Despite Interstate Bakeries Corp.’s (IBC) bankruptcy filing and subsequent release of a plethora of paperwork, the company’s true financial status has been shrouded in secrecy since April 15. On this date, the Kansas City, Mo.-based company announced its third-quarter earnings, the last time the company publicized audited financial quarterly reports. Although the company still has not released an audited quarterly report, it recently provided a patchwork picture of its earnings up until the company’s bankruptcy filing. This hodgepodge of financial data paints a bleak picture for the fresh bread and cake baker.
For the fiscal year ended May 29, IBC reported a 1.7% decrease in net sales to $3.47 billion, and a net loss of $25.7 million compared to the previous year’s net income of $27.5 million. The company said it is unable to file a compliant annual report because it is reviewing the proper accounting policy for a defined benefit pension plan that the company contributes to on behalf of about 900 of its 32,000 employees.
The company also released information for its first quarter ended Aug. 21. Similar to the year-end numbers, these results are unaudited because the company said it “needs to complete the analysis necessary to determine appropriate significant asset impairment charges related to its bankruptcy filing and in response to its fiscal 2005 financial performance.”
For the first quarter, the company’s sales decreased 2.3% to $812 million. The company attributed the net sales decrease to a 4.5% decline in unit volume. The company’s branded and private label white bread and individual snack cake items all reported sales shortfalls. The company partially offset these declines by enacting price increases on its private label breads and sweet goods, and its Baker’s Inn super premium breads.
For the quarter, the company reported a net loss of $16.9 million compared to last year’s net income of $11.2 million. The company’s net loss includes restructuring charges of $8.16 million related to bakery, bakery outlet and depot closings.
The company’s future earnings are expected to be impacted by restructuring charges from the closing of additional facilities. The company recently announced the closing of its Florence, S.C., bakery. The 85-year-old plant produces breads and rolls under the Wonder and Merita brands. Production from the bakery will be transferred to IBC plants in Charlotte, N.C., and Rocky Mount, N.C.
“Closing a bakery is a decision we never take lightly,” Tony Alvarez, IBC’s chief executive officer, said. “However, IBC must continue to seek production efficiencies on a national scale. Our entire management team is committed to making IBC more nimble and competitive, and consistent with the best interests of the company and its stakeholders.”