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, 2000
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 June 30, 2000 and 1999.
Audited Statement of Changes in Net Assets
Available for Benefits Years ended June 30, 2000 and 1999.
Notes to Financial Statements June 30, 2000 and
1999
Line 27a - Schedule of Assets Held for Investment
Purposes at June 30, 2000.
Line 27d - Schedule of Reportable Transactions for
the twelve months ended June 30, 2000.
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:__________________________
Kevin W. Oliver
Date: December 22, 2000
<PAGE>
THE EARTHGRAINS
COMPANY EMPLOYEE
STOCK OWNERSHIP/
401(K) PLAN
Report, Financial Statements and
Additional Information
June 30, 2000 and 1999
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(K) PLAN
Index to Report, Financial Statements and
Additional Information
June 30, 2000 and 1999
---------------------------------------------------------
Page
Report of Independent Accountants 1
Financial Statements:
Statement of Net Assets Available for
Benefits at June 30, 2000 and 1999 2
Statement of Changes in Net Assets
Available for Benefits for the Years
Ended June 30, 2000 and 1999 3
Notes to Financial Statements 4-9
Additional Information*:
Schedule of Assets Held for
Investment Purposes at June 30, 2000 Schedule I
Schedule of Reportable Transactions
for the Year Ended June 30, 2000 Schedule II
* Other schedules required by 29 CFR 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>
Pricewaterhouse Coopers 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 statement of net assets
available for benefits and the related statement 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, 2000 and 1999, and the changes in net
assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in
the United States of America. 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 auditing standards
generally accepted in the United States of America, 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 our opinion.
Our audits were conducted 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, 2000 and of reportable transactions for
the year ended June 30, 2000 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/ PRICEWATERHOUSE COOPERS LLP
Pricewaterhouse Coopers LLP
December 15, 2000
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(K) PLAN
Statement of Net Assets Available for Benefits
June 30, 2000 and 1999
---------------------------------------------------------
<TABLE>
June 30,
2000 1999
<S> <C> <C>
Assets
Investments:
The Earthgrains Company
Common Stock $56,063,839* $69,557,213*
Anheuser-Busch Companies, Inc.
Common Stock 11,579,358* 11,896,932*
Merrill Lynch Equity Index Trust Fund 9,249,895* 7,884,544*
AIM Blue Chip Fund 4,598,010* 3,040,081
AIM Balanced Fund 3,067,973 2,634,846
Merrill Lynch Institutional Fund 1,108,922 1,062,332
Oppenheimer U.S. Government Fund 1,043,857 1,088,222
Merrill Lynch Basic Value Fund 337,482 ---
Managers Intl. Equity Fund 33,638 ---
Oppenheimer Disciplined Value Fund --- 237,516
Participant Loans 1,811,615 1,656,515
----------- -----------
Total investments 88,894,589 99,058,201
Receivables:
Employee contribution receivable 244,543 ---
Interest income 18,867 13,654
----------- -----------
Total receivables 263,410 13,654
----------- -----------
89,157,999 99,071,855
Liabilities:
Notes payable (10,466,500) (12,925,599)
----------- -----------
Net assets available for benefits $78,691,499 $86,146,256
=========== ===========
<FN>
* Represents more than 5% of net assets available for benefits.
</FN>
</TABLE>
The accompanying notes are an integral part
of these financial statements.
-2-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(K) PLAN
Statement of Changes in Net Assets Available for Benefits
Years Ended June 30, 2000 and 1999
------------------------------------------------------------
<TABLE>
Years Ended
June 30,
2000 1999
<S> <C> <C>
Additions to net assets attributed to:
Contributions:
Employer $ 6,820,756 $ 5,883,611
Participants 8,452,445 10,336,858
----------- -----------
15,273,201 16,220,469
Investment income:
Interest 156,031 125,464
Dividends 842,463 878,403
Net realized and unrealized
(depreciation) appreciation in
fair value of investments (15,572,745) (3,023,122)
----------- -----------
(14,574,251) (2,019,255)
Total additions 698,950 14,201,214
----------- -----------
Deductions from net assets attributed to:
Distributions to participants 7,217,512 1,767,797
Interest expense 834,521 1,090,110
Administrative expenses 101,674 92,191
----------- -----------
Total deductions 8,153,707 2,950,098
----------- -----------
Net (decrease) increase (7,454,757) 11,251,116
Net assets available for benefits:
Beginning of year 86,146,256 74,895,140
----------- -----------
End of year $78,691,499 $86,146,256
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
-3-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 2000 and 1999
----------------------------------------------------------
1. Description of the Plan
The following summary of The Earthgrains Company
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 Administration
The Plan's named fiduciaries are Earthgrains, as
sponsor and plan administrator, and Merrill Lynch
("Trustee") as trustee. 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.
Effective December 1, 2000, the unallocated ESOP shares
held by Wachovia Bank, N.A. were transferred to CTC Illinois
Trust Company ("CTC").
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 and begins with the first
payday immediately following the date the above conditions
are satisfied.
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 plan
years ending 2000 and 1999. In addition, the sum of
before-tax and after-tax contribution rates must not exceed
16% of a participant's compensation, subject to certain
limitations of the Code. The Company contributes a matching
-4-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 2000 and 1999
-------------------------------------------------------
amount equal to 100% of a participant's matched
contributions, but not to exceed 4% of a participant's
annual compensation.
Participant and employer contributions vest and become
non-forfeitable immediately, plus actual earning thereon.
At June 30, 2000 and 1999, forfeited nonvested accounts
totaled $0.
Contributions received by the trust subsequent to June
30, 2000 for June 2000 employee contributions have been
included as a receivable on the statement of net assets as
of June 30, 2000.
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 Managers International Equity
Fund, the Merrill Lynch Basic 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 (see
Note 7). 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.
Participant Loans
A participant may borrow before-tax and/or after-tax
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.
-5-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 2000 and 1999
---------------------------------------------------------
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 Human Resources
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.
Reclassifications
Certain reclassifications have been made to the 1999
financial statements to conform with the 2000 presentation.
2. Summary of Significant Accounting Policies
Basis of Accounting
The Plan's financial statements are prepared on the
accrual basis of accounting.
Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United
States 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, 2000 and 1999,
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.
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.
-6-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 2000 and 1999
----------------------------------------------------------
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
(depreciation) 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.
Distributions to Participants
Distributions to participants for benefits are recorded
when paid.
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>
June 30,
2000 1999
<S> <C> <C>
Net assets available for benefits
per the financial statements $78,691,499 $86,146,256
Accrued employee contribution (244,543) ---
Amounts allocated to withdrawing
participants (16,962) (90,932)
----------- -----------
Net assets available for benefits
per the Form 5500 $78,429,994 $86,055,324
=========== ===========
</TABLE>
-7-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 2000 and 1999
---------------------------------------------------------
The following is a reconciliation of distributions to
participants per the financial statements to the Form 5500:
<TABLE>
Year Ended
June 30,
2000 1999
<S> <C> <C>
Distributions to participants
per the financial statements $7,217,512 $1,767,797
Add: Amounts allocated to
withdrawing participants
at June 30, 2000 16,962 90,932
Less: Amounts allocated to
withdrawing participants
at June 30, 1999 (90,932) (37,285)
---------- -----------
Distributions to participants
per the Form 5500 $7,143,542 $1,821,444
========== ==========
</TABLE>
5. Transactions with Parties-in-Interest
At June 30, 2000 and 1999, the Plan held shares of The
Earthgrains Company common stock. These shares had a total
cost of $40,742,718 and $34,853,638 and total market value
of $56,063,839 and $69,557,213 at June 30, 2000 and 1999,
respectively. During the twelve months ended June 30, 2000
and 1999, transactions with the Company included aggregate
purchases of $12,202,830 and $12,118,115 and sales totaling
$3,877,311 and $2,697,717, respectively.
During the five months ended November 30, 1999,
transactions with Wachovia Bank included aggregate purchases
and sales totaling $-0- and $984,680, respectively. During
the year ended June 30, 1999, transactions with Wachovia
Bank included aggregate purchases and sales totaling $-0-
and $245,834, respectively.
From December 1, 1999 through June 30, 2000,
transactions with CTC included aggregate purchases and sales
totaling $-0- and $-0-, respectively.
During the year ended June 30, 2000, transactions with
Merrill Lynch included aggregate purchases and sales
totaling $20,128,038 and $10,421,345, 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.
-8-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK
OWNERSHIP/401(k) PLAN
Notes to Financial Statements
June 30, 2000 and 1999
------------------------------------------------------------
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 Common 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
years ended June 30, 2000 and 1999, there were 346,078 and
83,051 shares released to participants. At June 30, 2000
and 1999, the Company Common Stock Fund held 1,257,349 and
1,523,373 unallocated shares and 795,081 and 529,067
allocated shares, respectively. The total ESOP loan
payments made to CTC were $1,962,616 from December 1, 1999
through June 30, 2000. The total ESOP loan payments made to
Wachovia were $997,539 from July 1, 1999 through November
30, 1999, and $1,647,168 for year ended June 30, 1999.
7. Subsequent Event
Effective July 1, 2000, the sponsor has eliminated the
Plan requirement for at least 50% of each participant's
before and after tax matched contributions for each plan
year be invested in Company shares for at least one full
plan year beginning after the date the contributions are
credited to the Plan. Participants will have the option to
direct the employer contributions into any investment fund
established under the Plan.
-9-
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK SCHEDULE I
OWNERSHIP/401(k) PLAN
Schedule of Assets Held for Investment Purposes
June 30, 2000
-------------------------------------------------------
<TABLE>
(c)
Description of
(b) investment including
Identity of issue, maturity date, rate of (e)
borrower, lessor interest, collateral, (d) Current
(a) or similar party par, or maturity value Cost Value
<S> <C> <C> <C> <C>
* The Earthgrains
Company Common stock $40,742,718 $56,063,839
Anheuser-Busch
Companies, Inc. Common stock ** 11,579,358
* Merrill Lynch Equity Index Trust Fund ** 9,249,895
AIM Blue Chip Fund-Class A ** 4,598,010
AIM Balanced Fund ** 3,067,973
* Merrill Lynch Institutional Fund ** 1,108,922
Oppenheimer U.S. Government Fund ** 1,043,857
* Merrill Lynch Basic Value Fund ** 337,482
Managers International Equity Fund ** 33,638
* Participant Loan
Fund, Interest
Rates 9.5% -
10.5% Participant loans 1,811,615 1,811,615
-----------
$88,894,589
===========
<FN>
* A party-in-interest as defined by ERISA.
</FN>
<FN>
** Cost omitted for participant directed investments.
</FN>
</TABLE>
<PAGE>
THE EARTHGRAINS COMPANY EMPLOYEE STOCK SCHEDULE II
OWNERSHIP/401(k) PLAN
Schedule of Reportable Transactions*
Year Ended June 30, 2000
------------------------------------------------------
<TABLE>
(b)
Description
of asset
(include
(a) interest (f)
Identity rate and Expense
of maturity (c) (d) (e) Incurred (g)
party in case Purchase Selling Lease with Cost of
involved of a loan) price price rental transaction asset
<S> <C> <C> <C> <C> <C> <C>
*The
Earthgrains Common
Company Stock $12,202,830 $ --- $ --- $ -- $12,202,830
Company 3,877,311 --- -- 4,111,163
(h) (i)
Current Net
value of gain
asset on or
transaction (loss)
date
<C> <C>
$12,202,830 $ ---
3,877,311 (233,852)
<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>
