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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1997
----------------------------------------------------
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 1-11165
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INTERSTATE BAKERIES CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1470322
- -------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
12 East Armour Boulevard, Kansas City, Missouri 64111
- ----------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 502-4000
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock,
$.01 par value per share New York Stock Exchange
- ------------------------ -------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
----------------------------------------------------
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
[ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $1,146,347,575 as of August 8, 1997. For these purposes only,
the registrant has assumed that shares of Common Stock, $.01 par value per
share, that may be deemed to be beneficially owned by certain members of the
Board of Directors constitute shares held by affiliates of the registrant.
There were 36,581,952 shares of Common Stock, $.01 par value per share,
outstanding as of August 8, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Part and Item Document Incorporated
of Form 10-K: By Reference
------------- ---------------------
Part II, Item 5 Annual Report*
Part II, Item 6 Annual Report*
Part II, Item 7 Annual Report*
Part II, Item 8 Annual Report*
Part III, Item 10 Proxy Statement**
Part III, Item 11 Proxy Statement**
Part III, Item 12 Proxy Statement**
Part III, Item 13 Proxy Statement**
- -------------------------------------------------------------------
* Refers to portions of Registrant's annual report to security
holders with respect to the fiscal year ended May 31, 1997.
** Refers to portions of Registrant's definitive proxy statement
filed on August 22, 1997.
FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference or made in this Report,
including those under the captions "Business," "Legal Proceedings" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and elsewhere are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, and are subject to
the safe harbor created by that Act. Such forward-looking statements include,
without limitation, the future availability and prices of raw materials, the
availability of capital on acceptable terms, the competitiveness of the bread
and cake industry, potential environmental liabilities and other statements
contained herein that are not historical facts. Because such forward-looking
statements involve risks and uncertainties, there are important factors that
could cause actual results to differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, changes in
general economic and business conditions (including in the bread and cake
markets), Interstate Bakeries Corporation's ability to recover its raw
material costs in the pricing of its products, the availability of capital on
acceptable terms, actions of competitors and governmental entities, the extent
to which Interstate Bakeries Corporation is able to develop new products and
markets for its products, the time required for such development, the level of
demand for such products, changes in Interstate Bakeries Corporation's
business strategies and other factors.
PART I
Item 1. Business
- ------- --------
General
- -------
Interstate Bakeries Corporation ("the Company"), through its wholly-owned
operating subsidiary, Interstate Brands Corporation ("Brands"), is the largest
baker and distributor of fresh bakery products in the United States. The
Company produces, markets, distributes and sells a wide range of breads,
rolls, snack cakes, donuts, sweet goods and related products. These products
are sold under a number of national brand names, such as "Wonder," "Hostess"
and "Home Pride," as well as regional brand names, including "Butternut,"
"Dolly Madison" and "Merita". Based on independent publicly available
market data, "Wonder" white bread and "Home Pride" wheat bread are the
number one and two selling branded breads sold in the United States.
"Hostess" products, including "Twinkies" and "Ho-Hos," are among the
leading snack cake products sold in the United States.
The principal executive offices of the Company are located at 12 East
Armour Boulevard, Kansas City, Missouri 64111, and the telephone number is
(816) 502-4000.
The Company distributes its products in markets representing
approximately 90% of the United States population. The Company operates 67
bakeries and more than 1,400 thrift stores and employs over 32,000 people.
Its driver-salesmen deliver products directly from the Company's over 1,200
distribution centers to more than 200,000 food outlets and stores.
The Company or its predecessors have baked and distributed fresh bread
and cake products since 1927. The Company has grown to its present size
primarily through acquisitions of other baking businesses. In its 1988 fiscal
year, the Company underwent a change in control through a leveraged buyout
transaction and acquired 10 bakeries in the Southeastern United States. In
July 1991, the Company returned to the public market by issuing shares of
Common Stock. In July 1995, the Company acquired Continental Baking Company
("CBC") from Ralston Purina Company ("Ralston") for $220,000,000 in cash and
16,923,077 shares of the Common Stock. Since the acquisition of CBC, the
Company has taken significant steps to continue to build and capitalize on the
brand equity in the "Wonder" and "Hostess" brands. The Company has also
worked to realize cost savings from the CBC acquisition and to achieve
economies of scale in the operations of Brands and CBC. On July 29, 1997,
Ralston issued $479,953,687.50 of 7% Stock Appreciation Income Linked
Securities ("SAILS"), which are exchangeable at maturity, at the option of
Ralston, for cash or up to 7,749,000 shares of the Company's Common Stock.
Pursuant to the SAILS transaction, the Company repurchased 1,000,000 shares of
its Common Stock from Ralston for $60,079,375, or $60.079375 per share, which
amount was the closing sales price of the Common Stock on the New York Stock
Exchange on July 23, 1997 of $61.9375 per share, less a 3% discount.
Products and Brands
- -------------------
The Company produces, markets, distributes and sells white breads,
variety breads, crusty breads, reduced calorie breads, English muffins, rolls
and buns under a number of well-known national brand names, including
"Wonder," "Home Pride" and "Bread du Jour," and regional brand names
including "Beefsteak," "Buttermaid," "Butternut," "Colombo," "Cotton's
Holsum," "DiCarlo," "Eddy's," "Emperor Norton," "Holsum," "Merita,"
"Millbrook Farms," "Parisian," "Sweetheart," "Toscano" and "Weber's";
bagels under the brand name "Braun's"; and croutons under the brand names
"Mrs. Cubbison's" and "Marie Callender's". The Company's snack cakes,
donuts, sweet rolls, snack pies, breakfast pastries, variety cakes, large
cakes and shortcakes are also sold under a number of well-known national and
regional brand names, including "Hostess" and "Dolly Madison." The Company
is also a baker and distributor of "Roman Meal" breads, including traditional
Roman Meal bread, Roman Meal variety breads, Roman Meal light breads, Roman
Meal buns, rolls and English muffins, and Sunmaid raisin bread. The
Company's various brands are positioned across a wide spectrum of consumer
categories and price points.
The Company believes that its brand product trademarks such as "Wonder,"
"Hostess," "Home Pride," "Butternut" and "Dolly Madison" and product
trademarks such as "Twinkies," "Ho-Hos" and "Zingers" are of material
importance to its strategy of brand building. The Company also owns a number
of patents related to the processes used in making the Company's bread and
cake products. The Company takes appropriate action from time to time against
third parties to prevent infringement of its trademarks and other intellectual
property. The Company also enters into confidentiality agreements from time
to time with employees and third parties as necessary to protect formulas and
processes used in producing the Company's products.
Marketing and Distribution
- --------------------------
The majority of the Company's bread sales are through supermarkets, while
the Company's cake products are sold principally through supermarkets and
convenience stores. Cake sales tend to be somewhat seasonal, with a
historically weak winter period, which the Company believes is attributable to
home baking and consumption patterns during the holiday season. Spring and
early summer months are historically stronger due to increased sales of
shortcake products during the fresh strawberry season. No single customer
accounts for more than 5% of the Company's net sales.
The Company's marketing and advertising campaigns are conducted through
targeted television and radio advertising, coupons in newspapers and other
printed media.
The Company distributes its products in markets representing
approximately 90% of the United States population, with its strongest presence
in southern California, the Pacific Northwest, the upper Midwest, the
Northeast, the Mountain States, the Middle Atlantic States and Florida.
With plants and distribution centers across the United States, the Company is
located close to the major marketplaces enabling efficient delivery and
superior customer service. The Company does not keep a backlog of inventory
as its fresh bakery products are promptly distributed to its customers after
being produced.
The Company's fresh bakery products are delivered from the Company's
network of 67 bakeries to its over 1,200 distribution centers. The products
are then delivered primarily to grocery and convenience stores by the
Company's delivery/salesmen on its more than 10,000 Company-owned routes.
Unsold products are picked up by the Company's delivery/salesmen and delivered
to the Company's more than 1,400 thrift stores for retail sale. Thrift store
sales represented approximately 12% of the net sales of the Company during
the fifty-two week period ended May 31, 1997.
Sources and Availability of Raw Materials
- -----------------------------------------
The ingredients of bread and cake products, principally flour, sugar and
edible oils, are readily available from numerous sources. Generally, the
Company purchases its commodity requirements on the spot markets, although the
Company attempts to lock in prices for raw materials through advance purchase
contracts, generally not longer than one year in duration, when prices are
expected to increase. Through its program of central purchasing of baking
ingredients and packaging materials, the Company believes it is able to
utilize its national presence to obtain competitive prices. The prices for
raw materials are dependent on a number of factors including the results of
crop production, transportation and processing costs, governmental legislation
and policies and export sales demand. Although commodity prices have been
volatile and may continue to be volatile, historically, the Company has been
able to recover the majority of its commodity cost increases through
increasing prices, switching to a higher-margin revenue mix and obtaining
additional operating efficiencies.
Employees
- ---------
The Company employs over 32,000 people. Approximately 81% of the
Company's employees are covered by over 600 union contracts. Most of the
Company's unionized workers are members of either the International
Brotherhood of Teamsters or the Bakery, Confectionery and Tobacco Workers
International Union. None of the 600 individual collective bargaining
agreements is material to the Company's consolidated operations. The Company
believes it has good relations with its union and nonunion employees.
Competition
- -----------
The Company faces intense competition in all of its markets from large,
national bakeries and smaller regional operators, as well as from supermarket
chains with their own bakeries or private label products and grocery stores
with their own in-store bakeries. Competition is based on product quality,
price, brand loyalty, effective promotional activities and the ability to
identify and satisfy emerging consumer preferences. Customer service,
including frequency of deliveries and maintenance of fully stocked shelves, is
also an important competitive factor and is central to the competition for
retail shelf space among bread and cake product distributors. The Earthgrains
Company, CPC International, Inc. and Flowers Industries, Inc. are the
Company's largest bread competitors, each marketing bread products under
various brand names. McKee Foods Corp., Tasty Baking Co., Drake Bakeries and
Entenmann's are the largest competitors of the Company with respect to cake
sales. The Company from time to time experiences price pressure in certain of
its markets as a result of competitors' promotional pricing practices.
However, the Company believes that its geographic diversity helps to limit the
effect of regionally-based competition.
Governmental Regulation; Environmental Matters
- ----------------------------------------------
The Company's operations are subject to regulation by various federal,
state and local governmental entities and agencies. As a baker of goods for
human consumption, the Company's operations are subject to stringent quality
and labeling standards, including the Federal Food and Drug Act. The
operations of the Company's bakeries and its delivery fleet are subject to
various federal, state and local environmental laws and workplace regulations,
including the Occupational Safety and Health Act, the Fair Labor Standards
Act, the Clean Air Act and the Clean Water Act. The Company believes that its
current legal and environmental compliance programs adequately address such
concerns and that it is in substantial compliance with such applicable laws
and regulations.
The Company has underground fuel storage tanks at various locations
throughout the United States which are subject to federal and state
regulations establishing minimum standards for such tanks and where necessary,
remediation of associated contamination. The Company is presently in the
process of testing and evaluating, and, if necessary, removing, replacing or
upgrading such tanks in order to comply with such laws. In addition, the
Company has received notices from the United States Environmental Protection
Agency, state agencies, and/or private parties seeking contribution, that it
has been identified as a "potentially responsible party" (PRP), under the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended. Because of these activities, the Company may be required to share in
the cost of cleanup with respect to a relatively small number of "Superfund"
sites. The Company's ultimate liability in connection with these sites may
depend on many factors including the volume of material contributed to the
site, the number of other PRP's and their financial viability and the
remediation methods and technology to be used. While it is difficult to
quantify the potential financial impact of actions involving environmental
matters, particularly remediation costs at waste disposal sites and future
capital expenditures for environmental control equipment, in the opinion of
the Company's management, the ultimate liability arising from such
environmental matters, taking into account established accruals for estimated
liabilities, should not be material to the overall financial position of the
Company, but could be material to results of operations or cash flows for a
particular quarter or annual period.
Item 2. Properties
- ------- ----------
Bakeries
- --------
The Company produces substantially all of its products through its
national network of 67 bakeries. All of the Company's bakeries are owned with
the exception of a bakery in each of San Francisco, Sacramento and San Diego
and the bakeries in Castroville and Montebello, California, which are located
in leased premises. The Company's bakeries are located as follows:
Akron, Ohio Memphis, Tennessee
Alexandria, Louisiana Miami, Florida
Anchorage, Alaska Milwaukee, Wisconsin
Billings, Montana Minonk, Illinois
Birmingham, Alabama Minot, North Dakota
Boise, Idaho Monroe, Louisiana
Boonville, Missouri Montebello, California
Buffalo, New York Natick, Massachusetts
Castroville, California Oakland, California
Charlotte, North Carolina Ogden, Utah
Cincinnati, Ohio Orlando, Florida
Columbus, Georgia Peoria, Illinois
Columbus, Indiana Philadelphia, Pennsylvania
Columbus, Ohio Pomona, California
Davenport, Iowa Portland, Oregon
Decatur, Illinois Richmond, Virginia
Denver, Colorado Roanoke, Virginia
Detroit, Michigan Rocky Mount, North Carolina
Emporia, Kansas Sacramento, California (2)
Florence, South Carolina Salt Lake City, Utah
Glendale, California San Diego, California (2)
Grand Junction, Colorado San Francisco, California (2)
Grand Rapids, Michigan San Pedro, California
Hodgkins, Illinois Schiller Park, Illinois
Indianapolis, Indiana Seattle, Washington (2)
Jacksonville, Florida Spokane, Washington
Jamaica, New York Springfield, Missouri
Kansas City, Missouri St. Louis, Missouri
Knoxville, Tennessee Tampa, Florida
Los Angeles, California (3) Tulsa, Oklahoma
Waterloo, Iowa
The Company attempts to realize operating synergies through consolidation
of redundant facilities. For example, in 1996 the Company closed its East
Brunswick, New Jersey and Utica, New York bakeries, sold its Tempe, Arizona
bakery and closed its Dallas bakery and exchanged certain of its assets for
the Roanoke, Virginia bakery of The Earthgrains Company. As a result of these
measures, the Company was able to consolidate production of certain products,
reduce costs and more efficiently utilize its remaining facilities.
The Company also makes capital investments to update or retrofit its
facilities to produce new products on existing lines and to increase line
speeds. For example, the Company retrofitted production lines in Columbus,
Georgia to produce snack cakes being produced by CBC in the Midwest and sold
in the Southeast, thereby reducing transportation costs. The Company is
completing a $20 million expansion and modernization of its Rocky Mount, North
Carolina bakery to produce bread and buns for sale in the Southeast United
States and has broken ground on the construction of a new state-of-the-art
bread bakery near Toledo, Ohio. The Company believes that its other
facilities are well maintained and does not foresee the need to make
significant capital improvements to such existing facilities in the near
future.
Other Properties
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The Company's over 1,200 distribution centers and more than 1,400 thrift
stores are located throughout the Company's distribution area. Generally,
each thrift store is between 500 and 1,600 square feet in size. Most of the
stores are located at the Company's distribution centers, with the remainder
located along the Company's distribution routes. The majority of the
Company's distribution centers and thrift stores are located in leased
premises.
Item 3. Legal Proceedings
- ------ -----------------
On July 20, 1995, the Company, CBC and the Antitrust Division of the
United States Department of Justice ("DOJ") signed, and filed with the United
States District Court for the Northern District of Illinois, stipulations for
Final Judgment (the "Final Judgment") and for holding separate certain assets
following the closing of the acquisition of CBC. The Final Judgment required
the divestiture of one white pan bread label in certain counties in southern
California, eastern Wisconsin, central Illinois and the Chicago area. The
Company has divested, to the satisfaction of the DOJ, certain assets in
eastern Wisconsin, central Illinois and the Chicago area, and is actively
pursuing the divestiture required in southern California pursuant to the Final
Judgment.
The Company has been named as a defendant in various other claims arising
out of its normal business operations. Based upon the facts available to
date, management believes that the Company has meritorious defenses to these
actions and that their ultimate resolution will not have a material adverse
effect on the Company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
-------------------------------------------------------------
Matters
-------
The section entitled "Common Stock Information" appearing on page 3 of
the Annual Report is incorporated herein by this reference. Note 3, entitled
"Debt", to the consolidated financial statements appearing on pages 23 and 24
of the Annual Report is also incorporated herein by this reference with regard
to limitations on cash dividends and Common Stock repurchases. The section
entitled, "Management's Discussion and Analysis of Financial Condition and
Results of Operations", specifically the subsection entitled "Capital
Resources and Liquidity" appearing on page 17 of the Annual Report is also
incorporated herein by this reference with regard to planned common stock
repurchases and dividend payments on the Common Stock. The 16,923,077
unregistered shares of the Company's Common Stock issued to Ralston on
July 22, 1995 in connection with the Company's acquisition of CBC, were issued
in reliance upon Section 4(2) of the Securities Act of 1933, as amended, as a
transaction by an issuer not involving any public offering.
Item 6. Selected Financial Data
- ------- -----------------------
The section entitled "Five-Year Summary of Financial Data", appearing on
page 15 of the Annual Report, is incorporated herein by this reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing on pages 16 to 17 of the Annual
Report is incorporated herein by this reference.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The consolidated financial statements and accompanying notes and Report
of Independent Public Accountants appearing on pages 18 to 28 of the Annual
Report are incorporated herein by this reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
PART III
The information required by Part III (Item 10, 11, 12 and 13) is
incorporated herein by reference to the Company's definitive proxy statement,
involving the election of directors, approval of the proposed Amendment to the
Company's Restated Certificate of Incorporation and ratification of
independent auditors filed on August 22, 1997.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
- -------- --------------------------------------------------------------
(a) Documents Filed as Part of this Report:
1. Financial Statements
The following financial statements and report included in the
Company's Annual Report are incorporated herein by reference:
Consolidated Balance Sheet at May 31, 1997 and June 1,
1996
For the 52 weeks ended May 31, 1997 and June 1,
1996, and the 53 weeks ended June 3, 1995:
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Consolidated Statement of Stockholders' Equity
Notes to Consolidated Financial Statements
Report of Independent Public Accountants dated July 15,
1997
2. Financial Statement Schedule
The following report and schedule are filed herewith as a
part hereof:
Report of Independent Public Accountants dated July 15,
1997
Schedule for the 52 weeks ended May 31, 1997 and June 1,
1996, and the 53 weeks ended June 3, 1995:
II Valuation and Qualifying Accounts
All other schedules have been omitted since the required
information is not present or not present in amounts
sufficient to require submission of the schedule, or because
the information required is included in the consolidated
financial statements or the notes thereto.
3. Exhibits
The exhibits are listed in the Exhibit Index. Copies of
certain documents have not been filed as exhibits, in
reliance upon paragraph (b)(4)(iii) of Item 601 of
Regulation S-K. Registrant agrees to furnish a copy of any
such instrument to the Securities and Exchange Commission
upon request.
(b) Reports on Form 8-K:
--------------------
No reports on Form 8-K were filed in the last quarter of the
fiscal year to which this Annual Report on Form 10-K relates.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
INTERSTATE BAKERIES CORPORATION
Dated: August 22, 1997 By: /s/ Charles A. Sullivan
-------------------------------
Charles A. Sullivan
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the dates indicated.
Capacities
Name of Signatory In Which Signing Date
- ----------------- ---------------- ----
/s/ Charles A. Sullivan Chairman of the Board, August 22, 1997
- ----------------------- Chief Executive Officer
Charles A. Sullivan and Director (Principal
Executive Officer)
/s/ G. Kenneth Baum Director August 22, 1997
- -------------------
G. Kenneth Baum
/s/ Leo Benatar Director August 22, 1997
- ---------------
Leo Benatar
/s/ E. Garrett Bewkes, Jr. Director August 22, 1997
- --------------------------
E. Garrett Bewkes, Jr.
/s/ Philip Briggs Director August 22, 1997
- -----------------
Philip Briggs
/s/ Robert B. Calhoun, Jr. Director August 22, 1997
- --------------------------
Robert B. Calhoun, Jr.
/s/ Frank E. Horton Director August 22, 1997
- -------------------
Frank E. Horton
/s/ William P. Stiritz Director August 22, 1997
- ----------------------
William P. Stiritz
/s/ James R. Elsesser Director August 22, 1997
- ---------------------
James R. Elsesser
/s/ Paul E. Yarick Vice President and Treasurer August 22, 1997
- ------------------ (Principal Financial Officer)
Paul E. Yarick
/s/ John F. McKenny Vice President and Corporate August 22, 1997
- ------------------- Controller (Principal
John F. McKenny Accounting Officer)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Interstate Bakeries Corporation
We have audited the consolidated financial statements of Interstate
Bakeries Corporation and its subsidiaries as of May 31, 1997 and June 1, 1996,
and for each of the three fiscal years in the period ended May 31, 1997, and
have issued our report thereon dated July 15, 1997; such consolidated
financial statements and report are included in your 1997 Annual Report to
Stockholders and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedule of Interstate Bakeries
Corporation and its subsidiaries, listed on Item 14. This consolidated
financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
July 15, 1997
INTERSTATE BAKERIES CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FIFTY-TWO WEEKS ENDED MAY 31, 1997 AND JUNE 1, 1996,
AND FIFTY-THREE WEEKS ENDED JUNE 3, 1995
(In Thousands)
Balance at Additions Accounts Balance
beginning charged charged at end
Description of period to income off of period
- ----------- ---------- --------- -------- ---------
1997:
Reserve for
discounts
and allow-
ances on
accounts
receivable $ 7,414 $ 563 $ - $ 7,977
Allowance for
doubtful
accounts 3,606 2,478 1,507 4,577
------- ------ ------- -------
$11,020 $3,041 $ 1,507 $12,554
======= ====== ======= =======
1996:
Reserve for
discounts
and allow-
ances on
accounts
receivable $ 8,404 $ (990) $ - $ 7,414
Allowance for
doubtful
accounts 3,744 621 759 3,606
------- ------ ------- -------
$12,148(1) $ (369) $ 759 $11,020
======= ====== ======= =======
1995:
Reserve for
discounts
and allow-
ances on
accounts
receivable $ 4,278 $ 143 $ - $ 4,421
Allowance for
doubtful
accounts 1,645 652 505 1,792
------- ------ ------- -------
$ 5,923 $ 795 $ 505 $ 6,213
======= ====== ======= =======
(1) Restated to include opening balance of Continental Baking Company acquired
on July 22, 1995.
EXHIBIT INDEX
-------------
Exhibit
No. Exhibit
- ------- ---------
3.1 Restated Certificate of Incorporation of Interstate Bakeries
Corporation, as amended (incorporated herein by reference to
Exhibit 3.1 to the Annual Report on Form 10-K of Interstate
Bakeries Corporation filed on August 30, 1995).
3.2 Restated Bylaws of Interstate Bakeries Corporation (incorporated
herein by reference to Exhibit 3.2 to the Annual Report on
Form 10-K of Interstate Bakeries Corporation filed on August 30,
1991 (the "1991 10-K")).
4.1 Article FOURTH of Restated Certificate of Incorporation of
Interstate Bakeries Corporation (incorporated herein by reference
to Exhibit A to the Proxy Statement relating to the 1997 Annual
Meeting of Stockholders of Interstate Bakeries Corporation).
10.1 Interstate Bakeries Corporation 1991 Stock Option Plan
(incorporated herein by reference to Exhibit 10.1 to the
Registration Statement on Form S-1 of Interstate Bakeries
Corporation, File No. 33-40830 (the "Form S-1")).
10.2 Employment Agreement, dated as of March 1, 1989, by and among
Interstate Bakeries Corporation, Interstate Brands Corporation and
Charles A. Sullivan (incorporated herein by reference to
Exhibit 10.2 to the Form S-1).
10.4 Memorandum of Agreement, dated as of May 16, 1991, by and among
Interstate Bakeries Corporation, Interstate Brands Corporation and
Charles A. Sullivan (incorporated herein by reference to
Exhibit 10.4 to the Form S-1).
10.5 Restated Memorandum of Agreement dated as of July 22, 1992 by and
among Interstate Bakeries Corporation, Interstate Brands
Corporation and Charles A. Sullivan (incorporated herein by
reference to Exhibit 10.5 to the Annual Report on Form 10-K of
Interstate Bakeries Corporation filed on August 20, 1992).
10.6 Credit Agreement, dated May 31, 1995, signed by Interstate Brands
Corporation, Chemical Bank, the Lenders and Issuing Bank (as
defined therein) (incorporated by reference to Exhibit 1 to the
Form 8-K filed on June 9, 1995).
10.7 Interstate Bakeries Corporation 1996 Stock Incentive Plan
(incorporated by reference to Exhibit A to the Proxy Statement
relating to the 1996 Annual Meeting of Stockholders of Interstate
Bakeries Corporation).
11.1 Statement regarding computation of per share earnings.*
13.1 Page 3 and pages 15 to 28 of the Interstate Bakeries Corporation
annual report to security holders for the year ended May 31,
1997. (Those portions of the annual report to security holders
not listed here shall not be deemed to be filed as a part of this
Report.)*
21.1 Subsidiaries of Interstate Bakeries Corporation (incorporated
herein by reference to Exhibit 22.1 to the 1991 10-K).
-------------------------
* Filed herewith.