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Tasty Baking Company (NYSE: TBC) today announced
financial results for the first quarter ended March 26, 2005.
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FINANCIAL HIGHLIGHTS FIRST QUARTER 2005
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$ in millions, except per share data
(a) Percentages may not calculate due to rounding
2005 2004 %Change(a)
Q1 Q1
----------- ---------- -----------
Gross Sales $65.9 $68.4 -3.5%
Volume -3.6%
Net Sales $41.2 $40.5 1.7%
Route Net Sales 1.1%
Non-Route Net Sales 3.8%
Gross Margin % 32.4% 30.7% 1.7% pts
Net Earnings per Share $0.06 $0.06
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RESULTS OF OPERATIONS - FIRST QUARTER
Net sales for the first quarter 2005 were $41.2 million, compared
to $40.5 million in the same period last year, an increase of 1.7%.
Gross sales decreased 3.5% in the first quarter versus the same
quarter a year ago driven by a 3.6% sales volume decline. The decline
in gross sales was offset by a decrease of 11.1% in discounts and
allowances for the first quarter 2005 versus 2004. The decline in
discounts and allowances was driven by lower promotional expense
year-over-year due to higher promoted price points in the route
geographies. In addition, the cost of product returns in the routes
decreased in the first quarter 2005 versus 2004.
Route net sales were up 1.1% in the first quarter 2005 versus the
first quarter 2004, driven primarily by the lower promotional expense
and an increase in sales of the Tastykake Sensables product line,
which was launched in the third quarter 2004. These improvements were
partially offset by a decline in Family Pack sales volume as a result
of higher promoted price points year over year. Non-route net sales
were up 3.8% for the first quarter 2005 compared to the same period
2004 due to increased sales to certain existing direct sales
customers.
Cost of sales, excluding depreciation, for the first quarter of
2005 decreased by 1.1%. This decrease in cost of sales dollars was
driven by the 3.6% sales volume decline in the first quarter 2005
compared to 2004. This decrease was partially offset by significant
increases in utility expenses in the first quarter 2005 compared to
the same quarter a year ago.
Gross margin was 32.4% of net sales for the first quarter of 2005
compared to 30.7% in the first quarter 2004. The 1.7 percentage point
improvement resulted from the improved price realization on net sales,
partially offset by the cost of sales increases.
Selling, general and administrative (S,G&A) expenses for the first
quarter of 2005 increased 9.3% compared to the first quarter 2004.
This change is attributed to increased investment in the sales and
information technology organizations, as well as increased marketing
expense compared to last year. The increase was also driven by
incremental costs for consulting services related to compliance with
Section 404 of the Sarbanes-Oxley Act and additional support in
January 2005 related to the implementation of the company's new
enterprise resource planning (ERP) system. These increases were
partially offset by a first quarter reduction in pension expense
during the conversion of the defined benefit pension plan to a defined
contribution pension plan.
Net income of $0.5 million and diluted net income per share of
$0.06 in the first quarter 2005 were equal to net income and diluted
net income per share in the first quarter 2004.
David S. Marberger, senior vice president and chief financial
officer, commented, "The net sales growth on lower sales volume
demonstrates the effectiveness of our pricing and promotional
strategy. We also continue to see improvement in the company's gross
margins, despite increases in gas and fuel oil expense, which are
currently affecting the entire industry. The increase in S,G&A in the
first quarter 2005 reflects the transitional costs of the ERP
implementation and Sarbanes-Oxley compliance, as well as the ongoing
investments in marketing and the sales and information technology
organizations. These investments in our business are necessary and
will position the company for sustainable sales and profit growth."
Charles P. Pizzi, president and chief executive officer of Tasty
Baking Company, concluded, "We are seeing improvement in the financial
results of the business as we execute our Strategic Transformation
Plan. The net sales growth of 1.7% in the first quarter is the best
quarter of net sales growth since the third quarter of 2001. We are
encouraged to see this net sales growth in both our route and
non-route businesses and believe the effective execution of our Plan
will enable this trend to continue."
CONFERENCE CALL INFORMATION
Tasty Baking Company management will host a conference call
Tuesday morning, May 3, 2005, at 11:00 a.m. EDT to discuss the
company's financial results. Investors will have the opportunity to
listen to the call over the Internet at Tasty Baking Company's web
site, http://www.tastykake.com. On the company's homepage, click on
"Corporate Info" and then "Investor Relations." For those who cannot
listen to the live broadcast, a replay will be available shortly after
the call and will remain available for ninety days on the company's
website. To access the telephone replay, please call 1-800-283-4595.
There is no access code or password. The telephone replay will be
available from 1:00 p.m. on May 3, 2005, until Tuesday, May 10, 2005,
at 11:59 p.m. EDT.
ABOUT TASTY BAKING COMPANY
Tasty Baking Company (NYSE: TBC), founded in 1914 and
headquartered in Philadelphia, Pennsylvania, is one of the country's
leading bakers of snack cakes, pies, cookies, and donuts with
manufacturing facilities in Philadelphia and Oxford, Pennsylvania.
Tasty Baking Company offers more than 100 products under the Tastykake
brand name. For more information on Tasty Baking Company, visit
www.tastykake.com. In addition, consumers can send Tastykake products
throughout the United States from the company's website or by calling
1-800-33-TASTY.
"Safe Harbor Statement" Under the Private Securities Litigation
Reform Act of 1995
Except for historical information contained herein, the matters
discussed herein are forward-looking statements (as such term is
defined in the Securities Act of 1933, as amended) that are subject to
risks and uncertainties that could cause actual results to differ
materially. There are a number of factors that may cause actual
results to differ from these forward-looking statements, including the
success of marketing and sales strategies and new product development,
the price of raw materials, and general economic and business
conditions. Other risks and uncertainties that may materially affect
the company are provided in the company's annual reports to
shareholders and the company's periodic reports filed with the
Securities and Exchange Commission from time to time, including
reports on Forms 10-K and 10-Q. Please refer to these documents for a
more thorough description of these and other risk factors.
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TASTY BAKING COMPANY AND SUBSIDIARIES
CONSOLIDATED HIGHLIGHTS OF OPERATING RESULTS
(Unaudited)
(000's, except per share amounts)
13 Weeks Ended
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3/26/2005 3/27/2004(a)
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Gross sales $ 65,946 $ 68,360
Less discounts and allowances (24,792) (27,882)
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Net sales 41,154 40,478
Cost of sales 26,024 26,325
Depreciation 1,801 1,730
Selling, general and administrative 12,654 11,577
Interest
expense 321 303
Other income, net (238) (226)
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Income before provision for income
taxes 592 769
Provision for income taxes 113 286
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Net income $ 479 $ 483
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Average number of shares outstanding: Basic 8,064 8,096
Diluted 8,167 8,113
Per share of common stock:
Net income: Basic $ 0.06 $ 0.06
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Diluted $ 0.06 $ 0.06
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Cash Dividend $ 0.05 $ 0.05
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(a)Amounts have been reclassified for comparative purposes.
TASTY BAKING COMPANY AND SUBSIDIARIES
CONSOLIDATED HIGHLIGHTS OF BALANCE SHEET
(Unaudited)
(000's)
3/26/2005 12/25/2004
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Current Assets $ 33,120 $ 30,153
Property, Plant, and Equipment, Net 63,498 65,035
Other Assets 23,618 23,314
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Total Assets $ 120,236 $ 118,502
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Reserve for Restructure, Current Portion $ 568 $ 436
Current Liabilities 24,020 22,948
Long Term Debt 13,974 13,159
Reserve for Restructure, Less Current
Portion 283 601
Accrued Pension and Other Liabilities 23,893 23,824
Postretirement Benefits Other than
Pensions 16,674 16,747
Shareholders' Equity 40,824 40,787
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Total Liabilities and Shareholders'
Equity $ 120,236 $ 118,502
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Total Debt $ 21,494 $ 16,572
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