-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UsLZPI/X7Yy1RjGzR5/928rnZj/8/eNG2zLlemC3g/W80kVj8A7HMmlk3tR5YgVF mDxXIO+o0Oq6N/77bupbwA== 0001018848-98-000008.txt : 19980527 0001018848-98-000008.hdr.sgml : 19980527 ACCESSION NUMBER: 0001018848-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980425 FILED AS OF DATE: 19980526 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEEBLER FOODS CO CENTRAL INDEX KEY: 0001018848 STANDARD INDUSTRIAL CLASSIFICATION: COOKIES & CRACKERS [2052] IRS NUMBER: 363839556 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13705 FILM NUMBER: 98631620 BUSINESS ADDRESS: STREET 1: 677 LARCH AVE CITY: ELMHURST STATE: IL ZIP: 60126 BUSINESS PHONE: 6308332900 FORMER COMPANY: FORMER CONFORMED NAME: KEEBLER CORP DATE OF NAME CHANGE: 19960715 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 25, 1998 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: NO. 001-13705 -------------------- KEEBLER FOODS COMPANY (Exact name of Registrant as specified in its charter) DELAWARE 36-3839556 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 677 LARCH AVE., ELMHURST, IL 60126 (Address of principal executive offices) 630-833-2900 (Registrant's telephone number, including area code) NOT APPLICABLE. (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 | | NUMBER OF SHARES OF COMMON STOCK, $0.01 PAR VALUE, OUTSTANDING AS OF THE CLOSE OF BUSINESS ON MAY 22, 1998: 83,934,077. PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS KEEBLER FOODS COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
APRIL 25, January 3, 1998 1998 ----------------- ----------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 27,333 $ 27,188 Trade accounts and notes receivable, net 104,576 98,963 Inventories, net: Raw materials 28,365 25,543 Package materials 9,042 7,306 Finished goods 79,050 78,131 Other 1,254 1,482 ----------------- ----------------- 117,711 112,462 Deferred income taxes 44,333 42,730 Other 20,854 20,303 ----------------- ----------------- Total current assets 314,807 301,646 PROPERTY, PLANT, AND EQUIPMENT, NET 474,123 478,121 TRADEMARKS AND TRADE NAMES, NET 152,936 154,146 GOODWILL, NET 46,683 47,059 PREPAID PENSION 42,166 43,060 ASSETS HELD FOR SALE 3,742 3,742 OTHER ASSETS 14,188 15,077 ----------------- ----------------- Total assets $ 1,048,645 $ 1,042,851 ================= ================= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 2
KEEBLER FOODS COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
APRIL 25, January 3, 1998 1998 ----------------- ----------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 29,315 $ 26,365 Trade accounts payable 97,412 126,213 Other liabilities and accruals 214,929 194,923 Income taxes payable 6,426 13,784 Plant and facility closing costs and severance 6,112 6,900 ----------------- ----------------- Total current liabilities 354,194 368,185 LONG-TERM DEBT 264,140 272,390 OTHER LIABILITIES: Deferred income taxes 68,258 69,417 Postretirement/postemployment obligations 62,756 60,605 Plant and facility closing costs and severance 13,800 15,578 Deferred compensation 16,867 18,669 Other 15,717 15,956 ----------------- ----------------- Total other liabilities 177,398 180,225 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock ($.01 par value; 100,000,000 shares authorized and - - none issued) Common stock ($.01 par value; 500,000,000 shares authorized and 83,934,077 and 77,595,213 shares issued, respectively) 839 776 Additional paid-in capital 168,707 148,613 Retained earnings 86,777 72,737 Treasury stock (3,410) (75) ----------------- ----------------- Total shareholders' equity 252,913 222,051 ----------------- ----------------- Total liabilities and shareholders' equity $ 1,048,645 $ 1,042,851 ================= ================= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3
KEEBLER FOODS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SIXTEEN Sixteen WEEKS ENDED Weeks Ended APRIL 25, 1998 April 19, 1997 ---------------- ---------------- NET SALES $ 636,746 $ 597,034 COSTS AND EXPENSES: Cost of sales 264,087 260,019 Selling, marketing, and administrative expenses 338,175 308,543 Other 2,808 2,920 ---------------- ---------------- INCOME FROM OPERATIONS 31,676 25,552 Interest (income) (389) (145) Interest expense 7,830 12,559 ---------------- ---------------- INTEREST EXPENSE, NET 7,441 12,414 ---------------- ---------------- INCOME BEFORE INCOME TAX EXPENSE 24,235 13,138 Income tax expense 10,195 5,525 ---------------- ---------------- INCOME BEFORE EXTRAORDINARY ITEM 14,040 7,613 EXTRAORDINARY ITEM: Loss on early extinguishment of debt, net of tax - 2,692 ---------------- ---------------- NET INCOME $ 14,040 $ 4,921 ================ ================ BASIC NET INCOME PER SHARE: Income before extraordinary item $ 0.17 $ 0.10 Extraordinary item - 0.04 ---------------- ---------------- Net income $ 0.17 $ 0.06 ================ ================ WEIGHTED AVERAGE SHARES OUTSTANDING 82,339 77,626 ================ ================ DILUTED NET INCOME PER SHARE: Income before extraordinary item $ 0.16 $ 0.10 Extraordinary item - 0.04 ---------------- ---------------- Net income $ 0.16 $ 0.06 ================ ================ WEIGHTED AVERAGE SHARES OUTSTANDING 87,138 79,246 ================ ================ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 4
KEEBLER FOODS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
SIXTEEN Sixteen WEEKS ENDED Weeks Ended APRIL 25, 1998 April 19, 1997 ------------------ ------------------- CASH FLOWS (USED BY) PROVIDED FROM OPERATING ACTIVITIES Net income $ 14,040 $ 4,921 Adjustments to reconcile net income to cash from operating activities: Depreciation and amortization 16,236 17,154 Deferred income taxes (2,762) 889 Accretion on Seller Note - 793 Loss on early extinguishment of debt, net of tax - 2,692 Loss (gain) on sale of property, plant, and equipment 133 (95) Changes in assets and liabilities: Trade accounts and notes receivable, net (5,613) 8,124 Inventories, net (5,249) (15,894) Income taxes payable (7,358) (1,564) Other current assets (551) 1,103 Deferred debt issue costs - (1,250) Trade accounts payable and other current liabilities (8,793) 2,290 Plant and facility closing costs and severance (2,564) (9,904) Other, net 1,351 (534) ------------------ ------------------- Cash (used by) provided from operating activities (1,130) 8,725 CASH FLOWS (USED BY) PROVIDED FROM INVESTING ACTIVITIES Capital expenditures (10,415) (8,261) Proceeds from property disposals 168 3,925 ------------------ ------------------- Cash (used by) provided from investing activities (10,247) (4,336) CASH FLOWS PROVIDED FROM (USED BY) FINANCING ACTIVITIES Purchase of treasury stock (3,335) (75) Exercise of options and warrant 20,157 - Long-term debt borrowings - 109,750 Long-term debt repayments (5,300) (157,800) Revolving Loan facility, net - 32,816 ------------------ ------------------- Cash provided from (used by) financing activities 11,522 (15,309) ------------------ ------------------- Increase (decrease) in cash and cash equivalents 145 (10,920) Cash and cash equivalents at beginning of period 27,188 11,954 ------------------ ------------------- Cash and cash equivalents at end of period $ 27,333 $ 1,034 ================== =================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 5
KEEBLER FOODS COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION INTERIM FINANCIAL STATEMENTS The unaudited interim consolidated financial statements included herein were prepared pursuant to the rules and regulations for interim reporting under the Securities Exchange Act of 1934. Accordingly, certain information and footnote disclosures normally accompanying the annual financial statements were omitted. The interim consolidated financial statements and notes should be read in conjunction with the annual audited consolidated financial statements and notes thereto. The accompanying unaudited interim consolidated financial statements contain all adjustments, consisting only of normal adjustments, which in the opinion of management were necessary for a fair statement of the results for the interim periods. Results for the interim periods are not necessarily indicative of results for the full year. BUSINESS AND OWNERSHIP Keebler Foods Company (the "Company") was acquired by INFLO Holdings Corporation ("INFLO") on January 26, 1996. INFLO was owned by Artal Luxembourg S. A. ("Artal"), a private investment company, Flowers Industries, Inc. ("Flowers"), a New York Stock Exchange-listed company, Bermore, Limited ("Bermore"), a privately held corporation and the parent of G.F. Industries, Inc., and certain members of the Company's current management. On November 20, 1997, INFLO was merged into Keebler Corporation, and subsequently changed its name to Keebler Foods Company. The Company made an initial public offering (the "Offering") of 13,386,661 shares of common stock on January 29, 1998. As part of the transaction, Flowers acquired additional shares of common stock from Artal and Bermore which increased its ownership from approximately 45% to 55%. Artal, having sold shares to both Flowers and the public, retained ownership of approximately 21%. Bermore exercised a warrant in exchange for 6,135,781 shares of common stock, sold shares to both Flowers and the public, and retained ownership of approximately 6%. Management's ownership remained at approximately 2%, with the balance of the outstanding common stock being sold to non-affiliates. FISCAL PERIODS PRESENTED The Company's fiscal year consists of thirteen four-week periods (52 or 53 weeks) and ends on the Saturday nearest December 31. The first quarter consists of four four-week periods. RECLASSIFICATIONS Certain reclassifications of prior period data have been made to conform with the current period reporting. 2. SHAREHOLDERS' EQUITY COMMON STOCK The consolidated financial statements reflect the Company's declaration of a 57.325-for-1 stock split of common stock (the "Stock Split") effective January 22, 1998. The Stock Split was effected in the form of a stock dividend. Accordingly, all references in the consolidated financial statements to number of shares, options, warrants, and the related prices, as well as per share amounts and the average number of shares outstanding, have been restated to reflect these changes. 6 KEEBLER FOODS COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) On January 29, 1998, the Company made a public offering of 13,386,661 shares of common stock. Concurrent with the Offering, Bermore exercised a warrant to purchase 6,135,781 shares of common stock. The exercise of the warrant resulted in the Company receiving $19.8 million of cash proceeds. All of the shares in the Offering were sold by Artal and Bermore, with no proceeds from the Offering going to the Company. TREASURY STOCK In March 1998, the Company's Board of Directors authorized the repurchase, at management's discretion, of up to $30.0 million in shares of the Company's common stock. The buyback program was primarily instituted to offset dilution which may result from the exercise and sale of shares related to employee stock options. The Company's repurchases of shares of common stock are recorded as treasury stock and result in a reduction of shareholders' equity. The Company utilizes the cost method for recording treasury stock transactions. Should the treasury shares be reissued, the Company intends to use a first-in, first-out method with the excess of repurchase cost over reissuance price treated as a reduction in retained earnings. Total treasury shares held were 157,894 and 42,994 at April 25, 1998 and January 3, 1998, respectively. The total cost of treasury stock held by the Company was approximately $3.4 million and $0.1 million at April 25, 1998 and January 3, 1998, respectively. 3. NET INCOME PER SHARE Basic net income per share is calculated using the weighted average number of common shares outstanding during each period. Diluted net income per share is calculated using the weighted average number of common and common equivalent shares outstanding during each period. The following table sets forth the computation of basic and diluted net income per share:
SIXTEEN Sixteen WEEKS ENDED Weeks Ended APRIL 25, 1998 April 19, 1997 ------------------- ------------------ (IN THOUSANDS) NUMERATOR: Income before extraordinary item............................................. $ 14,040 $ 7,613 Extraordinary item, net of tax............................................... - 2,692 ------------------- ------------------ Net income................................................................... $ 14,040 $ 4,921 =================== ================== DENOMINATOR: Denominator for Basic Net Income Per Share Weighted average shares................................................. 82,339 77,626 Effect of Dilutive Securities: Stock options........................................................... 4,021 1,620 Warrants................................................................ 778 - ------------------- ------------------ Diluted potential common shares......................................... 4,799 1,620 ------------------- ------------------ Denominator for Diluted Net Income Per Share................................. 87,138 79,246 =================== ==================
7 KEEBLER FOODS COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) At April 25, 1998, there were options to purchase 13,974 shares of common stock at $29.38 per share and 13,750 shares of common stock at $29.78 per share which were excluded from the computation of diluted net income per share as the exercise price of the options exceeded the average market price of common shares; and therefore, the effect would have been antidilutive. There were no antidilutive securities at April 19, 1997. 8 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Results of operations expressed as a percentage of net sales for the sixteen weeks ended April 25, 1998 and April 19, 1997 are set forth below:
Sixteen Weeks Ended ----------------------------------------- April 25, 1998 April 19, 1997 ------------------ ------------------ NET SALES 100.0% 100.0% COSTS AND EXPENSES: Cost of sales 41.5 43.5 Selling, marketing, and administrative expenses 53.1 51.7 Other 0.4 0.5 ------------------ ------------------ INCOME FROM OPERATIONS 5.0 4.3 INTEREST EXPENSE, NET 1.2 2.1 ------------------ ------------------ INCOME BEFORE INCOME TAX EXPENSE 3.8 2.2 Income tax expense 1.6 0.9 ------------------ ------------------ INCOME BEFORE EXTRAORDINARY ITEM 2.2 1.3 EXTRAORDINARY ITEM: Loss on early extinguishment of debt, net of tax 0.0 0.5 ------------------ ------------------ NET INCOME 2.2% 0.8% ================== ==================
NET SALES. Net sales for the first quarter of 1998 were $636.7 million, up 6.7% compared to net sales of $597.0 million for the comparable quarter in 1997. The net sales growth was driven primarily from selected price increases as well as an increase in sales volume. The majority of the price increases were initiated in the first quarter of 1998 coupled with some price increases which were instituted late in 1997. Volume gains, quarter-on-quarter, were achieved almost entirely from sales of new products and line extensions of existing products. Additionally, the sales mix in the first quarter of 1998 as compared to the first quarter of 1997, was more favorable which, to a lesser extent than price increases and volume gains, also contributed to the net sales growth. GROSS PROFIT. Gross profit of $372.7 million for the first quarter of 1998 was $35.6 million higher or 2.0 percentage points better than the comparable period of 1997. The improvement achieved in gross profit was attributed to increased sales achieved through both increased prices and volume gains, a more profitable sales mix, and lower production costs. Raw material costs were down 2.5% in 1998 due to lower flour, sugar, and chocolate prices when compared to the prior year. Despite an increase in labor wage rates due to inflation, labor costs per unit improved quarter-on-quarter reflecting productivity gains from increased automation in the bakeries. SELLING, MARKETING, AND ADMINISTRATIVE EXPENSES. Selling, marketing, and administrative expenses were $29.6 million higher for the sixteen weeks ended April 25, 1998, as compared to the sixteen weeks ended April 19, 1997. Increased spending was attributed primarily to higher marketing, sales force, and administrative expenses offset partially by lower distribution costs. The overall increase in selling, marketing, and administrative expenses was attributed to increased sales volume. The majority of the increase was related to higher marketing expense which was in part due to more advertising activity and campaigns than the year-earlier quarter. Lower distribution expenses were attributed to improved inventory handling and deployment as well as higher volume passing through a more efficient fixed cost structure. INCOME FROM OPERATIONS. Income from operations of $31.7 million for the sixteen weeks ended April 25, 1998 was $6.1 million higher than the comparable period in 1997. The improvement primarily resulted from improved gross margin attributed to increased net sales due to volume gains and increased prices, along with lower product costs, offset partially by higher selling, marketing, and administrative expenses. 9 INTEREST EXPENSE. Net interest expense was $7.4 million for the first quarter of 1998 compared to $12.4 million for the same period in 1997. The $5.0 million decrease in interest expense quarter-on-quarter was primarily due to a lower average debt balance and lower interest rates in 1998. The refinancing of the Credit Agreement, late in the first quarter of 1997, provided more favorable terms, fees, and interest rates and resulted in the early extinguishment of $53.2 million of debt. Additionally, in the fourth quarter of 1997, there was $70.0 million of principal pre-payments on the term note and a $29.0 million early extinguishment of the Seller Note. The weighted average interest rate for the first quarter of 1998 was 0.7 percentage points lower than the comparable period of 1997. INCOME TAXES. Income tax expense for the first quarter of 1998 was $4.7 million higher than the first quarter of 1997 due to an $11.1 million increase in pretax income for the sixteen weeks ended April 25, 1998 compared to the sixteen weeks ended April 19, 1997. The Company provided for income taxes at an effective tax rate of 42% for both the first quarter of 1998 and 1997. The effective tax rate exceeded the statutory rate due to nondeductible expenses, principally amortization of intangibles, including trademarks, trade names, and goodwill. EXTRAORDINARY ITEM NET OF INCOME TAXES. An after-tax extraordinary charge of $2.7 million on the early extinguishment of debt was recorded in the first quarter of 1997. The charge consisted of the write-off of unamortized bank fees associated with the extinguishment of certain term notes used to finance the acquisition of the Company and to complete the acquisition of Sunshine. The tax benefit on the extraordinary charge was $1.9 million. There was no extraordinary charge recorded in the first quarter of 1998. NET INCOME. Net income of $14.0 million for the sixteen weeks ended April 25, 1998 was $9.1 million higher than the comparable period of 1997. The significant growth in net earnings quarter-on-quarter was primarily attributed to net sales growth due to increased volume, along with price increases coupled with lower product costs and interest expense. LIQUIDITY AND CAPITAL RESOURCES Cash flows used by operating activities during the first quarter of 1998 were $1.1 million. Positive cash flow of $14.0 million provided from net earnings for the quarter was offset by increased funding of current liabilities and income taxes, spending on plant and facility closing costs and severance, and an increased investment in inventory and trade accounts receivable. The increased funding of current liabilities was attributed primarily to the timing of payments. The decrease in income taxes payable resulted from $20.3 million in first quarter tax payments, partially offset by the incremental provision for the quarter. Spending for plant and facility closing costs and severance of $2.6 million, although down from the same quarter of 1997, was related to exit costs associated with the Keebler and Sunshine acquisitions. The increased investment in inventories reflected the replenishment of on-hand inventory after a high fourth quarter selling period. For the first sixteen weeks of 1998, cash used by investing activities of $10.3 million was primarily used to fund capital expenditures. Capital spending was made principally to introduce new products, update and enhance production facilities, and achieve near-term cost savings and efficiencies in the manufacturing, sales, and distribution process. Cash provided by financing activities in the first quarter of 1998 was $11.5 million. Concurrent with the Company's initial public offering, Bermore, Limited exercised a warrant in exchange for 6,135,781 shares of common stock. The exercise of the warrant resulted in the Company receiving $19.8 million of cash proceeds on February 3, 1998. Furthermore, during the first sixteen weeks of 1998, employee stock options were also exercised resulting in an additional $0.4 million of cash proceeds. In order to offset any dilution which may result from the exercise of employee stock options or the sale of common stock, the Company used $3.3 million to repurchase common stock. Long-term debt repayments of $5.3 million, primarily for scheduled principal payments on the term note and other debt, also offset cash provided from the exercise of the warrant and employee stock options. As of April 25, 1998, cash and cash equivalents were $27.3 million, long-term debt was $264.1 million, and current maturities were $29.3 million. Available borrowings under the Company's Revolving Loan facility were $140.0 million for which there was no outstanding balance on April 25, 1998. The Company met all financial covenants contained in the financing agreements. Available cash, as well as existing short-term credit facilities, are expected to be sufficient to meet the Company's normal operating requirements for the foreseeable future. 10 FORWARD-LOOKING STATEMENTS When used in this discussion, the words "believes" and "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, over which the Company may have no control, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligations to republish revised forward-looking statements to reflect events or circumstances after the date thereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company, in this report, as well as the Company's periodic reports filed with the Securities and Exchange Commission. PART II: OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company shareholders conducted an annual meeting by the written consent of the majority of shareholders on January 21, 1998. By written consent, the majority of shareholders, on January 21, 1998, approved the Amended and Restated Certificate of Incorporation; the Amendment and Restatement of By-Laws; a stock split of 57.325 shares of common stock for every common share outstanding; the 1998 Omnibus Stock Incentive Plan; the Keebler Foods Company Nonemployee Director Stock Plan; Amendments to the Non-Qualified Stock Option Agreements; and, the uncontested re-election of the members of the Board of Directors (pursuant to vacancy) for which there was no solicitation of proxies and no change in directors. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit NUMBER DESCRIPTION ------ ----------- 10.22 (a) First Amendment to the Stock Purchase Agreement dated March 31, 1998 among Artal Luxembourg S.A., Flowers Industries, Inc., and Keebler Foods Company 27 Financial Data Schedule (b) Reports on Form 8-K None. 11 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KEEBLER FOODS COMPANY (Registrant) /s/ SAM K. REED ---------------------------------------------------- Sam K. Reed President and Chief Executive Officer Date: May 26, 1998 /s/ E. NICHOL MCCULLY ---------------------------------------------------- E. Nichol McCully Senior Vice President and Chief Financial Officer (Principal Financial Officer) Date: May 26, 1998 /s/ JAMES T. SPEAR ---------------------------------------------------- James T. Spear Vice President Finance and Corporate Controller (Principal Accounting Officer) Date: May 26, 1998 12 EX-10.22(A) 2 FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT, made this 31st day of March, 1998, by and among FLOWERS INDUSTRIES, INC., a Georgia corporation (hereinafter referred to as "Purchaser"), ARTAL LUXEMBOURG S.A., a Luxembourg corporation (hereinafter referred to as "Seller") and KEEBLER FOODS COMPANY, a Delaware corporation (hereinafter referred to as "Keebler"). WITNESSETH: WHEREAS, Purchaser, Seller and Keebler entered into a Stock Purchase Agreement, dated January 28, 1998 (the "Stock Purchase Agreement"); and WHEREAS, Purchaser, Seller and Keebler desire to amend the Stock Purchase Agreement as set forth herein. NOW, THEREFORE, for and in consideration of the premises and the mutual promises, agreements, representations, warranties and covenants hereinafter set forth, and the sum of ten dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby specifically agreed to and acknowledged, the Stock Purchase Agreement is hereby amended as follows: 1. Section 13.2 of the Stock Purchase Agreement is hereby amended by deleting said Section in its entirety and substituting in lieu thereof a new Section 13.2 reading as follows: 13.2 PURCHASES OF KEEBLER STOCK. -------------------------- 13.2.1 From the Closing Date until the earlier of (i) the date on which Seller (together with its Affiliates) beneficially owns less than 4,586,000 shares of Keebler Stock or (ii) twenty-four (24) months after the termination of the Lockup Period (such period, the "INITIAL STOCK REPURCHASE CONSENT PERIOD"), any purchase of shares of Keebler Stock by Purchaser or Keebler (other than purchases (A) by Purchaser or Keebler pursuant to put rights contained in agreements in effect on the Closing Date, (B) by Purchaser or Keebler from Artal or Management so long as such shares of Keebler Stock are not part of the Public Float at the time of purchase, (C) by Keebler from Bermore of Bermore's Shares which are permitted to be transferred by Bermore as a "Monthly Transfer" pursuant to Section 4.2(e) of the Bermore Agreement or by Purchaser or Keebler, as the case may be, pursuant to the tag-along and drag-along rights contained in Sections 4.3 and 4.4 of the Bermore Agreement and (D) by Purchaser and Keebler which together, in the aggregate with any prior such purchases, do not exceed (x) fifteen percent (15%) of the Public Float in Keebler Stock immediately after the Closing, (PROVIDED that the shares described in clause (y) hereof shall not in any event be included in calculating the Public Float) plus (y) the number of shares of Keebler Stock (i) either (A) issued to Management prior to February 3, 1998 or (B) issued to Management by the Company subsequent to February 3, 1998 pursuant to a stock option or any similar plan and (ii) subsequently sold by Management in transactions resulting in such shares trading in the public market, shall not be consummated without the prior written consent of Seller, and Keebler and Purchaser shall not take or permit to be taken any such action without such prior written consent; PROVIDED, HOWEVER, that the Extension Period shall be added to the twenty-four (24) month period set forth in (ii) above; and PROVIDED, FURTHER, that Purchaser will have the right at any time to purchase the number of shares of Keebler Stock required to maintain beneficial ownership of at least fifty-one percent (51%) of Keebler Stock on a fully diluted basis. 13.2.2. After the expiration of the Initial Stock Repurchase Consent Period (including any Extension Period added thereto) and until the earlier of (i) the date on which Seller (together with its Affiliates) beneficially owns less than 4,586,000 shares of Keebler Stock or (ii) thirty-six (36) months after the termination of the Lockup Period (the "SECOND STOCK REPURCHASE CONSENT Period"), any purchase of shares of Keebler Stock by Purchaser or Keebler (other than purchases (A) by Purchaser or Keebler pursuant to put rights contained in agreements in effect on the Closing Date, (B) by Purchaser or Keebler from Artal, Bermore or Management so long as such shares of Keebler Stock are not part of the Public Float at the time of purchase, (C) by Keebler from Bermore of Bermore's Shares which are permitted to be transferred by Bermore as a "Monthly Transfer" pursuant to Section 4.2(e) of the Bermore Agreement or by Purchaser or Keebler, as the case may be, pursuant to the tag-along and drag-along rights contained in Sections 4.3 and 4.4 of the Bermore Agreement and (D) by Purchaser and Keebler which together, in the aggregate with any prior such purchases during the Second Stock Repurchase Consent Period and purchases made during the Initial Stock Repurchase Consent Period, do not exceed (x) fifteen percent (15%) of the Public Float in Keebler Stock on the date immediately preceding any such purchase, (PROVIDED that the shares described in clause (y) hereof shall not in any event be included in calculating the Public Float) plus (y) the number of shares of Keebler Stock (i) either (A) issued to Management prior to February 3, 1998 or (B) issued to Management by the Company subsequent to February 3, 1998 pursuant to a stock option or any similar plan and (ii) subsequently sold by Management in transactions resulting in such shares trading in the public market, shall not be consummated without the prior written consent of Seller, and Keebler and Purchaser shall not take or permit to be taken any such action without such prior written consent; PROVIDED, HOWEVER, that the Extension Period 2 shall be added to the thirty-six (36) month period set forth in (ii) above, and PROVIDED, FURTHER, that Purchaser will have the right at any time to purchase the number of shares of Keebler Stock required to maintain beneficial ownership of at least fifty-one percent (51%) of Keebler Stock on a fully diluted basis." 2. Each party hereby represents and warrants to the others that: (a) it has all necessary power and authority (corporate or other) to enter into this First Amendment to Stock Purchase Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby; (b) the execution, delivery and performance of this First Amendment to Stock Purchase Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action (corporate or other); and (c) this First Amendment to Stock Purchase Agreement has been duly executed and delivered by such party and assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid and legally binding obligation of such party, enforceable against such party in accordance with its terms. 3. This First Amendment to Stock Purchase Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles thereof regarding conflict of laws, except for matters directly within the purview of the General Corporation Law of the State of Delaware. 4. Except to the extent expressly amended herein, all terms and conditions of the Stock Purchase Agreement are hereby affirmed and shall remain in full force and effect. 5. This First Amendment to Stock Purchase Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3 IN WITNESS WHEREOF, each party hereto has executed or caused this First Amendment to Stock Purchase Agreement to be executed on its behalf, all on the day and year first above written. FLOWERS INDUSTRIES, INC. "Purchaser" By: /s/ G. ANTHONY CAMPBELL ----------------------- Name: G. Anthony Campbell Title: Secretary and General Counsel ARTAL LUXEMBOURG S.A. "Seller" By: /s/ CARL R. KOHLER ------------------ Name: Carl R. Kohler Title: Managing Director KEEBLER FOODS COMPANY "Keebler" By: /s/ THOMAS E. O'NEILL --------------------- Name: Thomas E. O'Neill Title: Vice President, Secretary and General Counsel EX-27 3
5 This schedule contains summary financial information extracted from the Keebler Foods Company Consolidated Balance Sheet at April 25, 1998 and the Consolidated Statement of Operations for the sixteen weeks ended April 25, 1998 found on pages 2 through 4 of the Company's Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 4-MOS JAN-02-1999 JAN-04-1998 APR-25-1998 27,333 0 109,949 5,373 117,711 314,807 590,500 116,377 1,048,645 354,194 264,140 0 0 839 252,074 1,048,645 636,746 636,746 264,087 602,262 2,808 5,811 7,441 24,235 10,195 14,040 0 0 0 14,040 0.17 0.16
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