8-K 1 t48794_8k101904.txt OCTOBER 19, 2004 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 19, 2004 TOM'S FOODS INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 58-1516963 ------------------------------------- --------------------------------------- (Commission File Number) (I.R.S. Employer Identification Number) 900 8TH STREET, COLUMBUS, GEORGIA 31902 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (706) 323-2721 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. 3RD QUARTER RESULTS Tom's Foods Inc.'s net sales for the quarter ended September 11, 2004 were $44.4 million vs. $44.3 million in the same quarter in 2003 and a net loss of $633,000 compared to a net loss of $391,000 for the same period in 2003. Net sales for the 36 weeks ended September 11, 2004 were $130.3 million compared to $137.6 million for the same period in 2003 and a net loss of $2.6 million compared to a net loss of $2.5 million for the same period in 2003. Shown below are condensed balance sheets as of September 11, 2004 and January 3, 2004; condensed statements of operations for the 12 and 36 weeks ended September 11, 2004 and September 6, 2003; and condensed statements of cash flows for the 36 weeks ended September 11, 2004 and September 6, 2003. REVISED FISCAL 2004 FORECAST The Company is revising its previously reported estimates for fiscal 2004 EBITDA. Fiscal 2004 EBITDA is expected to be in a range of approximately $10 million to $10.5 million. In addition, fiscal 2004 operating cash flow after interest expense is estimated to be approximately $500,000. The Company had previously predicted that fiscal 2004 EBITDA would be in a range of approximately $14 million and $15 million and that operating cash flow after interest expense would be approximately $4 million. The Company's operations for the full 2004 fiscal year will be adversely affected by a number of factors, including: (i) lower than expected sales volume resulting from the initiation of bankruptcy proceedings by certain convenience store chains and reduced convenience store sales due to higher gas prices and reduced travel, (ii) unexpected reduced volume under a co-packing agreement and (iii) the impact of hurricane forced store temporary closings and distributor and company-owned distribution route temporary closings. The Company is examining whether any of the losses resulting from the hurricanes are recoverable under insurance policies. CONTINUATION OF EFFORTS TO REFINANCE INDEBTEDNESS The Company's credit facility ("Credit Facility") becomes due on October 22, 2004. The Credit Facility is secured by all of the receivables and inventory of the Company. At October 19, 2004 borrowings under the Credit Facility totaled $9.2 million (including $2.9 million in outstanding letters of credit) and an additional approximately $2.7 million was available for borrowing under the Company's borrowing base. Outstanding principal of $60 million and accrued interest of $3.15 million under the Company's 10.5% senior secured notes (the "Notes") mature on November 1, 2004. The Notes are secured by the Company's principal manufacturing facilities (including real property and equipment) and its intellectual property. The Company is currently in discussions with its Credit Facility lender for an extension of the term of the Credit Facility and with prospective lenders to refinance the Notes. There can be no assurance that the Company will be able to obtain an extension of the Credit Facility or refinance the Notes prior to their maturity. In the event the Company fails to extend the maturity of the Credit Facility, (i) the Company will be in default under the Credit Facility and the Notes (pursuant to cross default provisions) and the Credit Facility lender and the holders of the Notes will be entitled to exercise their remedies -2- under the terms of the Credit Facility and the Notes and such lenders could attempt to foreclose on their respective collateral securing such indebtedness and (ii) even if such foreclosure does not occur, the Company's ability to operate and obtain working capital necessary to operation its business would be materially adversely impacted. Under these circumstances, the Company would have difficulty maintaining existing relationships with its suppliers, who might stop providing supplies or services to the Company or provide or supply such services only on "cash on deliver" or other terms that would have an adverse impact on the Company's cash flow and the Company may have to consider pursuing appropriate restructuring options. -3- TOM'S FOODS INC. CONDENSED BALANCE SHEETS SEPTEMBER 11, 2004 AND JANUARY 3, 2004 (in thousands except share data)

-4- TOM'S FOODS INC. CONDENSED STATEMENTS OF OPERATIONS FOR THE TWELVE AND THIRTY-SIX WEEKS ENDED SEPTEMBER 11, 2004 AND SEPTEMBER 6, 2003 (in thousands)

-5- TOM'S FOODS INC. CONDENSED STATEMENTS OF CASH FLOWS FOR THE THIRTY-SIX WEEKS ENDED SEPTEMBER 11, 2004 AND SEPTEMBER 6, 2003 ( in thousands ) Thirty-Six Weeks Ended ------------------------------------------------------- Sept. 11, 2004 Sept. 6, 2003 ------------------------ ------------------------ (unaudited) (unaudited) Cash flows from operating activities: Net loss $ (2,629) $ (2,477) ------------------------ ------------------------ Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 5,102 5,620 Amortization of intangible assets 491 489 Amortization of deferred debt issuance cost 359 364 Provision for income taxes 78 93 (Gain) loss on disposal of property, plant, and equipment (15) (3) Changes in operating assets and liabilities: Accounts and notes receivable, net (3,431) (1,917) Inventories (2,016) 771 Other assets (298) (111) Accounts payable 1,157 (2,955) Other liabilities (1,339) (1,623) Accrued pension cost (124) 482 ------------------------ ------------------------ Total adjustments (36) 1,210 ------------------------ ------------------------ Net cash used in operating activities (2,665) (1,267) ------------------------ ------------------------ Cash flows from investing activities: Additions to property, plant, and equipment (2,921) (2,915) Proceeds from disposal of property, plant, and equipment 182 30 ------------------------ ------------------------ Net cash used in investing activities (2,739) (2,885) ------------------------ ------------------------ Cash flows from financing activities: Net borrowing from working capital revolving facility 5,998 5,689 Litigation escrow deposit 0 (1,563) Payments of other long-term debt (201) (40) ------------------------ ------------------------ Net cash provided by financing activities 5,797 4,086 ------------------------ ------------------------ Increase (decrease) in cash and cash equivalents 393 (66) Cash and cash equivalents, beginning of period 1,444 1,856 ------------------------ ------------------------ Cash and cash equivalents, end of period $ 1,837 $ 1,790 ======================== ======================== Interest paid during the period $ 3,813 $ 3,829 Income taxes paid during the period $ 63 $ 88

-6- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TOM'S FOODS INC. By: /s/ Rolland G. Divin ---------------------------- Rolland G. Divin President and Chief Executive Officer Dated: October 19, 2004 -7-

TOMS FOODS INC 8-K