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

The following table summarizes our identifiable other intangible ~~assets. The intangible asset values and lives related to the acquisition of Bantam are included in the table below. See further discussion in Note 2.~~assets:



	March 31, 2020			June 30, 2019
Tradenames (20 to 30-year life)
Gross carrying value	$	63,121		$	63,121
Accumulated amortization	(9,277		)	(7,335		)
Net carrying value	$	53,844		$	55,786
Customer Relationships (10 to 15-year life)
Gross carrying value	$	17,507		$	17,507
Accumulated amortization	(10,731		)	(9,641		)
Net carrying value	$	6,776		$	7,866
Technology / Know-how (10-year life)
Gross carrying value	$	8,950		$	8,950
Accumulated amortization	(3,172		)	(2,501		)
Net carrying value	$	5,778		$	6,449
Non-compete Agreements (5-year life)
Gross carrying value	$	791		$	791
Accumulated amortization	(729		)	(615		)
Net carrying value	$	62		$	176
Total net carrying value	$	66,460		$	70,277

March 31,
2019 June 30,
2018
Tradenames (20 to 30-year life)
Gross carrying value $ 63,121
$ 50,321
Accumulated amortization (6,688 ) (5,071 )
Net carrying value $ 56,433
$ 45,250
Customer Relationships (10 to 15-year life)
Gross carrying value $ 17,507
$ 14,207
Accumulated amortization (9,277 ) (8,283 )
Net carrying value $ 8,230
$ 5,924
Technology / Know-how (10-year life)
Gross carrying value $ 8,950
$ 6,350
Accumulated amortization (2,277 ) (1,682 )
Net carrying value $ 6,673
$ 4,668
Non-compete Agreements (5-year life)
Gross carrying value $ 791
$ 791
Accumulated amortization (576 ) (457 )
Net carrying value $ 215
$ 334
Total net carrying value $ 71,551
$ 56,176

Amortization expense for our other intangible assets, which is reflected in Selling, General and Administrative Expenses, was as follows:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Amortization expense	$	1,269	$	1,273	$	3,817	$	3,325

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Amortization expense $ 1,273
$ 1,007
$ 3,325
$ 2,980

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



2021	$	4,976
2022	$	4,902
2023	$	4,343
2024	$	4,343
2025	$	4,083

2020 $ 5,061
2021 $ 4,976
2022 $ 4,902
2023 $ 4,343
2024 $ 4,343

Note 8 – Income Taxes

The Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law on December 22, 2017 with an effective date of January 1, 2018. Most notably, the Tax Act reduced the statutory federal income tax rate for corporations from 35% to 21%. The statutory federal income tax rate for our 2019 tax return will be 21%.

The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) on December 22, 2017. SAB 118 allowed for a measurement period in which companies can either use provisional estimates for changes resulting from the Tax Act or apply the tax laws that were in effect immediately prior to the Tax Act being enacted if estimates cannot be determined at the time of the preparation of the financial statements until the actual impacts can be determined. We recorded an initial estimate of the impact of the Tax Act within our December 31, 2017 financial statements, and the ~~adjustments recorded in the second half of 2018 were not material. The measurement period has ended, and we have completed the accounting for all the impacts of the Tax Act.~~

~~Accrued federal income taxes of $1.1 million were included in Accrued Liabilities at March 31, 2019.~~ Prepaid federal income taxes of ~~$3.6~~$10.7 million and ~~prepaid state and local income taxes of $0.9~~$5.2 million were included in Other Current Assets at March 31, 2020 and June 30, ~~2018.~~2019, respectively. Prepaid state and local income taxes of $1.1 million and $0.1 million were ~~an immaterial amount~~included in Other Current Assets at March 31, ~~2019.~~2020 and June 30, 2019, respectively.

~~LANCASTER COLONY CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

Note 9 – Business Segment Information

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.

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. Our flatbread products and sprouted 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 store, which include salad dressing, slaw dressing and croutons. Within the frozen food section of the grocery store, we sell yeast rolls, garlic breads and mini stuffed bagels.

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 sell other roll products under a transitional co-packing arrangement resulting from the Omni acquisition.

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. Consequently, we do not prepare, and our Chief Operating Decision Maker does not review, separate balance sheets for the reportable segments. As such, our external reporting does not include the presentation of identifiable assets by reportable segment. The composition of our identifiable assets at March 31, ~~2019~~2020 is generally consistent with that of June 30, ~~2018. However, due to the acquisitions of Bantam in October 2018 and Omni in November 2018, the amount of Retail and Foodservice assets increased as compared to June 30, 2018.~~2019.

We ~~continue to~~ evaluate our Retail and Foodservice segments based on net sales and operating income which follow:



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Net Sales
Retail	$	169,414		$	153,038		$	521,701		$	502,088
Foodservice	151,949			164,844			491,833			482,029
Total	$	321,363		$	317,882		$	1,013,534		$	984,117
Operating Income
Retail	$	29,609		$	24,082		$	104,061		$	102,815
Foodservice	9,185			17,124			56,390			55,390
Restructuring and Impairment Charges	—			—			(886		)	—
Corporate Expenses	(8,804		)	(3,878		)	(23,793		)	(10,602		)
Total	$	29,990		$	37,328		$	135,772		$	147,603

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Net Sales
Retail $ 153,038
$ 152,011
$ 502,088
$ 493,441
Foodservice 164,844
144,163
482,029
421,314
Total $ 317,882
$ 296,174
$ 984,117
$ 914,755
Operating Income
Retail $ 24,082
$ 26,324
$ 102,815
$ 96,511
Foodservice 17,124
14,297
55,390
42,398
Corporate Expenses (3,878 ) (3,106 ) (10,602 ) (10,103 )
Total $ 37,328
$ 37,515
$ 147,603
$ 128,806

The following table sets forth net sales disaggregated by class of similar products for the Retail and Foodservice segments:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Retail
Frozen breads	$	68,682	$	59,846	$	221,084	$	207,256
Refrigerated dressings, dips and other	49,479		47,900		163,521		164,973
Shelf-stable dressings and croutons	51,253		45,292		137,096		129,859
Total Retail net sales	$	169,414	$	153,038	$	521,701	$	502,088
Foodservice
Dressings and sauces	$	106,306	$	115,746	$	341,039	$	347,583
Frozen breads and other	40,339		41,230		131,300		122,742
Other roll products	5,304		7,868		19,494		11,704
Total Foodservice net sales	$	151,949	$	164,844	$	491,833	$	482,029
Total net sales	$	321,363	$	317,882	$	1,013,534	$	984,117

LANCASTER COLONY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands, except per share data)

~~The following table sets forth net sales disaggregated by class of similar products for the Retail and Foodservice segments:~~

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Retail
Frozen breads $ 59,846
$ 56,360
$ 207,256
$ 202,843
Refrigerated dressings, dips and other 47,900
50,327
164,973
164,785
Shelf-stable dressings and croutons 45,292
45,324
129,859
125,813
Total Retail net sales $ 153,038
$ 152,011
$ 502,088
$ 493,441
Foodservice
Dressings and sauces $ 115,746
$ 108,757
$ 347,583
$ 316,202
Frozen breads and other 41,230
35,406
122,742
105,112
Other roll products 7,868
—
11,704
—
Total Foodservice net sales $ 164,844
$ 144,163
$ 482,029
$ 421,314
Total net sales $ 317,882
$ 296,174
$ 984,117
$ 914,755

The following table provides an additional disaggregation of Foodservice net sales by type of customer:



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Foodservice
National accounts	$	110,384	$	119,875	$	356,192	$	356,102
Branded and other	36,261		37,101		116,147		114,223
Other roll products	5,304		7,868		19,494		11,704
Total Foodservice net sales	$	151,949	$	164,844	$	491,833	$	482,029

Three Months Ended
March 31, Nine Months Ended
March 31,
2019 2018 2019 2018
Foodservice
National accounts $ 119,875
$ 108,406
$ 356,102
$ 314,180
Branded and other 37,101
35,757
114,223
107,134
Other roll products 7,868
—
11,704
—
Total Foodservice net sales $ 164,844
$ 144,163
$ 482,029
$ 421,314

Note 10 – Stock-Based Compensation

There have been no changes to our stock-based compensation plans from those disclosed in our ~~2018~~2019 Annual Report on Form 10-K.

Our stock-settled stock appreciation rights (“SSSARs”) compensation expense was $0.7 million ~~and $0.6 million~~ for the three months ended March 31, ~~2019~~2020 and ~~2018, respectively.~~2019. Year-to-date SSSARs compensation expense was ~~$2.3~~$2.2 million for the current-year period compared to ~~$1.7~~$2.3 million for the prior-year period. At March 31, ~~2019,~~2020, there was ~~$5.5~~$7.0 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of 2 years.

Our restricted stock compensation expense was ~~$0.5~~$0.7 million and ~~$0.6~~$0.5 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Year-to-date restricted stock compensation expense was ~~$2.2~~$2.1 million for the current-year period compared to ~~$1.8~~$2.2 million for the prior-year period. At March 31, ~~2019,~~2020, there was ~~$4.2~~$6.4 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of 2 years.

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

Our fiscal year begins on July 1 and ends on June 30. Unless otherwise noted, references to “year” pertain to our fiscal year; for example, ~~2019~~2020 refers to fiscal ~~2019~~2020, which is the period from July 1, ~~2018~~2019 to June 30, ~~2019~~2020.

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto, all included elsewhere in this report, and our ~~2018~~2019 Annual Report on Form 10-K. The forward-looking statements in this section and other parts of this report involve risks, uncertainties and other factors, including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements due to these factors. For more information, see the section below entitled “Forward-Looking Statements.”

OVERVIEW

Business Overview

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

Over 95% of our products are sold in the United States. Foreign operations and export sales have not been significant in the past and are not expected to be significant in the future based upon existing operations. We do not have any fixed assets located outside of the United States.

Our business has the potential to achieve future growth in sales and profitability due to attributes such as:

leading Retail market positions in several product categories with a high-quality perception;

recognized innovation in Retail products;

a broad customer base in both Retail and Foodservice accounts;

well-regarded culinary expertise among Foodservice customers;

recognized leadership in Foodservice product development;

experience in integrating complementary business acquisitions; and

historically strong cash flow generation that supports growth opportunities.

Our goal is to grow both Retail and Foodservice segment sales over time by:

introducing new products and expanding distribution;

leveraging the strength of our Retail brands to increase current product sales;

expanding Retail growth through strategic licensing agreements;

continuing to rely upon the strength of our reputation in Foodservice product development and quality; and

acquiring complementary businesses.

With respect to long-term growth, we continually evaluate the future opportunities and needs for our business specific to our plant infrastructure, IT platforms and other initiatives to support and strengthen our operations. Recent examples of resulting investments include a significant capacity expansion project for our Sister Schubert’s frozen dinner roll facility in Horse Cave, Kentucky that was completed in January 2020; a new R&D center that was completed near the end of 2019; and the establishment of a Transformation Program Office in 2019 that will serve to coordinate our various capital and integration efforts, including our enterprise resource planning system (“ERP”) that is now underway.

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.

Consistent with this acquisition strategy, inon November 16, 2018, we acquired, using available cash on hand, substantially all of the assets of Omni Baking Company LLC (“Omni”), a long-time supplier of products to our frozen garlic bread operations. On October 19, 2018, we acquired, using available cash on hand, all the assets of Bantam Bagels, LLC (“Bantam”), a producer and marketer of frozen mini stuffed bagels and ~~mini stuffed pancakes~~other frozen bread products sold to both the retail and foodservice channels. ~~Also, in November 2018 we acquired, using available cash on hand, all the assets of Omni Baking Company LLC (“Omni”), a long-time supplier of products to our frozen garlic bread operations.~~ See further discussion of these acquisitions in Note 2 to the condensed consolidated financial statements.

RECENT EVENTS

A novel strain of coronavirus (“COVID-19”) was first identified in Wuhan, China in December 2019. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in business slowdowns or shutdowns in affected areas. In the U.S., state and local

governments recommended or mandated actions to slow the transmission of COVID-19. These measures include limitations on public gatherings, social distancing requirements, travel restrictions, closures of bars and dine-in restaurants, stay-at-home orders, quarantines and restrictions that prohibit many non-essential employees from going to work.

We have ~~made substantial capital investments~~two major priorities while navigating through this period of volatility and uncertainty:


1.	to ensure the health, safety and welfare of our employees; and


2.	to continue to play our part in the vital food supply chain by adequately supplying our customers while maintaining the financial strength of our business.

With respect to ~~support~~our efforts to ensure the health, safety and welfare of our employees, we are complying with all guidelines issued by the Centers for Disease Control and Prevention as well as state and local health departments. We have also engaged a pulmonology and critical care physician to advise us on our employee safety protocols. Based on the advice of these experts, we have put in place a range of safety modifications and guidelines in our factories, distribution centers and offices to ensure that we can operate safely, including but not limited to:

engaging a third party to conduct employee temperature checks prior to entering our production facilities;

conducting extensive cleaning and sanitation of workstations and common areas before, during, and after each shift;

employing social distancing guidelines and modifications at workspaces and in break areas;

staggering between shift changes and breaks;

relaxing attendance requirements and enhancing our paid leave policy;

implementing quarantine protocols in the event of confirmed or suspected cases of COVID-19;

providing a $300 bonus for each of our front-line employees in late March and increasing the wage rate for our hourly front-line employees by $2 per hour beginning in April through the end date of the applicable stay-at-home order;

establishing business travel restrictions; and

working from home whenever possible, consistent with the applicable stay-at-home order.

With respect to our second priority, as of the date of this filing, there has been no material adverse change in our ability to manufacture and distribute our products. We have not experienced any significant disruptions to our shipping or warehousing operations or sourcing of raw materials. We are also pursuing additional second-sourcing options to help limit the risk of supply disruptions.

We continue to monitor the rapidly evolving situation and guidance from authorities, including federal, state and local public health departments, and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plans. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impact of COVID-19 on our results of operations, financial condition, or cash flows in the future. However, we do expect that it could have a material adverse impact on our future revenue growth as well as our overall profitability and may lead to higher-than-normal inventory levels, revised payment terms with certain of our customers, additional reserves for inventory and receivables, and higher plant operating costs.

During the three months ended March 31, 2020, particularly the month of March, the effects of COVID-19 and the related actions undertaken in the U.S. to attempt to control its spread, specifically the restriction of restaurant dine-in purchases and imposition of stay-at-home orders, negatively impacted the operating results of our Foodservice segment. In the three-month period, our Foodservice segment sales declined 8% to $151.9 million while segment operating income fell 46% to $9.2 million, including a $4.5 million inventory write-down attributed to the abrupt mid-March slowdown in our Foodservice demand. We anticipate Foodservice segment sales will continue to be negatively impacted and the recovery period for this segment’s sales and operating results is contingent upon the timeline for the resumption of full-service operations at U.S. restaurants, the lifting of stay-at-home orders, the overall pace of the U.S. economic recovery and the willingness of consumers to return to away-from-home dining.

With respect to our Retail segment, the impact of COVID-19 resulted in an increase in sales during the three months ended March 31, 2020, particularly starting mid-March, as consumer food purchases transitioned away from the foodservice channel and into the retail channel. We anticipate this sales shift to our Retail segment will continue at least until U.S. restaurants can resume normal operations and consumers return to more typical levels of spending in the foodservice channel.

Our Foodservice segment, which in 2019 accounted for 50% of our total net sales and approximately 65% of our total pounds produced, is undergoing reduced throughput due to the impact of COVID-19, which will result in a reduction in the recovery of our fixed manufacturing and overhead costs, and will therefore unfavorably influence our financial results.

We continue to operate from a position of financial strength and believe that cash provided by operating activities and our existing ~~operations~~balances in cash and ~~future growth opportunities. Based on~~equivalents, in addition to our ~~current plans and expectations, we believe~~access to capital under our ~~capital expenditures for 2019 will total approximately $70 million, which includes a substantial investment for a capacity expansion project at~~unsecured revolving credit facility, should be adequate to meet our ~~frozen dinner roll facility in Horse Cave, Kentucky that we expect to complete in mid-2020.~~liquidity needs over the next 12 months. We are ~~nearing~~also putting a greater emphasis on tracking the ~~completion~~

financial strength of ~~a dedicated R&D center~~our customers and suppliers and taking actions, where determined necessary, to limit our financial exposure and operational risks. Additional details regarding our financial strength are provided in ~~central Ohio that will benefit both~~ the Retail and Foodservice segments, and we are also investing in production capacity and increased automation at Angelic Bakehouse, Inc. (“Angelic”) to improve efficiencies in production. We have recently commenced several projects to expand packaging capacity and end-of-line automation for both segments. We will fund our remaining capital needs in 2019 with cash generated from operations and cash on hand.

“Financial Condition” section below.

RESULTS OF CONSOLIDATED OPERATIONS

~~Net Sales and Gross Profit~~

Three Months Ended
March 31, Nine Months Ended
March 31,
(Dollars in thousands) 2019 2018 Change 2019 2018 Change
Net Sales

Retail $ 153,038
$ 152,011
$ 1,027
1 % $ 502,088
$ 493,441
$ 8,647
2 %
Foodservice 164,844
144,163
20,681
14 % 482,029
421,314
60,715
14 %
Total $ 317,882
$ 296,174
$ 21,708
7 % $ 984,117
$ 914,755
$ 69,362
8 %
Gross Profit $ 75,397
$ 67,911
$ 7,486
11 % $ 247,988
$ 227,325
$ 20,663
9 %
Gross Margin 23.7 % 22.9 % 25.2 % 24.9 %



(Dollars in thousands, except per share data)	Three Months Ended March 31,											Nine Months Ended March 31,
(Dollars in thousands, except per share data)	2020			2019			Change					2020			2019			Change
Net Sales	$	321,363		$	317,882		$	3,481		1	%	$	1,013,534		$	984,117		$	29,417		3	%
Cost of Sales	244,401			242,485			1,916			1	%	744,575			736,129			8,446			1	%
Gross Profit	76,962			75,397			1,565			2	%	268,959			247,988			20,971			8	%
Gross Margin	23.9		%	23.7		%						26.5		%	25.2		%
Selling, General and Administrative Expenses	46,907			37,981			8,926			24	%	132,109			109,902			22,207			20	%
Change in Contingent Consideration	65			88			(23		)	(26	)%	192			(9,517		)	9,709			(102	)%
Restructuring and Impairment Charges	—			—			—			N/M		886			—			886			N/M
Operating Income	29,990			37,328			(7,338		)	(20	)%	135,772			147,603			(11,831		)	(8	)%
Operating Margin	9.3		%	11.7		%						13.4		%	15.0		%
Other, Net	727			1,329			(602		)	(45	)%	3,031			3,682			(651		)	(18	)%
Income Before Income Taxes	30,717			38,657			(7,940		)	(21	)%	138,803			151,285			(12,482		)	(8	)%
Taxes Based on Income	8,288			8,053			235			3	%	32,205			33,746			(1,541		)	(5	)%
Effective Tax Rate	27.0		%	20.8		%						23.2		%	22.3		%
Net Income	$	22,429		$	30,604		$	(8,175	)	(27	)%	$	106,598		$	117,539		$	(10,941	)	(9	)%
Diluted Net Income Per Common Share	$	0.81		$	1.11		$	(0.30	)	(27	)%	$	3.87		$	4.26		$	(0.39	)	(9	)%

Net Sales

Consolidated net sales for the three months ended March 31, ~~2019~~2020 increased 7%1% to a third quarter record ~~$317.9~~$321.4 million versus ~~$296.2~~$317.9 million last year. ~~Excluding~~This growth was driven by an increase in Retail segment net sales ~~attributed to the acquisitions of Bantam and Omni, consolidated~~partially offset by a decline in Foodservice segment net ~~sales increased 3% for the quarter.~~sales. Consolidated net sales for the nine months ended March 31, ~~2019~~2020 increased ~~8%. Excluding~~3% due to higher sales for both segments. See discussion of net sales ~~attributed to~~by segment following the ~~acquisitions~~discussion of ~~Bantam and Omni, consolidated net sales increased 6%~~“Earnings Per Share” below.

Gross Profit

Consolidated gross profit for the ~~year-to-date period.~~

~~Consolidated gross margins for the~~ three ~~and nine~~ months ended March 31, ~~2019~~2020 increased $1.6 million, or 2%, to $77.0 million compared to the prior-year ~~periods.~~period. The ~~increases were~~increase was driven by ~~higher~~the favorable sales ~~volumes,~~mix shift to the Retail segment and our cost savings programs. Gross profit was unfavorably impacted by a $4.5 million inventory write-down attributed to an abrupt mid-March slowdown in Foodservice demand due to the impact of ~~pricing actions~~COVID-19. In addition, the company incurred a charge of $1.0 million for bonuses paid to the front-line employees in our factories and ~~continued cost savings~~distribution network in ~~manufacturing and procurement attributed to~~gratitude for their work in helping us meet the shifting demand within our ~~lean six sigma program partially offset by integration costs associated with the Omni operations, investments to support expanding retail distribution of Bantam and higher warehousing costs.~~ business.

Consolidated gross ~~margins~~profit for the nine months ended March 31, ~~2019 also reflect expenses resulting from~~2020 increased $21.0 million, or 8%, to $269.0 million compared to the prior-year period. The increase was driven by the higher sales volumes, our ~~discontinuation~~cost savings programs, lower commodity costs and improved net price realization, as partially offset by the impact of ~~the Marzetti~~^® ~~Simple Harvest~~^® ~~line of refrigerated dips and increased freight costs.~~COVID-19.

Selling, General and Administrative Expenses

Three Months Ended
March 31, Nine Months Ended
March 31,
(Dollars in thousands) 2019 2018 Change 2019 2018 Change
SG&A Expenses $ 37,981
$ 29,875
$ 8,106
27 % $ 109,902
$ 97,005
$ 12,897
13 %
SG&A Expenses as a Percentage of Net Sales 11.9 % 10.1 % 11.2 % 10.6 %

Selling, general and administrative (“SG&A”) expenses increased ~~27%~~24% for the three months ended March 31, ~~2019. The increase in these costs was~~2020 and increased 20% for the year-to-date period. These increases were primarily driven by aERP expenses, higher ~~level of investment in retail brand marketing, most notably for New York~~ ~~BRAND~~ ~~Bakery~~^®IT-related costs and increased consumer spending, as ~~we withheld spending behind that brand in the prior year due~~well as higher bad debt expense related to ~~disruptions in the supply of our frozen garlic bread products. SG&A expenses also reflect increased investments in personnel and~~ the impact of ~~recent acquisitions, including salaries, consumer spending and amortization.~~COVID-19. ERP expenses are included within Corporate Expenses.

SG&A expenses increased 13% for the nine months ended March 31, 2019 and also include the impact of transaction expenses for the Bantam and Omni acquisitions in addition to severance costs incurred during our fiscal second quarter.



	Three Months Ended March 31,								Nine Months Ended March 31,
(Dollars in thousands)	2020		2019		Change				2020		2019		Change
SG&A Expenses - Excluding ERP	$	42,030	$	37,981	$	4,049	11	%	$	119,617	$	109,902	$	9,715	9	%
ERP Expenses	4,877		—		4,877		N/M		12,492		—		12,492		N/M
Total SG&A Expenses	$	46,907	$	37,981	$	8,926	24	%	$	132,109	$	109,902	$	22,207	20	%

Change in Contingent Consideration

The change in contingent consideration resulted in expense of $0.1 million and $0.2 million for the three and nine months ended March 31, ~~2019~~2020, respectively, compared to expense of $0.1 million and a net benefit of $9.5 million for the three and nine months ended March 31, ~~2019.~~2019, respectively. The prior-year net benefit for the ~~current~~ year-to-date period ~~reflects~~reflected a $9.7 million reduction in the fair value of ~~Angelic’s~~the contingent consideration liability for Angelic Bakehouse, Inc. (“Angelic”) as a result of our December 31, 2018 fair value measurement. See further discussion in Note 43 to the condensed consolidated financial statements.

~~Given~~Restructuring and Impairment Charges

In the ~~nature~~fourth quarter of ~~Angelic’s sales~~2019, we committed to a plan to close our frozen bread manufacturing plant located in Saraland, Alabama. This decision was intended to provide greater production efficiency by consolidating most of this facility’s operations into other existing plants, outsourcing certain requirements and ~~historical accounting treatment,~~discontinuing less profitable frozen bread products. Production at the ~~entire adjustment related~~plant ceased in July 2019. The operations of this plant have not been classified as discontinued operations as the closure did not represent a strategic shift that would have a major effect on our operations or financial results.

We recorded restructuring and impairment charges of $0.9 million for the nine months ended March 31, 2020, which primarily consisted of plant clean-up expenses and contract termination costs. These charges were not allocated to ~~Angelic’s contingent consideration was reflected within~~our two reportable segments due to their unusual nature. All of these charges were recorded in the ~~Retail segment.~~

three months ended September 30, 2019, and we do not expect any additional charges attributed to this plant closure.

Operating Income

~~The foregoing factors contributed to consolidated operating~~Operating income ~~totaling $37.3 million~~decreased 20% and ~~$147.6 million~~8% for the three and nine months ended March 31, ~~2019,~~2020, respectively. ~~Our~~For the quarter, operating income was unfavorably influenced by ~~segment~~the $4.5 million write-down of Foodservice inventory and higher SG&A costs, including ERP expenses. The change in operating income for the year-to-date period was ~~as follows:~~

Three Months Ended
March 31, Nine Months Ended
March 31,
(Dollars in thousands) 2019 2018 Change 2019 2018 Change
Operating Income
Retail $ 24,082
$ 26,324
$ (2,242 ) (9 )% $ 102,815
$ 96,511
$ 6,304
7 %
Foodservice 17,124
14,297
2,827
20 % 55,390
42,398
12,992
31 %
Corporate Expenses (3,878 ) (3,106 ) (772 ) 25 % (10,602 ) (10,103 ) (499 ) 5 %
Total $ 37,328
$ 37,515
$ (187 ) — % $ 147,603
$ 128,806
$ 18,797
15 %
Operating Margin
Retail 15.7 % 17.3 % 20.5 % 19.6 %
Foodservice 10.4 % 9.9 % 11.5 % 10.1 %
Total 11.7 % 12.7 % 15.0 % 14.1 %

also unfavorably impacted by the prior-year benefit from the reduction in the fair value of Angelic’s contingent consideration and the current-year restructuring and impairment charges. See discussion of operating results by segment following the discussion of ~~“Net Income”~~“Earnings Per Share” below.

Taxes Based on Income ~~Before Income Taxes~~

As impacted by the factors discussed above, coupled with higher levels of interest income, income before income taxes for the three months ended March 31, 2019 increased by $0.7 million to $38.7 million from the prior-year total of $38.0 million. Income before income taxesOur effective tax rate was 23.2% and 22.3% for the nine months ended March 31, 2020 and 2019, ~~and 2018 was $151.3 million and $130.4 million,~~ respectively.

~~Taxes Based on Income~~

Taxes based on income increased to $33.7 million for the nine months ended March 31, 2019 from the prior-year total of $27.5 million. Our effective tax rate was 22.3% and 21.1% for the nine months ended March 31, 2019 and 2018, respectively. The current-year and prior-year income tax expense and rate were favorably impacted by the Tax Cuts and Jobs Act of 2017 (“Tax Act”), which was signed into law on December 22, 2017 with an effective date of January 1, 2018. Most notably, the Tax Act reduced the statutory federal income tax rate for corporations from 35% to 21%. The statutory federal income tax rate for our 2019 tax return will be 21% as compared to a blended rate of 28.1% for our 2018 tax return. For the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, our effective tax rate varied from the statutory federal income tax rate as a result of the following factors:


	Nine Months Ended March 31,				Nine Months Ended March 31,
	2019		2018		2020		2019
Statutory rate	21.0	%	28.1	%	21.0	%	21.0	%
State and local income taxes	2.5		3.2		2.9		2.5
One-time benefit on re-measurement of net deferred tax liability	—		(7.1	)
Domestic manufacturing deduction for qualified income	—		(2.4	)
Net windfall tax benefits - stock-based compensation	(1.0	)	(0.3	)	(0.9	)	(1.0	)
Other	(0.2	)	(0.4	)	0.2		(0.2	)
Effective rate	22.3	%	21.1	%	23.2	%	22.3	%

We include the tax consequences related to stock-based compensation within the computation of income tax expense. We may experience increased volatility to our 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 the nine months ended March 31, 2020 and 2019, the impact of net windfall tax benefits from stock-based compensation reduced our effective tax rate by 0.9% and 1.0%., respectively.

~~2018 were not material. The measurement period has ended, and we have completed the accounting for all the impacts of the Tax Act.~~

~~Net Income~~Earnings Per Share

As influenced by the factors noted above, diluted net income per share for the third quarter of 2020 totaled $0.81, as compared to $1.11 per diluted share in the prior year. Year-to-date net income ~~for 2019 of $30.6 million increased $3.0 million from the preceding year’s net income~~per share was $3.87 per diluted share, as compared to $4.26 per diluted share for the ~~quarter of $27.6 million and year-to-date net income of $117.5 million was higher than the prior year-to-date total of $102.9 million.~~prior-year period. Diluted weighted average common shares outstanding have remained relatively stable for the current and prior-year periods ended March 31. ~~As a result,~~

In 2020, spend for the ERP reduced diluted earnings per share by $0.13 and ~~due to the change in net income for each year, net income per share~~$0.34 for the third quarter ~~of 2019 totaled $1.11~~and year-to-date periods, respectively. The Foodservice inventory write-down and bonuses paid to front-line employees reduced net income per diluted share ~~as compared to net income~~by $0.15 for the current-year third quarter and year-to-date periods. The restructuring and impairment charge had an unfavorable impact of ~~$1.00~~$0.02 per diluted share ~~in the prior year. Year-to-date net income per share was $4.26 per diluted share, as compared to $3.74 per diluted share~~ for ~~the prior-year period.~~

~~For~~ the nine months ended March 31, 2020. In 2019, ~~the after-tax benefit from~~ the reduction in the fair value of Angelic’s contingent consideration liability ~~was $7.4 million, or $.27~~increased diluted earnings per ~~diluted share. For~~share by $0.27 for the ~~nine months ended March 31, 2018, the Tax Act resulted in a one-time benefit of $9.2 million, or $.33 per diluted share, from the re-measurement of our net deferred tax liability.~~year-to-date period.

RESULTS OF OPERATIONS - SEGMENTS

Retail Segment


	Three Months Ended March 31,											Nine Months Ended March 31,										Three Months Ended March 31,										Nine Months Ended March 31,
(Dollars in thousands)	2019			2018			Change					2019			2018			Change				2020			2019			Change				2020			2019			Change
Net Sales	$	153,038		$	152,011		$	1,027		1	%	$	502,088		$	493,441		$	8,647	2	%	$	169,414		$	153,038		$	16,376	11	%	$	521,701		$	502,088		$	19,613	4	%
Operating Income	$	24,082		$	26,324		$	(2,242	)	(9	)%	$	102,815		$	96,511		$	6,304	7	%	$	29,609		$	24,082		$	5,527	23	%	$	104,061		$	102,815		$	1,246	1	%
Operating Margin	15.7		%	17.3		%						20.5		%	19.6		%					17.5		%	15.7		%					19.9		%	20.5		%



Consideration
Cash paid for acquisition	$	33,111
Contingent consideration - fair value of earn-out at date of closing	8,000
Fair value of total consideration	$	41,111

Purchase Price Allocation
Receivables	$	1,937
Inventories	684
Other current assets	95
Machinery and equipment	1,896
Goodwill (tax deductible)	20,677
Other intangible assets	18,700
Current liabilities	(2,256		)
Other noncurrent liabilities	(622		)
Net assets acquired	$	41,111



Preliminary Purchase Price Allocation
Inventories	$	809
Other current assets	180
Machinery and equipment	4,777
Goodwill (tax deductible)	21,722
Current liabilities	(3,059		)
Net assets acquired	$	24,429



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet be Purchased Under the Plans
January 1-31, 2019 ⁽¹⁾	120	$	172.76	120	1,391,140
February 1-28, 2019 ⁽¹⁾	20,740	$	156.83	20,740	1,370,400
March 1-31, 2019	—	$	—	—	1,370,400
Total	20,860	$	156.92	20,860	1,370,400


(1)	Includes ~~120 shares in January 2019 and 5,740~~2,660 shares in February ~~2019~~2020 and 52 shares in March 2020 that were repurchased in satisfaction of tax withholding obligations arising from the vesting of restricted stock granted to employees under the Lancaster Colony Corporation 2015 Omnibus Incentive Plan.




		LANCASTER COLONY CORPORATION
			(Registrant)
Date:	~~April 30, 2019~~May 5, 2020	By:	/s/ DAVID A. CIESINSKI
			David A. Ciesinski
			President, Chief Executive Officer
			and Director
			(Principal Executive Officer)

Date:	~~April 30, 2019~~May 5, 2020	By:	/s/ THOMAS K. PIGOTT
			Thomas K. Pigott
			Chief Financial Officer and Assistant Secretary
			(Principal Financial and Accounting Officer)




Exhibit Number	Description	~~Located at~~

10.1^{(a), (b)}	Form of Restricted Stock ~~Appreciation Rights~~Award Agreement for ~~Service Providers~~Employees and Consultants under the Lancaster Colony Corporation 2015 Omnibus Incentive Plan	~~Filed herewith~~

10.2^{(a), (b)}	Form of Stock Appreciation Rights Agreement for Employees and Consultants under the Lancaster Colony Corporation 2015 Omnibus Incentive Plan

~~31.1~~10.3	Design/Build Agreement between T. Marzetti Company and Gray Construction, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (000-04065), filed February 28, 2020)

10.4	Credit Agreement dated as of March 19, 2020 among Lancaster Colony Corporation, the Lenders, The Huntington National Bank as Syndication Agent and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (000-04065), filed March 20, 2020)

31.1^(b)	Certification of CEO under Section 302 of the Sarbanes-Oxley Act of 2002	~~Filed herewith~~

31.2^(b)	Certification of CFO under Section 302 of the Sarbanes-Oxley Act of 2002	~~Filed herewith~~

32^(c)	Certification of CEO and CFO under Section 906 of the Sarbanes-Oxley Act of 2002

101.INS^(b)	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

~~Furnished herewith~~101.SCH^(b)	Inline XBRL Taxonomy Extension Schema Document

101.CAL^(b)	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF^(b)	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB^(b)	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE^(b)	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104^(b)	The cover page of Lancaster Colony Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (included within Exhibit 101 attachments)

~~101.INS~~(a)	~~XBRL Instance Document~~Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.

(b)	Filed herewith

~~101.SCH~~(c)	~~XBRL Taxonomy Extension Schema Document~~	~~Filed~~Furnished herewith

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~	~~Filed herewith~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~	~~Filed herewith~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~	~~Filed herewith~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~	~~Filed herewith~~

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