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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 and
Exchange Act of 1934 (No Fee Required) for the fiscal year ended December
30, 2000 (53 weeks)
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) 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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock,
par value $.50 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 (ss. 229.405 of this chapter) 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 voting stock held by non-affiliates as of February
12, 2001 is $114,425,648 computed by reference to the closing price on the New
York Stock Exchange on such date.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 12, 2001.
Class Outstanding
Common Stock,
par value $.50 7,867,760 shares
DOCUMENTS INCORPORATED BY REFERENCE
Document Reference
- -------- ---------
Pages 12 to 31 inclusive of the Annual Report to Share-
holders for the Fiscal Year Ended December 30, 2001 Part II
Pages 2 to 10 inclusive of the definitive Proxy Statement
dated March 30, 2001 Part III
The index of exhibits is located on page number 7 of 15.
TASTY BAKING COMPANY AND SUBSIDIARIES
PART I
Item 1. Business
The Registrant was incorporated in Pennsylvania in 1914 and maintains
its main offices and manufacturing facilities in Philadelphia, Pennsylvania. The
Registrant's Tastykake Division (Tastykake) manufactures and sells a variety of
premium single portion cakes, pies, cookies, pretzels, brownies, pastries,
donuts, miniature donuts, snack bars, boxed cookies and large family sized
cakes, pies and danish under the well established trademark, TASTYKAKE(R). These
products comprise approximately 150 varieties. The availability of some
products, especially the holiday-themed offerings, varies according to the
season of the year. The single portion cakes, cookies and donuts principally
sell at retail prices for individual packages ranging from 50(cent) to 89(cent)
per package and family convenience packages ranging from $2.39 to $2.75. The
pies principally sell at a retail price of 89(cent) each and include various
fruit and creme filled varieties and, at various times of the year, additional
seasonal varieties. The pastries and brownies are marketed principally in snack
packages and sell at a retail price of 89(cent) per package. The best known
products with the widest sales acceptance are various sponge cakes marketed
under the product trademarks JUNIORS(R) and KRIMPETS(R), and chocolate enrobed
cakes under KANDY KAKES(R). Currently, the Registrant markets three varieties of
low-fat cake which are sold individually at a retail price of 59(cent) or in
family convenience packages at a retail price of $2.75. In 1999, Tastykake
introduced a line of large family sized cakes produced by Tasty Baking Oxford,
Inc., a wholly-owned subsidiary, and currently sold by the Registrant, under the
trademark CLASSIC BAKED GOODS(TM) at retail prices ranging from $2.99 to $3.49.
In addition, large pies, boxed cookies donuts, donut holes and large danish are
sold by the Registrant under the trademark CLASSIC BAKED GOODS(TM) at retail
prices ranging from $2.99 to $3.49. There are approximately forty varieties
available under the Classic Baked Goods line.
Dutch Mill Baking Company, Inc. (Dutch Mill), a wholly-owned
subsidiary, based in Wyckoff, New Jersey, produces approximately 25 varieties of
donuts, donut holes, cookies and cakes primarily under the trademark DUTCH
MILL(R). Dutch Mill's direct sales are made through distributors to retail
outlets in the New York City metropolitan area. These products are sold
primarily in family convenience packages at retail prices ranging from $1.99 to
$2.99 per package. Tastykake purchases donut holes from Dutch Mill which are
sold under the TASTYKAKE(R) label.
Tasty Baking Oxford, Inc., located in Oxford, Chester County,
Pennsylvania, currently manufactures honey buns, large cakes, donuts and muffins
under the trademarks TASTYKAKE(R), CLASSIC BAKED GOODS(TM), SNAK N' FRESH(R) and
AUNT SWEETIE'S BAKERY(R) for distribution through the traditional route and
distributor methods as well as private label, food service and institutional
marketplaces. The SNAK N' FRESH(R) and AUNT SWEETIE'S BAKERY(R) brands were
instituted to allow the Registrant to enter the private label and food service
markets without compromising the integrity of its TASTYKAKE(R) brand. All of the
products from the Oxford facility are sold to the Tastykake division for resale.
Tastykake products are sold principally by independent owner/operators
through distribution routes to approximately 25,000 retail outlets in New York,
New Jersey, Pennsylvania, Delaware, Maryland and Virginia, which make up
Tastykake's principal market. This method of distribution has been used since
1986. Tastykake also distributes its products through distributorships and major
grocery chains located in most areas of the country. The Registrant has formed
alliances with distributors who can handle the Tastykake product line most
effectively in order to promote geographic expansion. Products are sold in
forty-nine states, and Puerto Rico. Tastykake also distributes its products
through the TASTYKARE(R) program, whereby consumers can call a toll-free number
or visit our web-site to order the delivery of a variety of Tastykake gift
packs. The registrant opened two thrift outlets during 2000 and anticipates
twenty by the end of 2001 in order to recover the cost of stale, damaged and
other products not generally salable through normal distribution channels. These
products were previously discarded.
The Registrant is in the process of completing an upgrade of the entire
computer system for all its divisions which is enabling the Registrant to
coordinate a wide range of activities and will eventually link to large
customers and suppliers. In 1998, the Registrant began a $22 million
modernization program for the manufacturing facility in Philadelphia,
Pennsylvania. The program will be completed in phases and is expected to take
approximately four years from inception. Phase I of the program, the complete
renovation of the Krimpet and Junior production and packaging lines, was
completed in 1999. Phase II, the renovation of the cupcake lines, began in 2000.
Two of the four lines were successfully converted in 2000. These renovations are
expected to increase productivity and efficiency.
While the five largest customers of the Tastykake division comprise a
significant portion of its gross sales revenue, the large number of retailers
comprising the customer base ensures the availability of Tastykake products to
consumers in the principal market area.
Item 1. Business, continued
The Registrant maintains a comprehensive advertising program which from
time to time utilizes outdoor poster campaigns, newspapers, customer coupons,
radio and television advertising, and promotions with various sports teams.
While the Registrant sponsors research and development activities, the cost is
not a material item.
The Registrant is engaged in a highly competitive business. Although
the number of competitors varies among marketing areas, certain competitors are
national companies with multiple production facilities and nationwide
distribution systems. The Registrant believes it is one of the largest producers
in the country specializing in premium single portion pies and cakes. The
Registrant is able to maintain a strong competitive position in its principal
marketing area through the quality of its products and brand name recognition.
Outside of its principal market area, the Registrant's trademarks and
reputation for quality are not well-known. In these markets, the Registrant
competes for the limited shelf space available from retailers chiefly on price,
quality and the ability to sell its products (i.e. consumer acceptance).
The Registrant has a significant market position throughout its
principal marketing area. Outside of the principal market area, its market share
is generally less significant. Its principal competitor in the premium snack
cake market throughout the country is Interstate Bakeries Corporation, with its
three (3) brands - Hostess, Dolly Madison and Drakes. There are also local
independent bakers which compete in a number of regional markets. Interstate
Bakeries Corporation is a large publicly-held corporation which has achieved
national recognition of its "Hostess" brand name through national advertising
and competes on price, quality and brand name recognition. It also promotes its
Drakes product line in areas where the Registrant is attempting to expand its
market share. McKee Foods Corporation, a large privately-held company, competes
in the snack cake market under the brand "Little Debbie", principally as a low
price snack cake.
No difficulty was experienced in obtaining raw materials in 2000. It is
not anticipated that there will be any significant adverse effects on the
financial condition of the Registrant as a result of price fluctuations or
availability of raw materials in 2001.
The Registrant's policies with respect to working capital items are not
unique. Inventory is generally maintained at levels sufficient for one to three
weeks sales, while the ratio of current assets to current liabilities is
maintained at a level between 1.5 and 2.5 to 1.
The Registrant employs approximately 1,100 persons, including
approximately 140 part-time employees.
Item 2. Properties
The locations and primary use of the materially important physical
properties of the Registrant and its subsidiaries are as follows:
Location Primary Facility Use
2801 Hunting Park Avenue Corporate Office,
Philadelphia, PA (1) Production of cakes,
pies, cookies and donuts
Fox and Roberts Streets Sales and Finance Offices,
Philadelphia, PA (1) Data Processing
Operations, Office
Services and Warehouse
500 Braen Avenue Dutch Mill Offices,
Wyckoff, NJ (2) Production of donuts, donut holes
cookies and cakes
700 Lincoln Street Tasty Baking Oxford Offices,
Oxford, PA (3) Production of honey buns, donuts,
pastries, muffins, and large
cake, future production of other
varieties of baked goods
(1) These properties are recorded as capital leases. For a description
of major encumbrances on these properties, see Note 6 and 7 of Notes to
Consolidated Financial Statements in the 2000 Annual Report to Shareholders -
Exhibit 13, incorporated herein by reference.
(2) This property is leased under an operating lease. For a description
of rental obligations, see Note 7 of Notes to Consolidated Financial Statements
in the 2000 Annual Report to Shareholders - Exhibit 13, incorporated herein by
reference.
(3) This property was purchased and is owned by Tasty Baking Oxford,
Inc.
In addition to the above, the Registrant leases various other
properties used principally as local pick up and distribution points and more
recently, for the thrift store outlets. All of these properties are sufficient
for the business of the Registrant as now conducted, although certain
manufacturing space is near full utilization.
Item 3. Legal Proceedings
The Registrant is involved in certain legal and regulatory actions, all
of which have arisen in the ordinary course of the Registrant's business. The
Registrant is unable to predict the outcome of these matters, but does not
believe that the ultimate resolution of such matters will have a material
adverse effect on the consolidated financial position or results of operations
of the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
TASTY BAKING COMPANY AND SUBSIDIARIES
PART II
CROSS REFERENCE INDEX
FORM 10-K
ITEM NUMBER AND CAPTION INCORPORATED MATERIAL
Page(s) in Annual Report to
Shareholders for the Fiscal
Year Ended December 30, 2000
Item 5 Market for the Registrant's
Common Equity and Related
Shareholder Matters 16
Item 6 Selected Financial Data 17
Item 7 Management's Discussion and
Analysis of Financial Condition
and Results of Operations 13 - 15
Certain matters discussed in this Report, including those under
the headings "Business," "Legal Proceedings" and "Management's
Analysis," 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. These
forward-looking statements include comments about legal
proceedings, competition with the baking industry, availability
and pricing of raw materials and capital, improvements in
efficiency expected from plant modernization programs, sales
growth by distribution through private label, food service,
institutional sales and national sales programs, changes in the
Registrant's business strategies 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 which include changes in general
economic or business conditions nationally and in the
Registrant's primary markets, the availability of capital upon
terms acceptable to the Registrant, the availability and prices
of raw materials, the level of demand for the Registrant's
products, legal proceedings to which the Registrant is or may
become a party, the actions of competitors within the baking
industry, changes in consumer tastes or eating habits, the
success of plant modernization and business strategies
implemented by the Registrant to meet future challenges, and the
ability to develop and market in a timely and efficient manner
new products which are accepted by consumers.
Item 7a Quantitative and Qualitative Disclosure 23 - 24
about market risk
The Registrant has certain floating rate debt notes. Under
current market conditions, the Registrant believes that changes
in interest rates would not have a material impact on the
financial statements of the Registrant. The Registrant also has
notes receivable from owner operators whose rates adjust every
three years, and, therefore, would partially offset the
fluctuations in the Registrant's interest rates on its notes
payable. The Registrant also has the right to sell these notes
receivable, and could use these proceeds to liquidate a
corresponding amount of the debt notes payable. Information on
the debt and receivable notes can be found in the Notes to
Consolidated Financial Statements, Notes 4,5 and 3, respectively,
in the 2000 Annual Report to Shareholders.
TASTY BAKING COMPANY AND SUBSIDIARIES
PART III
CROSS REFERENCE INDEX
FORM 10-K
ITEM NUMBER AND CAPTION INCORPORATED MATERIAL
Page(s) in Annual Report to
Shareholders for the Fiscal
Year Ended December 30, 2000
Item 8 Consolidated Financial Statements
and Supplementary Data:
Summary of Significant Accounting
Policies 12
Quarterly Summary 16
Consolidated Statements of
Operations and Retained Earnings 18
Consolidated Statements of Cash Flows 19
Consolidated Balance Sheets 20 - 21
Consolidated Statements of Changes
in Capital Accounts 22
Notes to Consolidated Financial
Statements 23 - 30
Report of Independent Accountants 31
Item 9 Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
This item is not applicable.
Page(s) in definitive
Proxy Statement
Item 10 Directors and Executive Officers
of the Registrant 4 - 7
Item 11 Executive Compensation 8 - 10
Item 12 Security Ownership of Certain Beneficial
Owners and Management 2 - 4
Item 13 Certain Relationships and Related
Transactions
With respect to certain business
relationships of Fred C. Aldridge, Jr.,
Esquire, director 5
TASTY BAKING COMPANY AND SUBSIDIARIES
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
for the fiscal years ended December 30, 2000,
December 25, 1999 and December 26, 1998
------
Pages
(a)-1. List of Financial Statements
Summary of Significant Accounting Policies Incorporated herein
Quarterly Summary by reference to
Consolidated Statements of Operations and pages 12 to 31
Retained Earnings inclusive of the
Consolidated Statements of Cash Flows Annual Report to
Consolidated Balance Sheets Shareholders for the
Consolidated Statements of Changes in Capital fiscal year ended
Accounts December 30, 2000.
Notes to Consolidated Financial Statements See page 11 of 15.
Report of Independent Accountants
(a)-2. Schedule* for the fiscal years ended December 30, 2000,
December 25, 1999 and December 26, 1998:
Report of Independent Accountants 9 of 15
II. Valuation and Qualifying Accounts 10 of 15
(a)-3. Exhibits Index - The following Exhibit Numbers refer to
Regulation S-K, Item 601**
(3) (a) Articles of Incorporation of Registrant as
amended are incorporated herein by reference to
Exhibit 3 to Form 10-K report of Registrant for
1998.
(b) By-laws of Registrant as amended on March 31, 2000
are incorporated by reference to Exhibit 10 to
form 10-Q report of Registrant for the twenty-six
weeks ended June 24, 2000.
(10) (a) 1991 Long-term Incentive Plan, effective as of
January 1, 1991, is incorporated herein by
reference to Exhibit 10 to Form 10-K report of
Registrant for 1990.
(b) 1985 Stock Option Plan, effective December 20,
1985, is incorporated herein by reference to
Exhibit A of the Proxy Statement for the Annual
Meeting of Shareholders on April 18, 1986, filed
on or about March 21, 1986.
(c) Senior Management Employment Agreements dated July
1, 1988 are incorporated herein by reference to
Exhibit 10(c) to Form 10-K report of Registrant
for 1991.
(d) Supplemental Executive Retirement Plan, dated
February 18, 1983 and amended May 15, 1987 and
April 22, 1988, is incorporated herein by
reference to Exhibit 10(d) to Form 10-K report of
Registrant for 1991.
*All other schedules are omitted because they are inapplicable or not
required under Regulation S-X or because the required information is given in
the financial statements and notes to financial statements.
** All other exhibits are omitted because they are inapplicable.
TASTY BAKING COMPANY AND SUBSIDIARIES
ITEM 14, CONTINUED
Pages
(e) Management Stock Purchase Plan is incorporated herein
by reference to the Proxy Statement for the Annual
Meeting of Shareholders on April 19, 1968 filed on or
about March 20, 1968 and amended April 23, 1976,
April 24, 1987 and April 19, 1991.
(f) Trust Agreement dated as of November 17, 1989 between
the company and Meridian Trust Company relating to
Supplemental Executive Retirement Plan is
incorporated herein by reference to Exhibit 10(f) to
Form 10-K report of Registrant for 1994.
(g) Director Retirement Plan dated October 15, 1987 is
incorporated herein by reference to Exhibit 10(h) to
Form 10-K report of Registrant for 1992.
(h) 1993 Replacement Option Plan (P&J Spin-Off) is
incorporated herein by reference to Exhibit A of the
Definitive Proxy Statement dated March 17, 1994 for
the Annual Meeting of Shareholders on April 22, 1994.
(i) 1994 Long Term Incentive Plan is incorporated herein
by reference to Exhibit 10(j) to Form 10-K report of
Registrant for 1994.
(j) Trust Agreement dated January 19, 1990 between the
company and Meridian Trust Company relating to the
Director Retirement Plan is incorporated herein by
reference to Exhibit 10(k) to Form 10-K report of
Registrant for 1995.
(k) 1997 Long Term Incentive Plan is incorporated herein
by reference to Annex II of the Proxy Statement for
the Annual Meeting of Shareholders on April 24, 1998.
Each of exhibits 10(a) - 10(k) constitute management contracts
or compensatory plans or arrangements.
(13) Annual Report to Shareholders for the
fiscal year ended December 30, 2000,
pages 12 to 31 only. (The balance of the
Annual Report is not deemed "filed" or
"soliciting material".) 11 of 15
(21) Subsidiaries of the Registrant 12 of 15
(23)(a) Consent of Independent Accountants 13 of 15
(b) The Registrant did not file a report on Form 8-K during the fourth
quarter ended December 30, 2000.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Shareholders and
the Board of Directors
Tasty Baking Company
Our audits of the consolidated financial statements referred to in our report
dated February 13, 2001, appearing on page 31 of the 2000 Annual Report to
Shareholders of Tasty Baking Company and subsidiaries, (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the Financial Statement Schedule
listed in Item 14(a)(2) of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 13, 2001
TASTY BAKING COMPANY AND SUBSIDIARIES
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
for the fiscal years ended December 30, 2000, December 25, 1999 and December 26, 1998
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Period Expenses Deductions(1) Period
----------- ---------- ---------- ---------- ----------
Deducted from applicable assets:
Allowance for doubtful accounts:
For the fiscal year ended December 30, 2000 $2,874,088 $1,250,385 $795,129 $3,329,344
========== ========== ======== ==========
For the fiscal year ended December 25, 1999 $2,849,538 $ 428,864 $404,314 $2,874,088
========== ========== ======== ==========
For the fiscal year ended December 26, 1998 $2,548,552 $ 716,000 $415,014 $2,849,538
========== ========== ======== ==========
Inventory valuation reserves:
For the fiscal year ended December 30, 2000 $ 275,109 $ 185,149 $158,644 $ 301,614
========== ========== ======== ==========
For the fiscal year ended December 25, 1999 $ 135,000 $ 323,709 $183,600 $ 275,109
========== ========== ======== ==========
For the fiscal year ended December 26, 1998 $ 125,000 $ 78,225 $ 68,225 $ 135,000
========== ========== ======== ==========
Spare parts inventory reserve for obsolescence:
For the fiscal year ended December 30, 2000 $ 407,072 $ 153,787 $115,796 $ 445,063
========== ========== ======== ==========
For the fiscal year ended December 25, 1999 $ 340,000 $ 116,489 $ 49,417 $ 407,072
========== ========== ======== ==========
For the fiscal year ended December 26, 1998 $ 325,000 $ 29,762 $ 14,762 $ 340,000
========== ========== ======== ==========
Equipment allowance for obsolescence:
For the fiscal year ended December 30, 2000 $ 175,000 $ 25,000 $ - $ 200,000
========== ========== ======== ==========
For the fiscal year ended December 25, 1999 $ 150,000 $ 42,086 $ 17,086 $ 175,000
========== ========== ======== ==========
For the fiscal year ended December 26, 1998 $ 100,000 $ 44,348 $ (5,652) $ 150,000
========== ========== ======== ==========
(1) Decrease due to write-off of related assets.
TASTY BAKING COMPANY AND SUBSIDIARIES
The Annual Report to Shareholders for the fiscal year ended December
30, 2000 will be mailed to all shareholders on March 30, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and 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
By /s/ Carl S. Watts
-----------------------------------
Carl S. Watts, Chairman, President
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 and on the dates indicated.
Signature Capacity Date
- ----------------------------------- ------------------------- --------------
/s/ Philip J. Baur, Jr. Retired Chairman of the March 30, 2001
- --------------------------------- Board and Director of
Philip J. Baur, Jr. Tasty Baking Company
/s/ Carl S. Watts Chairman of the Board, March 30, 2001
- --------------------------------- President, Chief
Carl S. Watts Executive Officer and
Director of Tasty
Baking Company
/s/ Nelson G. Harris Chairman of The March 30, 2001
- --------------------------------- Executive Committee and
Nelson G. Harris Director of Tasty
Baking Company
/s/ John M. Pettine Executive Vice President, March 30, 2001
- --------------------------------- Chief Financial and
John M. Pettine Accounting Officer and
Director of Tasty
Baking Company
/s/ Fred. C. Aldridge, Jr. Director of Tasty Baking March 30, 2001
- --------------------------------- Company
Fred C. Aldridge, Jr.
/s/ G. Fred DiBona, Jr. Director of Tasty Baking March 30, 2001
- --------------------------------- Company
G. Fred DiBona, Jr.
/s/ Ronald J. Kozich Director of Tasty Baking March 30, 2001
- --------------------------------- Company
Ronald J. Kozich
/s/ Judith M. von Seldeneck Director of Tasty Baking March 30, 2001
- --------------------------------- Company
Judith M. von Seldeneck