Results Include Compensation Charge Relating to 1999 Stock Bonus Plan
Tasty Baking Company (NYSE:TBC) today announced financial results for the first quarter ended March 31, 2001.
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For the first quarter, gross sales were a record $65,655,000, compared with $61,148,000 in the first quarter last year, an increase of 7.4%. Gross sales, less discounts and allowances, resulted in net sales of $42,394,000, compared with $40,343,000 reported for the same period last year, an increase of 5.1%. Net income for the thirteen weeks was $2,119,000 or $0.26 per diluted share compared to $2,023,000 or $0.26 per diluted share, during the comparable period in 2000. The number of diluted shares outstanding for the current quarter was 8,022,865 compared with 7,823,210 for the first quarter of last year.
During the first quarter 2001, the $14.00 and $16.00 stock price targets pertaining to the 1999 Stock Bonus Plan were achieved and a resulting pretax charge of $805,000 of compensation expense was recorded. While the company anticipated achieving the $14.00 per share price target in the first quarter, it did not anticipate achieving the $16.00 per share price target in the same quarter, and as a result the first quarter 2001 was impacted by $0.03 per diluted share. Therefore, without the additional expense related to the $16.00 per share price target, diluted earnings per share would have been $0.29, in line with analysts’ expectations. The achievement of the $16.00 target completes the 1999 Stock Bonus Plan.
Carl S. Watts, Chairman and Chief Executive Officer, commented, “We are pleased with the results of our first quarter, which marks our sixth consecutive quarter of year-over-year record sales. Profit from operations improved by 7.5% for the quarter, despite the impact of the cost of the Stock Bonus Plan.”
Mr. Watts stated, “Although route sales for the quarter increased approximately 1.7% compared with last year, they were below budgeted levels. There were several reasons for being below budget including resistance to price increases that were instituted during the latter part of the fourth quarter 2000, reduced Tastykake promotional activity during the first quarter of year 2001, and heavy competitive pressure. We are confident that we will return to budgeted route sales levels during the second quarter.”
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By GlobalData“We are extremely pleased with the 29% increase in our national sales programs, which were above our budgeted expectations. Our strategy to seek additional channels of distribution continues to produce favorable results as our business with mass merchandisers, limited assortment retailers, and other outlets continues to increase. Our relationship with Wal-Mart also continues to strengthen. While we are very proud of the progress we have made in our national sales programs, we are working diligently to establish relationships with other national mass merchandisers,” Mr. Watts added.
Mr. Watts continued, “We are moving forward with our goal to open 20 thrift stores this year and that project is ahead of schedule. We are currently operating 12 thrift stores throughout our direct-store-delivery marketing area. Thrift stores not only provide us a way to help offset the increase in stale in connection with the re-launch of the Classic Baked Goods product line, but they also help us recapture sales of other products.”
Mr. Watts added, “We continued to experience higher energy costs during the quarter. We are working hard to offset these increases by better efficiencies in our manufacturing plants and careful control of our other operating expenses throughout the corporation.”
Mr. Watts concluded, “We believe the four major strategies that we have in place are the best suited ones to drive the business in the months and years ahead. We will continue to seek alternative and new channels of distribution, introduce new products for new eating occasions, grow our business nationally, and open thrift stores to help lower our costs. We remain cautiously optimistic that we will deliver solid results for the remainder of the year.”
Tasty Baking Company is one of the largest independent baking companies in the United States, and is the leading snack cake provider of the Mid-Atlantic region. The Company operates three bakeries in the Mid-Atlantic region, and distributes its products in 49 states under the Tastykake brand name.
Except for historical information contained herein, the matters discussed are forward-looking statements (as such term is defined in the Securities Act of 1933, as amended) and because such statements include risks and uncertainties, actual results may differ materially from those forward-looking statements. Factors that may cause actual results to differ from the forward-looking statements in this release include, but are not limited to, changes in general economic and business conditions and other factors described in the Company’s filings with the Securities and Exchange Commission.
TASTY BAKING COMPANY AND SUBSIDIARIES
CONSOLIDATED HIGHLIGHTS OF OPERATING RESULTS
(Unaudited)
13 Weeks Ended
03/31/2001 03/25/2000
Gross sales $ 65,655,374 $ 61,147,760
Less discounts and allowances (23,261,285) (20,804,414)
Net sales 42,394,089 40,343,346
Cost of sales 26,413,844 25,997,012
Depreciation 1,849,030 1,862,367
Operating expenses 10,732,086 9,323,427
Interest expense and other (income), net (36,109) 28,691
38,958,851 37,211,497
Income before provision for income taxes 3,435,238 3,131,849
Provision for income taxes (1,315,787) (1,109,333)
Net income $ 2,119,451 $ 2,022,516
Average number of shares
outstanding: Basic 7,902,402 7,823,210
Diluted 8,022,865 7,823,210
Per share of common stock:
Net income : Basic $0.27 $0.26
Diluted $0.26 $0.26
Cash Dividend $0.12 $0.12
