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 for the fiscal year ended December 27, 2003 (52
weeks)
( ) 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 Company 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
(Company'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 company (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 company 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 company'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. [X]
Indicate by check mark whether the company is an accelerated filer(as defined in
Rule 12b-2 of the Act). YES X NO
----
The aggregate market value of voting stock held by non-affiliates as of December
27, 2003 is $72,108,491 (computed by reference to the number of shares of voting
stock outstanding on December 27, 2003, and the closing price on the New York
Stock Exchange on June 27, 2003).
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 16, 2004.
Class Outstanding
----- -----------
Common Stock,
par value $.50 8,095,886 shares
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Document
Reference
Portions of the Annual Report to Shareholders for the
Fiscal Year Ended December 27, 2003 Part II
Portions of the company's definitive Proxy Statement,
for the Annual Meeting of Shareholders to be held on
May 7, 2004, which is expected to be filed with the
Securities and Exchange Commission not later
than 120 Days after the end of the company's last fiscal year Part III
Page 1 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
PART I
Item 1. Business
--------------------
The company was incorporated in Pennsylvania in 1914 and maintains its
main offices and manufacturing facilities in Philadelphia, Pennsylvania. The
company's Tastykake Division (Tastykake) manufactures and sells a variety of
premium single portion cakes, pies, cookies, pretzels, brownies, pastries,
donuts, miniature donuts, and snack bars under the well established trademark,
TASTYKAKE(R). These products comprise approximately 100 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
40(cent) to 99(cent) per package and family convenience packages ranging from
$2.59 to $2.99. The individual pies include various fruit and creme filled
varieties and, at various times of the year, additional seasonal varieties. The
retail price for the pies increased in 2003 to $0.79. The pastries and brownies
are marketed principally in snack packages and sell at a retail price of
99(cent) per package. The best known products with the widest sales acceptance
are various sponge cakes marketed under the trademarks JUNIORS(R) and
KRIMPETS(R), and chocolate enrobed cakes under KANDY KAKES(R). During 2003, the
company discontinued all but the large donuts line sold under the trademark
CLASSIC BAKED GOODS(TM).
During the fourth quarter of 2001 the company closed the plant of its
wholly-owned subsidiary, Dutch Mill Baking Company, Inc. (Dutch Mill), based in
Wyckoff, New Jersey. Dutch Mill was then merged into the company's subsidiary,
Tasty Baking Oxford, Inc. The trademark DUTCH MILL(R) will remain an asset of
the company.
Tasty Baking Oxford, Inc., located in Oxford, Chester County,
Pennsylvania, currently manufactures honey buns, donuts, mini donuts and donut
holes under the trademark TASTYKAKE(R). The company does not currently
manufacture under the trademarks of SNAK N' FRESH(R) and AUNT SWEETIE'S
BAKERY(R). The SNAK N' FRESH(R) and AUNT SWEETIE'S BAKERY(R) brands were
instituted to allow the company to enter the private label markets without
compromising the integrity of its TASTYKAKE(R) brand. All of the products
manufactured at the Oxford facility are sold to the company for resale.
Tastykake products are sold principally by independent sales
distributors through distribution routes to approximately 15,000 retail outlets
in Delaware, Maryland, New Jersey, New York, Pennsylvania and Virginia, which
make up the company's principal market. During 2003, the core route regions were
expanded to include the eastern shore of Maryland, Pittsburgh, PA and Cleveland,
OH. This method of distribution for direct store deliveries has been used since
1986. The company also distributes its products through distributorships and
major grocery chains which have centralized warehouse distribution capabilities
located in many areas of the country. The company has formed alliances with
distributors which can warehouse and distribute the Tastykake product line most
effectively. During 2003, the company refocused its efforts in its core sales
distributor business, while at the same time, carefully evaluating existing and
new business possibilities outside the core market. As a result, the decision
was made in 2003 to pull out of the West Coast markets and add 36 new routes to
the core region. Products are sold throughout the continental United States and
Puerto Rico. The company also distributes its products through the TASTYSHOP
program, whereby consumers can call a toll-free number or visit the company's
website to order the delivery of a variety of Tastykake gift packs.
During 2002, the company closed its remaining 18 thrift stores which
did not meet the profitability objectives set by the company. The company closed
6 stores during the second quarter and closed the remaining 12 stores as of year
end. The company has recorded restructuring charges related to the closures. The
company's thrift store program was first implemented at the end of 2000. The
purpose of the thrift stores was to recover the cost of stale, damaged and other
products not generally salable through normal distribution channels, to recoup
part of the cost of developing and introducing new products into the
marketplace, and to raise consumer awareness and acceptance of the company's
products. The company is in the process of soliciting other outlets for its
stale and damaged products.
The company's top 20 customers represent 57.9% of its 2003 net sales.
The top customer, Wal-Mart, represents 15.2% of the company's net sales for
2003. This relationship has been reasonably consistent over the prior two years.
If any of the customers in this group changed their buying patterns with the
company, its current sales levels could be adversely affected.
Page 2 of 16
Item 1. Business, continued
-------------------------------
The company maintains a diverse advertising program which utilizes
outdoor poster campaigns, newspapers, customer coupons, radio advertising, and
promotions with various sports teams. During 2003, the company engaged in an
elevated level of radio advertising and events and increased promotions with
various sports teams. In 2004 the company intends to engage in television
advertising campaigns. The advertising strategy is at a higher level than had
been experienced in the past. While the company sponsors research and
development activities, the cost is not material.
The company 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, nationwide distribution
systems and large advertising and promotion budgets. The company is one of the
largest producers in the country specializing in premium single portion snack
cakes and pies. The company is able to maintain a strong competitive position in
its principal marketing area through the quality of its products and brand name
recognition. The company has a significant market share throughout its principal
marketing area.
Outside of its principal marketing area, awareness of the company's
trademarks and reputation for quality is not as strong. In these markets, the
company competes for the limited shelf space available from retailers using
price, product quality and consumer acceptance. The company has been able to
increase its sales nationally through the distribution of its products using
mass merchandisers, third party distributors, convenience stores and other
methods of distribution.
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 (Interstate) which
owns three major brands - Hostess, Dolly Madison and Drakes. Local independent
bakers also compete in a number of regional markets. Interstate is a large
publicly held corporation which has achieved national recognition of its Hostess
brand name through national advertising, and it competes on price, product
quality and brand name recognition. Interstate also promotes its Drakes product
line in areas where the company is attempting to expand its market share. McKee
Foods Corporation, a large privately held company, competes in the snack cake
market under the brand name Little Debbie as a low price snack cake. Little
Debbie holds the largest share of the snack cake market in the United States.
Many large food companies have begun to advertise and promote single-serve
packages of their traditional multi-serve cookie and sweet and salty snack
varieties which now compete against the company for a portion of the overall
snack market. George Weston Foods, a large privately held company, competes in
the multi-serve and single-serve baked goods market under the brand name of
Entenmann's.
The company is dependent upon sugar, eggs, oils, flour and cocoa to
manufacture its products. The price of sugar was stable during 2003, and the
USDA statistics project a reduction in demand for sugar in 2004, which may
result in lower sugar prices. Egg prices increased dramatically in 2003 for the
following reasons: hen disease, the laying hen population has decreased by four
million, increased egg consumption due to the high protein-low carb diets, and
new animal welfare guidelines cutting the number of layers per cage from six to
five. This cut will also affect 2004 supplies. Flour was adversely affected by
drought conditions in the Midwest during 2003, which could expose the company to
price increases during 2004. In addition, the political unrest has stabilized in
the Ivory Coast of West Africa which is a key supplier of cocoa to the world
market. This stability should result in cocoa becoming more available and lower
commodity prices for 2004. Soybeans were affected by a poor growing season in
2003 in the United States, Asia and Europe, resulting in higher prices for
soybean oil. Availability of soybeans for 2004 is at an all time low.
The company's policies with respect to working capital items are not
unique. Inventory is generally maintained at levels sufficient for one to three
weeks of sales, while the ratio of current assets to current liabilities is
maintained at a level between 1.3 and 2.5 to 1.
The company employs approximately 1,100 persons, including
approximately 120 part-time employees.
Since February 11, 2003, the company's annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to the Section 13(a) or 15(d) of the
Exchange Act have been made available free of charge through its website the
same day as they are made available on the SEC website. These reports are
available by going to the company's website at www.tastykake.com, under the
"Investor Relations-SEC Filings-SEC website" captions.
Page 3 of 16
Item 1. Business, continued
-------------------------------
The Corporate Governance Guidelines, Code of Business Conduct and
charters for the Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee will be available on the company's website at
www.tastykake.com, under the "Investor Relations-Corporate Governance" captions,
on or before the date of the Annual Meeting or are available upon written
request directed to the Secretary of the Company at 2801 Hunting Park Avenue,
Philadelphia, Pennsylvania 19129.
The company will also post to its website any amendments to the
Business Code of Conduct, or a waiver from the provisions of the Business Code
of Conduct relating to the company's principal executive officers or directors.
Waivers will be located under the "Investor Relations-Corporate
Governance-Business Code of Conduct-Waivers" caption.
Item 2. Properties
----------------------
The locations and primary use of the materially important physical
properties of the company 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 (2) Data Processing Operations,
Office Services and Warehouse
700 Lincoln Street Tasty Baking Oxford Offices,
Oxford, PA (3) Production of honey buns, mini
donuts and donut holes
(1) This property is recorded as a capital lease. See Note 6 of Notes
to Consolidated Financial Statements in the 2003 Annual Report to Shareholders -
Exhibit 13, incorporated herein by reference.
(2) This property is owned by Tasty Baking Company upon satisfaction of
its obligation to the Philadelphia Industrial Development Corporation and a
mortgage lender in January 2003. It had been recorded previously as a capital
lease.
(3) This property was purchased and is owned by Tasty Baking Oxford,
Inc. It is secured by a first party mortgage as collateral under the company's
credit facility as described in Note 5 of Notes to Consolidated Financial
Statements in the 2003 Annual Report to Shareholders - Exhibit 13, incorporated
herein by reference.
In addition to the above, the company leases various other properties
used principally as local pick up and distribution points. All of these
properties are sufficient for the business of the company as now conducted.
Item 3. Legal Proceedings
-----------------------------
The company is involved in certain legal and regulatory actions, all of
which have arisen in the ordinary course of the company's business. The company
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 company.
However, if one or more of such matters were determined adversely to the
company, the ultimate liability arising therefrom should not be material to the
financial position of the company, but could be material to its results of
operations in any quarter or annual period.
In November, 1998, nine (9) independent route sales distributors
(Plaintiffs), on behalf of all present and former route sales distributors,
commenced suit against the company seeking recovery from the company of amounts
(i) which the sales distributors paid in the past to the Internal Revenue
Service on account of employment taxes, and (ii) collected by the company since
January 1, 1998 as an administrative fee from all unincorporated sales
distributors. The company removed the complaint to the United States District
Court for the Eastern District of Pennsylvania and was successful in having the
complaint dismissed with prejudice as to all federal causes of action.
Page 4 of 16
Item 3. Legal Proceedings (continued)
-----------------------------------------
Subsequently, Plaintiffs commenced a new suit in Common Pleas Court for
Philadelphia County, Pennsylvania, asserting state law claims seeking damages
for (1) the alleged erroneous treatment of the sales distributors as independent
contractors by the company such that the sales distributors were required to pay
self-employment, social security and federal unemployment taxes which they
allege should have been paid by the company, and (2) for breach of contract
relating to the collection of an administrative fee from all unincorporated
sales distributors. The Court dismissed with prejudice the Plaintiffs first
claim in March 2000. As to the second claim, in January 2002, the Court
certified a class of approximately 200 sales distributors (representing
approximately 40% of the company's current routes), consisting of unincorporated
sales distributors who, since February 7, 1998, have paid or continue to pay the
administrative fee to the company. The company believes the case to be without
merit and is defending the matter vigorously. The company has not established
any reserve in the event that the ultimate outcome of this litigation proves
unfavorable to the company. If this matter is determined adversely to the
company, the ultimate liability arising therefrom should not be material to the
financial position of the company, but could be material to its results of
operations in any quarter or annual period.
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.
Page 5 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
PART II
CROSS REFERENCE INDEX
FORM 10-K
ITEM NUMBER AND CAPTION INCORPORATED MATERIAL
----------------------- --------------------
Caption in Annual
Report to Shareholders for the
Fiscal Year Ended December 27, 2003
Item 5 Market for the Company's Common Equity and Related Shareholder
Matters Quarterly Summary
(Unaudited)
Item 6 Selected Financial Data Five Year Selected Financial Data
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations Management's Review
Certain matters discussed in this Report, including those under the
headings "Business," "Legal Proceedings" and "Management's Discussion
and Analysis," contain "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
within the baking industry, availability and pricing of raw materials
and capital, sales growth by distribution through national sales
programs, private label, food service, institutional sales and other
channels of distribution, changes in the company'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 company's primary
markets, the availability of capital upon terms acceptable to the
company, the availability and prices of raw materials, the level of
demand for the company's products, the outcome of legal proceedings to
which the company is or may become a party, the actions of competitors
within the packaged food industry, changes in consumer tastes or
eating habits, the success of business strategies implemented by the
company 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 about
Market Risk Notes to Consolidated
Financial Statements
The company has certain floating rate debt notes. Under current market
conditions, the company believes that changes in interest rates would
not have a material impact on the financial statements of the company.
The company also has notes receivable from sales distributors whose
rates adjust every three years, and, therefore, would partially offset
the fluctuations in the company's interest rates on its notes payable.
The company 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 5
and 4, respectively, in the 2003 Annual Report to Shareholders.
Page 6 of 16
FORM 10-K
ITEM NUMBER AND CAPTION
-----------------------
INCORPORATED MATERIAL
---------------------
Caption in Annual Report to
Shareholders for the Fiscal
Year Ended December 27, 2003
Item 8 Consolidated Financial Statements and
Supplementary Data:
Quarterly Summary Quarterly Summary
(Unaudited)
Consolidated Statements of Consolidated Financial
Operations and Retained Earnings Statements
Consolidated Statements of Cash Flows Consolidated Financial
Statements
Consolidated Balance Sheets Consolidated Financial
Statements
Consolidated Statements of Changes Consolidated Financial
in Capital Accounts Statements
Notes to Consolidated Financial Notes to Consolidated
Statements Financial Statements
Report of Independent Auditors Report of Independent Auditors
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
This item is not applicable.
Item 9A Controls and Procedures
---------------------------------
The company maintains a system of disclosure controls and procedures designed to
provide reasonable assurance as to the reliability of its consolidated financial
statements and other disclosures included in the report. The company established
a disclosure committee, which consists of certain members of management. The
company carried out an evaluation, under the supervision and with the
participation of management, including the Chief Executive Officer and Chief
Financial Officer, of the design and operation of the company's disclosure
controls and procedures as of the end of the period covered by this report.
Based on this evaluation, the company's Chief Executive Officer and Chief
Financial Officer concluded that the company's disclosure controls and
procedures are effective at a reasonable level of assurance for gathering,
analyzing and disclosing material information the company is required to
disclose in the reports it files with the SEC pursuant to the Securities and
Exchange Act of 1934, within the time periods specified in the SEC's rules and
forms. In addition, the company reviewed its internal control over financial
reporting and there have been no changes during the company's fourth fiscal
quarter covered by this report in the company's internal control over financial
reporting, to the extent that elements of internal control over financial
reporting are subsumed within disclosure controls and procedures, that has
materially affected, or is reasonably likely to materially affect, the company's
internal control over financial reporting.
Page 7 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
PART III
CROSS REFERENCE INDEX
FORM 10-K
ITEM NUMBER AND CAPTION INCORPORATED MATERIAL
----------------------- ---------------------
Caption in definitive
Proxy Statement for the Annual Meeting of
Shareholders to be held on May 7, 2004
Item 10 Directors and Executive Officers Directors and Executive
of the Company Officers; Corporate
Governance - Code of Business Conduct,
Section 16(a) Beneficial Ownership Reporting
Compliance; Committees of the Board of
Directors, second paragaph
Item 11 Executive Compensation Compensation of
Executive Officers; Perfomance Graph
Item 12 Security Ownership of Certain Beneficial Principal Holders of
Owners and Management and Related Stockholder Voting Securities;
Matters Beneficial Ownership of
Directors, Nominees and
Executive Officers
The following table sets forth information about the company's equity
compensation plans as of December 27, 2003, including the Management Stock
Purchase Plan, 1991 Long Term Incentive Plan, 1993 Replacement Option Plan (P&J
Spin-Off), 1994 Long Term Incentive Plan, 1997 Long Term Incentive Plan, 2003
Long Term Incentive Plan and Restricted Stock Incentive Plan.
(b) (c)
(a)
Number of Weighted-Average
Securities to be Issued Exercise Price of
upon Outstanding Options, Number of
Exercise of Warrants, and Rights Securities
Outstanding of Compensation Plans Remaining Available
Options, Warrants and (excluding securities for Future
Plan Category Rights reflected in (a)) Issuance Under Equity
------------- ------ ----------------- ---------------------
Equity compensation
plans approved by
security holders 847,171 $ 11.33 155,002
Equity compensation
plans not approved by
security holders (1) 71,500 $ 11.54 -
------- -------
Total 918,671 155,002
======= =======
(1) There was one award of 4,000 shares of the company's common stock
on October 7, 2002, to Mr. Pizzi as an inducement to his commencing employment
with the company. The balance of 67,500 shares represents options granted to
directors on December 20, 1996 and March 26, 1999,to purchase the company's
common stock granted to nonemployee directors.
Item 13 Certain Relationships and Related Transactions Compensation of Executive
Officers - Compensation
During fiscal 2003, the company paid Mr. Fred C.Aldridge, Jr., a Committee Interlocks and
director of the company, $18,750 in consideration for legal services Insider Participation
rendered to the company. Mr. Aldridge resigned as counsel to the
company on February 8, 2003 and no longer provides legal services to
Page 8 of 16
the company.
FORM 10-K
ITEM NUMBER AND CAPTION
----------------------- INCORPORATED MATERIAL
---------------------
Item 14 Principal Accountant Fees and Services Fees Paid to
Independent Auditors;
Pre-Approval Policy for
Services by Independent Auditors
Page 9 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
PART IV
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
For the Fiscal Years Ended December 27, 2003,
December 28, 2002 and December 29, 2001
------
Pages
(a)-1. List of Financial Statements ------
Quarterly Summary Incorporated herein
Consolidated Statements of Operations and Retained by reference to
Earnings captions in 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 27, 2003
Notes to Consolidated Financial Statements, including
Summary of Significant Accounting Policies
Report of Independent Auditors
(a)-2. Schedule* for the fiscal years ended December 27, 2003,
December 28, 2002 and December 29, 2001:
Report of Independent Accountants 13 of 16
II. Schedule of Valuation and Qualifying Accounts 14 of 16
(a)-3. Exhibits Index - The following Exhibit Numbers refer to
Regulation S-K, Item 601**
(3) (a) Articles of Incorporation of Company as
amended are incorporated herein by
reference to Exhibit 3 to Form 10-K
report of company for fiscal 1998.
(b) By-laws of Company as amended on May 2,
2003 is incorporated herein by reference
to Exhibit 10 to Form 10-Q report of
Company for the twenty-six weeks ended
June 28, 2003.
(10) (a) 2003 Long Term Incentive Plan,
effective as of March 27, 2003, is
incorporated herein by reference to
Appendix B of the Proxy Statement for
the Annual Meeting of the Shareholders
on May 2, 2003, filed on or about March
31, 2003.
(b) Tasty Baking Company Restricted Stock
Incentive Plan, effective as of December
21, 2000, is incorporated herein by
reference to Exhibit 10 to Form 10-Q
report of Company for the twenty-six
weeks ended June 30, 2001.
(c) 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 Company for fiscal
1990.
(d) 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.
(e) 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
Company for fiscal 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.
Page 10 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
ITEM 15, CONTINUED
Pages
-----
(f) 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.
(g) Trust Agreement dated as of November 17,
1989 between the Company and Wachovia
Bank, N.A.(formerly Meridian Trust
Company) relating to Supplemental
Executive Retirement Plan is
incorporated herein by reference to
Exhibit 10(f) to Form 10-K report of
Company for 1994.
(h) Director Retirement Plan dated October
15, 1987 is incorporated herein by
reference to Exhibit 10(h) to Form 10-K
report of Company 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
company for 1994.
(k) Trust Agreement dated January 19, 1990
between the Company and Wachovia Bank,
N.A.(formerly Meridian Trust Company)
relating to the Director Retirement Plan
is incorporated herein by reference to
Exhibit 10(k) to Form 10-K report of
company for 1995.
(l) 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.
(m) Employment Agreement dated as of August
14, 2002 between the company and Charles
P. Pizzi is incorporated herein by
reference to Exhibit 10(m) to Form 10-K
report of company for 2002.
(n) Supplemental Retirement Plan Agreement
dated as of October 7, 2002 between the
company and Charles P. Pizzi is
incorporated herein by reference to
Exhibit 10(n) to Form 10-K report of
company for 2002.
(o) Personal Leave Agreement dated as of
December 28, 2002 between the company
and Carl S. Watts is incorporated herein
by reference to Exhibit 10(o) to Form
10-K report of company for 2002.
(p) Severance Agreement dated March 13, 2003
between the company and Gary G. Kyle is
incorporated herein by reference to
Exhibit 10(p) to Form 10-K report of
company for 2002.
(q) Personal Leave Agreement dated as of
December 27, 2003 between the company
and John M. Pettine.
(r) Tasty Baking Company 2000 Restricted
Stock Incentive Plan is incorporated by
reference to Appendix B of the Proxy
Statement for the Annual Meeting of
Shareholders on April 27, 2001, filed on
or about March 30, 2001.
Each of exhibits 10(a) - 10(r) constitutes a management contract or compensatory
plan or arrangement.
(13) Portions of the Annual Report to Shareholders for the fiscal
year ended December 27, 2003
(21) Subsidiaries of the Company
Page 11 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
ITEM 15, CONTINUED
(23)(a) Consent of Independent Accountants
(31)(a) Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(31)(b) Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(32) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The company filed the following reports on Form 8-K during the
thirteen weeks ended December 27, 2003:
On October 6, 2003, the company furnished a report on Form 8-K under
Item 9, Regulation FD Disclosure, attaching a press release announcing
its accelerated investment in route expansion and brand marketing and
an anticipated net loss for the third quarter ended September 27,
2003.
On October 28, 2003, the company furnished a report on Form 8-K under
Item 12, Results of Operation and Financial Condition, attaching a
press release announcing its financial results for the third quarter
ended September 27, 2003.
On December 8, 2003, the company furnished a report on Form 8-K under
Item 5, Other Events and Regulation FD Disclosure, attaching a press
release announcing the election of David J. West to its Board of
Directors at its meeting on December 5, 2003.
Page 12 of 16
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 March 10, 2004, of the 2003 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 15(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
March 10, 2004
Page 13 of 16
TASTY BAKING COMPANY AND SUBSIDIARIES
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
for the fiscal years ended December 27, 2003, December 28, 2002 and December 29, 2001
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at Charged to Balance
Beginning Costs and at end
of Period Expenses Deductions of Period
---------- --------- ---------- ---------
Description
-----------
Deducted from applicable assets:
Allowance for doubtful accounts:
For the fiscal year ended December 27, 2003 $3,606 $1,059 $1,017 $3,648
====== ====== ====== ======
For the fiscal year ended December 28, 2002 $3,752 $ 958 $1,104 $3,606
====== ====== ====== ======
For the fiscal year ended December 29, 2001 $3,329 $ 773 $ 350 $3,752
====== ====== ====== ======
Inventory valuation reserves:
For the fiscal year ended December 27, 2003 $ 682 $ 300 $ 750 $ 232
====== ====== ====== ======
For the fiscal year ended December 28, 2002 $ 335 $ 702 $ 355 $ 682
====== ====== ====== ======
For the fiscal year ended December 29, 2001 $ 302 $ 81 $ 48 $ 335
====== ====== ====== ======
Spare parts inventory reserve for obsolescence:
For the fiscal year ended December 27, 2003 $ 365 $ 396 $ 705 $ 56
====== ====== ====== ======
For the fiscal year ended December 28, 2002 $ 481 $ 48 $ 164 $ 365
====== ====== ====== ======
For the fiscal year ended December 29, 2001 $ 445 $ 122 $ 86 $ 481
====== ====== ====== ======
Page 14 of 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TASTY BAKING COMPANY
/s/ Charles P. Pizzi
-----------------------------
Charles P. Pizzi,
President and
Chief Executive Officer
/s/ David S. Marberger
-----------------------------
David S. Marberger,
Senior Vice President,
Chief Financial Officer and
Chief Accounting Officer
[Principal Financial and
Accounting Officer]
Page 15 of 16
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 company and in
the capacities and on the dates indicated.
Signature Capacity Date
------------------------------------------ --------------------------- --------------------------
/s/ James E. Ksansnak Chairman of the Board March 10, 2004
------------------------------------------ and Director of Tasty
James E. Ksansnak Baking Company
/s/ Charles P. Pizzi President, Chief March 10, 2004
------------------------------------------ Executive Officer and
Charles P. Pizzi Director of Tasty
Baking Company
/s/ Fred C. Aldridge, Jr. Director of Tasty March 10, 2004
------------------------------------------ Baking Company
Fred C. Aldridge, Jr.
/s/ Philip J. Baur, Jr. Director of Tasty March 10, 2004
------------------------------------------ Baking Company
Philip J. Baur, Jr.
/s/ G. Fred DiBona, Jr. Director of Tasty March 10, 2004
------------------------------------------ Baking Company
G. Fred DiBona, Jr.
/s/ Ronald J. Kozich Director of Tasty March 10, 2004
------------------------------------------ Baking Company
Ronald J. Kozich
/s/ Judith M. von Seldeneck Director of Tasty March 10, 2004
------------------------------------------ Baking Company
Judith M. von Seldeneck
/s/ David J. West Director of Tasty March 10, 2004
------------------------------------------ Baking Company
David J. West
/s/ David S. Marberger Senior Vice President March 10, 2004
------------------------------------------ Chief Financial Officer
David S. Marberger Chief Accounting Officer
[Principal Financial and
Accounting Officer]
Page 16 of 16