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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 (Fee Required) for the fiscal year ended December 30,
1995 (52 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 American 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_____
The aggregate market value of voting stock held by non-affiliates as of February
15, 1996 is $65,033,584 computed by reference to the closing price on the
American Stock Exchange on such date.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 9, 1996.
Class Outstanding
Common Stock,
par value $.50 6,184,850 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, 1995 Part II
Pages 2 to 12 inclusive of the definitive Proxy Statement
dated March 20, 1996 Part III
(Note: Portions of pages 10 through 12 are not deemed "filed")
The index of exhibits is located on page number 7 of 17.
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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) is engaged in the manufacture and
sale of a variety of small single portion cakes, pies, cookies, muffins,
pretzels, brownies, pastries, donuts and miniature donuts and cupcakes under the
well established trademark, TASTYKAKE(R). These products comprise approximately
85 varieties. The availability of some products, especially the holiday-themed
offerings, varies according to the season of the year. The cakes, cookies and
donuts principally sell at retail prices for individual packages ranging from
30(cent) to 69(cent) per package and family convenience packages and jumbo packs
ranging from $1.99 to $3.99. The best known products with the widest sales
acceptance are various cupcakes and sponge cakes marketed under the product
trademarks JUNIORS(R) and KRIMPETS(R), and chocolate covered cakes under KANDY
KAKES(R). The pies principally sell at retail for 69(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 69(cent) per
package. Three varieties of english muffins range from $1.49 to $1.69 per
package. In response to a major market trend that has been heightened
considerably by the introduction of nutritional labeling, eight new low-fat cake
varieties were introduced in 1995. These low-fat products are sold primarily in
family convenience packages which sell at a retail price of $2.39 per package.
Tastykake products are sold principally by independent owner/operators
through distribution routes to approximately 25,000 retail outlets in a six
state region from New York to Virginia, which is Tastykake's principal market.
Tastykake also distributes its products through major grocery chains in states
located throughout the mid-west, southwest and south. Including these market
areas, products are sold by distributors in approximately thirty states.
Tastykake also distributes its products through the TASTYKARE(TM) program,
whereby consumers can call a toll-free number to order the delivery of a variety
of Tastykake gift packs. Although the division's three largest customers
comprise a significant portion of its net sales revenue, the large number of
retailers comprising the customer base ensure the availability of TASTYKAKE(R)
products to consumers.
In August 1995, the Registrant acquired all of the outstanding shares of
capital stock of Dutch Mill Baking Company, Inc. (Dutch Mill). Dutch Mill, based
in Wyckoff, New Jersey, produces approximately 25 varieties of donuts, muffins,
cookies and cakes which are marketed primarily under the trademark DUTCH MILL(R)
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 $2.39 to $2.69 per package.
The Registrant maintains a comprehensive advertising program which utilizes
outdoor poster campaigns, newspapers, customer coupons, radio and television
spot advertising and promotions with various sports teams. While the companies
sponsor research and development activities, the cost is not a material item.
The Registrant is engaged in a highly competitive business, particularly in
new marketing areas where its trademarks and reputation are not well-known.
Although the number of competitors varies among marketing areas and certain
competitors are national companies with multiple production facilities and a
nationwide distribution system, the Registrant believes it is one of the largest
independent producers in the country specializing primarily in small pies and
cakes. The Registrant is able to maintain a strong competitive position in its
principle marketing areas through the quality of its products.
2 of 17
Item 1. Business, continued
The Registrant's policies with respect to working capital items is 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
120 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 and cookies
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, muffins,
cookies and cakes
(1) These properties are recorded as capital leases. For a description of
major encumbrances on these properties, see Note 10 and 11 of Notes to
Consolidated Financial Statements in the 1995 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 11 of Notes to Consolidated Financial Statements in
the 1995 Annual Report to Shareholders - Exhibit 13, incorporated herein by
reference.
In addition to the above, the Registrant leases various other properties
used principally as local pick up and distribution points. All of these
properties are sufficient for the business of the Registrant as now conducted,
although certain manufacturing space is near full utilization.
3 of 17
Item 3. Legal Proceedings
In November, 1995, the Registrant received a proposed assessment from the
Internal Revenue Service for employment taxes based on an assertion that during
the years 1990 through 1994 the Registrant's independent owner/operators were
employees and not independent contractors. It is the Registrant's view that the
assertion is without merit since the independent owner/operator relationships
were established in compliance with the appropriate Internal Revenue Code
requirements. Therefore, the Registrant intends to vigorously defend its
position. At this time, however, the Registrant is unable to estimate the
possible loss, if any, that may be incurred as a result of this proposed
assessment. The ultimate outcome of this proposed assessment may or may not have
a material impact on the Registrant's financial position or results of
operations.
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 of the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
This item is not applicable.
4 of 17
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, 1995
Item 5 Market for the Registrant's
Common Stock 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
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 - 31
Report of Independent Accountants 31
Item 9 Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
This item is not applicable.
5 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
PART III
CROSS REFERENCE INDEX
FORM 10-K
ITEM NUMBER AND CAPTION INCORPORATED MATERIAL
Page(s) in definitive
Proxy Statement
Item 10 Directors and Executive Officers
of the Registrant 4 - 6
Item 11 Executive Compensation* 7 - 12
Item 12 Security Ownership of Certain Beneficial
Owners and Management 2 - 3
Item 13 Certain Relationship and Related
Transactions
With respect to certain business
relationships of Fred C. Aldridge, Jr.,
Esquire, director 5
*Note that the sections entitled "Report of
Compensation Committee on Executive
Compensation" and "PERFORMANCE GRAPH"
pursuant to Reg. S-K, Item 402(a)(9) are not
deemed "Soliciting Material" or "filed" as
part of this report.
6 of 17
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, 1995,
December 31, 1994 and January 1, 1994
__________
Pages
(a)-1. List of Financial Statements
Summary of Significant Accounting Policies Incorporated herein
Quarterly Summary by reference to
Consolidated Statements of Operations and page 12 and pages
Retained Earnings 18 - 31 inclusive of
Consolidated Statements of Cash Flows the Annual Report to
Consolidated Balance Sheets Shareholders for the
Consolidated Statements of Changes in Capital fiscal year ended
Accounts December 30, 1995.
Notes to Consolidated Financial Statements See page 13 of 17.
(a)-2. Schedule* for the fiscal years ended December
30, 1995, December 31, 1994 and January 1,
1994:
Report of Independent Accountants 9 of 17
II. Valuation and Qualifying Accounts 10 of 17
(a)-3. Exhibits Index - The following Exhibit Numbers
refer to Regulation S-K, Item 601**
(3) Articles of Incorporation and Bylaws
of registrant as amended and
currently effective are incorporated
herein by reference to Exhibit 3 to
Form 10-K report of Registrant for
1992. 11 of 17
(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.
7 of 17
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) 1988 Director Option Plan effective
April 22, 1988 is incorporated
herein by reference to Exhibit 10(g)
to Form 10-K report of Registrant
for 1992.
(h) Director Retirement Plan dated
October 16, 1987 is incorporated
herein by reference to Exhibit 10(h)
to Form 10-K report of Registrant
for 1992.
(i) 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.
(j) 1994 Long Term Incentive Plan is
incorporated herein by reference to
Exhibit 10(j) to Form 10-K report of
Registrant for 1994.
(k) Trust Agreement dated January 19,
1990 between the company and
Meridian Trust Company relating to
the Director Retirement Plan. 12 of 17
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,
1995, pages 12 to 31 only. (The
balance of the Annual Report is not
deemed "filed" or "Soliciting
Material".) 13 of 17
(21) Subsidiaries of the Registrant 14 of 17
(23)(a) Consent of Independent Accountants
with respect to Form S-3
(Registration No. 33-30560) and
Post- Effective Amendment No. 10 to
Form S-8 (Registration No. 2-55836)
and Post- Effective Amendment No. 3
to Form S-8 (Registration No.
33-18904) and Post- Effective
Amendment No. 4 to Form S-3
(Registration No. 33-8427). 15 of 17
(b) The Registrant did not file a report on Form
8-K during the fourth quarter ended December
30, 1995.
8 of 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
the Board of Directors
Tasty Baking Company
Philadelphia, Pennsylvania
Our report on the consolidated financial statements of Tasty Baking Company
and subsidiaries has been incorporated by reference in this Form 10-K from page
31 of the 1995 Annual Report to the Shareholders of Tasty Baking Company. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 7 of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
February 14, 1996
9 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
for the fiscal years ended December 30, 1995,
December 31, 1994 and January 1, 1994
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, 1995 $2,063,765 $ 785,036 $ 487,007 $2,361,794
========== ========== ========== ==========
For the fiscal year ended December 31, 1994 $1,644,739 $ 592,040 $ 173,014 $2,063,765
========== ========== ========== ==========
For the fiscal year ended January 1, 1994 $1,429,897 $ 530,980 $ 316,138 $1,644,739
========== ========== ========== ==========
Inventory valuation reserves:
For the fiscal year ended December 30, 1995 $ 74,535 $ 12,781 $ 12,316 $ 75,000
========== ========== ========== ==========
For the fiscal year ended December 31, 1994 $ 81,023 $ 129,847 $ 136,335 $ 74,535
========== ========== ========== ==========
For the fiscal year ended January 1, 1994 $ 85,000 $ 59,796 $ 63,773 $ 81,023
========== ========== ========== ==========
Spare parts inventory reserve for obsolescence:
For the fiscal year ended December 30, 1995 $ 73,025 $ 46,262 $ 19,287 $ 100,000
========== ========== ========== ==========
For the fiscal year ended December 31, 1994 $ 89,760 $ 23,825 $ 40,560 $ 73,025
========== ========== ========== ==========
For the fiscal year ended January 1, 1994 $ 162,000 $ 108,484 $ 180,724 $ 89,760
========== ========== ========== ==========
Equipment allowance for obsolescence:
For the fiscal year ended December 30, 1995 $ 19,136 $ 29,726 $ 23,862 $ 25,000
========== ========== ========== ==========
For the fiscal year ended December 31, 1994 $ 32,510 $ (13,374)(2) $ -- $ 19,136
========== ========== ========== ==========
For the fiscal year ended January 1, 1994 $ 175,000 $ (140,554)(2) $ 1,936 $ 32,510
========== ========== ========== ==========
(1) Decrease due to write-off of related assets.
(2) Reflects a reestimation of the equipment allowance for obsolescence
during fiscal years 1994 and 1993.
10 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
Articles of Incorporation and By-Laws of Tasty Baking Company as amended and
currently effective.
EXHIBIT 3
11 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
Trust Agreement
EXHIBIT 10
12 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
Annual Report to Shareholders for the fiscal year ended December 30, 1995
EXHIBIT 13
13 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
EXHIBIT 21
14 of 17
CONSENT OF INDEPENDENT ACCOUNTANTS
EXHIBIT 23(a)
15 of 17
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, President
and Chief Executive Officer
16 of 17
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.
- ------------------------------------------ Chairman of the Board March 22, 1996
Philip J. Baur, Jr. and Director of Tasty
Baking Company
/s/ Carl S. Watts
- ------------------------------------------ President and Chief March 22, 1996
Carl S. Watts Executive Officer and
Director of Tasty
Baking Company
/s/ Nelson G. Harris
- ------------------------------------------ Chairman of The March 22, 1996
Nelson G. Harris Executive Committee and
Director of Tasty
Baking Company
/s/ John M. Pettine
- ------------------------------------------ Vice President, Chief March 22, 1996
John M. Pettine Financial and Accounting
Officer and Director of
Tasty Baking Company
/s/ Fred. C. Aldridge, Jr.
- ------------------------------------------ Director of Tasty Baking March 22, 1996
Fred C. Aldridge, Jr. Company
/s/ James L. Everett, III
- ------------------------------------------ Director of Tasty Baking March 22, 1996
James L. Everett, III Company
/s/ Harold F. Still, Jr.
- ------------------------------------------ Director of Tasty Baking March 22, 1996
Harold F. Still, Jr. Company
/s/ Judith M. von Seldeneck
- ------------------------------------------ Director of Tasty Baking March 22, 1996
Judith M. von Seldeneck Company
17 of 17