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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarter (twelve weeks) ended September 9, 2000.
[ ] 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
Tom's Foods Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
58-1516963
(I.R.S. Employer Identification No.)
900 8th Street
Columbus, GA 31902
(Address of principal executive offices, including zip code)
(706) 323-2721
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
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TOM'S FOODS INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE TWELVE WEEKS
ENDED SEPTEMBER 9, 2000
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of September 9, 2000 (unaudited) and January 1, 2000 ...................... 3
Statements of Operations (unaudited) for the twelve and thirty-six weeks ended
September 9, 2000 and September 11, 1999 .................................................... 4
Statements of Cash Flows (unaudited) for the thirty-six weeks ended
September 9, 2000 and September 11, 1999 ........................................... 5
Notes to Financial Statements ............................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .............................................................. 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................................................ 9
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TOM'S FOODS INC.
BALANCE SHEETS
SEPTEMBER 9, 2000 AND JANUARY 1, 2000
(in thousands except per share data)
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September 9, 2000 January 1, 2000
----------------- ---------------
(unaudited)
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ASSETS
Current Assets:
Cash and short-term investments $ 2,810 $ 5,391
Accounts and notes receivable, net 16,395 14,285
Inventories:
Raw materials 2,775 2,564
Packaging materials 1,985 2,135
Finished goods and work in progress 6,141 5,103
Other current assets 3,191 4,065
--------- ---------
Total current assets 33,297 33,543
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Property, plant, and equipment:
Land and land improvements 5,753 5,744
Buildings 17,528 16,887
Machinery, equipment and vehicles 50,077 49,496
Vending and other distribution equipment 10,258 9,961
Furniture and fixtures 12,342 10,280
Construction in progress 4,305 4,761
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Total property, plant, and equipment 100,263 97,129
Accumulated depreciation (50,841) (46,363)
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Net property, plant, and equipment 49,422 50,766
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Noncurrent accounts and notes receivable, net 317 493
Other assets 1,909 1,837
Deferred debt issue costs, net 2,039 2,385
Goodwill and intangible assets, net 44,371 45,056
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Total assets $ 131,355 $ 134,080
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving debt $ 0 $ 0
Accounts payable 8,396 10,984
Accrued liabilities 10,316 8,799
Current portion of long-term debt 1,000 1,000
Current portion of other debt obligations 177 130
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Total current liabilities 19,889 20,913
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Long-term debt:
Senior secured notes 60,000 60,000
Industrial development revenue bonds 8,000 9,000
Other debt obligations 579 467
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Total long-term debt 68,579 69,467
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Other long-term obligations 37 37
Accrued pension cost 7,610 7,671
Accrued postretirement benefits other than pensions 1,779 1,779
Exchangeable Preferred Stock, $.01 par value, Class A, 7,000 shares
authorized, 7,000 shares issued and outstanding at Sept. 9, 2000
and January 1, 2000 9,458 8,811
Shareholders' Equity:
Common stock, $0.01 par value; 10,000 shares authorized,
5,000 shares issued and outstanding at 9/9/00 & 1/1/00 0 0
Preferred Stock, $.01 par value, Class B, 21,737 shares authorized,
21,737 shares issued and outstanding at 9/9/00 & 1/1/00 28,590 26,810
Additional paid-in capital 43,725 43,725
Accumulated deficit (48,312) (45,133)
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Total shareholders' equity 24,003 25,402
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Total liabilities and shareholders' equity $ 131,355 $ 134,080
========= =========
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The accompanying notes are an integral part of these financial statements.
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TOM'S FOODS INC.
STATEMENTS OF OPERATIONS
FOR THE TWELVE AND THIRTY-SIX WEEKS ENDED
SEPTEMBER 9, 2000 AND SEPTEMBER 11, 1999
(in thousands)
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TWELVE WEEKS ENDED THIRTY-SIX WEEKS ENDED
-------------------------------- --------------------------------
Sept. 9, 2000 Sept. 11, 1999 Sept. 9, 2000 Sept. 11, 1999
------------- -------------- ------------- --------------
(unaudited) (unaudited) (unaudited) (unaudited)
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Net sales $ 47,811 $ 47,989 $ 141,396 $ 144,536
Cost of goods sold (29,019) (29,756) (85,542) (89,469)
---------- ---------- ---------- ----------
Gross profit 18,792 18,233 55,854 55,067
Expenses and other income:
Selling and administrative expenses (16,963) (16,453) (50,565) (49,947)
Amortization of goodwill, intangible assets
and refinancing costs (514) (502) (1,527) (1,507)
Other income, net 312 244 488 540
---------- ---------- ---------- ----------
Income from operations 1,627 1,522 4,250 4,153
Interest expense, net (1,875) (1,918) (5,551) (5,520)
---------- ---------- ---------- ----------
Loss before income taxes (248) (396) (1,301) (1,367)
Provision for income taxes 32 30 97 90
---------- ---------- ---------- ----------
Net loss $ (280) $ (426) $ (1,398) $ (1,457)
========== ========== ========== ==========
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The accompanying notes are an integral part of these financial statements.
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TOM'S FOODS INC.
STATEMENTS OF CASH FLOWS
FOR THE THIRTY-SIX WEEKS ENDED
SEPTEMBER 9, 2000 AND SEPTEMBER 11, 1999
(in thousands)
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THIRTY-SIX WEEKS ENDED
--------------------------------------
September 9, 2000 September 11, 1999
----------------- ------------------
(unaudited) (unaudited)
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Cash flows from operating activities:
Net loss $ (1,398) $ (1,457)
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Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 6,841 6,387
Provision for income taxes 97 90
Dividends accrued 647 626
Loss (gain) on disposal of property, plant, and equipment 22 (71)
Changes in operating assets and liabilities:
Accounts and notes receivable, net (1,978) (2,176)
Inventories (1,040) (1,459)
Other assets 803 (187)
Accounts payable (2,588) (3,263)
Other liabilities 1,418 1,516
Accrued pension cost (62) 387
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Total adjustments 4,160 1,850
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Net cash provided by operating activities 2,762 393
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Cash flows from investing activities:
Additions to property, plant, and equipment (4,393) (5,055)
Proceeds from disposal of property, plant, and equipment 282 208
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Net cash used in investing activities (4,111) (4,847)
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Cash flows from financing activities:
Net borrowing on working capital revolver 0 2,724
Deferred debt issuance (102) 0
Repayments of industrial revenue bonds debt (1,000) 0
Repayments of other long-term debt (130) (102)
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Net cash (used in) provided by financing activities (1,232) 2,622
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Decrease in cash and short-term investments (2,581) (1,832)
Cash and short-term investments, beginning of period 5,391 3,087
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Cash and short-term investments, end of period $ 2,810 $ 1,255
========= =========
Interest paid during the period $ 4,089 $ 4,200
Income taxes paid during the period $ 169 $ 70
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The accompanying notes are an integral part of these financial statements.
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TOM'S FOODS INC.
NOTES TO FINANCIAL STATEMENTS
Item 1. BASIS OF FINANCIAL STATEMENTS AND FORMATION AND ORGANIZATION
The accompanying unaudited financial statements of Tom's Foods Inc. have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in the
annual report and Form 10-K for the fiscal year ended January 1, 2000.
The accompanying unaudited financial statements include, in the opinion of
management, all adjustments, which are of a normal recurring nature, necessary
for a fair presentation for the periods presented. Results for the interim
periods presented are not necessarily indicative of results that may be expected
for a full fiscal year.
FISCAL YEAR
The Company's fiscal year is the 52- or 53-week period ending on the Saturday
nearest to December 31. The current year, fiscal 2000, ends December 30, 2000
and contains 52 weeks. The Company's first three quarters contain twelve weeks
of results while the fourth quarter contains 16 or 17 weeks coinciding with the
Company's fiscal year.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined using
the average cost for raw materials, packaging materials, and work in process.
Finished goods cost is determined using the first-in, first-out method. Cost
elements include the cost of raw materials, direct labor, and overhead incurred
in the manufacturing process.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
TWELVE WEEKS ENDED SEPTEMBER 9, 2000
COMPARED TO TWELVE WEEKS ENDED SEPTEMBER 11, 1999
Net sales for the third quarter ended September 9, 2000 were $47.8 million, a
decrease of 0.4%, or $178,000 compared to $48.0 million for the corresponding
period in 1999.
Gross profit increased to $18.8 million in the third quarter of 2000 from $18.2
million in the third quarter of 1999, an increase of $559,000 or 3.1%. The gross
profit margin percentage of 39.3% for the third quarter of 2000 was 1.3
percentage points higher than the third quarter of 1999 due largely to the
continued emphasis on operational cost efficiencies and favorable materials
costs and product mix.
For the third quarter 2000, selling and administrative expenses increased to
$17.0 million from $16.5
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million in the 1999 period, an increase of 1.3% or $510,000.
Other Income was $312,000 for the third quarter of 2000 compared to $244,000 for
the corresponding period in 1999.
Interest expense, net of interest income, decreased $43,000 to $1.9 million in
the third quarter of 2000 compared to the third quarter of 1999 due to lower
average outstanding revolver borrowing.
The provision for income taxes was $32,000 in 2000 compared to $30,000 for 1999,
an increase of $2,000 due to higher franchise taxes. The Company estimates that
it will have no Federal tax obligation for the fiscal year due to loss
carryforwards from prior years.
The net loss for the twelve-week period ended September 9, 2000 was $280,000 an
improvement of $146,000 compared to the net loss of $426,000 for the twelve
weeks ended September 11, 1999.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
represents the sum of income (loss) before income taxes plus interest expense,
depreciation and amortization. EBITDA is a widely accepted measure of a
Company's ability to incur and service debt, to undertake capital expenditures,
and to meet working capital requirements. EBITDA is not a measure of financial
performance under generally accepted accounting principles and should not be
considered an alternative either to net income as an indicator of the Company's
operating performance or as an indicator of the Company's liquidity. EBITDA for
the third quarter of 2000 was $3.9 million compared to $3.6 million for the same
period in 1999.
THIRTY-SIX WEEKS ENDED SEPTEMBER 9, 2000
COMPARED TO THE THIRTY-SIX WEEKS ENDED SEPTEMBER 11, 1999
Net sales for the thirty-six weeks ended September 9, 2000 were $141.4 million,
a decrease of 2.2%, or $3.1 million compared to $144.5 million for the
corresponding period in 1999.
Gross profit dollars for the first thirty-six weeks of 2000 increased $787,000
to $55.9 million compared to $55.1 million for the same period in 1999. The
gross profit percentage of 39.5% for the first thirty-six weeks of 2000 was 1.4
percentage points higher than the 38.1% for the same period of 1999 due to
continued emphasis on operational efficiencies and favorable materials costs and
product mix.
For the first thirty-six weeks of 2000, selling and administrative expenses were
$50.6 million, an increase of $618,000 or 1.2%, from the $49.9 million for the
first thirty-six weeks of 1999.
Other income was $488,000 for the first thirty-six weeks of 2000 compared to
$540,000 for the corresponding period in 1999.
Interest expense, net of interest income, increased $31,000 to $5.6 million
during the first thirty-six weeks of 2000 versus the same thirty-six weeks of
1999.
The provision for income taxes was $97,000 in 2000 compared to $90,000 for 1999,
an increase of $7,000 due to higher franchise taxes. The Company estimates that
it will have no Federal tax obligation for the fiscal year due to loss
carryforwards from prior years.
The net loss for the thirty-six week period ended September 9, 2000 was $1.4
million, an
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improvement of $59,000 compared to the net loss of $1.5 million for the
thirty-six week period ended September 11, 1999.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
represents the sum of income (loss) before income taxes plus interest expense,
depreciation and amortization. EBITDA is a widely accepted measure of a
Company's ability to incur and service debt, to undertake capital expenditures,
and to meet working capital requirements. EBITDA is not a measure of financial
performance under generally accepted accounting principles and should not be
considered an alternative either to net income as an indicator of the Company's
operating performance or as an indicator of the Company's liquidity. EBITDA for
the first thirty-six weeks of 2000 was $11.1 million compared to $10.5 million
for the same period in 1999.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow requirements are for working capital, capital
expenditures and debt service. The Company has met its liquidity needs through
internally generated funds and a revolving line of credit established in January
2000 which matures in January 2004.
As of September 9, 2000, the Company had no outstanding revolving loans, had
letters of credit outstanding of $2.2 million and $12.8 million in borrowing
availability thereunder. The Company's working capital of $13.4 million as of
September 9, 2000 was a decrease of $734,000 compared to the working capital of
$14.1 million for the same period in 1999.
Net cash provided by operating activities was $2.8 million for the thirty-six
week period ended September 9, 2000, an improvement of $2.4 million versus net
cash provided by operating activities of $393,000 during the same period in
1999.
Capital expenditures were $4.4 and $5.1 million during the thirty-six week
periods ended September 9, 2000 and September 11, 1999, respectively.
Net cash used in financing activities was $1.2 million for the first thirty-six
weeks of 2000 versus net cash provided by financing activities of $2.6 million
for the same period of 1999. On September 1, 2000, the Company made its first
principal payment of $1.0 million on its outstanding industrial revenue bond
obligations.
Net cash used during the thirty-six week period ended September 9, 2000 was $2.6
million versus $1.8 million of cash used during the thirty-six week period ended
September 11, 1999.
The Company believes that internally generated funds and amounts which will be
available to it under the revolving line of credit are and will continue to be
sufficient to satisfy its operating cash requirements, planned capital
expenditures, and long term debt obligations as they come due.
CAUTIONARY STATEMENT RELATED TO FORWARD-LOOKING STATEMENTS
The statements contained in the foregoing "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere which are not
historical facts are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. There can be no assurance that
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any forward-looking statement will be realized or that actual results will not
be significantly higher or lower than set forth in such forward-looking
statement.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial data schedule (for SEC use only)
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed by the
Registrants during the quarter ended September 9, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TOM'S FOODS INC.
By /s/ Rolland G. Divin
-------------------------------------------------
Rolland G. Divin
President, Chief Executive Officer,
and Director (Principal Executive Officer)
Date: October 13, 2000
By /s/ S. Albert Gaston
-------------------------------------------------
S. Albert Gaston
Senior Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: October 13, 2000
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