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 28, 2002 (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 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. [X]
Indicate by check mark whether the registrant 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 February
11, 2003 is $62,983,262 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 11, 2003.
Class Outstanding
----- -----------
Common Stock,
par value $.50 8,099,212 shares
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Document Reference
-------- ---------
Pages 14 to 39 inclusive of the Annual Report to Share-
holders for the Fiscal Year Ended December 28, 2002 Part II
Pages 3 to 23 inclusive, 27 and 29 to 30 inclusive of the
definitive Proxy Statement dated March 31, 2003 Part III
1 of 17
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 120 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 99(cent)
per package and family convenience packages ranging from $2.50 to $2.99. The
pies principally sell at retail prices from 50(cent) to 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 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). 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 $2.50 to $3.29.
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 $2.50 to $3.59. There are approximately 35 varieties
available under the Classic Baked Goods line.
During the fourth quarter of 2001 the Registrant 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 Registrant's
subsidiary, Tasty Baking Oxford, Inc. The trademark DUTCH MILL(R) will remain an
asset of the Registrant.
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). These products are distributed through independent
owner/operators and regional distributors. 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 manufactured at the Oxford facility are
sold to the Registrant for resale.
Tastykake products are sold principally by independent owner/operators
through distribution routes to approximately 15,000 retail outlets in Delaware,
Maryland, New Jersey, New York, Pennsylvania and Virginia, which make up the
Registrant's principal market. This method of distribution for direct store
deliveries has been used since 1986. The Registrant also distributes its
products through distributorships and major grocery chains which have
centralized warehouse distribution capabilities located in many areas of the
country. The Registrant has formed alliances with distributors which can
warehouse and distribute the Tastykake product line most effectively in order to
promote geographic expansion. Products are sold in a majority of the continental
United States and Puerto Rico. The Registrant also distributes its products
through the TASTYKARE(R) program, whereby consumers can call a toll-free number
or visit the Registrant's web-site to order the delivery of a variety of
Tastykake gift packs.
During 2002, the Registrant closed its remaining 18 thrift stores which
did not meet the profitability objectives set by the Registrant. The Registrant
closed 6 stores during the second quarter and closed the remaining 12 stores as
of year end. The Registrant has recorded restructuring charges related to the
closures. The Registrant'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
Registrant's products. The Registrant is in the process of soliciting other
outlets for its stale and damaged products.
In 1998, the Registrant began a $22 million modernization
program(program) for its manufacturing facility in Philadelphia, Pennsylvania.
These renovations were undertaken to increase productivity and efficiency. The
program is being completed in phases and was 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 cupcake
lines were successfully converted in 2000 and the third line was completed in
2002. The remaining portion of the program is still in process and decisions
regarding the details of its completion will be made prior to the end of fiscal
2003.
2 of 17
Item 1. Business, continued
The Registrant's top 20 customers represent 74.1% of its 2002 net
sales. The top two customers in this group represent 13.7% and 11.6% of the
Registrant's net sales for 2002. These relationships have been reasonably
consistent over the prior two years. If any of the customers in this group
changed their buying patterns with the Registrant, its current sales levels
could be adversely affected.
The Registrant maintains an 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, nationwide distribution
systems and large advertising and promotion budgets. The Registrant believes it
is one of the largest producers in the country specializing in premium single
portion snack cakes and pies. 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. The Registrant has a significant market
share throughout its principal marketing area.
Outside of its principal marketing area, awareness of the Registrant's
trademarks and reputation for quality is not as strong. In these markets, the
Registrant competes for the limited shelf space available from retailers using
price, product quality and consumer acceptance. The Registrant has been able to
increase its sales nationally through the distribution of its products using
mass merchandisers, wholesale clubs, convenience stores and other distribution
outlets. The Registrant's growth in national sales has resulted in higher
average balances of finished product inventory which are needed to satisfy the
delivery requirements of these customers, and in higher average accounts
receivable balances due to longer billing cycles and payment terms of national
account customers.
Outside of the principal marketing 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 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 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 Registrant for a portion of the overall snack
market.
The Registrant is heavily dependent upon sugar, flour and cocoa to
manufacture its products. No difficulties were experienced in obtaining raw
materials in 2002. The price of sugar was higher but stable during 2002. Recent
drought conditions in the Midwest may result in reduced wheat supplies which
could expose the Registrant to price increases during 2003. In addition, there
has been political unrest in the Ivory Coast of West Africa which is a key
supplier of cocoa pressed cake to the world market. This instability has
resulted in reduced availability and higher commodity prices for cocoa pressed
cake. At present, the Registrant purchases cocoa pressed cake and manufactures
it into cocoa powder which it uses as a principal ingredient in many of its
chocolate products. Because of the uncertainty of the supply of cocoa pressed
cake, the Registrant may switch to processed cocoa powder which has a higher
cost and will adversely affect the margins on the chocolate products in which it
is used. 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 the availability of raw materials in 2003.
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 of 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 1,060 persons, including
approximately 140 part-time employees.
Since February 11, 2003, the Registrant'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 Registrant's website(www.tastykake.com) and selecting
"Corporate Info," "SEC Filings," and then "SEC website."
3 of 17
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
700 Lincoln Street Tasty Baking Oxford offices,
Oxford, PA (2) Production of honey buns, donuts,
pastries, muffins, and large
cake
(1) These properties are recorded as capital leases. For a description
of major encumbrances on these properties, see Note 7 and 8 of Notes to
Consolidated Financial Statements in the 2002 Annual Report to Shareholders -
Exhibit 13, incorporated herein by reference.
(2) 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. All of
these properties are sufficient for the business of the Registrant as now
conducted.
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. However, if one or more of such matters were determined
adversely to the Registrant, the ultimate liability arising therefrom should not
be material to the financial position of the Registrant, but could be material
to its results of operations in any quarter or annual period.
In November, 1998, nine (9) independent route owner/operators
(Plaintiffs), on behalf of all present and former route owner/operators,
commenced suit against the Registrant seeking recovery from the Registrant of
amounts (i) which the owner/operators paid in the past to the Internal Revenue
Service on account of employment taxes, and (ii) collected by the Registrant
since January 1, 1998 as an administrative fee from all unincorporated
owner/operators. The Registrant 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.
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 owner/operators as independent
contractors by the Registrant such that the owner/operators were required to pay
self-employment, social security and federal unemployment taxes which they
allege should have been paid by the Registrant, and (2) for breach of contract
relating to the collection of an administrative fee from all unincorporated
owner/operators. 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 owner/operators (representing approximately 43% of
the Registrant's current routes), consisting of unincorporated owner/operators
who, since February 7, 1998, have paid or continue to pay the administrative fee
to the Registrant. The Registrant believes the case to be without merit and is
defending the matter vigorously. The Registrant has not established any reserve
in the event that the ultimate outcome of this litigation proves unfavorable to
the Registrant. If this matter is determined adversely to the Registrant, the
ultimate liability arising therefrom should not be material to the financial
position of the Registrant, 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.
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 28, 2002
Item 5 Market for the Registrant's
Common Equity and Related
Shareholder Matters 20
On October 7, 2002, the Registrant issued 4,000 shares of common
stock to Mr. Charles P. Pizzi as an inducement to become
President and CEO and not for any cash consideration. The
issuance of the shares was exempt from registration under Section
4(2) of the Securities Act of 1933, as amended, as an exempt
private placement.
Item 6 Selected Financial Data 21
Item 7 Management's Discussion and
Analysis of Financial Condition
and Results of Operations 14 - 19
Certain matters discussed in this Report, including those under
the headings "Business," "Legal Proceedings" and "Management's
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, improvements in
efficiency expected from plant modernization programs, sales
growth by distribution through national sales programs, private
label, food service, institutional sales and other channels of
distribution, 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, the outcome of legal proceedings to which the
Registrant 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 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
about market risk 29 - 30
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
5 of 17
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 5,6 and 4, respectively,
in the 2002 Annual Report to Shareholders.
6 of 17
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 28, 2002
Item 8 Consolidated Financial Statements
and Supplementary Data:
Quarterly Summary 20
Consolidated Statements of
Operations and Retained Earnings 22
Consolidated Statements of Cash Flows 23
Consolidated Balance Sheets 24 - 25
Consolidated Statements of Changes
in Capital Accounts 26
Notes to Consolidated Financial
Statements 27 - 38
Report of Independent Accountants 39
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 6 - 10
Item 11 Executive Compensation 8 and 11 - 23
Item 12 Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder
Matters 3 - 5 and 27
Item 13 Certain Relationships and Related
Transactions
With respect to certain business
relationships of Fred C. Aldridge, Jr.,
Esquire, director 7
Item 14 Controls and Procedures
The Registrant 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 Registrant established
a disclosure committee, which consists of certain members of
management. Within 90 days prior to the date of filing of this
report, the Registrant 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 Registrant's
disclosure controls and procedures. Based on this evaluation,
the Registrant's Chief Executive Officer and Chief Financial
Officer concluded that the
7 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
PART III
CROSS REFERENCE INDEX
FORM 10-K
ITEM NUMBER AND CAPTION
-----------------------
Item 14 Controls and Procedures cont'd.
Registrant's disclosure controls and procedures are effective
for gathering, analyzing and disclosing material information
the Registrant is required to disclose in the reports it files
with the Securities and Exchange Commission(SEC) pursuant to
the Securities and Exchange Act of 1934, within the time
periods specified in the SEC's rules and forms. There have
been no significant changes in the Registrant's internal
controls or in other factors that could significantly affect
internal controls subsequent to the date of this evaluation.
Page(s) in definitive
Proxy Statement
Item 15 Principal Accountant Fees and Services 29 - 30
8 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
PART IV
ITEM 16: EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
for the fiscal years ended December 28, 2002,
December 29, 2001 and December 30, 2000
------
Pages
-----
(a)-1. List of Financial Statements
Quarterly Summary Incorporated herein
Consolidated Statements of Operations and Retained by reference to
Earnings pages 14 to 39
Consolidated Statements of Cash Flows inclusive of the
Consolidated Balance Sheets Annual Report to
Consolidated Statements of Changes in Capital Shareholders for the
Accounts fiscal year ended
Notes to Consolidated Financial December 28, 2002.
Statements, including See page 13 of 17.
Summary of Significant Accounting Policies
Report of Independent Accountants
(a)-2. Schedule* for the fiscal years ended December 28, 2002, December
29, 2001 and December 30, 2000:
Report of Independent Accountants 11 of 17
II. Valuation and Qualifying Accounts 12 of 17
(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 June 27, 2002.
(10)(a) 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 Registrant for the twenty-six weeks ended June 30,
2001.
(b) 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.
(c) 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.
(d) 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 with
respect to W. Dan Nagle and Joseph H. Bauer(2 year
agreement).
(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 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.
9 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
ITEM 16, 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 Registrant 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
Registrant 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 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
Registrant 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 Registrant 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 Registrant and Charles P. Pizzi.
(n) Supplemental Retirement Plan Agreement dated as of
October 7, 2002 between the Registrant and Charles P.
Pizzi.
(o) Personal Leave Agreement dated as of December 28, 2002
between the Registrant and Carl S. Watts.
(p) Severance Agreement dated March 13, 2003 between the
Registrant and Gary G. Kyle.
(q) 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(q) constitute management contracts
or compensatory plans or arrangements.
(13) Annual Report to Shareholders for the fiscal year ended
December 28, 2002, pages 14 to 39 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 15 of 17
(b) On December 30, 2002, the Registrant furnished a report on Form 8-K,
pursuant to Regulation FD, announcing the closure of its 12 remaining
thrift stores, the retirement of Carl S. Watts as Chairman of the Board and
Director, the departure of several executives and guidance on its
anticipated fourth quarter loss resulting from the restructure charges
related to the above, and from additional pension expense based on the
immediate recognition method. The related press release was included.
10 of 17
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 19, 2003, appearing on page 39 of the 2002 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 16(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 19, 2003
11 of 17
TASTY BAKING COMPANY AND SUBSIDIARIES
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
for the fiscal years ended December 28, 2002, December 29, 2001 and December 30, 2000
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 Period
----------- --------- -------- ---------- ------
Deducted from applicable assets:
Allowance for doubtful accounts:
For the fiscal year ended December 28, 2002 $3,751,854 $ 958,365 $1,104,102 $3,606,117
=========== ========== ========== ==========
For the fiscal year ended December 29, 2001 $3,329,344 $ 772,372 $ 349,862 $3,751,854
=========== ========== ========== ==========
For the fiscal year ended December 30, 2000 $2,874,088 $1,250,385 $ 795,129 $3,329,344
=========== ========== ========== ==========
Inventory valuation reserves:
For the fiscal year ended December 28, 2002 $ 335,000 $ 702,568 $ 355,095 $ 682,473
=========== ========== ========== ==========
For the fiscal year ended December 29, 2001 $ 301,614 $ 81,340 $ 47,954 $ 335,000
=========== ========== ========== ==========
For the fiscal year ended December 30, 2000 $ 275,109 $ 185,149 $ 158,644 $ 301,614
=========== ========== ========== ==========
Spare parts inventory reserve for obsolescence:
For the fiscal year ended December 28, 2002 $ 480,559 $ 48,516 163,676 $ 365,399
=========== ========== ========== ==========
For the fiscal year ended December 29, 2001 $ 445,063 $ 121,546 $ 86,050 $ 480,559
=========== ========== ========== ==========
For the fiscal year ended December 30, 2000 $ 407,072 $ 153,787 $ 115,796 $ 445,063
=========== ========== ========== ==========
12 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/ 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
/s/ John M. Pettine
------------------------------------
John M. Pettine, Executive Vice
President and Director
13 of 17
Certification
I, Charles P. Pizzi, President and Chief Executive officer of Tasty Baking
Company, certify that:
(1) I have reviewed this annual report on Form 10-K of Tasty Baking Company;
(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board or directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
(6) The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 27, 2003
---------------
/s/ Charles P. Pizzi
--------------------
Charles P. Pizzi
President and
Chief Executive Officer
14 of 17
Certification
I, David S. Marberger, Senior Vice President and Chief Financial Officer of
Tasty Baking Company, certify that:
(1) I have reviewed this annual report on Form 10-K of Tasty Baking Company;
(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board or directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
(6) The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 27, 2003
--------------
/s/ David S. Marberger
----------------------
David S. Marberger
Senior Vice President
and Chief Financial Officer
15 of 17
Certification
I, John M. Pettine, Executive Vice President of Tasty Baking Company, certify
that:
(1) I have reviewed this annual report on Form 10-K of Tasty Baking Company;
(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board or directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
(6) The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 27, 2003
--------------
/s/ John M. Pettine
-------------------
John M. Pettine
Executive Vice President
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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 27, 2003
------------------------------------------
Philip J. Baur, Jr. Board and Director of
Tasty Baking Company
/s/ Charles P. Pizzi President, Chief March 27, 2003
------------------------------------------
Charles P. Pizzi Executive Officer and
Director of Tasty
Baking Company
/s/ John M. Pettine Executive Vice President March 27, 2003
------------------------------------------
John M. Pettine and Director of Tasty
Baking Company
/s/ Fred C. Aldridge, Jr. Director of Tasty March 27, 2003
------------------------------------------
Fred C. Aldridge, Jr. Baking Company
/s/ G. Fred DiBona, Jr. Director of Tasty Baking March 27, 2003
------------------------------------------
G. Fred DiBona, Jr. Company
/s/ Ronald J. Kozich Director of Tasty Baking March 27, 2003
------------------------------------------
Ronald J. Kozich Company
/s/ Judith M. von Seldeneck Director of Tasty Baking March 27, 2003
------------------------------------------
Judith M. von Seldeneck Company
17 of 17