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 twenty-six weeks ended July 1, 1995
or
( ) 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 1-5084
TASTY BAKING COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1145880
(State of Incorporation) (IRS Employer Identification Number)
2801 Hunting Park Avenue
Philadelphia, Pennsylvania 19129
(Address of principal executive offices) (Zip Code)
Telephone: 215-221-8500
(Registrant's Telephone Number, including area code)
N O N E
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
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 _X_ NO ___.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at July 1, 1995
Common stock, par value $.50 6,136,652 shares
Index of exhibits is located on page 8 of 9.
Page 1 of 9
<PAGE>
TASTY BAKING COMPANY AND SUBSIDIARY
INDEX
Page Number
Part I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
July 1, 1995 and December 31, 1994 .............................3
Consolidated Condensed Statements of Operations -
13 weeks and 26 Weeks Ended July 1, 1995
and July 2, 1994 ...............................................4
Consolidated Condensed Statements of Cash Flows -
26 Weeks Ended July 1, 1995 and July 2, 1994 ...................5
Notes to Consolidated Condensed Financial Statements .............6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ..................7
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K ........................8
Signatures .......................................................9
Page 2 of 9
<PAGE>
TASTY BAKING COMPANY AND SUBSIDIARY
PART I - FINANCIAL INFORMATION CONSOLIDATED CONDENSED BALANCE SHEETS
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
July 1, Dec. 31
1995 1994
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 63,306 $ 147,251
Accounts and notes receivable,
net of allowance for
doubtful accounts 19,478,014 17,574,423
Inventories:
Raw materials 1,622,760 1,657,926
Work in progress 606,836 633,909
Finished goods 688,110 645,225
------------ ------------
2,917,706 2,937,060
------------ ------------
Deferred income taxes,
prepayments and other 4,227,842 3,681,528
------------ ------------
Total current assets 26,686,868 24,340,262
------------ ------------
Property, plant and equipment 124,226,856 122,001,864
Less accumulated depreciation 87,634,087 84,063,636
------------ ------------
36,592,769 37,938,228
------------ ------------
Long-term receivables 10,986,348 10,872,115
------------ ------------
Deferred income taxes 10,385,706 10,830,705
------------ ------------
Other assets and deferred charges 3,054,553 3,155,286
------------ ------------
Total assets $ 87,706,244 $ 87,136,596
============ ============
</TABLE>
<TABLE>
<CAPTION>
July 1, Dec. 31,
1995 1994
(unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 222,831 $ 222,831
Current obligations under capital leases 484,442 455,712
Notes payable, banks 200,000 1,800,000
Accounts payable 4,762,561 4,075,343
Accrued liabilities 5,788,059 4,552,843
Accrued income taxes (206,826) 893,111
------------ ------------
Total current liabilities 11,251,067 11,999,840
------------ ------------
Long-term debt, less
current portion 5,239,938 5,349,558
------------ ------------
Long-term obligations under capital
leases, less current portion 1,916,780 2,166,293
------------ ------------
Deferred income 2,317,612 3,271,268
------------ ------------
Accrued pensions and other
liabilities 12,536,582 11,691,444
------------ ------------
Postretirement benefits
other than pensions 19,956,694 19,707,364
------------ ------------
SHAREHOLDERS' EQUITY
Common stock 3,644,544 3,644,544
Capital in excess of par value stock 29,191,309 29,175,510
Retained earnings 18,708,312 17,228,764
------------ ------------
51,544,165 50,048,818
Less:
Treasury stock, at cost 16,601,004 16,601,793
Management Stock Purchase Plan
receivables and deferrals 455,590 496,196
------------ ------------
34,487,571 32,950,829
------------ ------------
Total liabilities and
shareholders' equity $ 87,706,244 $ 87,136,596
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 3 of 9
<PAGE>
TASTY BAKING COMPANY AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the 13 Weeks Ended For the 26 Weeks Ended
---------------------- ----------------------
<S> <C> <C> <C> <C>
7/01/95 7/02/94 7/01/95 7/02/94
Net Sales $ 36,656,188 $ 36,081,956 $ 73,720,455 $ 73,150,888
Costs and expenses:
Cost of sales 23,016,442 21,645,455 46,169,548 43,851,322
Depreciation 1,825,788 1,781,813 3,709,932 3,571,398
Selling, general and administrative 9,523,043 10,423,837 18,893,691 20,945,650
Severance and restructure charges 950,000 1,240,000 950,000 1,240,000
Interest expense 154,159 193,178 319,067 368,173
Other income, net (929,124) (840,626) (1,836,669) (1,667,234)
------------ ------------ ------------ ------------
34,540,308 34,443,657 68,205,569 68,309,309
------------ ------------ ------------ ------------
Income before provision for income taxes 2,115,880 1,638,299 5,514,886 4,841,579
Provision for income taxes 889,034 636,976 2,317,164 1,931,692
------------ ------------ ------------ ------------
Net income $ 1,226,846 $ 1,001,323 $ 3,197,722 $ 2,909,887
============ ============ ============ ============
Average common shares outstanding 6,139,918 6,141,989 6,143,967 6,147,466
Per share of common stock:
Net income $ .20 $ .16 $ .52 $ .47
===== ===== ===== =====
Cash dividend $ .14 $ .13 $ .28 $ .26
===== ===== ===== =====
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 4 of 9
<PAGE>
TASTY BAKING COMPANY AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the 26 Weeks Ended
07/01/95 07/02/94
<S> <C> <C>
Cash flows from (used for) operating activities
Net income $ 3,197,722 $ 2,909,887
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 3,709,932 3,571,398
Amortization 26,943 31,334
Deferred taxes 444,999 398,276
Other 199,202 198,658
Changes in assets and liabilities affecting operations (1,608,054) (826,468)
----------- -----------
Net cash from operating activities 5,970,744 6,283,085
----------- -----------
Cash flows from (used for) investing activities
Proceeds from owner/operator's loan repayments 1,993,905 1,415,005
Purchase of property, plant and equipment (2,364,473) (2,258,957)
Loans to owner/operators (2,108,138) (1,863,102)
Other 72,594 (26,826)
----------- -----------
Net cash used for investing activities (2,406,112) (2,733,880)
----------- -----------
Cash flows used for financing activities
Dividends paid (1,718,174) (1,595,549)
Payment of long-term debt (330,403) (873,934)
Net decrease in short-term debt (1,600,000) (1,100,000)
----------- -----------
Net cash used for financing activities (3,648,577) (3,569,483)
----------- -----------
Net decrease in cash (83,945) (20,278)
Cash, beginning of year $ 147,251 $ 141,026
----------- -----------
Cash, end of period $ 63,306 $ 120,748
=========== ===========
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest $ 292,525 $ 324,126
=========== ===========
Income taxes $ 2,972,067 $ 2,189,695
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
Page 5 of 9
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Severance and Restructure Charges - In the second quarter of 1995, the
company incurred severance costs of $950,000 resulting in a charge to net
income of $550,000 or $.09 per share after related tax benefit. The
severance charge resulted from changes in certain management positions
during the second quarter of 1995. The management positions were
established in connection with a Restructuring Program (the Program)
implemented in 1994.
In the second quarter of 1994, the Company completed the Program. The
Program was designed to enhance overall competitiveness, productivity and
efficiency in a highly competitive marketplace. The program resulted in a
charge against second quarter 1994 earnings of $1,240,000 which had an
after-tax effect of $719,200 or $.12 per share. Included in this charge
were the costs associated with workforce reductions and realignments, and
severance pay.
2. Interim Financial Information - In the opinion of management, the
accompanying unaudited consolidated condensed financial statements contain
all adjustments (consisting of only normal recurring accruals) necessary to
present fairly the financial position of the company as of July 1, 1995,
and December 31, 1994 and the results of its operations for the thirteen
and twenty-six weeks ended July 1, 1995 and July 2, 1994 and cash flows for
the twenty-six weeks ended July 1, 1995 and July 2, 1994. These unaudited
consolidated condensed financial statements should be read in conjunction
with the consolidated financial statements and footnotes thereto in the
company's 1994 Annual Report to Shareholders. In addition, the results of
operations for the twenty-six weeks ended July 1, 1995 are not necessarily
indicative of the results to be expected for the full year.
Advertising expenses and certain other expense items are charged to
operations in the year incurred. However, for interim reporting purposes
the expenses are charged to operations on a pro-rata basis over the
company's accounting periods. For the twenty-six weeks ended July 1, 1995
and July 2, 1994, the difference between the actual expenses incurred and
the expenses charged to operations was not significant.
3. Earnings Per Share - Per share amounts are based on the weighted average
number of common shares and equivalent shares outstanding during the
quarter and year to date.
Page 6 of 9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the second quarter of 1995, the company realized net income of $1,226,846
versus $1,001,323 for the second quarter of 1994. Included in the results were a
severance charge in the second quarter of 1995 of $950,000 and a restructure
charge in the second quarter of 1994 of $1,240,000 which, after related tax
benefits, reduced net income by $550,000 or $.09 per share and $719,200 or $.12
per share, respectively. On a comparable operating basis, before the net effect
of the severance and restructure charges, net income increased to $1,776,846 or
$.29 per share from $1,720,523 or $.28 per share in 1994, increases of 3% and
4%, respectively.
For the twenty-six weeks ended July 1, 1995, the company realized net income of
$3,197,722 or $.52 per share versus $2,909,887 or $.47 per share for the
comparable period in 1994. On a comparable operating basis, before the net
effect of severance and restructure charges, net income increased to $3,747,722
or $.61 per share in 1995 from $3,629,087 or $.59 per share in 1994,
representing an increase of 3%.
The severance charge in 1995 resulted from changes in certain management
positions during the second quarter of 1995. The management positions were
established in connection with a restructuring program implemented in 1994. The
restructure charge in 1994 reflects the costs associated with this restructuring
program, which realigned departments and responsibilities in every area within
the company to enhance productivity and efficiency.
Net sales for the second quarter of 1995 were $36,656,188 versus $36,081,956 for
the comparable period in 1994. This increase was due, in part, to an increase in
unit sales of approximately 1%, as the company continued to experience difficult
market conditions.
Cost of sales in the second quarter of 1995 increased by 6% over the second
quarter of 1994. Higher ingredient and packaging costs accounted for 3% of this
increase and in addition, cost of sales in 1995 includes approximately $913,000
of shipping case costs, while in 1994 shipping case costs of approximately
$708,000 are reflected in operating expenses. This change in classification was
done as a result of a change in operating policy that treats shipping cases as
completely disposable items.
Depreciation expense increased in the second quarter of 1995 by 2.5% over the
second quarter of 1994 due to the installation of new electrical transformers
and the completion of a new telephone system in the fourth quarter of 1994.
The decrease in interest expense for the second quarter of 1995 versus the
second quarter of 1994 was the result of lower average borrowing levels.
The effective tax rates on net income for the quarters ended July 1, 1995 and
July 2, 1994 were 42.0% and 38.9%, respectively, which compares to a federal
statutory rate of 34%. The principal reason for the difference between the
effective rates and the statutory rate in 1995 and 1994 was the effect of state
income taxes.
FINANCIAL CONDITION
The company has consistently demonstrated the ability to generate sufficient
cash for working capital from operations. Bank borrowings, under various lines
of credit arrangements, are used to supplement cash flow from operations during
periods of cyclical shortages.
For the twenty-six weeks ended July 1, 1995, net cash from operating activities
decreased by $312,341 to $5,970,744 from $6,283,085 for the comparable period in
1994. Net cash from operating activities was negatively impacted by changes in
working capital, particularly an increase in prepaid items, relative to the same
period in 1994.
Net cash used for investing activities decreased by $327,768 from the second
quarter of 1994 principally due to a decrease in the funds needed to finance the
net owner-operator loan activity during the period. Net cash used for financing
activities increased by $79,094 relative to the same period in 1994. This
increase is primarily the result of an increase in dividend payments of $122,625
relative to the prior year.
Page 7 of 9
<PAGE>
For the remainder of 1995, the company anticipates that cash flow from
operations, along with the continued availability of bank lines of credit,
revolving credit agreements and other long-term financing, will provide
sufficient cash to meet operating and financing requirements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The registrant did not file a report on Form 8-K during the
thirteen weeks ended July 1, 1995.
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
Page 8 of 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TASTY BAKING COMPANY
(Registrant)
Date: August 11, 1995 JOHN M. PETTINE
John M. Pettine
Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 9 of 9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000096412
<NAME> TASTY BAKING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> JUL-01-1995
<CASH> 63
<SECURITIES> 0
<RECEIVABLES> 19,478
<ALLOWANCES> 0
<INVENTORY> 2,918
<CURRENT-ASSETS> 26,687
<PP&E> 124,227
<DEPRECIATION> 87,634
<TOTAL-ASSETS> 87,706
<CURRENT-LIABILITIES> 11,251
<BONDS> 7,157
<COMMON> 3,645
0
0
<OTHER-SE> 30,843
<TOTAL-LIABILITY-AND-EQUITY> 87,706
<SALES> 36,656
<TOTAL-REVENUES> 37,585
<CGS> 23,016
<TOTAL-COSTS> 23,016
<OTHER-EXPENSES> 2,776
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154
<INCOME-PRETAX> 2,116
<INCOME-TAX> 887
<INCOME-CONTINUING> 1,227
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,227
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
