-----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, D1YHMUt7IHFq6QWnH1qI5IXxrO7/95BGjGqRDaStGbSNKJVgCJAimfhAX0VaRDb2 hCFbzhCIye8l6Koan4QeTw== 0000907098-97-000002.txt : 19970127 0000907098-97-000002.hdr.sgml : 19970127 ACCESSION NUMBER: 0000907098-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961214 FILED AS OF DATE: 19970124 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLOWERS INDUSTRIES INC /GA CENTRAL INDEX KEY: 0000826227 STANDARD INDUSTRIAL CLASSIFICATION: BAKERY PRODUCTS [2050] IRS NUMBER: 580244940 STATE OF INCORPORATION: GA FISCAL YEAR END: 0629 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09787 FILM NUMBER: 97509998 BUSINESS ADDRESS: STREET 1: US HWY 19 STREET 2: P O BOX 1338 CITY: THOMASVILLE STATE: GA ZIP: 31792 BUSINESS PHONE: 9122269110 MAIL ADDRESS: STREET 1: PO BOX 1338 200 US HIGHWAY 19 S CITY: THOMASVILLE STATE: GA ZIP: 31792 FORMER COMPANY: FORMER CONFORMED NAME: FLOWERS INDUSTRIES OF GEORGIA INC DATE OF NAME CHANGE: 19871220 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D C 20549 (Mark One) ([chech mark]) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 14, 1996 ( ) 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 1-9787 Flowers Industries, Inc. (Exact name of registrant as specified in its charter) Georgia 58-0244940 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) U. S. Highway 19, P O Box 1338, Thomasville, Georgia (Address of principal executive offices) 31799 (Zip Code) 912/226-9110 (Registrant's telephone number, including area code) N/A (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 [check mark] No __________ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _________ No __________ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Each Class Outstanding at January 17, 1997 Common Stock, $.625 Par Value 58,630,127 FLOWERS INDUSTRIES, INC. INDEX Page Number PART I. Financial Information Item 1. Financial Statements Consolidated Balance Sheet December 14, 1996 and June 29, 1996 3 Consolidated Statement of Income Twenty Four Weeks Ended December 14, 1996 and December 16, 1995 5 Consolidated Statement of Income Twelve Weeks Ended December 14, 1996 and December 16, 1995 6 Consolidated Statement of Cash Flows Twenty Four Weeks Ended December 14, 1996 and December 16, 1995 7 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 -2- FLOWERS INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET ASSETS (000's Omitted) December 14, June 29, CURRENT ASSETS: 1996 1996 ---------- -------- Cash and temporary investments $ 4,972 $ 25,039 -------- --------- Accounts receivable 161,735 120,301 -------- --------- Inventories: Raw materials 41,259 25,939 Finished goods 27,530 25,527 Supplies 19,384 17,110 -------- --------- 88,173 68,576 -------- --------- Deferred income taxes 11,652 10,992 Prepaid expenses 6,779 5,319 -------- --------- 273,311 230,227 PROPERTY, PLANT & EQUIPMENT: Land 23,457 23,386 Buildings 183,909 183,502 Machinery and equipment 393,732 393,319 Furniture, fixtures and transportation equipment 23,008 21,365 Construction and capital projects in progress 100,500 63,005 -------- --------- 724,606 684,577 Less: accumulated depreciation (284,574) (264,107) -------- --------- 440,032 420,470 -------- --------- OTHER ASSETS AND DEFERRED CHARGES: Notes receivable from distributors 0 61,236 Investment in unconsolidated affiliate 68,095 68,326 Other long-term assets 32,305 24,567 -------- --------- 100,400 154,129 -------- --------- COST IN EXCESS OF NET TANGIBLE ASSETS: Cost in excess of net tangible assets 45,286 45,962 Less: accumulated amortization (1,805) (1,345) -------- --------- 43,481 44,617 -------- --------- $857,224 $849,443 ======== =========
(See Accompanying Notes to Consolidated Financial Statements) -3- FLOWERS INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (000's Omitted except share data) December 14, June 29, CURRENT LIABILITIES: 1996 1996 ----------- --------- Notes payable $ 57,002 $ 6,593 Obligations under capital leases 2,242 1,988 Accounts payable 67,793 98,796 Accrued taxes other than income taxes 4,608 5,369 Income taxes 870 1,264 Accrued compensation, interest and other liabilities 85,261 67,738 --------- -------- 217,776 181,748 --------- -------- LONG-TERM NOTES PAYABLE 251,869 254,355 --------- -------- OBLIGATIONS UNDER CAPITAL LEASES 2,864 2,573 --------- -------- INDUSTRIAL REVENUE BONDS 17,570 17,770 --------- -------- DEFERRED INCOME TAXES 45,192 47,270 --------- -------- DEFERRED INCOME 0 40,403 --------- -------- COMMON STOCK: Par value $.625 authorized 100,000,000 shares, issued 59,090,726 36,932 36,932 Capital in excess of par value 59,137 58,783 Retained earnings 248,555 234,069 Less - common stock in treasury, 457,914 and 506,749 shares, respectively (7,512) (6,493) Less - Restricted Stock Award and Equity Incentive Award (15,159) (17,967) --------- -------- Total common stockholders' equity 321,953 305,324 --------- -------- $857,224 $849,443 ========= ========
(See Accompanying Notes to Consolidated Financial Statements) -4- FLOWERS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (000's Omitted except share data) For the 24 Weeks Ended ---------------------------- December 14, December 16, 1996 1995 ------------ ------------ Sales $ 704,000 $ 560,212 Sale of distributor notes 43,244 0 Other income (expense) (1,897) 2,692 ----------- ----------- 745,347 562,904 ----------- ----------- Materials, supplies, labor and other manufacturing costs 398,806 303,643 Selling, delivery and administrative expenses 261,590 211,526 Depreciation and amortization 20,366 18,139 Interest 12,485 4,151 ----------- ----------- 693,247 537,459 ----------- ----------- Pre-tax income 52,100 25,445 Federal and state income taxes 19,694 9,618 Equity in net loss of unconsolidated affiliate (195) 0 ----------- ----------- Net income $ 32,211 $ 15,827 =========== =========== Net income per common share $ 0.56 $ 0.28 =========== =========== Weighted average number of shares outstanding used in calculation of net income per common share 57,815,744 57,298,471 Cash dividends paid per common share $0.3025 $0.2825 =========== ===========
(See Accompanying Notes to Consolidated Financial Statements) -5- FLOWERS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (000's Omitted except share data) For the 12 Weeks Ended ---------------------------- December 14, December 16, 1996 1995 ------------ ----------- Sales $ 381,290 $ 290,538 Other income 1,856 795 ----------- ----------- 383,146 291,333 ----------- ----------- Materials, supplies, labor and other manufacturing costs 216,534 159,862 Selling, delivery and administrative expenses 132,078 107,357 Depreciation and amortization 10,321 9,179 Interest 5,038 2,186 ----------- ----------- 363,971 278,584 ----------- ----------- Pre-tax income 19,175 12,749 Federal and state income taxes 7,248 4,819 Equity in net income of unconsolidated affiliate 336 0 ----------- ----------- Net income $ 12,263 $ 7,930 =========== =========== Net income per common share $0.21 $0.14 =========== =========== Weighted average number of shares outstanding used in calculation of net income per common share 57,948,022 57,426,161 Cash dividends paid per common share $0.1525 $0.1425 =========== ===========
(See Accompanying Notes to Consolidated Financial Statements) -6- FLOWERS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (000's Omitted) For the 24 Weeks Ended -------------------------- December 14, December 16, 1996 1995 ----------- ----------- Cash flows from operating activities: Cash received from customers $ 654,627 $555,744 Interest received 561 269 Sale of distributor notes receivable 65,954 0 Other 2,306 1,371 --------- -------- Cash provided by operating activities: 723,448 557,384 --------- -------- Cash paid to suppliers and employees 697,211 547,147 Interest paid 12,933 5,077 Income taxes paid 23,644 12,269 --------- -------- Cash disbursed from operating activities 733,788 564,493 --------- -------- Net cash flow from operating activities (See Schedule 1) (10,340) (7,109) --------- -------- Cash flows from investing activities: Purchase of property, plant and equipment (37,037) (27,167) Acquisition of businesses 0 (7,311) Divestiture of business 200 1,061 Other (1,692) 396 --------- -------- Net cash disbursed for investing activities (38,529) (33,021) --------- -------- Cash flows from financing activities: Dividends paid (17,725) (16,389) Purchases of treasury stock (146) (570) Increase in short-term notes payable 50,409 0 Increase in long-term notes payable 3,625 27,410 Payments of long-term notes payable (7,361) (1,225) --------- -------- Net cash provided by financing activities 28,802 9,226 --------- -------- Net decrease in cash $ (20,067) $(30,904) ========= ========
(See Accompanying Notes to Consolidated Financial Statements) -7- FLOWERS INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (000's Omitted) For the 24 Weeks Ended ------------------------------ December 14, December 16, Schedule 1 1996 1995 - ------------------------------------------------------------------------- ------------ ------------ Schedule reconciling earnings to net cash flow from operating activities: Net income $ 32,211 $ 15,827 -------- -------- Noncash expenses, revenues, losses and gains included in income: Depreciation and amortization 20,366 18,139 Deferred income taxes 0 (1) Increase in accounts receivable (45,237) (7,362) Increase in inventories (19,740) (3,676) Increase in prepaids (1,396) (690) Decrease in distributor notes receivable 65,954 0 Decrease in accounts payable (31,464) (13,702) Increase (decrease) in accrued taxes and other liabilities 12,015 (15,644) Decrease in deferred distributor income (43,244) 0 Equity in net income of unconsolidated affiliate 195 0 -------- -------- $(10,340) $ (7,109) ======== ======== Schedule 2 - ------------------------------------------------------------------------- Schedule of noncash financing activities: Common stock received in connection with the exercise of employee stock options $ 501 $ 1,007 ======== ======== Stock issued and held in escrow in connection with Restricted Stock Awards $ 94 $ 3,004 ======== ======== Exercise of Equity Incentive Awards $ 2,365 $ 1,653 ======== ======== Stock released from acquisition escrow $ 2,565 $ 0 ======== ======== Note receivable from divestiture of business $ 1,311 $ 2,500 ======== ======== Stock issued for acquisition $ 4,000 $ 1,119 ======== ========
(See Accompanying Notes to Consolidated Financial Statements) -8- FLOWERS INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of December 14, 1996 and June 29, 1996, the results of operations for the twelve and twenty- four weeks ended December 14, 1996 and December 16, 1995 and statement of cash flows for the twenty-four weeks ended December 14, 1996 and December 16, 1995. 2. The results of operations for the twelve and twenty-four week periods ended December 14, 1996 and December 16, 1995, are not necessarily indicative of the results to be expected for a full year. 3. During September 1996, the Company accrued for certain claims by the Internal Revenue Service ("IRS"), relating primarily to the Company's independent distributor program. The IRS asserted that the independent distributor program generated ordinary income upon the initial sale of the territory. In a related, but separate transaction, on September 20, 1996, the Company sold $66,000,000 of notes receivable from independent distributors to a financial institution. Of the $66,000,000 of notes sold, $44,000,000 was initially without recourse to the Company with the remaining $22,000,000 having limited recourse. Concurrently, approximately $43,000,000 of deferred income was recognized by the Company. The Company acts as a servicing agent for the financial institution and is entitled to receive a fee for these services. 4. Net Income Per Common Share - Net income per common share is computed by dividing (a) net income by (b) the average number of common shares outstanding, increased by common equivalent shares (options and Restricted Shares) determined using the treasury stock and if converted methods. -9- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources: The Company's working capital increased $7,056,000 to $55,535,000 at the end of the second quarter of fiscal 1997, with cash and temporary investments decreasing to $4,972,000 from $25,039,000 at June 29, 1996. The working capital increase is due primarily to increased receivables as a result of sales increases, particularly in the new Mrs. Smith's pie business acquired during the fourth quarter of fiscal 1996. The decrease in cash and temporary investments was primarily due to cash expended for capital projects throughout the Company. At the end of the second quarter of fiscal 1997, the Company had a total of $107,000,000 borrowed under a five-year $300,000,000 syndicated loan facility. Also, currently outstanding are $125,000,000 of long-term Senior Notes issued through a private placement completed during the third quarter of fiscal 1996. During the second quarter of fiscal 1997, the Company entered into a short-term $50,000,000 Commercial Paper program to finance the seasonal build-up of frozen inventory. Borrowings outstanding under this program at December 14, 1996 were $50,000,000. During the first quarter of fiscal 1997, the Company sold $66,000,000 of distributor notes receivable to a financial institution. The proceeds from this sale were used to pay a portion of the Company's debt outstanding at that time. Dividends paid per share increased 7% to $.1525 in the second quarter of fiscal 1997 from $.1425 paid in the second quarter of fiscal 1996. Results of Operations: Sales increased 26% to $704,000,000 in the first half of fiscal 1997 as compared with the first half of fiscal 1996. Acquisitions consummated subsequent to the second quarter of fiscal 1996 contributed approximately two-thirds of the increase, while increased volume of 8%, exclusive of the acquisitions was also a factor in the sales increase. Sales increased 31% to $381,290,000 in the second quarter of fiscal 1997 as compared with the second quarter of fiscal 1996. Acquisitions consummated subsequent to the second quarter of fiscal 1996 and increased internal volume growth of approximately 8% were factors in the sales increase. Pre-tax income increased 105% to $52,100,000 and 50% to $19,175,000 in the first half and second quarter of fiscal 1997, respectively. The sale of the distributor notes receivable during the first quarter as discussed above generated $43,244,000 of pre-tax income during the first half of the year. The sale of these notes was necessitated by the Company's decision to settle claims by the Internal Revenue Service that the notes constituted current rather than deferred income. The gain generated by the sale of the notes was partially offset primarily by approximately $19,000,000 of expenses relating to the Internal Revenue Service audit and the write-down of certain idle facilities. Operationally, income for the first half and second quarter of fiscal 1997 was positively impacted by the new Mrs. Smith's pie business, which the Company acquired during the fourth quarter of fiscal 1996, as well as sales and volume gains at the remainder of the Company's operations. The income increase was partially offset by higher raw material costs, particularly flour, the Company's primary raw material. -10- PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Shareholders was held October 18, 1996 in Thomasville, Georgia for the following purposes: (1) To elect four (4) members to the Board of Directors to serve for three years or until their successors shall be elected and shall have qualified: For Withheld Joe E. Beverly 50,418,508 458,597 Russell M. Fryar 50,404,364 472,741 Amos R. McMullian 50,403,448 473,657 J. V. Shields, Jr. 50,402,910 474,195 (2) To consider and act upon a proposal to select Price Waterhouse LLP as independent accountants for the Company for fiscal 1997: For 50,743,799 Against 27,185 Abstain 106,122 Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 11 - Computation of Earnings Per Common Share. (Pages 12 and 13) (b) Exhibit 27 - Financial Data Schedule. (Page 14) (c) Reports on Form 8-K No reports on Form 8-K were filed by the Company for the second quarter ended December 14, 1996. -11- Exhibit 11 FLOWERS INDUSTRIES, INC. COMPUTATION OF NET INCOME PER SHARE (000's Omitted except share data) For the 24 Weeks Ended --------------------------------- December 14, December 16, 1996 1995 ------------ ------------ Net income for net income per common share $ 32,211 $ 15,827 ========== ========== Number of shares used in calculation of per common share data: Weighted average number of common shares outstanding during the period 58,589,507 57,814,915 Add (Deduct) - Shares issuable upon exercise of employee stock options based on quarter-end market price 294,223 155,729 Shares issuable upon award of performance shares and restricted stock award based on quarter-end market price (1,067,986) (672,173) ---------- ---------- Weighted average number of shares used in calculation of net income per common share 57,815,744 57,298,471 ========== ========== Net income per common share $ 0.56 $ 0.28 ========== ==========
(See Accompanying Notes to Consolidated Financial Statements) -12- Exhibit 11 FLOWERS INDUSTRIES, INC. COMPUTATION OF NET INCOME PER SHARE (000's Omitted except share data) For the 12 Weeks Ended -------------------------------- December 14, December 16, 1996 1995 ------------ ----------- Net income for net income per common share $ 12,263 $ 7,930 ========== ========== Number of shares used in calculation of per common share data: Weighted average number of common shares outstanding during the period 58,632,103 57,913,335 Add (Deduct) - Shares issuable upon exercise of employee stock options based on quarter-end market price 305,021 151,911 Shares issuable upon award of performance shares and restricted stock award based on quarter-end market price (989,102) (639,085) ---------- ---------- Weighted average number of shares used in calculation of net income per common share 57,948,022 57,426,161 ========== ========== Net income per common share $ 0.21 $ 0.14 ========== ==========
(See Accompanying Notes to Consolidated Financial Statements) -13- 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 thereunto duly authorized. FLOWERS INDUSTRIES, INC. /s/ Amos R. McMullian By: Amos R. McMullian Chairman of the Board /s/ Russell M. Fryar By: Russell M. Fryar Vice President, Treasurer and Chief Accounting Officer January 17, 1997 Date -14- EX-27 2
5 This schedule contains summary financial information extracted from the Flowers Industries, Inc. Consolidated Statement of Income for the twelve and twenty-four weeks ended December 14, 1996 and the Flowers Industries, Inc. Consolidated Balance Sheet at December 14, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 YEAR 3-MOS JUN-28-1997 JUN-28-1997 JUN-30-1996 SEP-22-1996 DEC-14-1996 DEC-14-1996 4,972 4,972 0 0 161,735 161,735 0 0 88,173 88,173 273,311 273,311 724,606 724,606 284,574 284,574 857,224 857,224 217,776 217,776 0 0 0 0 0 0 36,932 36,932 285,021 285,021 857,224 857,224 704,000 381,290 745,347 383,146 398,806 216,534 693,247 363,971 0 0 0 0 12,485 5,038 52,100 19,175 19,694 7,248 0 0 0 0 0 0 0 0 32,211 12,263 0.56 0.21 0.56 0.21
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