-----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, JQ4U4ZuFTh85xgb+onwU/zu3Df13y9voCEvN2NyOzhWOgJedEop0qruChLyQ4rhY uHcQSImr4AZWQFrvM9AC3A== 0000907098-96-000071.txt : 19960816 0000907098-96-000071.hdr.sgml : 19960816 ACCESSION NUMBER: 0000907098-96-000071 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960531 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960814 SROS: NYSE 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09787 FILM NUMBER: 96612185 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 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D C 20549 FORM 8-K(A) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): August 14, 1996 (May 31, 1996) Flowers Industries, Inc. Georgia 1-9787 58-0244940 (State or Other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification No.) Incorporation) U. S. Highway 19, P O Box 1338, Thomasville, Georgia 31799 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) 912/226-9110 Exhibit index is on page 2 Item 7. Financial Statements and Exhibits Item 7 of the Form 8K of Flowers Industries, Inc., dated June 13, 1996 is hereby amended in its entirety as follows: (a) Financial statements of business acquired. The following financial statements of Mrs. Smith's, Inc. as of April 30, 1996 and for the year ended April 30, 1996, which are required by Item 7, are attached as Exhibit 99(a): Report of independent auditors Balance sheet Statement of operations Statement of cash flows Notes to financial statements The financial information in these financial statements has been audited by Ernst & Young LLP, independent public accountants, in accordance with established professional standards and procedures as set forth in the Report of Independent Auditors which is attached as part of Exhibit 99(a). (b) Unaudited pro forma financial information. The following unaudited pro forma financial information for the thirty-six week fiscal period ended March 9, 1996, and the fiscal year ended July 1, 1995, which is required by Item 7, is attached as Exhibit 99(b): Flowers Industries, Inc. Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet at March 9, 1996 Flowers Industries, Inc. Unaudited Pro Forma Condensed Consolidated Combined Statements of Income for the year ended July 1, 1995 and the thirty-six weeks ended March 9, 1996 The accompanying Unaudited Pro Forma Condensed Consolidated Combined Financial Information gives effect to the acquisition by Flowers Industries, Inc. ("Flowers") of the trademark and certain other intangible assets of Mrs. Smith's, Inc. (Mrs. Smith's) as well as the lease of certain property from The J.M. Smucker Company. The Unaudited Pro Forma Condensed Consolidated Combined Statement of Income for the year ended July 1, 1995 and the thirty-six weeks ended March 9, 1996 present the pro forma combined results assuming that the acquisition occurred at the beginning of the periods presented. The Unaudited Pro Forma Consolidated Combined Balance Sheet at March 9, 1996 presents the pro forma combined financial position of Flowers assuming the acquisition had occurred at that date. The unaudited pro forma financial information is provided for informational purposes only and does not purport to be indicative of the future results or financial position of Flowers or what the results of operations or financial position would have been had the acquisition been effected on the dates indicated. This information should be read in conjunction with the historical financial statements of Flowers and Mrs. Smith's. (c)Exhibits 23 Consent of Ernst and Young LLP 99(a) Mrs. Smith's, Inc. financial statements as of and for the year ended April 30, 1996 99(b) Flowers Industries, Inc. pro forma condensed consolidated combined financial statements SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FLOWERS INDUSTRIES, INC. Date: August 14, 1996 By: /s/ C Martin Wood III C Martin Wood III Senior Vice President and Chief Financial Officer EX-23 2 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-91198) pertaining to the Flowers Industries, Inc. 401(k) Retirement Savings Plan filed April 13, 1995, and in the Registration Statements on Form S-8 and Form S-3 (No. 33-34855) for the Flowers Industries, Inc. 1982 Incentive Stock Option Plan and the Flowers Industries, Inc. 1989 Executive Stock Incentive Plan dated May 18, 1990, of our report dated May 23,1996, with respect to the financial statements of Mrs. Smith's, Inc. for the year ended April 30, 1996, included in Flowers Industries Inc.'s Current Report on Form 8-K dated August 14, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Philadelphia, Pennsylvania August 9, 1996 EX-99.(A) 3 Report of Independent Auditors Board of Directors and Shareholders The J.M. Smucker Company We have audited the accompanying balance sheet of Mrs. Smith's, Inc. as of April 30, 1996, and the related statements of operations and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mrs. Smith's, Inc. as of April 30, 1996, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/ERNST & YOUNG LLP May 23, 1996 Mrs. Smith's, Inc. Balance Sheet April 30, 1996 (Dollars In Thousands) Assets Current assets: Cash $ 474 Trade receivables, net 8,934 Inventories: Finished products 14,673 Raw materials, containers, and supplies 12,012 26,685 Deferred federal income taxes 1,378 Intercompany receivable from the J.M. Smucker Company 940 Other receivables 682 Prepaid expenses 306 State income taxes receivable 220 Noncompete agreement 183 Total current assets 39,802 Property, plant, and equipment: Land and land improvements 955 Buildings and fixtures 10,144 Machinery and equipment 25,305 Construction in progress 1,888 38,292 Accumulated depreciation (6,320) Total property, plant, and equipment 31,972 Other noncurrent assets: Notes receivable--employees 632 Trademark, net of accumulated amortization of $1,427 25,973 Goodwill, net of accumulated amortization of $447 8,133 Total other noncurrent assets 34,738 $106,512 Liabilities and shareholder's equity Current liabilities: Accounts payable $ 4,671 Salaries, wages, and additional compensation 1,579 Accrued marketing and merchandising 4,564 Accrued product returns 261 Accrued expenses 52 Total current liabilities 11,127 Noncurrent liabilities: Note payable to The J.M. Smucker Company 46,016 Intercompany payable to The J.M. Smucker Company 34,945 Deferred federal income taxes 3,038 Deferred retirement benefits 94 Total noncurrent liabilities 84,093 Shareholder's equity: Common shares--no par value: Authorized--750 shares; outstanding--100, at stated value (one dollar) -- Additional capital 10,000 Retained income 1,292 Total shareholder's equity 11,292 $106,512
See accompanying notes. Mrs. Smith's, Inc. Statement of Operations Year ended April 30, 1996 (Dollars In Thousands) Net sales $113,205 Cost of products sold 72,563 Gross profit 40,642 Selling, distribution, and administrative expenses 34,193 Operating income 6,449 Other expense--net 884 Interest expense 3,244 Income before income taxes 2,321 Provision for income taxes 943 Net income $ 1,378
See accompanying notes. Mrs. Smith's, Inc. Statement of Cash Flows Year ended April 30, 1996 (Dollars In Thousands) Operating activities Net income $ 1,378 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization 4,140 Deferred income taxes 1,663 Loss on sale of equipment 17 Changes in assets and liabilities: Trade receivables 214 Inventories (2,003) Other current assets (4,942) Accounts payable and accrued items (6,651) Net cash used for operating activities (6,184) Investing activities Additions to property, plant, and equipment (4,826) Proceeds from sale of property, plant, and equipment 21 Net cash used for investing activities (4,805) Financing activities Advances from The J.M. Smucker Company 10,930 Net cash provided from financing activities 10,930 Net decrease in cash and cash equivalents (59) Cash and cash equivalents at beginning of year 533 $ 474
See accompanying notes. Mrs. Smith's, Inc. Notes to Financial Statements April 30, 1996 1. Sale of the Business Mrs. Smith's, Inc. (the Company), a wholly owned subsidiary of The J.M. Smucker Company, manufactures and markets branded frozen pies and pie shells under the Mrs. Smith's brand name and produces aluminum pans for its pie operations and steel magnetic shielding for sale to third parties. The Company, which maintains its headquarters and principal manufacturing facility in Pottstown, Pennsylvania, sells its products primarily in the United States. Effective May 31, 1996, The J.M. Smucker Company completed the sale of the Company to a subsidiary of Flowers Industries, Inc. for a combination of cash, notes receivable, and assumption of certain liabilities. In connection with this divestiture, The J.M. Smucker Company has entered agreements to lease certain property, plant, and equipment of the Company to a Flowers subsidiary called Mrs. Smith's Bakeries Inc. under operating lease agreements. 2. Accounting Policies Inventories The Company values its inventories at the lower of first-in, first-out (FIFO) cost or market, with market considered as replacement value. Intangible Assets The excess of cost over the fair value of net assets acquired and the trademark are being amortized using the straight-line method over 40 years. The Company continually evaluates whether events or circumstances have occurred that would indicate the carrying value may not be recoverable or the useful life warrants revision. When factors indicate that goodwill and other intangible assets should be evaluated for possible impairment, the Company analyzes the future recoverability of the asset using an estimate of the related undiscounted future cash flows of the business, and recognizes any adjustment to its carrying value on a current basis. Property, Plant, and Equipment Property, plant, and equipment are carried at cost with depreciation computed over the estimated useful life by the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Advertising Expense Advertising costs are expensed as incurred. Advertising expense was $4,522,000 in 1996. Income Taxes The Company is included in the consolidated federal income tax return of The J.M. Smucker Company. The amount of income taxes allocated to the Company is based on the amount of taxes determined as if the Company filed a separate return. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Risks and Uncertainties The Company's products are primarily sold through brokers to chain, wholesale, cooperative and independent grocery accounts and other consumer markets. The fruit raw materials used by the Company are generally purchased from independent growers and suppliers. Because of the seasonal volatility of the quantities of most of the crops on which the Company depends, it is necessary to prepare and freeze stocks of fruit and fruit juices and maintain them in cold storage warehouses. The Company believes there is no concentration of risk with any single customer or supplier whose failure or non-performance would materially affect the Company's results. In addition, the Company insures its business and assets against insurable risks in a manner that it deems appropriate. It believes that the risk of loss from noninsurable events would not have a material adverse effect on the Company's operations as a whole. 3. Employee Benefit Plans Defined Benefit Pension Plan: All employees of the Company are covered under The J.M. Smucker Company's pension plan. Benefits are based on the employee's years of service and compensation. The plan is funded in conformity with the funding requirements of applicable government regulations. The costs of the plan have been actuarially determined. No separate determination has been made of the actuarial present value of the accumulated benefits and the plan's net assets as they relate to employees of the Company. Pension expense, as allocated to the Company, was $49,000 for the year ended April 30, 1996. Savings Plan: The J.M. Smucker Company also sponsors an employee savings plan under Section 401(k) of the Internal Revenue Code for all employees not covered by collective bargaining agreements. The contributions made by The J.M. Smucker Company under the plan are based on a specified percentage of employee contributions. The charge to operations for this plan, as allocated to the Company, was $144,000 for the year ended April 30, 1996. Deferred Retirement Benefit Plan: In addition to providing pension benefits, The J.M. Smucker Company sponsors an unfunded defined postretirement plan which provides health care and life insurance benefits to substantially all active and retired, domestic, nonrepresented employees, and their covered dependents and beneficiaries. The plan is contributory, with retiree contributions adjusted periodically, and contains other cost-sharing features, such as deductibles and coinsurance. Covered employees generally are eligible for these benefits when they have reached age 55 and attained 10 years of service. The costs of the plan have been actuarially determined. No separate determination has been made of the actuarial present value of accumulated benefits as they relate to employees of the Company. 4. Related Party Transactions Intercompany charges for the year ended April 30, 1996 were as follows: Cost of products sold $ 7,329,000 Selling, distribution, and administrative expenses 7,841,000 Interest expense 3,244,000 State income taxes 231,000 Other 2,212,000 $20,857,000
5. Leases The Company leases certain land, buildings, equipment, and cold storage facilities under operating leases which primarily are one year in duration and contain annual renewal options. Rental expense in 1996 totaled $3,987,000, including charges based on quantities stored amounting to $970,000. 6. Income Taxes Significant components of the Company's deferred tax assets and liabilities at April 30, 1996 are as follows: Deferred tax liabilities: Depreciation $3,048,000 Goodwill 482,000 Other 118,000 Total deferred tax liabilities 3,648,000 Deferred tax assets: Vacation 236,000 Trademark 466,000 Coupon accrual 664,000 Inventory capitalization 226,000 Package design costs 239,000 Noncompete amortization 130,000 Other 27,000 Total deferred tax assets 1,988,000 Net deferred tax liabilities $1,660,000
Significant components of the provision for income taxes are as follows: 1996 Current: Federal $ (951,000) State and local 231,000 Deferred 1,663,000 $ 943,000
A reconciliation of the statutory federal income tax rate and the effective tax rate follows: 1996 Statutory federal income tax rate 35% Increase in income taxes resulting from state and local income taxes, net of federal income tax benefit 6 Effective income tax rate 41% Estimated state income taxes paid $631,000
EX-99.(B) 4 Flowers Industries, Inc. Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet At March 9, 1996 (Amounts in thousands) Flowers Mrs. Smith's Pro Forma Pro Forma March 9, 1996 January 31, 1996 Adjustments Combined Historical Historical ASSETS Current assets Cash and temporary investments $ 6,865 $ (1,233) $ 1,233 $ 6,865 Accounts Receivable 104,482 12,780 (12,780) 104,482 Inventories 59,427 21,322 (21,322) 59,427 Prepaid expenses and other 5,973 181 (181) 5,973 Deferred income taxes 9,285 9,285 186,032 33,050 (33,050) 186,032 Property, Plant and Equipment Land 22,774 955 (955) 22,774 Buildings 154,866 9,990 (9,990) 154,866 Machinery and equipment 376,710 20,704 (20,704) 376,710 Furniture, fixtures and transportation 24,212 2,110 (2,110) 24,212 equipment Construction in progress 100,494 3,243 (3,243) 100,494 679,056 37,002 (37,002) 679,056 Less: accumulated depreciation (287,173) (5,504) 5,504 (287,173) 391,883 31,498 (31,498) 391,883 Other Assets and Deferred Charges Notes receivable from distributors 60,751 60,751 Investment in unconsolidated affiliate 62,054 62,054 Other long-term assets 23,861 866 (866) 23,861 146,666 866 (866) 146,666 Cost in excess of net tangible assets 11,690 36,580 (36,580) 11,690 30,000 30,000 Less: accumulated amortization (1,215) (393) 393 (1,215) 10,475 36,187 (6,187) 40,475 $735,056 $101,601 $(71,601) $765,056 LIABILITIES Notes payable $ 5,784 $ 5,784 Obligations under capital leases 1,559 1,559 Accounts payable 57,701 $ 4,340 $ (4,340) 57,701 Accrued taxes other than income taxes 3,201 3,201 Income taxes 5,293 (1,573) 1,573 5,293 Accrued compensation , interest and other liabilities 55,261 10,056 (10,056) 55,261 128,799 12,823 (12,823) 128,799 Long-term notes payable 198,909 30,000 228,909 Obligations under capital leases 2,268 2,268 Industrial revenue bonds 17,920 17,920 Deferred income taxes 41,818 1,344 (1,344) 41,818 Deferred income 41,708 41,708 Intercompany payable and other 76,991 (76,991) COMMON STOCK Par value 36,932 1 (1) 36,932 Capital in excess of par value 54,899 10,000 (10,000) 54,899 Retained earnings 233,359 442 (442) 233,359 Less: common stock in treasury (13,805) (13,805) Less: restricted stock award and executive incentive award (7,751) (7,751) 303,634 10,443 (10,443) 303,634 $735,056 $101,601 $(71,601) $765,056
[FN] Elimination of all assets not acquired, liabilities not assumed and Mrs. Smith's equity. Represents addition of the Mrs. Smith's, Inc. trademark and other intangible assets valued at $30,000,000. Represents a note payable to The J.M. Smucker Company for $15,000,000 and an increase in Flowers line of credit borrowings of $15,000,000. FLOWERS INDUSTRIES, INC. Unaudited Pro Forma Condensed Consolidated Combined Statement of Income For the year ended July 1, 1995 (in thousands, except per share data) Flowers Mrs. Smith's Pro Forma Pro Forma July 1, 1995 April 30, 1995 Adjustments Combined Historical Historical Sales $1,129,203 $120,258 $1,249,461 Other Income 10,751 1,853 12,604 1,139,954 122,111 1,262,065 Materials, Supplies, labor and other manufacturing costs 599,416 77,725 $3,000 680,141 Selling, delivery and administration expense 428,833 33,604 462,437 Depreciation and amortization 36,604 3,944 (944) 37,367 763 (3,000) Interest 7,086 3,988 1,140 9,099 873 (3,988) 1,071,939 119,261 (2,156) 1,189,044 Income before taxes 68,015 3,579 2,156 73,021 Federal and state income taxes 25,714 1,435 815 27,964 Net income 42,301 2,144 1,341 45,057 Net income per common share 0.75 0.03 0.01 0.79 Weighted average number of shares outstanding used in calculation of net income per common share 56,868 56,868 56,868 56,868
[FN] Represents increase in lease expense as a result of the operating lease of certain assets of Mrs. Smith's. Reduction of Mrs. Smith's goodwill amortization previously recorded. Represents increase in Flowers amortization as a result of the acquisition of Mrs. Smith's trademark and other intangible assets. Decrease in Mrs. Smith's fixed asset depreciation. Increase in interest expense resulting from a note payable to The J.M. Smucker Company. Increase in interest expense resulting from an increase in Flowers line of credit borrowing. Elimination of Mrs. Smith's, Inc. intercompany interest expense. FLOWERS INDUSTRIES, INC. Unaudited Pro Forma Condensed Consolidated Combined Statement of Income For the thirty-six weeks ended March 9, 1996 (in thousands, except per share data) Flowers Mrs. Smith's Pro Forma Pro Forma March 9, 1996 January 31, 1996 Adjustments Combined Historical Historical Sales $835,225 $108,266 $943,491 Other Income 3,842 1,504 5,346 839,067 109,770 948,837 Materials, supplies, labor and other manufacturing costs 453,258 80,887 $2,250 536,395 Selling, delivery and administrative expense 315,941 23,251 339,192 Depreciation and amortization 27,644 2,958 (788) 28,137 573 (2,250) Interest 7,644 3,027 855 9,154 655 (3,027) 804,487 110,123 (1,732) 912,878 Income (loss) before taxes 34,580 (353) 1,732 35,959 Federal and state income tax (benefit) 13,071 (140) 655 13,586 Net income (loss) $21,509 $ (213) $1,077 $ 22,373 Net income per common share $ 0.38 $ 0.00 $ 0.01 $ 0.39 Weighted average number of shares outstanding used in calculation of net income per common share 57,333 57,333 57,333 57,333
[FN] Represents increase in lease expense as a result of the operating lease of certain assets of Mrs. Smith's. Reduction of Mrs. Smith's goodwill amortization previously recorded. Represents increase in Flowers amortization as a result of the acquisition of Mrs. Smith's trademark and other intangible assets. Decrease in Mrs. Smith's fixed asset depreciation. Increase in interest expense resulting from a note payable to The J.M. Smucker Company. Increase in interest expense resulting from an increase in Flowers line of credit borrowing. Elimination of Mrs. Smith's, Inc. intercompany interest expense. -----END PRIVACY-ENHANCED MESSAGE-----