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Summary Of Significant Accounting Policies | 12 Months Ended
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Jun. 30, 2014
Accounting Policies [Abstract] |
Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The accompanying 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.” Intercompany transactions and accounts have been eliminated in consolidation. 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, 2014 refers to fiscal 2014, which is the period from July 1, 2013 to June 30, 2014. Discontinued Operations On January 30, 2014, we sold effectively all of the net operating assets of our candle manufacturing and marketing operations. The financial results of these operations are reported as discontinued operations for all periods presented herein. The footnote presentation has been revised to remove the effect of the discontinued operations, as appropriate. See further discussion and disclosure about discontinued operations in Note 2. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires that we make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates included in these consolidated financial statements include allowance for doubtful accounts receivable, net realizable value of inventories, useful lives for the calculation of depreciation and amortization, impairments of long-lived assets, accruals for marketing and merchandising programs, tax contingency reserves for uncertain tax positions, pension and postretirement assumptions, as well as expenses related to distribution and self-insurance accruals. Actual results could differ from these estimates. Cash and Equivalents We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The carrying amounts of our cash and equivalents, including money market funds and commercial paper, approximate fair value due to their short maturities and are considered level 1 investments, which have quoted market prices in active markets for identical assets. As a result of our cash management system, checks issued but not presented to the banks for payment may create negative book cash balances. When such negative balances exist, they are included in other accrued liabilities. Receivables and the Allowance for Doubtful Accounts The carrying amounts of our accounts receivable approximate fair value. We provide an allowance for doubtful accounts based on the aging of accounts receivable balances, historical write-off experience and on-going reviews of our trade receivables. Measurement of potential losses requires credit review of existing customer relationships, consideration of historical effects of relevant observable data, including present economic conditions such as delinquency rates, and the economic health of customers. Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and equivalents and trade accounts receivable. By policy, we limit the amount of credit exposure to any one institution or issuer. Our concentration of credit risk with respect to trade accounts receivable is mitigated by our credit evaluation process and by having a large and diverse customer base. However, see Note 13 with respect to our accounts receivable with Wal-Mart Stores, Inc. and McLane Company, Inc., a wholesale distribution subsidiary of Berkshire Hathaway, Inc. Inventories Inventories are valued at the lower of cost or market and are costed by various methods that approximate actual cost on a first-in, first-out basis. Due to the nature of our business, work in process inventory is not a material component of inventory. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. We use the straight-line method of computing depreciation for financial reporting purposes based on the estimated useful lives of the corresponding assets. Estimated useful lives for buildings and improvements range generally from two to 40 years while machinery and equipment range generally from two to 20 years. For tax purposes, we generally compute depreciation using accelerated methods. Purchases of property, plant and equipment included in accounts payable and excluded from the property additions and the change in accounts payable in the Consolidated Statement of Cash Flows at June 30 were as follows:
| 2014 |  | 2013 |  | 2012
Construction in progress in accounts payable | $ | 2,755 |  |  | $ | 332 |  |  | $ | 677 |
The following table sets forth depreciation expense in each of the years ending June 30:
| 2014 |  | 2013 |  | 2012
Depreciation expense | $ | 17,419 |  |  | $ | 16,036 |  |  | $ | 15,815 |
Long-Lived Assets We monitor the recoverability of the carrying value of our long-lived assets by periodically considering whether indicators of impairment are present. If such indicators are present, we determine if the assets are recoverable by comparing the sum of the undiscounted future cash flows to the assets’ carrying amounts. Our cash flows are based on historical results adjusted to reflect our best estimate of future market and operating conditions. If the carrying amounts are greater, then the assets are not recoverable. In that instance, we compare the carrying amounts to the fair value to determine the amount of the impairment to be recorded. Goodwill and Other Intangible Assets Goodwill is not amortized. It is evaluated annually at April 30, by applying impairment testing procedures, as appropriate. Other intangible assets with lives restricted by contractual, legal, or other means are amortized on a straight-line basis over their useful lives to general and administrative expense. We periodically evaluate the future economic benefit of the recorded goodwill and other intangible assets when events or circumstances indicate potential recoverability concerns. Carrying amounts are adjusted appropriately when determined to have been impaired. See further discussion regarding goodwill and other intangible assets in Note 3. Accrued Marketing and Distribution Various marketing programs are offered to customers to reimburse them for a portion or all of their promotional activities related to our products. Additionally, we often incur various costs associated with shipping products to the customer. We provide accruals for the costs of marketing and distribution based on historical information as may be modified by estimates of actual costs incurred. Accruals for Self-Insurance Self-insurance accruals are made for certain claims associated with employee health care, workers’ compensation and general liability insurance. These accruals include estimates that are primarily based on historical loss development factors. Shareholders’ Equity We are authorized to issue 3,050,000 shares of preferred stock consisting of 750,000 shares of Class A Participating Preferred Stock with $1.00 par value, 1,150,000 shares of Class B Voting Preferred Stock without par value and 1,150,000 shares of Class C Nonvoting Preferred Stock without par value. Our Board of Directors approved a share repurchase authorization of 2,000,000 shares in November 2010. Approximately 1,426,000 shares remained authorized for future purchase at June 30, 2014. Revenue Recognition We recognize revenue upon transfer of title and risk of loss, provided that evidence of an arrangement exists, pricing is fixed or determinable, and collectability is probable. Net sales are recorded net of estimated sales discounts, returns and certain sales incentives, including coupon redemptions and rebates. Advertising Expense We expense advertising as it is incurred. The following table summarizes advertising expense as a percentage of net sales in each of the years ending June 30:
| 2014 |  | 2013 |  | 2012
Advertising expense as a percentage of net sales | 2 | % |  | 2 | % |  | 2 | %
Shipping and Handling Shipping and handling fees billed to customers are included in net sales, while our shipping and handling costs are included in cost of sales. Stock-Based Employee Compensation Plans We account for our stock-based employee compensation plans in accordance with GAAP for stock-based compensation, which requires the measurement and recognition of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of the employee services is recognized as compensation expense over the period that an employee provides service in exchange for the award, which is typically the vesting period. See further discussion and disclosure in Note 7. Income Taxes Our income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in numerous domestic jurisdictions. Our annual tax rate is determined based on our income, statutory tax rates and the permanent tax impacts of items treated differently for tax purposes than for financial reporting purposes. Tax law requires certain items be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Realization of certain deferred tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods. Although realization is not assured, management believes it is more likely than not that our deferred tax assets will be realized and thus we have not recorded any valuation allowance for the years ended June 30, 2014 or 2013. In accordance with accounting literature related to uncertainty in income taxes, tax benefits from uncertain tax positions that are recognized in the financial statements are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on our results of operations, cash flow or financial position. See further discussion in Note 6. 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. Basic and diluted income per common share from continuing operations were calculated as follows:
| 2014 |  | 2013 |  | 2012
Income from continuing operations | $ | 100,986 |  |  | $ | 103,860 |  |  | $ | 92,349 |
Income from continuing operations available to participating securities | (174 | ) |  | (326 | ) |  | (170 | )
Income from continuing operations available to common shareholders | $ | 100,812 |  |  | $ | 103,534 |  |  | $ | 92,179 |
Weighted average common shares outstanding - basic | 27,264 |  |  | 27,252 |  |  | 27,233 |
Incremental share effect from: |  |  |  |  |
Nonparticipating restricted stock | 3 |  |  | 3 |  |  | 4 |
Stock-settled stock appreciation rights | 41 |  |  | 30 |  |  | 28 |
Weighted average common shares outstanding - diluted | 27,308 |  |  | 27,285 |  |  | 27,265 |
Income per common share from continuing operations - basic | $ | 3.70 |  |  | $ | 3.80 |  |  | $ | 3.38 |
Income per common share from continuing operations - diluted | $ | 3.69 |  |  | $ | 3.79 |  |  | $ | 3.38 |
Comprehensive Income and Accumulated Other Comprehensive Loss Comprehensive income includes changes in equity that result from transactions and economic events from non-owner sources. Comprehensive income is composed of two subsets – net income and other comprehensive income (loss). Included in other comprehensive income (loss) are pension and postretirement benefits adjustments. The following table presents the amounts reclassified out of accumulated other comprehensive loss by component:
| 2014 |  | 2013
Accumulated other comprehensive loss at beginning of period | $ | (8,391 | ) |  | $ | (12,162 | )
Defined Benefit Pension Plan Items: |  |  |
Net gain arising during the period | 65 |  |  | 5,160 |
Amortization of unrecognized net loss (1) | 460 |  |  | 687 |
Amortization of transition asset (1) | — |  |  | (1 | )
Postretirement Benefit Plan Items: |  |  |
Net gain arising during the period | 31 |  |  | 162 |
Amortization of unrecognized net gain (1) | (27 | ) |  | (22 | )
Amortization of prior service asset (1) | (5 | ) |  | (5 | )
Total other comprehensive income, before tax | 524 |  |  | 5,981 |
Total tax expense | (194 | ) |  | (2,210 | )
Other comprehensive income, net of tax | 330 |  |  | 3,771 |
Accumulated other comprehensive loss at end of period | $ | (8,061 | ) |  | $ | (8,391 | )
(1) Included in the computation of net periodic benefit income/cost. See Notes 8 and 9 for additional information. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 14-09”) which creates a comprehensive set of guidelines for the recognition of revenue under the principle: “Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” The requirements of ASU 14-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and will require either retrospective application to each prior period presented or retrospective application with the cumulative effect of initially applying the standard recognized at the date of adoption. We are currently evaluating the impact this ASU will have on our financial position and results of operations.

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