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 OCTOBER 7, 2000
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 NOVEMBER 14, 2000: 85,016,219.
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
<TABLE>
KEEBLER FOODS COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
OCTOBER 7, 2000 January 1, 2000
------------------ ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,469 $ 20,717
Trade accounts and notes receivable, net 52,367 65,052
Inventories, net:
Raw materials 28,120 34,243
Package materials 17,170 13,907
Finished goods 137,273 126,954
Other 2,080 1,176
------------------ ------------------
184,643 176,280
Deferred income taxes 34,668 46,252
Other 38,583 27,278
------------------ ------------------
Total current assets 330,730 335,579
.
PROPERTY, PLANT AND EQUIPMENT, NET 610,337 553,031
GOODWILL, NET 527,611 370,188
TRADEMARKS, TRADE NAMES AND OTHER INTANGIBLES, NET 239,177 211,790
PREPAID PENSION 30,914 33,240
ASSETS HELD FOR SALE 1,159 6,662
OTHER ASSETS 17,140 17,693
------------------ ------------------
Total assets $ 1,757,068 $ 1,528,183
================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
2
</TABLE>
<PAGE>
<TABLE>
KEEBLER FOODS COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
OCTOBER 7, 2000 January 1, 2000
------------------ ------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 50,660 $ 37,283
Trade accounts payable 146,750 147,862
Other liabilities and accruals 237,406 237,447
Income taxes payable 1,138 23,603
Plant and facility closing costs and severance 12,232 11,290
------------------ ------------------
Total current liabilities 448,186 457,485
LONG-TERM DEBT 546,104 419,160
OTHER LIABILITIES:
Deferred income taxes 127,544 124,389
Postretirement/postemployment obligations 63,546 64,383
Plant and facility closing costs and severance 7,397 12,062
Deferred compensation 26,312 24,581
Other 20,398 16,808
------------------ ------------------
Total other liabilities 245,197 242,223
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
86,348,001 and 84,655,874 shares issued, respectively) 863 846
Additional paid-in capital 207,492 182,686
Retained earnings 349,238 255,813
Treasury stock (40,012) (30,030)
------------------ ------------------
Total shareholders' equity 517,581 409,315
------------------ ------------------
Total liabilities and shareholders' equity $ 1,757,068 $ 1,528,183
================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
3
</TABLE>
<PAGE>
<TABLE>
KEEBLER FOODS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<CAPTION>
TWELVE Twelve FORTY Forty
WEEKS ENDED Weeks Ended WEEKS ENDED Weeks Ended
OCTOBER 7, 2000 October 9, 1999 OCTOBER 7, 2000 October 9, 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET SALES $ 642,203 $ 615,844 $ 2,111,635 $ 2,055,724
COSTS AND EXPENSES:
Cost of sales 254,237 261,244 870,967 899,296
Selling, marketing and administrative expenses 301,752 284,375 983,999 952,066
Other 10,569 7,265 20,797 22,025
Restructuring and impairment charge - - (996) 69,208
--------------- --------------- --------------- ---------------
INCOME FROM OPERATIONS 75,645 62,960 236,868 113,129
Interest (income) (1,517) (249) (3,002) (1,190)
Interest expense 11,568 7,346 37,189 29,687
--------------- --------------- --------------- ---------------
INTEREST EXPENSE, NET 10,051 7,097 34,187 28,497
--------------- --------------- --------------- ---------------
INCOME BEFORE INCOME TAX EXPENSE 65,594 55,863 202,681 84,632
Income tax expense 24,644 23,742 80,767 41,204
--------------- --------------- --------------- ---------------
NET INCOME $ 40,950 $ 32,121 $ 121,914 $ 43,428
=============== =============== =============== ===============
BASIC NET INCOME PER SHARE $ 0.48 $ 0.38 $ 1.44 $ 0.52
WEIGHTED AVERAGE SHARES OUTSTANDING 84,994 83,708 84,365 83,785
DILUTED NET INCOME PER SHARE $ 0.46 $ 0.37 $ 1.39 $ 0.50
WEIGHTED AVERAGE SHARES OUTSTANDING 88,240 87,423 87,728 87,741
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
4
</TABLE>
<PAGE>
<TABLE>
KEEBLER FOODS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
FORTY Forty
WEEKS ENDED Weeks Ended
OCTOBER 7, 2000 October 9, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES
Net income $ 121,914 $ 43,428
Adjustments to reconcile net income to cash from
operating activities:
Depreciation and amortization 72,547 62,651
Deferred income taxes 22,367 (11,018)
(Gain) loss on sale of property, plant and equipment (1,623) 249
Gain on sale of value brands assets (5,700) -
Restructuring and impairment charge (615) 46,071
Income tax benefit related to stock options exercised 18,875 8,838
Changes in assets and liabilities:
Trade accounts and notes receivable, net 10,890 (35,241)
Inventories, net (211) (10,853)
Income taxes payable (21,329) (4,651)
Other current assets (10,202) (7,827)
Trade accounts payable and other current liabilities (17,313) 27,016
Plant and facility closing costs and severance (17,592) 11,554
Other, net 2,819 7,622
------------------ ------------------
Cash provided from operating activities 174,827 137,839
CASH FLOWS USED BY INVESTING ACTIVITIES
Capital expenditures (53,174) (68,637)
Proceeds from property disposals 8,617 2,833
Purchase of Sesame Street license (10,000) -
Proceeds from sale of value brands assets 17,000 -
Purchase of Austin Quality Foods, Inc., net of cash acquired (253,797) -
------------------ ------------------
Cash used by investing activities (291,354) (65,804)
CASH FLOWS PROVIDED FROM (USED BY) FINANCING ACTIVITIES
Purchase of treasury stock (9,982) (21,350)
Exercise of employee stock options 5,948 2,741
Proceeds from receivables securitization 13,000 125,000
Long-term debt repayments (34,198) (103,861)
Revolving facility, net 170,000 (77,800)
Dividends paid (28,489) -
------------------ ------------------
Cash provided from (used by) financing activities 116,279 (75,270)
------------------ ------------------
Decrease in cash and cash equivalents (248) (3,235)
Cash and cash equivalents at beginning of period 20,717 23,515
------------------ ------------------
Cash and cash equivalents at end of period $ 20,469 $ 20,280
================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
5
</TABLE>
<PAGE>
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(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.
FISCAL YEAR
Keebler's fiscal year consists of thirteen four week periods (fifty-two or
fifty-three 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. ACQUISITION OF AUSTIN QUALITY FOODS, INC.
On March 6, 2000, Keebler Foods Company ("Keebler") acquired Austin Quality
Foods, Inc. ("Austin") from R&H Trust Co. (Jersey) Limited, as Trustee, HB
Marketing & Franchising L.P., 697163 Alberta Ltd., and William C. Burkhardt, for
a purchase price, net of cash acquired, of $253.7 million, excluding related
fees and expenses paid of approximately $3.0 million. The acquisition of Austin
was a cash transaction funded with approximately $235.0 million from borrowings
under the $700.0 million Senior Credit Facility Agreement dated as of September
28, 1998, and the remainder from cash received on additional sales of accounts
receivable under Keebler's Receivables Purchase Agreement.
The acquisition of Austin by Keebler has been accounted for as a purchase. The
total purchase price and the fair value of liabilities assumed have been
allocated to the tangible and intangible assets of Austin based on respective
fair values. The acquisition has resulted in an unallocated excess purchase
price over fair value of net assets acquired of $168.5 million, which is being
amortized on a straight-line basis over a forty year period.
Results of operations for Austin from March 6, 2000 to October 7, 2000 have been
included in the consolidated statements of operations. The following unaudited
pro forma information has been prepared assuming the acquisition had taken place
at the beginning of each respective fiscal year reported. The unaudited pro
forma information includes adjustments for interest expense that would have been
incurred related to financing the purchase, additional depreciation of the
property, plant and equipment acquired and amortization of the trademarks, trade
names, other intangibles and goodwill arising from the acquisition. The
unaudited pro forma consolidated results of operations are not necessarily
indicative of the results that would have been reported had the Austin
acquisition been effected on the first day of the year reported.
6
<PAGE>
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. ACQUISITION OF AUSTIN QUALITY FOODS, INC. (CONTINUED)
<TABLE>
<CAPTION>
Unaudited
(IN THOUSANDS EXCEPT PER SHARE DATA) For the Forty Weeks Ended
------------------------------------
October 7, 2000 October 9, 1999
----------------- -----------------
<S> <C> <C>
Net sales....................................................................... $ 2,139,130 $ 2,217,917
Net income...................................................................... $ 117,478 $ 42,148
Diluted net income per share.................................................... $ 1.35 $ .48
</TABLE>
3. ASSETS HELD FOR SALE
On May 2, 2000, the Sayreville, New Jersey manufacturing facility, which had
been held for sale after its closure, was sold for $7.5 million. The sale
resulted in a pre-tax gain of approximately $2.0 million, which was recorded in
other income during the first half of the year. Disposition of the remaining
assets held for sale is expected to occur within the next thirty-three months
without a significant gain or loss.
4. DEBT
Long-term debt consisted of the following at October 7, 2000:
<TABLE>
<CAPTION>
(IN THOUSANDS) Interest Rate Final Maturity OCTOBER 7, 2000
------------------ ----------------------- ------------------
<S> <C> <C> <C>
Revolving Facility.................................. 6.845% September 28, 2004 $ 170,000
Term Facility....................................... 6.827% September 28, 2004 287,000
Senior Subordinated Notes........................... 10.750% July 1, 2006 124,400
Other Senior Debt................................... Various 2001-2005 8,840
Capital Lease Obligations........................... Various 2002-2042 6,524
------------------
596,764
Less: Current maturities............................ 50,660
------------------
Total.......................................... $ 546,104
==================
</TABLE>
On March 6, 2000, Keebler utilized existing credit facilities in order to
finance the acquisition of Austin. The additional borrowings were under the
Revolving Facility, which was originally entered into on September 28, 1998. At
October 7, 2000, the outstanding balance on the Revolving Facility was $170.0
million, with an available balance of $180.0 million.
5. RESTRUCTURING AND IMPAIRMENT CHARGE
In May of 1999, Keebler closed its manufacturing facility in Sayreville, New
Jersey, which resulted in a pre-tax restructuring and impairment charge, in
1999, to operating income of $66.3 million in total. In the second quarter of
2000, the charge was reduced by an adjustment of $1.0 million. The adjustment
related to severance and other exit costs from the facility closure due to
lower-than-expected severance costs and the earlier-than-expected sale of the
facility. The restructuring and impairment charge included $19.2 million for
cash costs related to severance and other exit costs from the Sayreville
facility. The remaining $46.1 million were non-cash charges for asset
impairments related to the Sayreville closing, including write-downs of
property, plant and equipment at Sayreville and equipment at other locations,
and a proportionate reduction of goodwill acquired in the Sunshine Biscuits,
Inc. acquisition in June 1996. Approximately 650 employees were terminated as a
result of the closing of the Sayreville facility, of which approximately 600
employees were represented by unions.
7
<PAGE>
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. RESTRUCTURING AND IMPAIRMENT CHARGE (CONTINUED)
The following table sets forth the activity related to the liabilities accrued
in conjunction with the restructuring and impairment charge:
<TABLE>
<CAPTION>
(IN THOUSANDS) January 1, 2000 Provision Spending Adjustment OCTOBER 7, 2000
------------------ ------------ ------------ -------------- -------------------
<S> <C> <C> <C> <C> <C>
Severance................. $ 2,037 $ - $ (1,196) $ (140) $ 701
Facility closure.......... 2,567 - (852) (1,556) 159
Other..................... 1,717 - 56 700 2,473
------------------ ------------ ------------ -------------- -------------------
Total................. $ 6,321 $ - $ (1,992) $ (996) $ 3,333
================== ============ ============ ============== ===================
</TABLE>
At October 7, 2000, $3.2 million remained for plant and facility closing costs
and severance accruals and $.1 million for other liabilities and accruals. Only
costs related to the settlement of worker's compensation claims (included in
other above), and health and welfare payments are expected to extend beyond the
year ended December 30, 2000.
6. PLANT AND FACILITY CLOSING COSTS AND SEVERANCE
In conjunction with the March 6, 2000 Austin acquisition, Keebler has recognized
estimated costs pursuant to a plan to exit certain activities of the acquired
company. These exit costs, for which there is no future economic benefit, were
provided for in the purchase price allocation and were equal to $14.5 million.
Spending equal to $8.8 million has occurred through October 7, 2000. Staff
reductions of approximately 80 non-union employees are expected as part of the
exit plan. Approximately 75 employees had been terminated at October 7, 2000.
The remaining terminations are expected to occur by February 23, 2001. Spending
on exit costs is expected to be substantially complete before the end of 2001,
with primarily health and welfare payments extending beyond that timeframe.
During 1998, as part of acquiring President International, Inc. ("President"),
Keebler provided for $12.8 million in exit costs in the allocation of the
purchase price. At January 1, 2000, there remained $7.4 million in reserves of
which $2.8 million was spent during the first three quarters of 2000. There were
260 employees at January 1, 2000, still expected to be terminated as part of the
exit plan, of which approximately 175 were represented by a union. Throughout
the first forty weeks of 2000, approximately 150 employees under union contract
and approximately 35 employees not under union contract had been terminated. The
remaining terminations are scheduled to occur in the fourth quarter of 2000.
In the second quarter of the current year, Keebler adjusted accruals previously
established in the accounting for the Keebler and Sunshine acquisitions by
reducing goodwill and other intangibles by $0.5 million and $1.1 million,
respectively, to recognize exit costs that are now expected to be less than
initially anticipated.
8
<PAGE>
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. PLANT AND FACILITY CLOSING COST AND SEVERANCE (CONTINUED)
The following table sets forth the activity in Keebler's plant and facility
closing costs and severance liabilities exclusive of the liabilities resulting
from the restructuring and impairment charge recorded during 1999:
<TABLE>
<CAPTION>
January 1, OCTOBER 7,
(IN THOUSANDS) 2000 Provision Spending Adjustment 2000
------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
KEEBLER COMPANY
Severance................... $ 24 $ - $ - $ - $ 24
Facility closure............ 7,829 - (1,430) (500) 5,899
------------- ------------ ------------ ------------- -------------
Subtotal................ 7,853 - (1,430) (500) 5,923
------------- ------------ ------------ ------------- -------------
SUNSHINE BISCUITS, INC.
Severance................... $ 63 $ - $ (17) $ - $ 46
Facility closure............ 1,962 - (689) (1,116) 157
------------- ------------ ------------ ------------- -------------
Subtotal................ 2,025 - (706) (1,116) 203
------------- ------------ ------------ ------------- -------------
PRESIDENT INTERNATIONAL, INC.
Severance................... $ 2,829 $ - $ (2,235) $ - $ 594
Facility closure............ 4,596 - (569) - 4,027
Other....................... 10 - (10) - -
------------- ------------ ------------ ------------- -------------
Subtotal................ 7,435 - (2,814) - 4,621
------------- ------------ ------------ ------------- -------------
AUSTIN QUALITY FOODS, INC.
Severance................... $ - $ 13,979 $ (8,398) $ - $ 5,581
Facility closure............ - 479 (408) - 71
Other....................... - 28 (5) - 23
------------- ------------ ------------ ------------- -------------
Subtotal................ - 14,486 * (8,811) - 5,675
------------- ------------ ------------ ------------- -------------
Total................. $ 17,313 $ 14,486 $ (13,761) $ (1,616) $ 16,422
============= ============ ============ ============= =============
* Recorded as part of the purchase price allocation.
</TABLE>
7. SEGMENT INFORMATION
Keebler has adopted Statement of Financial Standards No. 131 "Disclosures about
Segments of an Enterprise and Related Information" for reporting segment
information. Keebler's reportable segments are Branded and Specialty. The
reportable segments were determined using Keebler's method of internal
reporting, which divides and analyzes the business by sales channel. The nature
of the customers, products and method of distribution can vary by sales channel.
The reportable segments represent an aggregation of similar sales channels. The
Branded segment is comprised of sales channels that principally market brand
name cookie and cracker products to retail outlets. Either a Keebler sales
employee or a distributor sells products in the Branded segment. The sales
channels in the Specialty segment primarily sell cookie, cracker and brownie
products that are manufactured on a made-to-order basis or that are produced in
individual packs to be used in various institutions (i.e., restaurants,
hospitals, etc.), as well as cookies manufactured for the Girl Scouts of the
U.S.A. Many of the products sold by the Specialty segment are done so through
the use of brokers.
9
<PAGE>
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. SEGMENT INFORMATION (CONTINUED)
Keebler evaluates the performance of the reportable segments and allocates
resources based on the segment's profit contribution, defined as earnings before
certain functional support costs, amortization, interest and income taxes. While
the accounting policies for each reportable segment are the same as for the
total company, the cost of sales used to determine a segment's profit
contribution is calculated using standard costs for each product, whereas actual
cost of sales is used to determine consolidated income from operations.
There are no intersegment transactions that result in revenue or profit. Asset
information by reportable segment is not presented, as Keebler does not report
or generate such information internally. However, depreciation expense included
in the determination of a segment's profit contribution has been presented. The
depreciation expense for each reportable segment reflects the amount absorbed in
the standard cost of products sold, as well as the depreciation that relates to
assets used entirely by the respective segment. The following table presents
certain information included in the profit contribution of each segment for the
twelve weeks ended October 7, 2000 and October 9, 1999 and the forty weeks ended
October 7, 2000 and October 9, 1999. Prior year amounts have been restated for
reclassifications between reportable segments.
<TABLE>
<CAPTION>
Branded Specialty
Segment Segment Other (a) Total
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
TWELVE WEEKS ENDED OCTOBER 7, 2000:
NET SALES TO EXTERNAL CUSTOMERS............. $ 512,412 $ 129,791 $ - $ 642,203
DEPRECIATION EXPENSE........................ 5,205 2,404 9,475 17,084
PROFIT CONTRIBUTION......................... 92,896 23,108 - 116,004
TWELVE WEEKS ENDED OCTOBER 9, 1999:
Net sales to external customers............. $ 479,598 $ 136,246 $ - $ 615,844
Depreciation expense........................ 5,297 2,034 7,673 15,004
Profit contribution......................... 83,362 17,759 - 101,121
FORTY WEEKS ENDED OCTOBER 7, 2000:
NET SALES TO EXTERNAL CUSTOMERS............. $ 1,597,553 $ 514,082 $ - $ 2,111,635
DEPRECIATION EXPENSE........................ 19,194 9,216 25,743 54,153
PROFIT CONTRIBUTION......................... 264,305 103,594 - 367,899
FORTY WEEKS ENDED OCTOBER 9, 1999:
Net sales to external customers............. $ 1,533,543 $ 522,181 $ - $ 2,055,724
Depreciation expense........................ 15,804 6,275 25,510 47,589
Profit contribution......................... 240,905 90,148 - 331,053
(a) Represents expenses incurred by the functional support departments that are not allocated to the reportable segments.
</TABLE>
The net sales to external customers from the reportable segments equal the
consolidated net sales of Keebler. A reconciliation of segment profit
contribution to total consolidated income from continuing operations before
income tax expense for the twelve weeks ended October 7, 2000 and October 9,
1999 and the forty weeks ended October 7, 2000 and October 9, 1999 is as
follows:
10
<PAGE>
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
-------------------------------------- ---------------------------------------
OCTOBER 7, 2000 October 9, 1999 OCTOBER 7, 2000 October 9, 1999
----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
INCOME BEFORE INCOME TAX EXPENSE:
Reportable segment's profit contribution.... $ 116,004 $ 101,121 $ 367,899 $ 331,053
Unallocated functional support costs (b).... 40,359 38,161 132,027 148,716
Restructuring and impairment charge......... - - (996) 69,208
Interest expense, net....................... 10,051 7,097 34,187 28,497
----------------- ----------------- ------------------ -----------------
Income before Income Tax Expense......... $ 65,594 $ 55,863 $ 202,681 $ 84,632
================= ================= ================== =================
(b) Includes support costs such as distribution, research and development, corporate administration and other (income) expense,
which are not allocated internally to reportable segments.
</TABLE>
8. SALE OF VALUE BRANDS ASSETS
On January 4, 2000, Keebler sold its Birmingham, Alabama, and North Little Rock,
Arkansas bakeries and the SUNNY and GREGS brands to Consolidated Biscuit
Company. As a result of the sale, Keebler recorded a $5.7 million pre-tax gain
in other income during the first quarter of 2000.
9. INCOME TAXES
During the quarter, Keebler decreased the annual effective tax rate from 41.0%
to 39.8%. The effective tax rate declined due to increased earnings, the
adoption of a change in the tax basis of the assets acquired and liabilities
assumed in the Keebler acquisition, in accordance with the Internal Revenue Code
Section 338, and a satisfactory resolution of certain income tax contingencies.
Partially offsetting the reduction in the effective tax rate was the increase in
intangible amortization expense as a result of the Austin acquisition. The
effective tax rate remains above the federal statutory rate due to nondeductible
expenses, primarily the amortization of intangibles, resulting from the
Sunshine, President and Austin acquisitions.
10. SUBSEQUENT EVENTS
On October 26, 2000, Kellogg Company announced it reached an agreement to
acquire Keebler Foods Company in a transaction entered into with Keebler and
with Flowers Industries, Inc., the majority shareholder of Keebler. Completion
of the merger is subject to customary closing conditions and regulatory
approvals. There can be no assurance that such approvals will be obtained. The
transaction is expected to close during the first quarter of 2001.
On November 7, 2000, the Board of Directors of Keebler declared a quarterly cash
dividend of $0.1125 per common share payable on December 20, 2000, to
stockholders of record on December 6, 2000.
11
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
MATTERS AFFECTING COMPARABILITY
The following discussion of the financial condition and results of
operations for the twelve and forty weeks ended October 7, 2000 and October 9,
1999 should be read in conjunction with Keebler's 1999 annual report on Form
10-K filed with the Securities and Exchange Commission on March 20, 2000.
Keebler's operating results for the forty weeks ended October 7, 2000,
include the operating results of Austin Quality Foods, Inc. ("Austin") from the
acquisition date of March 6, 2000, whereas the comparable period ended October
9, 1999, does not. Keebler's operating results for the forty weeks ended October
7, 2000, do not include the operating results of the Birmingham, Alabama, and
North Little Rock, Arkansas bakeries and the SUNNY and GREGS brands ("the value
brands business"), as these brands were sold to Consolidated Biscuit Company on
January 4, 2000. The comparable forty weeks ended October 9, 1999, includes the
operating results of the value brands business.
RESULTS OF OPERATIONS
Results of operations expressed as a percentage of net sales for the twelve
and forty weeks ended October 7, 2000 and October 9, 1999 are set forth below:
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
-------------------------------------- ------------------------------------
October 7, 2000 October 9, 1999 October 7, 2000 October 9, 1999
------------------ ------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
NET SALES......................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales..................................... 39.6 42.4 41.2 43.7
Selling, marketing and administrative expenses.... 47.0 46.2 46.6 46.3
Restructuring and impairment charge............... - - - 3.4
INCOME FROM OPERATIONS............................ 11.8 10.2 11.2 5.5
Interest Expense, net............................. 1.6 1.1 1.6 1.4
NET INCOME........................................ 6.4% 5.2% 5.8% 2.1%
</TABLE>
Keebler's reportable segments are Branded and Specialty, which were
determined using Keebler's method of internal reporting, which divides and
analyzes the business by sales channel. The reportable segments represent an
aggregation of similar sales channels. We evaluate the performance of the
reportable segments and allocate resources based on the segment's profit
contribution, defined as earnings before certain functional support costs,
amortization, interest and income taxes. While the accounting policies for each
reportable segment are the same as for the total company, the cost of sales used
to determine a segment's profit contribution is calculated using standard costs
for each product, whereas actual cost of sales is used to determine consolidated
income from operations. Prior year numbers have been restated for
reclassifications between reportable segments.
12
<PAGE>
BRANDED SEGMENT
The Branded segment sells a number of well-recognized products, primarily to
retail outlets such as supermarkets, mass merchandisers, warehouse club stores,
convenience stores and drug stores. This segment also imports and distributes
CARR'S crackers in the U.S. under an exclusive long-term licensing and
distribution agreement with United Biscuits.
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
------------------------------------------ -----------------------------------------
October 7, 2000 October 9, 1999 October 7, 2000 October 9, 1999
--------------------- -------------------- -------------------- --------------------
($ IN MILLIONS) $ % $ % $ % $ %
---------- ---------- --------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................... $ 512.4 $ 479.6 $1,597.6 $1,533.5
PROFIT CONTRIBUTION................. $ 92.9 18.1% $ 83.4 17.4% $ 264.3 16.5% $ 240.9 15.7%
</TABLE>
Net sales in the Branded segment for the twelve weeks ended October 7, 2000
grew 6.8% over the year-earlier quarter to $512.4 million and year-to-date net
revenues of $1,597.6 million exceeded the comparable period of 1999 by 4.2%. The
acquisition of Austin accounted for $37.4 million and $92.6 million of the total
increase in net sales for the twelve and forty weeks ended October 7, 2000,
respectively. Also impacting comparisons for the third quarter and year-to-date
period was the sale of the value brands business, which contributed $8.1 million
and $34.3 million of revenues for the twelve and forty weeks ended October 9,
1999, respectively. Excluding the effect of current year Austin revenues and net
sales recorded by the value brands business in the prior year, net sales for the
quarter and year-to-date period ended October 7, 2000 grew $3.5 million and $5.7
million, respectively, as compared to the similar periods of the previous year.
Growth in the current quarter was driven by volume gains in core Keebler brand
cookie and cracker products, sales of new products and distribution points added
in the national rollout of FAMOUS AMOS and MURRAY SUGAR FREE. New products in
the current quarter included the rollout of the SESAME STREET line. These
revenue gains versus the prior year quarter were partially offset by declines in
secondary cookie brands, which were limited by competitive activity. For the
forty weeks ended October 7, 2000, the primary drivers of the net sales growth
as compared to the prior year included new product introductions, greater
distribution of FAMOUS AMOS and MURRAY SUGAR FREE cookies, and retail business
outside supermarkets, including mass merchandisers and convenience channels. New
products contributing to the overall growth for the year were SESAME STREET
cookies and crackers, also HARVEST BAKERY, WHEATABLES SNACK MIX and SNAX STIX.
Revenue growth for the year was constrained by competitive activity and the
impact of product culls on certain secondary brand products.
For the twelve and forty weeks ended October 7, 2000, profit contribution in
the Branded segment was $92.9 million, or 18.1% of net sales, and $264.3
million, or 16.5% of net sales, respectively. The increase in profit
contribution for both the third quarter and year-to-date was attributed to a
higher gross margin achieved on KEEBLER and CHEEZ-IT core products and
incremental Austin sales volume, combined with productivity enhancements and
cost savings at our bakeries. Higher gross margins were the result of a
favorable sales mix, which included increased revenues from higher margin core
products. Cost savings were achieved through favorable commodity and packaging
costs as well as capital programs to improve efficiency and increase capacity.
Partially offsetting these gains were volume declines, primarily due to the loss
of the value brands business. Higher marketing expenses, due to increased
support behind the SESAME STREET launch, also partly offset the increase in
profit contribution.
13
<PAGE>
SPECIALTY SEGMENT
The Specialty segment produces cookies, crackers and brownies for the
foodservice market and private label retailers. In addition, we also produce
custom-baked products for other marketers of branded food products, including
sales of cookies to the Girl Scouts of the U.S.A.
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
------------------------------------------ -----------------------------------------
October 7, 2000 October 9, 1999 October 7, 2000 October 9, 1999
--------------------- -------------------- -------------------- --------------------
($ IN MILLIONS) $ % $ % $ % $ %
---------- ---------- --------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES.......................... $ 129.8 $ 136.2 $ 514.1 $ 522.2
PROFIT CONTRIBUTION................ $ 23.0 17.7% $ 17.8 13.1% $ 103.4 20.1% $ 90.2 17.3%
</TABLE>
The Specialty segment recorded net sales of $129.8 million and $514.1
million for the respective quarter and year-to-date ended October 7, 2000.
Revenues for the twelve and forty weeks ended October 7, 2000 fell short of the
comparable periods of a year ago by $6.4 million and $8.1 million, respectively.
Volume declines of custom-baked products for other marketers of branded
products, as well as on-going losses experienced in the private label industry
drove the majority of the unfavorability in the Specialty segment. Overall sales
shortages were partially offset by revenue growth in the foodservice market,
which was mainly due to continued growth in specialty crackers, and increased
sales of both Grab 'n Go products and ice cream cones. The inclusion of Austin
contributed incremental sales of $8.8 million and $17.3 million, or 6.8% and
3.4%, as a percent of net sales, to the respective twelve and forty week
periods.
Profit contribution for the Specialty segment of $23.0 million and $103.4
million finished the twelve and forty weeks ended October 7, 2000, $5.3 million
and $13.3 million ahead of the comparable periods of the prior year. Excluding
Austin, Keebler's profit contribution closed 4.6 and 3.0 percentage points, as a
percentage of net sales, higher than the same twelve and forty week periods of
last year, respectively. The primary contributor to the favorable profit
contribution was a focus shift to higher margin products, which also carry a
lower cost of goods sold in dollars spent, as well as a percentage of net sales.
Additional improvements were also noted by the introduction of more efficient
cost saving programs.
COST OF SALES
Cost of sales for the twelve weeks ended October 7, 2000, was $254.2
million, or 39.6% of net sales, compared to $261.2 million, or 42.4% of net
sales, in the comparable quarter of the prior year. Year-to-date cost of sales
for the forty weeks ended October 7, 2000 was $871.0 million, or 41.2% of net
sales, versus $899.3 million, or 43.7% of net sales, for the year-earlier
period. Before including the sale of Austin products, cost of sales, as a
percentage of net sales, was 38.8% and 40.3% for the twelve and forty weeks
ended October 7, 2000, respectively. Cost of sales in both the third quarter and
year-to-date periods benefited from savings generated from productivity and
efficiency initiatives as well as other cost reduction programs. Favorable raw
material prices continued to benefit the quarter, as has been trended throughout
the forty weeks ended October 7, 2000. Reduced sales of contract packaged
products, and private label and value products also contributed to lower cost of
sales. In addition, cost of sales improvements can be attributed to a favorable
shift in the overall business mix to both higher margin products and channels of
distribution. These aforementioned factors more than offset the increase to cost
of sales resulting from the inclusion of Austin subsequent to its acquisition.
SELLING, MARKETING AND ADMINISTRATIVE EXPENSES
Selling, marketing and administrative expenses for the twelve and forty
weeks ended October 7, 2000 totaled $301.8 million and $984.0 million,
respectively. This contributed to a $17.4 million and $31.9 million increase
over the respective quarter and year-to-date periods of a year ago. Higher
selling, marketing and administrative expenses were mainly due to the inclusion
of Austin activity. Excluding Austin, selling, marketing and administrative
expenses finished 3.1 and 1.5 percentage points, as a percentage of net sales,
higher than the comparable quarter and year-to-date periods of last year,
respectively. Marketing spending was up slightly due to additional support for
the launch of the Sesame Street product line. Increased selling and distribution
14
<PAGE>
expense was due to transition expenses related to the conversion costs of
certain non-core independent distributor routes acquired in the President
acquisition into Keebler's direct store door delivery system and also higher
fuel costs.
OTHER
Other expense for the quarter and year-to-date ended October 7, 2000 was
$10.6 million and $20.8 million, respectively. For the twelve weeks ended
October 7, 2000, other expense exceeded the comparable period of last year by
$3.3 million. The 45.5% increase was primarily driven by higher amortization
resulting from intangibles recorded in the Austin acquisition, and on entering
into a licensing agreement for the right to market cookies and crackers under
the Sesame Street name. Also contributing to the increased expense were higher
costs related to the Receivables Purchase Agreement and increased bank fees.
Other expense finished the forty weeks ended October 7, 2000, by $1.2 million
favorable to the same period of a year ago. The primary contributor to the 5.6%
improvement were the pre-tax gains totaling $7.7 million realized in the sale of
the value brands business and recognition of the sale of the Sayreville
manufacturing facility. These gains more than offset increased expense for
amortization, costs of the receivables securitization, and higher bank fees.
RESTRUCTURING AND IMPAIRMENT CHARGE
In May of 1999, Keebler closed its manufacturing facility in Sayreville, New
Jersey, which resulted in a pre-tax restructuring and impairment charge to
income from operations of $66.3 million. In the second quarter of 2000 the
charge was reduced by an adjustment of $1.0 million. The adjustment was for
costs related to severance and other exit costs from the facility due to
lower-than-expected severance costs and the earlier-than-expected sale of the
facility. On May 2, 2000, the Sayreville, New Jersey facility was sold. The
restructuring and impairment charge included $19.2 million for cash costs
related to severance and other exit costs from the Sayreville facility. The
remaining $46.1 million were non-cash charges for asset impairments related to
the Sayreville closing, including write-downs of property, plant and equipment
at Sayreville and equipment at other locations, and a proportionate reduction of
goodwill acquired in the Sunshine Biscuits, Inc. ("Sunshine") acquisition in
June 1996. Of the total $65.3 million charge, approximately $64.6 million was
recorded as plant and facility closing costs and severance. The remaining $0.7
million was recorded as other liabilities and accruals. Approximately 650 total
employees were terminated as a result of the closing of the Sayreville facility,
of which approximately 600 employees were represented by unions. At October 7,
2000, $3.2 million remained for plant and facility closing costs and severance
accruals and $0.1 million for other liabilities and accruals. Only costs related
to the settlement of workers' compensation claims and health and welfare
payments are expected to extend beyond the year ended December 30, 2000. The
amount of suspended depreciation and amortization that would have been
recognized for the forty weeks ended October 7, 2000, if the prior year
impairments had not been recognized, was approximately $4.2 million.
INTEREST EXPENSE, NET
For the quarter and year-to-date ended October 7, 2000, net interest expense
of $10.1 million and $34.2 million, respectively, exceeded the comparable
periods of last year by $3.0 million and $5.7 million. The respective 41.6% and
20.0% increases of expense for the twelve and forty-week periods were primarily
related to the incremental debt incurred during the first quarter of 2000 in
order to finance the Austin acquisition. Outstanding debt at October 7, 2000,
was $123.9 million higher than the amount outstanding at October 9, 1999. Also
contributing to the additional expense over last year was an increase in the
weighted average interest rate versus the same periods of a year ago.
INCOME TAX EXPENSE
Income tax expense of $24.6 million and $80.8 million for the respective
twelve and forty weeks ended October 7, 2000, increased over the same periods of
last year by $0.9 million and $39.6 million, respectively. Higher taxable
earnings primarily resulted in the higher income tax expense. A lower effective
tax rate of 39.8% versus 42.5% in 1999 partially offset the higher earnings
impact. The effective tax rate declined due to increased earnings, the adoption
of a change in the tax basis of the assets acquired and liabilities assumed in
the Keebler acquisition, in accordance with the Internal Revenue Code Section
338, and a satisfactory resolution of certain income tax contingencies.
Partially offsetting the reduction in the effective tax rate was the increase in
intangible amortization expense as a result of the Austin acquisition. The
effective tax rate remains above the federal statutory rate due to nondeductible
expenses, primarily the amortization of intangibles, resulting from the
Sunshine, President and Austin acquisitions.
15
<PAGE>
NET INCOME
Net income for the quarter ended October 7, 2000 was $41.0 million or $8.8
million higher than the comparable twelve weeks of last year. Net income for the
forty weeks ended October 7, 2000 of $121.9 million surpassed prior year results
by $78.5 million. On a year-to-date basis and before considering the effects of
restructuring and impairment adjustments, net income finished $32.8 million
greater than prior year earnings. The growth in net income over the comparable
twelve and forty-week periods of last year was primarily driven by the strength
of sales growth in our core branded business and margin expansion through both
the successful integration of the Austin acquisition into the Keebler business,
and the benefits from productivity and cost reduction programs.
LIQUIDITY AND CAPITAL RESOURCES
For the forty weeks ended October 7, 2000, cash provided from operating
activities totaled $174.8 million. Year-to-date net earnings of $121.9 million
combined with a $10.9 million decrease in trade accounts and notes receivable,
were the primary drivers of the positive cash flow. The reduced receivable
balance was due to improved cash collections as compared to the prior year in
addition to higher utilization of off-balance sheet financing. Also contributing
to the cash flow was the $18.9 million tax benefit on stock options exercised.
Partly offsetting these positive cash resources were lower trade accounts
payable and other current liabilities of $17.3 million due to disbursement
timing and spending of $17.6 million for plant and facility closing costs and
severance.
Cash used by investing activities for the year totaled $291.4 million, with
$253.8 million, net of cash acquired, used to fund the acquisition of Austin
during the first quarter. Other investing activities included the $10.0 million
purchase of a Sesame Street license agreement. Year-to-date capital spending of
$53.2 million was used to enhance, upgrade and automate the existing production
and distribution facilities as part of capacity improvements and cost reduction
programs. Slightly offsetting these uses of cash were proceeds of $25.6 million
received from disposals of assets. The sale of the value brands business and the
sale of the Sayreville facility combined for $24.5 million of the proceeds
received during the year.
Financing activities during the first forty weeks of 2000 provided $116.3
million of cash. The increase mainly resulted from proceeds from borrowings of
long-term debt under the Revolving facility in connection with the acquisition
of Austin. Also contributing to the cash flow from financing activities during
the year was $13.0 million of incremental proceeds from the sale of accounts
receivable under the Receivables Purchase Agreement and $5.9 million of cash
generated from the exercise of employee stock options. Offsetting these positive
cash flows were scheduled debt repayments of $34.2 million, dividend payments of
$28.5 million and common stock purchases into treasury totaling $10.0 million.
As of October 7, 2000, cash and cash equivalents were $20.5 million and
total debt outstanding was $596.8 million, of which current maturities were
$50.7 million. Available borrowings under Keebler's Revolving facility were
$350.0 million, of which $170.0 million was outstanding at October 7, 2000. All
financial covenants contained in the financing agreements have been met by
Keebler. Available cash, as well as existing credit facilities, are expected to
be sufficient to meet normal operating requirements for the foreseeable future.
NEW ACCOUNTING PRONOUNCEMENTS
In May 2000, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board reached consensus on Issue No. 00-14 "Accounting for
Certain Sales Incentives". This Issue addresses the recognition, measurement,
and income statement classification of sales incentives offered by vendors
(including manufacturers) that have the effect of reducing the price of a
product or service to a customer at the point of sale. For cash sales incentives
within the scope of this Issue, costs are generally recognized at the date on
which the related revenue is recorded and is to be classified as a reduction of
revenue. The effect of adoption resulting from changes in classification will
require restatement of prior year financial statements. EITF 00-14 is expected
to impact how the Company classifies certain marketing costs. Management is
currently assessing the impact of this guidance.
16
<PAGE>
In June 2000, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standards No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," an amendment of FASB
Statement No. 133. FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. FASB Statement No. 138
addresses a limited number of issues causing implementation difficulties for
numerous entities that apply FASB Statement No. 133.
FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference or made in this discussion are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). These statements are subject
to the safe harbor provisions of the Reform Act. Such forward-looking statements
include, without limitation, statements about:
o sales trends
o the competitiveness of the cookie and cracker industry;
o the future availability and prices of raw and packaging materials;
o potential regulatory obligations;
o our strategies and
o other statements that are not historical facts.
When used in this discussion, the words "anticipate," "believe," "estimate,"
"expect" and similar expressions are generally intended to identify
forward-looking statements. Because such forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements, including, but not limited to:
o changes in general economic or business conditions (including in the
cookie and cracker industry);
o actions of customers and competitors;
o our ability to recover material costs in the pricing of our products;
o the extent to which we are able to successfully develop new products
and markets for our products;
o the time required for such development;
o the level of demand for such products and
o changes in our business strategies.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal market risks to which we are exposed that may adversely affect
results of operations and financial position include changes in future interest
rates and raw material prices. We seek to minimize or manage these market risks
through normal operating and financing activities and through the use of
interest rate swap agreements and commodity futures and options contracts. The
use of these instruments is limited to hedging activities and they are not
entered for trading or speculative purposes. These agreements and contracts are
entered into at a corporate level and as such, any income or expense associated
with these transactions is not allocated to our reportable segments.
Our exposure to market risk for changes in interest rates relates primarily
to long-term debt obligations. Our current debt structure consists of both fixed
and floating rate debt. Interest rate swap agreements are used to effectively
manage changes in interest rates related to the majority of our borrowings with
the objective of reducing overall interest costs. Sensitivity analysis was used
to assess the impact that changes in market prices have on the fair value of
interest rate swap agreements at year end. The fair value of the interest rate
swap agreements at October 7, 2000, with a notional amount of $316.5 million,
remains comparable to year end. Additionally, interest rates have not fluctuated
materially from year end and therefore, the sensitivity analysis performed as of
January 1, 2000 for interest rate swap agreements remains a valid estimate.
We enter into commodity futures and options contracts to neutralize the
impact of price increases on raw material purchases that are not likely to be
recovered through higher prices on our products. We also used sensitivity
analysis to assess the potential impact on the fair value of commodity futures
and options contracts. Assuming a ten percent increase or decrease in market
price, the fair value of open contracts with a notional amount of $.1 million at
October 7, 2000 would not be significantly impacted.
17
<PAGE>
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
NUMBER DESCRIPTION
------- -----------
27 Financial Data Schedule
18
<PAGE>
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, Chief Executive Officer and Director
Date: November 17, 2000
/s/ E. Nichol McCully
------------------------------------------------------
E. Nichol McCully
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: November 17, 2000
/s/ James T. Spear
------------------------------------------------------
James T. Spear
Vice President Finance and Corporate Controller
(Principal Accounting Officer)
Date: November 17, 2000
19
