UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 6, 2004
OR
| ¨ | 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 1-11165
INTERSTATE BAKERIES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 43-1470322 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 12 East Armour Boulevard, Kansas City, Missouri | 64111 | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code) (816) 502-4000
(Former name, former address and former fiscal year, if changed since last report.)
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
There were 45,383,839 shares of common stock, $0.01 par value per share, outstanding on April 6, 2004.
INTERSTATE BAKERIES CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 6, 2004
CONTENTS
| Description |
Page | |||
| PART I - FINANCIAL INFORMATION (UNAUDITED) |
||||
| ITEM 1. Financial Statements |
||||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5-15 | ||||
| ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16-25 | |||
| ITEM 3. Quantitative and Qualitative Disclosures About Market Risk |
25 | |||
| 26 | ||||
| 26 | ||||
| 27 | ||||
| 28 | ||||
| 29 | ||||
| 30 | ||||
INTERSTATE BAKERIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 6, 2004 |
May 31, 2003 |
|||||||
| (In thousands) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Accounts receivable, less allowance for doubtful accounts of $3,562,000 ($4,000,000 at May 31) |
$ | 180,038 | $ | 182,738 | ||||
| Inventories |
71,576 | 79,728 | ||||||
| Other current assets |
79,890 | 87,429 | ||||||
| Total current assets |
331,504 | 349,895 | ||||||
| Property and equipment: |
||||||||
| Land and buildings |
450,399 | 451,999 | ||||||
| Machinery and equipment |
1,099,482 | 1,103,524 | ||||||
| 1,549,881 | 1,555,523 | |||||||
| Less accumulated depreciation |
(734,225 | ) | (702,050 | ) | ||||
| Net property and equipment |
815,656 | 853,473 | ||||||
| Goodwill |
215,346 | 215,346 | ||||||
| Other intangible assets |
190,875 | 191,995 | ||||||
| Other assets |
43,970 | 34,982 | ||||||
| $ | 1,597,351 | $ | 1,645,691 | |||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Long-term debt payable within one year |
$ | 62,347 | $ | 56,259 | ||||
| Accounts payable |
116,428 | 117,701 | ||||||
| Accrued expenses |
243,405 | 251,621 | ||||||
| Total current liabilities |
422,180 | 425,581 | ||||||
| Long-term debt |
477,675 | 528,771 | ||||||
| Other liabilities |
364,070 | 365,582 | ||||||
| Total long-term liabilities |
841,745 | 894,353 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, par value $0.01 per share; authorized - 1,000,000 shares; issued - none |
— | — | ||||||
| Common stock, par value $0.01 per share; authorized - 120,000,000 shares; issued - 81,579,000 shares |
816 | 816 | ||||||
| Additional paid-in capital |
586,595 | 588,950 | ||||||
| Retained earnings |
445,576 | 443,345 | ||||||
| Treasury stock, at cost - 36,192,000 shares (36,298,000 at May 31) |
(678,911 | ) | (680,913 | ) | ||||
| Treasury stock held in rabbi trust, at cost - none (477,000 shares at May 31) |
— | (8,946 | ) | |||||
| Unearned restricted stock compensation |
(7,602 | ) | — | |||||
| Accumulated other comprehensive loss |
(13,048 | ) | (17,495 | ) | ||||
| Total stockholders’ equity |
333,426 | 325,757 | ||||||
| $ | 1,597,351 | $ | 1,645,691 | |||||
See accompanying notes.
1
INTERSTATE BAKERIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Sixteen Weeks Ended |
Forty Weeks Ended |
|||||||||||||||
| March 6, 2004 |
March 8, 2003 |
March 6, 2004 |
March 8, 2003 |
|||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 1,019,711 | $ | 1,045,574 | $ | 2,664,524 | $ | 2,707,761 | ||||||||
| Cost of products sold |
505,032 | 522,543 | 1,309,574 | 1,320,992 | ||||||||||||
| Selling, delivery and administrative expenses |
483,558 | 487,489 | 1,232,078 | 1,223,072 | ||||||||||||
| Restructuring charges |
1,463 | 5,000 | 4,155 | 6,450 | ||||||||||||
| Other charges |
— | — | — | 3,591 | ||||||||||||
| Depreciation and amortization |
32,230 | 29,098 | 75,151 | 72,821 | ||||||||||||
| 1,022,283 | 1,044,130 | 2,620,958 | 2,626,926 | |||||||||||||
| Operating income (loss) |
(2,572 | ) | 1,444 | 43,566 | 80,835 | |||||||||||
| Other income |
(10 | ) | (32 | ) | (26 | ) | (78 | ) | ||||||||
| Interest expense |
10,935 | 12,172 | 28,198 | 30,172 | ||||||||||||
| 10,925 | 12,140 | 28,172 | 30,094 | |||||||||||||
| Income (loss) before income taxes |
(13,497 | ) | (10,696 | ) | 15,394 | 50,741 | ||||||||||
| Provision for income taxes |
(6,890 | ) | (3,947 | ) | 3,684 | 18,723 | ||||||||||
| Net income (loss) |
$ | (6,607 | ) | $ | (6,749 | ) | $ | 11,710 | $ | 32,018 | ||||||
| Earnings (loss) per share: |
||||||||||||||||
| Basic |
$ | (0.15 | ) | $ | (0.15 | ) | $ | 0.26 | $ | 0.72 | ||||||
| Diluted |
$ | (0.15 | ) | $ | (0.15 | ) | $ | 0.26 | $ | 0.71 | ||||||
See accompanying notes.
2
INTERSTATE BAKERIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Forty Weeks Ended |
||||||||
| March 6, 2004 |
March 8, 2003 |
|||||||
| (In thousands) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 11,710 | $ | 32,018 | ||||
| Depreciation and amortization |
75,151 | 72,821 | ||||||
| Non-cash interest expense-deferred debt fees |
1,703 | 1,326 | ||||||
| Non-cash interest on swap agreements |
(2,154 | ) | 2,758 | |||||
| Non-cash common stock award |
— | 3,591 | ||||||
| Non-cash restricted stock and deferred share compensation expense |
1,305 | 608 | ||||||
| Loss on sale/writedown of property and equipment |
844 | 1,633 | ||||||
| Change in operating assets and liabilities: |
||||||||
| Accounts receivable |
2,700 | 12,543 | ||||||
| Inventories |
8,152 | (1,906 | ) | |||||
| Other current assets |
3,255 | (11,277 | ) | |||||
| Accounts payable and accrued expenses |
(1,129 | ) | 14,441 | |||||
| Long-term portion of self-insurance reserves |
(1,410 | ) | (402 | ) | ||||
| Other |
16 | (1,292 | ) | |||||
| Cash from operating activities |
100,143 | 126,862 | ||||||
| Cash flows from investing activities: |
||||||||
| Additions to property and equipment |
(39,867 | ) | (80,595 | ) | ||||
| Sale of assets |
4,160 | 3,384 | ||||||
| Acquisition of other intangible assets |
(12 | ) | (4,522 | ) | ||||
| Acquisition and development of software assets |
(10,639 | ) | — | |||||
| Other |
(22 | ) | 331 | |||||
| Cash from investing activities |
(46,380 | ) | (81,402 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Reduction of long-term debt |
(45,008 | ) | (46,070 | ) | ||||
| Common stock dividends paid |
(9,479 | ) | (9,359 | ) | ||||
| Stock option exercise proceeds |
776 | 10,299 | ||||||
| Acquisition of treasury stock |
(22 | ) | (188 | ) | ||||
| Debt fees |
(30 | ) | (142 | ) | ||||
| Cash from financing activities |
(53,763 | ) | (45,460 | ) | ||||
| Change in cash and cash equivalents |
— | — | ||||||
| Cash and cash equivalents: |
||||||||
| Beginning of period |
— | — | ||||||
| End of period |
$ | — | $ | — | ||||
| Cash payments made: |
||||||||