Philadelphia-based Tasty Baking Company yesterday [Wednesday] announced its Q4 and FY financial results ended 29 December 2001.


For the Q4, gross sales decreased 6.8% to US$60.6m, compared with US$65.1m year on year. Gross sales, less discounts and allowances, resulted in net sales of US$38.8m, compared with US$42.4m reported the same period last year, a decrease of 8.3%. For the thirteen weeks, net income was US$652,000, compared with US$2,506,000 in 2000, while net income per diluted share was US$0.08, compared with US$0.32 in 2000.


The company explained, however, that the disappointing Q4 results were impacted by a restructure charge of US$1,728,000, which primarily relates to the closure of the company’s Dutch Mill Baking Company facility in October 2001 and two company thrift stores in December 2001. The after-tax effect of this charge was US$1,038,000 or US$0.13 per diluted share. Therefore, after reflecting the effect of this charge, Tasty Baking’s operating results for the Q4 reached US$1,690,000 or US$0.21 per diluted share.


For the full year meanwhile, gross sales increased 2.3% to US$255.3m, compared with US$249.7m last year. Gross sales, less discounts and allowances, resulted in net sales of US$164.6m, compared with US$164.3m year on year. Net income was US$6.3m, or US$0.78 per diluted share, compared with US$8.1m, or US$1.04 per diluted share in 2000. After reflecting the after-tax effect of the restructure charge, the company’s FY operating results were US$7.4m or US$0.90 per diluted share.


Carl S. Watts, chairman and CEO, commented: “We are disappointed with the results of the Q4. We fully anticipated achieving our goals, however, there were several factors, including record unseasonal temperatures during November and December, which had a negative effect on consumer buying habits resulting in less consumption of snack cake type products.

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“The sluggish economy, coupled with continuing competitive pressures, was quite evident during the period as sales declined despite heavy promotional efforts during the quarter. On a positive note, we were able to maintain our market share. In addition, we were not able to overcome the fourteen selling weeks in 2000 versus thirteen weeks in 2001. That extra week’s gross sales amounted to approximately US$4,700,000. Overall business was soft in all sales areas including thrift store operations.


“Despite the fact that overall costs in the quarter were well within budgeted goals, we have already taken steps to try to offset increasing operating expenses as we move into 2002.


“We also completed the closure of our Dutch Mill baking facility in Wyckoff, New Jersey and moved the production of these products to the Hunting Park and Oxford facilities. While we were pleased with our efforts to reach twenty thrift stores during the year, two stores were under-performing and we made the decision to close them in December 2001.


“We continue to believe our four-prong approach in the execution of our long-term strategies will help us to grow the route territories and national sales. We will continue to establish alternative methods and channels of distribution, look to introduce new products and expand on our ever-growing business relationship with our mass merchandisers. We are currently operating eighteen thrift stores and, although they did not show the desired results in 2001, we are confident that we will turn a profit in 2002.”


Watts concluded: “In 2002, we are optimistic that we are starting to see business improve. Sales during the month of January returned to normal levels. We remain optimistic that the first quarter of 2002 will put us back on track to achieve our desired sales and profit results.”

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