SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Annual Report
(Mark One)
[X] Annual Report pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended June 30, 1999
Or
[ ] Transition report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
------------------------------
Commission file number ___________________
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
THE EARTHGRAINS COMPANY EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
THE EARTHGRAINS COMPANY
8400 Maryland Avenue
St. Louis, Missouri 63105
REQUIRED INFORMATION
Item 1. The Plan is subject to ERISA. See Item 4.
Item 2. The Plan is subject to ERISA. See Item 4.
Item 3. The Plan is subject to ERISA. See Item 4.
Item 4. Financial Statements and Exhibits.
----------------------------------
(a) Financial Statements:
Audited Statement of Net Assets Available for Benefits at June 30, 1999
and June 30, 1998.
Audited Statement of Changes in Net Assets Available for Benefits for
the twelve months ended June 30, 1999 and June 30, 1998.
Notes to Financial Statements
Line 27a - Schedule of Assets Held for Investment Purposes at June 30,
1999.
Line 27d - Schedule of Reportable Transactions for the twelve months
ended June 30, 1999.
Appendix information has not been provided.
<PAGE>
(b) Exhibits:
Exhibit 23 Consent of Independent Accountants
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE EARTHGRAINS COMPANY EMPLOYEE
STOCK OWNERSHIP/401(K) PLAN
By: /S/ EDWARD J. WIZEMAN
-------------------------
Edward J. Wizeman
Administrative Committee Member
Date: December 22, 1999
<PAGE>
THE EARTHGRAINS
COMPANY EMPLOYEE
STOCK OWNERSHIP/
401(k) PLAN
Report, Financial Statements and
Additional Information
June 30, 1999 and 1998
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Index to Report, Financial Statements and
Additional Information
June 30, 1999 and 1998
____________________________________________________________________
Page
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits 2-3
Statement of Changes in Net Assets Available
for Benefits 4-5
Notes to Financial Statements 6-11
Additional Information*:
Line 27a - Schedule of Assets Held for
Investment Purposes, June 30, 1999 Schedule I
Line 27d - Schedule of Reportable Transactions,
Year Ended June 30, 1999 Schedule II
* Other schedules required by Section 2520.103-10 of Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
<PAGE>
PricewaterhouseCoopers LLP
Report of Independent Accountants
To the Participants and Administrator
of The Earthgrains Company Employee
Stock Ownership/401(k) Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Earthgrains Employee Stock Ownership/401(k) Plan (the "Plan") at June 30,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes at June 30, 1999 and of reportable transactions for
the year ended June 30, 1999 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
November 15, 1999
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Statement of Net Assets Available for Benefits
Page 2
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30,
1999 1998
<S> <C> <C>
Assets
Investments, at fair value
The Earthgrains Company
Common Stock* $ 69,557,213 $ 69,568,070
Anheuser-Busch Companies, Inc.
Common Stock* 11,896,932 8,665,872
Merrill Lynch Equity Index Trust Fund* 7,884,544 5,207,030
AIM Blue Chip Fund 3,040,081 1,800,348
AIM Balanced Fund 2,634,846 1,536,933
Oppenheimer U.S. Government Fund 1,088,222 702,090
Merrill Lynch Institutional Fund 1,075,986 388,813
Oppenheimer Disciplined Value Fund 237,516 29,175
Participant Loans 1,656,515 802,409
------------ ------------
Total investments 99,071,855 88,700,740
Liabilities
Notes payable (12,925,599) (13,805,600)
------------ ------------
Net assets available for benefits $ 86,146,256 $ 74,895,140
============ ============
<FN>
* Represents more than 5% of net assets available for benefits.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Statement of Changes in Net Assets Available
for Benefits
Page 3
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended
June 30,
1999 1998
<S> <C> <C>
Additions to net assets attributed to:
Contributions:
Employer $ 5,883,611 $ 3,708,186
Participants 10,336,858 4,956,380
----------- -----------
16,220,469 8,664,566
Investment income:
Interest 125,464 74,362
Dividends 878,403 731,720
Net realized and unrealized (depreciation)
appreciation in fair value of investments (3,023,122) 28,984,027
----------- -----------
(2,019,255) 29,790,109
Total additions 14,201,214 38,454,675
----------- -----------
Deductions from net assets attributed to:
Distributions to participants 1,767,797 3,403,857
Interest expense 1,090,110 1,267,764
Administrative expenses 92,191 19,908
----------- -----------
Total deductions 2,950,098 4,691,529
----------- -----------
Net increase 11,251,116 33,763,146
Net assets available for benefits, beginning
of year 74,895,140 41,131,994
----------- -----------
Net assets available for benefits, end of year $86,146,256 $74,895,140
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 1999 and 1998
Page 4
- -------------------------------------------------------------------
1. Description of the plan
The following summary of The Earthgrains Employee Stock Ownership/401(k)
Plan (Plan) is intended to provide only a general description of the Plan.
Participants should refer to the plan document for more complete information.
General
The Plan is intended to be an employee stock ownership plan (ESOP) within
the meaning of the Internal Revenue Code (Code), designed to primarily invest in
The Earthgrains Company ("Earthgrains" or the "Company") common stock, and is
intended to constitute a cash or deferred arrangement pursuant to section 401(k)
of the Code. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Plan amendments
Effective April 1, 1998, the Company matching contribution increased from 3%
of participants' annual compensation to 4%. Additionally, as of July 1, 1998
all participants were given immediate vesting rights of 100% in their respective
account balance.
Plan administration
The Plan's named fiduciaries are Earthgrains, as sponsor and plan
administrator, and Merrill Lynch (Trustee) as trustee. Effective January 2,
1998, the Company appointed Merrill Lynch as Trustee and recordkeeper.
Accordingly, the Plan's assets were transferred from Wachovia Bank to Merrill
Lynch. As sponsor, the Company has the right to amend the Plan, designate the
Plan's named fiduciaries and exercise all fiduciary functions necessary for the
operation of the Plan except those assigned to another named fiduciary by the
Plan or the trust agreement. The Company has appointed the Human Resource
Committee to exercise the authority and responsibility for general
administration of the Plan. The Trustee has the exclusive authority and
discretion to invest, manage and hold assets of the trust in accordance with the
provisions of the Plan and the separate trust agreement.
Plan participation
Each Company employee (other than employees covered by a nonparticipating
collective bargaining agreement) is eligible to participate in the Plan after
the employee has been credited with one year of service. Participation by
eligible employees is voluntary.
Contributions
A participant may make matched and unmatched contributions. Both matched
and unmatched contributions may be before-tax and after-tax. A participant may
contribute from 1% to 4% of their compensation through payroll deduction for
before-tax matched contributions and after-tax matched contributions. The sum
of the matched contributions may not be less than 1% or more than 4% of the
participant's compensation. In addition, the participant may contribute from
1%-16/% of their compensation through payroll deduction for before-tax unmatched
contributions and after-tax unmatched contributions; however, the maximum amount
of before-tax contributions allowed is $10,000 for the years ending 1999 and
1998. In addition, the sum of before-tax and after-tax contribution rates must
not exceed 16% of a participant's compensation,
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 1999 and 1998
Page 5
- -------------------------------------------------------------------
subject to certain limitations of the Code. The Company contributes a matching
amount equal to 100% of a participant's matched contributions, but not to exceed
4% of a participant's annual compensation.
Participant contributions vest and become non-forfeitable immediately.
Effective July 1, 1998, employer contributions vest and become non-forfeitable
immediately. Prior to the plan amendment, employer contributions vested and
became non-forfeitable after two years of service or upon termination of
employment by reason of death, permanent disability, upon termination of
employment after reaching age 60, or in the event of a "change in control" of
the Company (as defined in the Plan). Forfeitures of nonvested balances were
used to pay administrative plan expenses prior to the amendment. At June 30,
1999 and 1998, forfeited nonvested accounts totaled $0 and $66,243,
respectively.
Investments
The Trustee maintains The Earthgrains Company Common Stock Fund, the
Anheuser-Busch Companies Common Stock Fund, the Merrill Lynch Institutional
Fund, the Merrill Lynch Equity Index Trust Fund, the Oppenheimer Disciplined
Value Fund, the Oppenheimer U.S. Government Fund, the AIM Blue Chip Fund, and
the AIM Balanced Fund for the investment of participant and employer
contributions. All employer contributions are invested in The Earthgrains
Company Common Stock Fund. At least 50% of each participant's matched
contributions must be invested in The Earthgrains Company Common Stock Fund for
at least one full plan year after the date the matched contributions are
credited to the Plan. After the participant's matched contributions have
matured, they may elect to invest the matched contributions in the other
investment funds. Contributions can be invested in increments of 1% into any
fund established under the Plan. Earnings thereon are reinvested in the fund to
which they relate.
Distributions
The Plan permits three types of in-service withdrawals: a non-hardship
withdrawal, an age 59 1/2 withdrawal and a hardship withdrawal, as defined in
the plan document, subject to certain restrictions. Termination distributions
from The Earthgrains Company Common Stock Fund and the Anheuser-Busch Companies
Common Stock Fund are in the form of a stock certificate for all full shares and
a check for the fair market value of any partial shares. Alternatively, the
participant may elect to receive the fair market value of this common stock in
cash. The value of any investments in other funds will be distributed in cash
by a check unless the participant elects to have these amounts converted to
Company stock prior to distribution. All in-service withdrawals are distributed
in cash.
Vesting
Effective July 1, 1998, participants are immediately vested in their
participant and employer matching contributions, plus actual earnings thereon.
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 1999 and 1998
Page 6
- --------------------------------------------------------------------
Participant loans
A participant may borrow before-tax and/or after-tax vested account
balances. The minimum loan amount is $1,000; the maximum amount is the lesser
of $50,000 less the highest outstanding loan balance under the Plan during the
last 12 months, or 50% of the vested account balance. The interest rate is set
at the prime rate plus one percentage point. Once the loan has been approved,
the interest rate is fixed for the entire term of the loan. The term of the
loan for the purchase of a principal residence may be up to 10 years; the term
of a loan for any other reason may not exceed 5 years.
Expenses
Under the Plan, participants are charged an annual recordkeeping fee in
addition to a loan fee, if applicable. The recordkeeping fee is charged against
earnings on the participants' investments. All other fees of the Plan are paid
by the Company.
Amendment or termination of the Plan
The Company anticipates that the Plan will continue without interruption,
but reserves the right to terminate its participation in the Plan subject to
provisions of ERISA. If the Plan is terminated, the Investment Committee will
direct an accounting and distribution of all amounts held in the trust to the
participants and beneficiaries. The distributions will be made in a lump-sum to
each participant or beneficiary in the Plan as of the termination date. This
distribution will take place no later than one year subsequent to the plan
termination.
2. Summary of significant accounting policies
Basis of accounting
The Plan's financial statements are prepared on the accrual basis of
accounting.
The Company has elected to adopt Statement of Position 99-3, "Accounting for
and Reporting of Certain Defined Contribution Plan Investments and Other
Disclosure Matters," for the plan year ended June 30, 1999. Accordingly, fund
information is not presented in the financial statements.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions to and deductions from net
assets during the reporting period. Actual results could differ from those
estimates.
Investment valuation
Investments in common stock, U.S. government securities and corporate debt
instruments are stated at fair value based on the quoted market price at June
30, 1999 and 1998, respectively. Investments in interest bearing cash and
interests in common/collective trusts are stated at fair value as determined by
the Trustee. Participant loans are valued at cost which approximates fair
value.
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 1999 and 1998
Page 7
- --------------------------------------------------------------------
Investment securities are exposed to various risks, such as interest rate,
market, and credit. Due to the level of risk associated with certain investment
securities and the level of uncertainty related to changes in the value of
investment securities, it is at least reasonably possible that changes in risks
in the near term could materially affect the amounts reported in the Statement
of Net Assets Available for Benefits.
Security transactions and investment income
Investment purchases and sales, and related realized gains or losses, are
recorded on the valuation date. Interest and dividend income are also recorded
as of the valuation date. Net realized and unrealized appreciation in fair
value of investments is comprised of the change in market value compared to the
cost of investments retained in the Plan, and realized gains and losses on
security transactions which represent the difference between proceeds and cost.
3. Federal income tax status
The Internal Revenue Service has determined and informed the Company by a
letter dated April 23, 1998 that the Plan is designed in accordance with
applicable sections of the Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
4. Reconciliation of financial statements to Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
June 30,
1999 1998
<S> <C> <C>
Net assets available for benefits per the
Financial statements $86,146,256 $74,895,140
Amounts allocated to withdrawing participants (90,932) (37,285)
___________ ___________
Net assets available for benefits per
the Form 5500 $86,055,324 $74,857,855
=========== ===========
</TABLE>
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 1999 and 1998
Page 8
- --------------------------------------------------------------------
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year ended
June 30, 1999
<S> <C>
Distributions to participants per the
financial statements $1,767,797
Add: Amounts allocated to withdrawing
participants at June 30, 1999 90,932
Less: Amounts allocated to withdrawing
participants at June 30, 1998 (37,285)
__________
Distributions to participants per
the Form 5500 $1,821,444
==========
</TABLE>
5. Transactions with parties-in-interest
At June 30, 1999 and 1998, the Plan held shares of The Earthgrains Company
common stock. These shares had a total cost of $34,853,638 and $25,693,565 and
total market value of $69,557,213 and $69,568,070 at June 30, 1999 and 1998,
respectively. During the 12 months ended June 30, 1999, transactions with the
Company included aggregate purchases and sales totaling $12,118,115 and
$2,697,717, respectively.
During the year ended June 30, 1999, transactions with Wachovia Bank
included aggregate purchases and sales totaling $0 and $245,834, respectively.
During the year ended June 30, 1999, transactions with Merrill Lynch
included aggregate purchases and sales totaling $21,682,943 and $8,108,102,
respectively.
These transactions are allowable party-in-interest transactions under
Section 408(e) and 408(b)(8) of ERISA and the regulations promulgated
thereunder.
6. Notes payable.
In July 1996, the Plan issued $16,804,484 in guaranteed 8% ESOP notes to
The Earthgrains Company. Interest is payable quarterly. The ESOP shall have
the right to prepay all at any time, or any portion from time to time, of the
unpaid principal prior to maturity, without penalty or premium, provided that on
each prepayment date the ESOP shall pay to the order of the Company all accrued
and unpaid interest on the principal portion being prepaid to and including the
date of such prepayment. Proceeds received from issuance of the notes were used
to purchase 1,026,228 shares of Company common stock. The shares are maintained
in the Company Stock Fund and are released and allocated to plan participants to
fund employer matching contributions, based on calculations specified in the
plan document, as contributions are made to the Plan. During the year ended
June 30, 1999, 83,051 shares were
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 1999 and 1998
Page 9
- -------------------------------------------------------------------
released to participants. At June 30, 1999 and 1998 the Company Common Stock
Fund held 1,523,373 and 828,301 unallocated shares and 529,067 and 174,042
allocated shares, respectively. The total ESOP loan payments made to Wachovia
were $1,647,168 during the 1999 Plan year.
<PAGE>
<TABLE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK SCHEDULE I
OWNERSHIP/401(k) PLAN
Line 27a - Schedule of Assets Held for
Investment Purposes
June 30, 1999
_______________________________________________________________________________
<CAPTION>
(a) (b) (c) (d) (e)
Identity of issue, borrower, Description of investment including Cost Current
lessor or similar party maturity date, rate of interest, Value
collateral, par, or maturity value
<S> <S> <S> <C> <C>
* The Earthgrains Company Common stock $34,853,638 $69,557,213
Anheuser-Busch Companies, Inc. Common stock 4,442,148 11,896,932
* Merrill Lynch Equity Index Trust Fund 5,887,341 7,884,544
AIM Balanced Fund 2,417,928 2,634,846
AIM Blue Chip Fund - Class A 2,400,079 3,040,081
Oppenheimer U.S. Government Fund 1,133,338 1,088,222
* Merrill Lynch Institutional Fund 1,075,986 1,075,986
Oppenheimer Disciplined Value Fund 229,511 237,516
* Participant Loan Fund Participant loans 1,656,515 1,656,515
<FN>
* Represents party-in-interest.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK SCHEDULE II
OWNERSHIP/401(k) PLAN
Line 27d - Schedule of Reportable Transactions*
Year Ended June 30, 1999
- ---------------------------------------------------------------------------
<CAPTION>
(b)
Description of asset (c) (d) (e)
(a) (include interest rate and Purchase Selling Lease
Identity of party involved maturity in case of a loan) Price Price Rental
<S> <S> <C> <C> <C>
Anheuser-Busch Companies, Inc. Common Stock $ 256,806
$ 1,099,959
*The Earthgrains Company Common Stock 12,118,115
2,697,717
Merrill Lynch Institutional Fund 759,608
248,438
Merrill Lynch Equity Index Trust Fund 1,868,609
563,668
Oppenheimer U.S. Government Fund 685,365
257,053
AIM Balanced Fund 1,320,479
368,648
AIM Blue Chip Fund-Class A 1,176,555
413,019
(b) (h)
(a) Description of (f) (g) Current value of (i)
Identity of party asset (include interest Expense incurred Cost of asset on Net gain
involved rate and maturity in with transaction asset transaction date or (loss)
case of a loan)
<S> <S> <C> <C> <C> <C>
Anheuser-Busch Common Stock $ 256,806 $ 256,806
Companies, Inc. 458,491 1,099,959 $ 641,468
*The Earthgrains Common Stock 12,118,115 12,118,115
Company 1,816,386 2,697,717 881,331
Merrill Lynch Institutional Fund 759,608 759,608
248,438 248,438
Merrill Lynch Equity Index Trust Fund 1,868,609 1,868,609
492,351 563,668 71,317
Oppenheimer U.S. Government Fund 685,365 685,365
258,979 257,053 (1,926)
AIM Balanced Fund 1,320,479 1,320,479
351,452 368,648 17,196
AIM Blue Chip Fund-Class A 1,176,555 1,176,555
361,216 413,019 51,803
<FN>
* Transactions or series of transactions in excess of 5 percent of the current
value of the Plan's assets as of the beginning of the plan year as defined in
Section 2520.103-6 of the Department of Labor's Rules and Regulations for reporting
and disclosure under ERISA.
</FN>
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this filing on Form 11-K
of our report dated May 1, 1999, which appears on page 34 of the 1999 Annual
Report to Shareholders of The Earthgrains Company, which is incorporated by
reference in The Earthgrains Company's Annual Report on Form 10-K for the fiscal
year ended March 30, 1999.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
St. Louis, Missouri
November 15, 1999
<PAGE>
