FLOWERS FOODS INC, 10-12B, 2000-12-01

FLOWERS FOODS INC
10-12B, 2000-12-01

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 2000

FILE NO.

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934

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FLOWERS FOODS, INC.
(Exact Name of Registrant as Specified in Its Charter)

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<TABLE>
<S> <C>
GEORGIA 58-2582379
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

1919 FLOWERS CIRCLE
THOMASVILLE, GEORGIA 31757
(Address of Principal Executive (Zip Code)
Offices)
</TABLE>

(229) 226-9110
(Registrant's telephone number, including area code)

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COPIES TO:

LIZANNE THOMAS, ESQ.
MARK L. HANSON, ESQ.
JONES, DAY, REAVIS & POGUE
3500 SUNTRUST PLAZA
303 PEACHTREE STREET
ATLANTA, GA 30308-3242
TELEPHONE: (404) 521-3939

Securities to be registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
<S> <C>
Common Stock, $.01 per share The New York Stock Exchange
Rights to Purchase Series A Junior The New York Stock Exchange
Participating Preferred Stock
</TABLE>

Securities to be registered pursuant to Section 12(g) of the Act: NONE
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<PAGE> 2

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The Registrant incorporates by reference into this Registration Statement
(i) certain portions of the Annual Report on Form 10-K for the fiscal year ended
January 1, 2000 of Flowers Industries, Inc. (File No. 1-9787) filed with the
Securities and Exchange Commission ("SEC") on March 31, 2000, and certain
portions of the Quarterly Report on Form 10-Q for the forty weeks ended October
7, 2000 of Flowers Industries, Inc. filed with the SEC on November 21, 2000,
(ii) the financial statements of Keebler Foods Company for the fiscal year ended
January 1, 2000 filed as an exhibit to the Flowers Industries, Inc. Annual
Report on Form 10-K on March 31, 2000 and (iii) certain portions of the
Quarterly Report on Form 10-Q for the forty weeks ended October 7, 2000 of
Keebler Foods Company (File No. 1-3705) filed with the SEC on November 21, 2000.

<TABLE>
<CAPTION>
Items of Flowers Industries Annual Report
on Form 10-K being incorporated
by reference
-----------------------------------------
<S> <C>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations

Item 7a. Quantitative and Qualitative Disclosures about Market Risk
PART IV

Item 14. Report of Independent Accountants

Consolidated statement of income for the fifty-two weeks
ended January 1, 2000 and January 2, 1999, the twenty-seven
weeks ended January 3, 1998 and the fifty-two weeks ended
June 28, 1997

Consolidated balance sheet at January 1, 2000 and January 2,
1999

Consolidated statement of changes in stockholders' equity
for the fifty-two weeks ended January 1, 2000 and January 2,
1999, the twenty-seven weeks ended January 3, 1998 and the
fifty-two weeks ended June 28, 1997

Consolidated statement of cash flows for the fifty-two weeks
ended January 1, 2000 and January 2, 1999, the twenty-seven
weeks ended January 3, 1998 and the fifty-two weeks ended
June 28, 1997

Notes to consolidated financial statements
</TABLE>

i
<PAGE> 3

<TABLE>
<CAPTION>
Items of Flowers Industries Quarterly Report
on Form 10-Q being incorporated
by reference
--------------------------------------------
<S> <C>
PART I
Item 1. Financial Statements
Consolidated Balance Sheet at
October 7, 2000 and January 1, 2000
Consolidated Statement of Income for the
Forty weeks ended October 7, 2000 and October 9, 1999
Consolidated Statement of Cash Flows for the
Forty weeks ended October 7, 2000 and October 9, 1999
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
</TABLE>

<TABLE>
<CAPTION>
Items of Keebler
Quarterly Report on Form 10-Q being
incorporated by reference
-----------------------------------
<S> <C>
PART I
Item 1. Financial Statements

Consolidated Balance Sheet at
October 7, 2000 and January 1, 2000

Consolidated Statement of Operations for the
Twelve weeks ended October 7, 2000 and October 9, 1999 and
for the Forty weeks ended October 7, 2000 and October 9, 1999

Notes to Consolidated Financial Statements
</TABLE>

ii
<PAGE> 4

FLOWERS FOODS, INC.

INFORMATION REQUIRED IN INFORMATION STATEMENT AND INCORPORATED IN
FORM 10 BY REFERENCE

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS ON FORM 10

ITEM 1. BUSINESS

The information required by this item is contained under: (i) the sections
"Summary -- Flowers Foods, Inc.," "Summary -- Strategic Focus," and "Summary --
Corporate Information," "Risk Factors," "Cautionary Note Regarding Forward
Looking Statements," "The Spin-off," "Agreements Between Flowers Industries and
Flowers Foods Relating to the Spin-Off" and "Business" of the Information
Statement and such sections are incorporated herein by reference, (ii) portions
of the Flowers Industries, Inc. Annual Report on Form 10-K for the fiscal year
ended January 1, 2000 and Quarterly Report on Form 10-Q for the forty weeks
ended October 7, 2000, each filed as an exhibit hereto, and such material is
incorporated herein by reference and (iii) the financial statements of Keebler
Foods Company for the fiscal year ended January 1, 2000 filed as an exhibit to
the Flowers Industries, Inc. Annual Report on Form 10-K and certain portions of
the Quarterly Report on Form 10-Q for the forty weeks ended October 7, 2000 of
Keebler Foods Company filed with the SEC on November 21, 2000, filed as exhibits
hereto and such material is incorporated herein by reference.

ITEM 2. FINANCIAL INFORMATION

The information required by this item is contained under: (i) the sections
"Summary -- Summary Historical Financial Data," "Summary -- Summary Pro Forma
Financial Data," "Selected Historical Financial Data," "Capitalization" and "Pro
Forma Financial Data," of the Information Statement and such sections are
incorporated herein by reference, (ii) portions of the Flowers Industries, Inc.
Annual Report on Form 10-K for the fiscal year ended January 1, 2000 and
Quarterly Report on Form 10-Q for the forty weeks ended October 7, 2000, each
filed as an exhibit hereto, and such material is incorporated herein by
reference and (iii) the financial statements of Keebler Foods Company for the
fiscal year ended January 1, 2000 filed as an exhibit to the Flowers Industries,
Inc. Annual Report on Form 10-K and certain portions of the Quarterly Report on
Form 10-Q for the forty weeks ended October 7, 2000 of Keebler Foods Company
filed with the SEC on November 21, 2000, filed as exhibits hereto, and such
material is incorporated herein by reference.

ITEM 3. PROPERTIES

The information required by this item is contained under the section
"Business -- Properties" of the Information Statement and such section is
incorporated herein by reference.

iii
<PAGE> 5

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is contained under the section
"Security Ownership of Certain Beneficial Owners and Management" of the
Information Statement and such section is incorporated herein by reference.

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS

The information required by this item is contained under the section
"Management" of the Information Statement and such section is incorporated
herein by reference.

ITEM 6. EXECUTIVE COMPENSATION

The information required by this item is contained under the section
"Management" of the Information Statement and such section is incorporated
herein by reference.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is contained under the sections
"Agreements between Flowers Industries and Flowers Foods Relating to the
Spin-Off," "Management" and "Certain Relationships and Related Party
Transactions" of the Information Statement and such section is incorporated
herein by reference.

ITEM 8. LEGAL PROCEEDINGS

The information required by this item is contained under the section
"Business -- Legal Proceedings" of the Information Statement and such section is
incorporated herein by reference.

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The information required by this item is contained under the sections "The
Spin-Off," "Dividend Policy" and "Description of Capital Stock" of the
Information Statement and such sections are incorporated herein by reference.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

On October 19, 2000 Flowers Foods, Inc. issued 1,000 shares of its common
stock to Flowers Industries, Inc., its direct parent, for consideration of $500.
In the opinion of Flowers Foods this transaction is exempt from registration
under the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof
in that such transaction did not involve any public offering.

ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED

The information required by this item is contained under the section
"Description of Capital Stock" of the Information Statement and such section is
incorporated herein by reference.

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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The information required by this item is contained in the section
"Description of Capital Stock -- Limited Liability and Indemnification
Provisions" of the Information Statement and such section is incorporated herein
by reference.

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is contained under: (i) the sections
"Summary -- Summary Historical Financial Data," "Summary -- Summary Pro Forma
Financial Data" "Selected Historical Financial Data," "Capitalization" and "Pro
Forma Financial Data," of the Information Statement and such sections are
incorporated herein by reference, (ii) portions of the Flowers Industries, Inc.
Annual Report on Form 10-K for the fiscal year ended January 1, 2000 and
Quarterly Report on Form 10-Q for the forty weeks ended October 7, 2000, each
filed as an exhibit hereto, and such material is incorporated herein by
reference and (iii) the financial statements of Keebler Foods Company for the
fiscal year ended January 1, 2000 filed as an exhibit to the Flowers Industries,
Inc. Annual Report on Form 10-K and certain portions of the Quarterly Report on
Form 10-Q for the forty weeks ended October 7, 2000 of Keebler Foods Company
filed with the SEC on November 21, 2000 filed as exhibits hereto and such
material is incorporated herein by reference.

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

(a) List of Financial Statements.

The information required by this section is contained in (i) portions of
the Flowers Industries, Inc. Annual Report on Form 10-K for the fiscal year
ended January 1, 2000 and the Flowers Industries, Inc. Quarterly Report on Form
10-Q for the forty weeks ended October 7, 2000, each filed as an exhibit hereto,
and such material is incorporated herein by reference and (ii) the financial
statements of Keebler Foods Company for the fiscal year ended January 1, 2000
filed as an exhibit to the Flowers Industries, Inc. Annual Report on Form 10-K
and certain portions of the Quarterly Report on Form 10-Q for the forty weeks
ended October 7, 2000 of Keebler Foods Company filed with the SEC on November
21, 2000, filed as exhibits hereto and such material is incorporated herein by
reference.

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<PAGE> 7

(b) Exhibits. The following documents are filed as exhibits hereto:

<TABLE>
<CAPTION>
EXHIBIT
NO. NAME OF EXHIBIT
------- ---------------
<C> <C> <S>
2.1 -- Distribution Agreement by and between Flowers Industries,
Inc. and Flowers Foods, Inc. dated as of October 26, 2000.
3.1 -- Form of Restated Articles of Incorporation of Flowers Foods,
Inc.*
3.2 -- Form of Restated Bylaws of Flowers Foods, Inc.*
4.1 -- Form of Share Certificate of Common Stock of Flowers Foods,
Inc.*
4.2 -- Form of Rights Agreement between Flowers Foods, Inc. and
First Union National Bank as Rights Agent.*
10.1 -- Employee Benefits Agreement by and between Flowers
Industries, Inc. and Flowers Foods, Inc. dated as of October
26, 2000.
21 -- Subsidiaries of Flowers Foods, Inc.*
27 -- Financial Data Schedule (for SEC use only)
99.1 -- Portions of the Annual Report on Form 10-K for the fiscal
year ended January 1, 2000 of Flowers Industries, Inc.,
filed with the SEC on March 31, 2000.
99.2 -- Portions of the Quarterly Report on Form 10-Q for the forty
weeks ended October 7, 2000 of Flowers Industries, Inc.,
filed with the SEC on November 21, 2000.
99.3 -- Financial Statements of Keebler Foods Company for the fiscal
year ended January 1, 2000.
99.4 -- Portions of the Quarterly Report on Form 10-Q for the forty
weeks ended October 7, 2000 of Keebler Foods Company filed
with the SEC on November 21, 2000.
</TABLE>

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* To be filed by amendment

vi
<PAGE> 8

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the undersigned registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.

FLOWERS FOODS, INC.

By: /s/ G. ANTHONY CAMPBELL
-----------------------------------
Name: G. Anthony Campbell
Title: Secretary and General
Counsel

Dated: December 1, 2000

vii
<PAGE> 9

PRELIMINARY INFORMATION STATEMENT

SUBJECT TO COMPLETION, DATED DECEMBER 1, 2000

FLOWERS FOODS, INC.

Common Stock
$.01 Par Value

The board of directors of Flowers Industries, Inc. has approved an agreement
and plan of restructuring and merger and related agreements under which Flowers
Industries will:

- spin-off its Flowers Bakeries and Mrs. Smith's Bakeries businesses and
certain other corporate assets and liabilities to its shareholders in the
form of a new, publicly-traded company called Flowers Foods, Inc., as a
result of which Flowers Industries' primary asset will be the majority
interest in Keebler; and

- merge with a wholly-owned subsidiary of Kellogg.

This information statement is being sent to you to describe the spin-off and
the business and financial position of Flowers Foods following the transaction
and requires no action by you. Please refer to the proxy statement relating to
the merger of Flowers Industries and Kellogg for detailed information regarding
that transaction.

Currently, Flowers Foods is a wholly-owned subsidiary of Flowers Industries.
Flowers Industries intends to distribute, in a taxable spin-off, all of the
outstanding shares of Flowers Foods to Flowers Industries shareholders on a pro
rata basis. As part of the spin-off, you will receive one share of Flowers Foods
common stock for every shares of Flowers Industries common stock you own
as of the close of business on the record date for the spin-off, which is
currently expected to be on or about January , 2001.

The spin-off and the merger will each occur only if the other occurs. If
Flowers Industries shareholders do not approve the merger, or if the other
conditions to the merger are not met, the spin-off will not occur. If the merger
is approved, the transaction will occur in three, effectively simultaneous
steps:

- Flowers Industries will spin-off its Flowers Bakeries and Mrs. Smith's
Bakeries businesses and certain other corporate assets and liabilities to
its shareholders as a new, publicly-traded company called Flowers Foods.
Shareholders of Flowers Industries will receive one share of Flowers Foods
for every shares of Flowers Industries common stock they hold on
the record date for the spin-off.

- Flowers Industries, which will then have as its primary asset the majority
interest in Keebler, will merge with a wholly-owned subsidiary of Kellogg,
becoming itself a wholly-owned subsidiary of Kellogg. The shareholders of
Flowers Industries will become entitled to receive, subject to adjustments
at closing, approximately $12.50 in cash in exchange for each share of
Flowers Industries common stock that they owned.

- Keebler will then merge with a wholly-owned subsidiary of Kellogg, as a
result of which Keebler will become a wholly-owned subsidiary of Kellogg.
The public stockholders of Keebler common stock, other than Flowers
Industries, will receive $42.00 per share in cash.

The record date and the distribution date for the spin-off, as well as the
closing date for the merger, will all be the same day. When all three steps are
completed -- the spin-off, the Flowers Industries/Kellogg merger, and the
Kellogg/Keebler merger -- there will be a new publicly-owned company, Flowers
Foods, which will own and operate the traditional Flowers Industries bakery
businesses, and Kellogg will own all of the shares of Keebler stock. At the
closing of the transaction, Flowers Industries shareholders will own an interest
in Flowers Foods in the same proportion as their prior ownership interest in
Flowers Industries.

If the merger is approved by Flowers Industries shareholders, no further
action on your part is necessary for you to receive the shares of Flowers Foods
common stock to which you are entitled in the spin-off. You do not need to take
any action for the spin-off to occur. You do not have to pay for the shares of
Flowers Foods common stock that you will receive in the spin-off, nor do you
have to surrender or exchange shares of Flowers Industries common stock in order
to receive shares of Flowers Foods common stock. However, you will be required
to surrender your shares of Flowers Industries common stock in order to receive
the cash consideration to be paid in connection with the Flowers
Industries/Kellogg merger. That process is described in more detail in the proxy
statement relating to the Flowers Industries/Kellogg merger.

Because Flowers Industries currently owns all the outstanding shares of
Flowers Foods common stock, there has been no public trading market for the
Flowers Foods common stock. We have applied for listing of Flowers Foods common
stock on the New York Stock Exchange and, following the spin-off and the merger,
we expect that Flowers Foods common stock will trade on the New York Stock
Exchange under the symbol "FLO".

As you review this information statement, you should carefully consider the
matters described in "Risk Factors," beginning on page 10.

-------------------------

NO VOTE OF SHAREHOLDERS IS REQUIRED IN CONNECTION WITH THE SPIN-OFF.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The date of this information statement is , 2001
<PAGE> 10

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 3
Risk Factors................................................ 10
Cautionary Note Regarding Forward Looking Statements........ 15
The Spin-Off................................................ 16
Agreements Between Flowers Industries and Flowers Foods
Relating to the Spin-Off.................................. 20
Capitalization.............................................. 24
Dividend Policy............................................. 25
Selected Historical Financial Data.......................... 26
Pro Forma Financial Data.................................... 28
Business.................................................... 40
Management.................................................. 51
Certain Relationships and Related Party Transactions........ 57
Security Ownership of Certain Beneficial Owners and
Management................................................ 58
Description of Capital Stock................................ 60
Where You Can Find Additional Information................... 70
Incorporation of Certain Information by Reference........... 71
</TABLE>

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SUMMARY

This summary highlights information relating to Flowers Industries, Flowers
Foods and the Flowers Foods common stock being distributed in the spin-off. It
is not a complete description of all the information that may be important to
you. To fully understand the spin-off and Flowers Foods, you should read this
information statement carefully, including the risk factors as well as the
financial statements of Flowers Industries and the accompanying notes, which are
incorporated by reference herein and the pro forma information for Flowers Foods
which appear elsewhere in this information statement.

The information about us and our business contained in this information
statement assumes that the spin-off and related merger with Kellogg have been
completed. If Flowers Industries shareholders do not approve the merger, the
spin-off will not occur.

FLOWERS FOODS, INC.

Flowers Foods is one of the largest producers and marketers of frozen and
non-frozen bakery and dessert products in the United States. Flowers Foods will
consist of the following businesses after they are spun off from Flowers
Industries:

- Flowers Bakeries; and

- Mrs. Smith's Bakeries.

We have a leading presence in each of the major product categories in which
we compete. In our Flowers Bakeries business, our Flowers Bakeries brands rank
first in branded sales measured in dollars and units in the 22 major
metropolitan markets we serve. Our Mrs. Smith's Bakeries business is one of the
leading frozen dessert producers and marketers in the United States, and our
Mrs. Smith's pies are the leading national brand of frozen pies sold at retail.

FLOWERS BAKERIES. Our Flowers Bakeries business produces and markets baked
foods to customers in the super-regional 16 state area in and surrounding the
southeastern United States. We have devoted significant resources to modernize,
automate and expand our production facilities and distribution capabilities, and
enhance our information technology. This bakery products business is comprised
of 27 production facilities which are generally within or contiguous to our
existing region and which can be served with our extensive direct store door
delivery system. Our strategy is to continue to better serve new and existing
customers, principally by:

- increasing the productivity and efficiency of our production facilities;
and

- using information technology to enhance our direct store door delivery
system.

MRS. SMITH'S BAKERIES. Our Mrs. Smith's Bakeries business produces and
markets frozen desserts as well as bread, rolls and buns for sale to retail and
foodservice customers. Traditionally, retail frozen pie sales are heavily
concentrated in the year-end holiday season. In an effort to increase sales
outside of the holiday season, we launched "Operation 365," a strategy aimed at
significantly expanding non-seasonal sales in the frozen dessert product line by
extending the well-recognized Mrs. Smith's brand name to existing and related
retail and foodservice products. Examples of significant retail product line
extensions include Mrs. Smith's Restaurant Classics and Mrs. Smith's Cookies and
Cream frozen pies, while the Grand Finales frozen pie product line was
introduced in the foodservice channel.
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OUR STRATEGIC FOCUS

Our strategy is to be the country's leading producer and marketer of a
full-line of frozen and non-frozen bakery and dessert products serving all
categories of customers through all channels of distribution. Our Flowers
Bakeries and Mrs. Smith's Bakeries businesses each develop strategies based on
the requirements of their particular food category.

We employ the following five overall corporate strategies:

- maintain and extend strong brand recognition;

- invest in and operate efficient production facilities;

- provide customer service-oriented distribution;

- offer a broad range of products to customers in multiple channels of
distribution; and

- continue to pursue growth through strategic acquisitions and investments.

CORPORATE INFORMATION

Our principal executive offices are located at 1919 Flowers Circle,
Thomasville, Georgia 31757 and our telephone number is (229) 226-9110.
References in this information statement to "Flowers Foods," "we," "our" and
"us" collectively refer to Flowers Foods, Inc. We maintain internet sites at
www.flowersfoods.com, www.flowersbakeries.com and www.mrssmiths.com. The
information contained on, or connected to, our websites is not a part of this
information statement.

THE TRANSACTION

THE MERGER. Flowers Foods is currently a wholly-owned subsidiary of
Flowers Industries. On October 26, 2000, Flowers Industries entered into an
agreement and plan of restructuring and merger with Kellogg Company under which
a wholly-owned subsidiary of Kellogg will merge with and into Flowers
Industries. Flowers Industries, whose principal asset at the time of the merger
will be its majority ownership interest in Keebler, will survive the merger as a
wholly-owned subsidiary of Kellogg. As a condition to the merger, Flowers
Industries has agreed to transfer its fresh and frozen bakery operations, and
certain other corporate assets and liabilities, to Flowers Foods, which is
currently a wholly-owned subsidiary of Flowers Industries, and to distribute all
of the outstanding shares of common stock of Flowers Foods to Flowers
Industries' shareholders on a pro-rata basis immediately prior to the merger.

For more information about the merger, the agreement and plan of
restructuring and merger and related matters, you should refer to the proxy
statement relating to the Flowers Industries/Kellogg merger accompanying this
information statement.

THE SPIN-OFF. Effective virtually simultaneously with the completion of
the merger described below, Flowers Industries will distribute all of the
outstanding shares of Flowers Foods common stock on a pro rata basis to its
shareholders. Following the effective time of the spin-off, all of the
outstanding shares of Flowers Foods common stock will be held by shareholders of
Flowers Industries who are shareholders as of the record date for the spin-off.
You will
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<PAGE> 13

not pay for the Flowers Foods common stock you will receive in the spin-off, but
the spin-off will be taxable to you. The spin-off is summarized below:

Distributing Company: Flowers Industries, Inc., a Georgia corporation.

Spun-off Company: Flowers Foods, Inc., a Georgia corporation and
currently a wholly-owned subsidiary of Flowers
Industries, Inc.

Consideration to be Received
by Flowers Industries
Shareholders in the Spin-off
and the Merger: The spin-off and merger will occur virtually
simultaneously. Flowers Industries shareholders
will receive approximately $12.50 per share in
cash in exchange for each share of Flowers
Industries common stock that they own and one
share of Flowers Foods common stock in the
spin-off for every shares of Flowers
Industries common stock they hold at the close
of business on the record date for the
spin-off. Flowers Industries shareholders will
be required to surrender their shares of
Flowers Industries common stock to receive the
cash consideration in the merger, but will not
be required to take any additional action to
receive shares of Flowers Foods common stock in
the spin-off.

Flowers Foods Common Stock: Immediately prior to the spin-off, shares
of Flowers Foods common stock will be
outstanding, and they will all be distributed in
the spin-off. Immediately after the spin-off, we
estimate that about shareholders
of record will hold shares of Flowers Foods
common stock, although some of the shares may be
registered in "street name" by a single
shareholder who represents a number of
shareholders.

Distribution Ratio: One share of Flowers Foods common stock for
every shares of Flowers Industries common
stock that you hold on the record date for the
spin-off.

Record Date/Spin-off Date: The close of business on or about January ,
2001.

Distribution Agent: First Union National Bank, which is also the
registrar and transfer agent for Flowers
Industries common stock and for Flowers Foods
common stock.

Proposed New York Stock
Exchange Symbol: "FLO"

Trading Market: Because Flowers Industries currently owns all of
Flowers Foods common stock, there has not been a
public trading market for the Flowers Foods
common stock. We have applied for listing of
Flowers Foods common stock on the New York Stock
Exchange and, following the spin-off and the
merger, we expect that Flowers Foods
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<PAGE> 14

common stock will be traded on the New York
Stock Exchange.

Federal Income Tax
Consequences: The spin-off and merger should be treated as a
single taxable transaction for United States
federal income tax purposes. A Flowers
Industries shareholder generally should
recognize gain or loss in an amount equal to the
difference between:

- the sum of the fair market value of the shares
of Flowers Foods common stock distributed in
the spin-off plus the cash proceeds received
pursuant to the merger; and

- the Flowers Industries shareholder's adjusted
tax basis immediately prior to the transaction
in the shares of Flowers Industries common
stock surrendered.

Such gain or loss should be a capital gain or
loss if the shares of Flowers Industries common
stock are held as a capital asset by the Flowers
Industries shareholder. However, if the receipt
of Flowers Foods stock is treated as a separate
transaction for tax purposes, it would be deemed
to be a distribution taxable as an ordinary
income dividend to the extent of our current or
accumulated earnings and profits. For a more
detailed description of the federal income tax
consequences of the spin-off and the merger, see
"The Spin-Off -- Principal United States Federal
Income Tax Consequences."

Our Management and Management
Compensation: The management team of Flowers Industries will
become the management of Flowers Foods following
the spin-off. The compensation, awards and other
benefits expected to be available to members of
Flowers Foods management are described in
"Management."
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SUMMARY HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following summary historical financial data of Flowers Industries,
Flowers Foods' predecessor, as of and for the 52 weeks ended January 1, 2000,
January 2, 1999, the 27 week transition period ended January 3, 1998 and for the
52 weeks ended June 28, 1997 have been derived from the consolidated financial
statements of Flowers Industries, which have been audited by
PricewaterhouseCoopers, LLP, independent accountants. The summary historical
financial data of Flowers Industries as of and for the 40 weeks ended October 7,
2000 and October 9, 1999 are derived from the unaudited consolidated financial
statements of Flowers Industries, which, in the opinion of management, include
all adjustments necessary for a fair presentation. Operating results for the 40
weeks ended October 7, 2000 are not necessarily indicative of the results that
may be achieved for the 52 weeks ending December 30, 2000.

This historical data should be read in conjunction with Flowers Industries'
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Flowers Industries' consolidated financial statements and the
related notes, which are incorporated herein by reference and have been filed as
exhibits to Flowers Foods' registration statement on Form 10, of which this
information statement is a part.

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<PAGE> 16

SUMMARY PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table represents summary unaudited pro forma condensed
consolidated financial data for Flowers Foods. Following the spin-off, Flowers
Foods will consist of the traditional bakery businesses of Flowers Industries.
For accounting purposes, we will treat the transactions as a disposal of
Keebler. Accordingly, the unaudited pro forma financial information, included
elsewhere herein, reflects the exclusion of assets and liabilities and the
results of operations of Keebler from the Flowers Industries consolidated
financial statements. The summary pro forma condensed consolidated financial
data have been derived from the Flowers Foods unaudited pro forma condensed
consolidated financial statements which are included elsewhere in this
information statement. The unaudited pro forma condensed consolidated statement
of income data sets forth Flowers Foods' results of operations for the 52 weeks
ended January 1, 2000, January 2, 1999, the 27 week transition period ended
January 3, 1998, the 52 weeks ended June 28, 1997, and the 40 weeks ended
October 7, 2000 and October 9, 1999, and assumes the spin-off and merger were
completed at the beginning of the respective periods. The unaudited pro forma
condensed consolidated balance sheet data sets forth Flowers Foods' financial
position at October 7, 2000, and assumes the spin-off and merger were completed
on October 7, 2000.

The pro forma adjustments are based upon available information and upon
certain assumptions that Flowers Industries believes are reasonable and which
are described in the notes to the unaudited pro forma condensed consolidated
financial statements included elsewhere in this information statement. The
unaudited pro forma condensed consolidated financial data is presented for
informational purposes only and may not be indicative of the results of
operations or financial position that would have occurred had the spin-off and
merger occurred on the dates indicated, or which may be obtained in the future.
You should read the summary unaudited pro forma condensed consolidated financial
data presented below in connection with the unaudited pro forma condensed
consolidated financial statements and the related notes included elsewhere in
this information statement.

<TABLE>
<CAPTION>
52 WEEKS ENDED
--------------------------------------- 27 WEEKS ENDED 52 WEEKS ENDED
JANUARY 1, 2000(A) JANUARY 2, 1999(B) JANUARY 3, 1998(C) JUNE 28, 1997(C)
------------------ ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales..................... $1,568,239 $1,538,887 $784,097 $1,437,713
(Loss) income from
operations.............. (6,971) 36,350 36,815 69,659
Net (loss) income from
continuing operations... $ (9,177) $ (10,435) $ 5,499 $ 54,603
Diluted net (loss) income
per share from
continuing operations... $ (0.46) $ (0.54) $ 0.31 $ 3.09
Weighted average shares
outstanding............. 20,084 19,360 17,755 17,680
</TABLE>

8
<PAGE> 17

<TABLE>
<CAPTION>
40 WEEKS ENDED
---------------------------------------
OCTOBER 7, 2000(A) OCTOBER 9, 1999(A)
------------------ ------------------
<S> <C> <C> <C> <C>
Sales................... $1,205,831 $1,166,433
Income (loss) from
continuing
operations............ 13,395 (19,071)
Net loss from continuing
operations............ $ (669) $ (16,317)
Diluted net loss per
share from continuing
operations............ $ (.03) $ (0.81)
Weighted average shares
outstanding........... 20,074 20,078
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 7, 2000
---------------
<S> <C>
BALANCE SHEET DATA:
Total assets................................................ $1,104,902
Long term debt.............................................. $ 203,001
Stockholders' equity........................................ $ 634,704
</TABLE>

-------------------------

(a) The summary unaudited pro forma condensed consolidated income data for
Flowers Foods has been derived from the historical consolidated statement
of income of Flowers Industries, adjusted to reflect (i) the exclusion of
the results of operations of Keebler Foods Company that is included in the
Flowers Industries consolidated statement of income for the respective
periods, (ii) the change in interest expense resulting from the elimination
of approximately $625.0 million of long-term debt as a result of the
merger, (iii) the change in amortization expense resulting from the
elimination of Flowers Industries' investment in Keebler and (iv) the
related income tax effects of (i), (ii) and (iii). This pro forma summary
financial information has been prepared on the assumption that the spin-off
and the merger occurred as of the beginning of the respective periods.

(b) The summary unaudited pro forma condensed consolidated income data for
Flowers Foods has been derived from the historical consolidated statement
of income of Flowers Industries, adjusted to reflect the exclusion of the
results of operations of Keebler from Flowers Industries.

(c) The summary unaudited pro forma condensed consolidated income data for
Flowers Foods has been derived from the historical consolidated statement
of income of Flowers Industries, adjusted to reflect the elimination of its
income from investment in its then unconsolidated affiliate, Keebler.
9
<PAGE> 18

RISK FACTORS

RISKS FACTORS RELATING TO OUR BUSINESS

OUR MRS. SMITH'S BAKERIES BUSINESS MAY CONTINUE TO PERFORM BELOW EXPECTATIONS,
WHICH COULD HARM OUR FINANCIAL RESULTS.

Our Mrs. Smith's Bakeries business has incurred net operating losses over
the past six quarters and may not be profitable in the near future. Our ability
to increase revenues, reduce costs and achieve profitability at Mrs. Smith's
Bakeries in the future will primarily depend on our ability to increase sales of
our products outside of the traditional holiday season through the retail and
foodservice channels and to reduce production, distribution and other costs. We
cannot assure you that our Mrs. Smith's Bakeries business will be able to
increase revenues and reduce costs at a rate required to generate profitable
results.

OUR ABILITY TO COMPETE EFFECTIVELY IN THE HIGHLY COMPETITIVE FOOD INDUSTRY MAY
AFFECT OUR OPERATIONAL PERFORMANCE AND FINANCIAL RESULTS.

The food industry is highly competitive. We face competition in all of our
markets from large, national companies and smaller, regional operators, as well
as from supermarket chains with their own production facilities or private label
products and grocery stores with their own in-store bakeries. Some of our
competitors, including other diversified food companies, are larger and may have
greater financial resources than we do. From time to time we experience price
pressure in certain of our markets as a result of competitors' promotional
pricing practices as well as market conditions generally. Competition is based
on product quality, distribution effectiveness, brand loyalty, price, effective
promotional activities and the ability to identify and satisfy emerging consumer
preferences.

OUR BUSINESS IS SUBJECT TO THE RISK OF PRICE FLUCTUATIONS OF RAW MATERIALS.

Our principal ingredients are flour, sugar, shortening and fruit, all of
which are subject to price fluctuations. Any substantial fluctuation in the
prices of raw materials would, if not offset by product price increases or
commodities hedging activities, have an adverse impact on our profitability. We
attempt to recover our commodity cost increases by increasing prices, promoting
a higher-margin product mix and obtaining additional operating efficiencies. We
may not be able to continue to offset raw material price increases to the same
extent in the future. We enter into contracts for the purchase of raw materials
at fixed prices, which are designed to protect us against raw material price
increases during their term. These contracts could cause us to pay higher prices
for our raw materials than would otherwise be available at the time we utilize
the raw materials. We also use paper products, such as corrugated cardboard,
aluminum products, such as pie plates, and films and plastics to package our
products. We are dependent upon natural gas and propane as a fuel for firing
ovens as well as gasoline and diesel as fuel for distribution vehicles.
Substantial fluctuations in prices of packaging materials or continued higher
prices of fuels could adversely affect our operating performance and financial
results.

10
<PAGE> 19

THE LOSS OR CONTINUED CONSOLIDATION OF ANY OF OUR KEY CUSTOMERS COULD HAVE A
SIGNIFICANT NEGATIVE IMPACT ON OUR FINANCIAL RESULTS.

The largest purchaser of our products, Winn-Dixie, Inc., accounted for
approximately 10.2% of Flowers Foods' sales during fiscal 1999. We expect that
our sales to Winn-Dixie will continue to constitute a significant percentage of
our revenues. The loss of Winn-Dixie as an outlet for our products could
significantly harm our competitive position. In addition, the continued
consolidation of food retailers and foodservice distributors has reduced the
number of customers for our products. The additional consolidation of customers
for our products could have a significant adverse impact on our financial
results.

THE PRESENCE OF LARGER COMPANIES COMPETING FOR ACQUISITION OPPORTUNITIES MAY
AFFECT OUR STRATEGY OF GROWTH BY ACQUISITION OF ADDITIONAL FOODS BUSINESSES.

Our growth has depended, in significant part, on our ability to acquire
and, thereafter, integrate and operate additional food businesses. Our strategy
includes pursuing acquisition candidates that complement our existing product
lines, geographic presence, or both, and leverage our production capacity,
distribution network, purchasing power, brand management capabilities and
operating efficiencies. Presently, we have no material acquisition candidates
under active consideration. Potential competitors for acquisition opportunities
include larger companies that may have greater financial resources. Competition
for acquiring food businesses may result in acquisitions on terms that prove to
be less advantageous to us than have been attainable in the past or may increase
acquisition prices to levels unacceptable to us. As a result, we may not be able
to find attractive acquisition candidates in the future. In addition, we may not
be successful in integrating future acquisitions into our existing operations or
succeed in reducing the costs and increasing the profitability of any businesses
we acquire in the future.

OUR BUSINESS IS SUBJECT TO FEDERAL, STATE AND LOCAL GOVERNMENT REGULATIONS, THE
IMPACT OF WHICH COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS AND FINANCIAL
POSITION.

Our operations are subject to regulation by various federal, state and
local government entities and agencies. As a producer of food products for human
consumption, our operations are subject to stringent production, packaging,
quality, labeling and distribution standards, including regulations mandated by
the following laws:

- Federal Food and Drug Act;

- Occupational Safety and Health Act;

- Fair Labor Standards Act;

- Clean Air Act; and

- Clean Water Act.

We believe that our current legal and environmental compliance programs
adequately address such regulations and that we are in substantial compliance
with such applicable laws and regulations. However, we cannot predict whether
future regulation by various federal, state and local governmental entities and
agencies would harm our business and financial results.

11
<PAGE> 20

IF OUR PRODUCTS CONTAIN DEFECTS, OUR SALES COULD SUFFER AND WE COULD INCUR
INCREASED COSTS, WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
PROFITABILITY.

We could be liable if the consumption of any of our products cause injury,
illness or death. We also may be required to recall certain of our products that
become contaminated or are damaged. We are not aware of any material product
liability judgment against us or product recall. However, a product liability
judgment or product recall could severely affect our business or financial
results.

WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS,
WHICH COULD HARM OUR COMPETITIVE POSITION, RESULTING IN DECREASED REVENUE.

We believe that our trademarks and other proprietary rights are important
to our success and competitive position. Accordingly, we devote substantial
resources to the establishment and protection of our trademarks and proprietary
rights. We have taken actions to establish and protect our trademarks and other
proprietary rights. However, these actions may be inadequate to prevent
imitation of our products by others or to prevent others from claiming
violations of their trademarks and proprietary rights by us.

RISKS FACTORS RELATING TO THE SECURITIES MARKETS AND OWNERSHIP OF FLOWERS FOODS
COMMON STOCK

FLOWERS FOODS DOES NOT HAVE AN OPERATING HISTORY AS AN INDEPENDENT COMPANY.

After completion of the spin-off, Flowers Foods will be an independent
public company. Although Flowers Foods will be operated by members of senior
management who operated Flowers Industries' bakery businesses prior to the
spin-off, we do not have an operating history as an independent company. The pro
forma financial information included in this information statement may not
necessarily reflect the results of operations and financial position that would
have been achieved had Flowers Foods and our subsidiaries operated as an
independent company during the periods presented nor is it necessarily
indicative of what our future results of operations will be. After the spin-off,
we will be responsible for obtaining our own financing and corporate
administrative services, including legal, human resources, information and
technology systems and tax and accounting services. We may have difficulty
obtaining financing or services on terms that are acceptable to us, if at all.

BECAUSE THERE HAS BEEN NO PRIOR TRADING MARKET FOR OUR COMMON STOCK, OUR STOCK
PRICE MAY BE VOLATILE.

There is no current trading market for Flowers Foods common stock. We have
applied for listing of Flowers Foods common stock on the New York Stock Exchange
and, following the spin-off and the merger, we expect that Flowers Foods common
stock will trade on the New York Stock Exchange under the symbol "FLO".

We cannot assure you that our shares will be approved for listing on the
New York Stock Exchange, actively traded or as to the prices at which the shares
will trade. Some Flowers Industries shareholders who receive Flowers Foods
common stock may decide that they do not want to remain invested in us and may
sell their shares following the spin-off. This may delay the development of an
orderly trading market for Flowers Foods common stock for a period of time
following the spin-off.

12
<PAGE> 21

Prices for our shares will be determined in the marketplace and may be
influenced by many factors, including, but not limited to:

- the depth and liquidity of the market for the shares;

- our results of operations;

- investors' evaluations of the future prospects for Flowers Foods and the
food industry;

- our dividend policy;

- changes in the economic conditions in the food industry; and

- general economic and market conditions.

In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. These market fluctuations could have a material
adverse effect on the trading price of our shares.

OUR FAILURE TO ATTRACT AND RETAIN KEY MANAGEMENT PERSONNEL COULD HARM OUR
BUSINESS.

Our business requires managerial, financial and operational expertise. We
do not have employment agreements with any members of our current management. We
have no reason to believe that any of our key management personnel will cease to
be active in our business, but, if we lose any of our key personnel, our
business operations could suffer.

OUR ARTICLES OF INCORPORATION AND BYLAWS, OUR SHAREHOLDER RIGHTS PLAN AND
PROVISIONS OF GEORGIA LAW COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO
ACQUIRE US, EVEN IF DOING SO COULD BE IN YOUR INTEREST.

Provisions of our articles of incorporation and bylaws could make it more
difficult for a third party to acquire us, even if doing so might be in the best
interest of our shareholders. It could be difficult for a potential bidder to
acquire us because:

- our directors serve for staggered terms;

- our directors may be removed only for a cause by a supermajority vote of
our shareholders;

- our directors have adopted a shareholder rights plan; and

- we are subject to the fair-price and business combination provisions of
the Georgia corporate law.

Also, our Board of Directors can issue preferred stock and determine the
price, rights, and preferences of this preferred stock without shareholder
approval. This authority gives our Board greater flexibility to take actions
such as making acquisitions. However, if we issue preferred stock, a third party
may find it more difficult to acquire control of us.

13
<PAGE> 22

WE CANNOT GIVE ANY ASSURANCE THAT WE WILL PAY DIVIDENDS.

The payment of dividends on our common stock is subject to the discretion
of our Board of Directors and will depend on factors such as our financial
position, results of operations and such other factors as our Board of Directors
may, in its discretion, consider relevant. We cannot assure you that we will pay
any dividends in the future or if we do whether they will be at a level
consistent with dividends paid by Flowers Industries in the past.

WE HAVE AGREED TO INDEMNIFY FLOWERS INDUSTRIES FOR CERTAIN LIABILITIES WHICH MAY
ACCRUE FOLLOWING THE SPIN-OFF.

We have agreed in the distribution agreement and the employee benefits
agreement relating to the spin-off and in the merger agreement with Kellogg, to
indemnify Flowers Industries and its respective officers, directors, employees,
successors and assigns, from and against any and all damages arising in
connection with certain liabilities, including tax liabilities, that arise in
connection with the spin-off or the operations of Flowers Industries prior to
the spin-off. If certain events occur or certain liabilities arise, we may be
required to pay substantial sums to meet our indemnification obligations. Such
payments could have a material adverse effect on our operating performance and
financial results.

THE CHARACTER AND AMOUNT OF INCOME, GAIN OR LOSS YOU MAY RECOGNIZE AS A RESULT
OF THE SPIN-OFF AND MERGER CANNOT BE PRECISELY DETERMINED.

Your receipt of cash and Flowers Foods common stock in connection with the
spin-off and the merger will be a taxable transaction. The spin-off and merger
are intended to constitute a single integrated transaction pursuant to which
each Flowers Industries shareholder generally will recognize capital gain or
loss equal, in each case, to the difference between (1) the fair market value of
the Flowers Foods shares distributed in the spin-off plus the cash proceeds
received pursuant to the merger and (2) the shareholder's adjusted tax basis in
the Flowers Industries common stock surrendered in exchange. However, if the
receipt of Flowers Foods stock is treated as a separate transaction for tax
purposes, it would be deemed to be a distribution taxable as an ordinary income
dividend to the extent of our current or accumulated earnings and profits. In
addition, the amount of income, gain or loss, if any, that you will recognize
will depend, in part, on the fair market value of the Flowers Foods common stock
you receive in the spin-off and your basis in the Flowers Industries common
stock you sell in the merger. Accordingly, we cannot assure you as to the
character and exact amount of income, gain or loss you may recognize as a result
of the spin-off and the merger.

14
<PAGE> 23

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

We have made forward-looking statements in this information statement,
including in the sections entitled "Summary," "Risk Factors," and "Business,"
that are based on our management's beliefs and assumptions and on information
currently available to our management. Forward-looking statements include the
information concerning our possible or assumed future results of operations,
business strategies, financing plans, competitive position, potential growth
opportunities, potential operating performance improvements, benefits resulting
from the spin-off and the merger, the effects of competition and the effects of
future legislation or regulations. Forward-looking statements include all
statements that are not historical facts and can be identified by the use of
forward-looking terminology such as the words "believe," "continue," "may,"
"will," "should" or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. You should not put undue reliance on any
forward-looking statements. We do not have any intention or obligation to update
forward-looking statements after we distribute this information statement.

Some of the risks and other factors that could affect our performance and
operating results are discussed under "Risk Factors" and elsewhere in this
information statement. There may also be other risks that we are unable to
predict at this time.

15
<PAGE> 24

THE SPIN-OFF

BACKGROUND OF THE SPIN-OFF

On October 26, 2000, Flowers Industries and Kellogg Company entered into an
agreement and plan of restructuring and merger under which a wholly-owned
subsidiary of Kellogg will merge with and into Flowers Industries. Flowers
Industries, whose principal asset at the time of the merger will be the majority
ownership interest in Keebler, will survive the merger as a wholly-owned
subsidiary of Kellogg. As a condition to the merger, Flowers Industries has
agreed to transfer its fresh and frozen bakery operations, and certain other
corporate assets and liabilities, to Flowers Foods, which is currently a
wholly-owned subsidiary of Flowers Industries. Effective virtually
simultaneously with the merger, Flowers Industries will distribute all of the
outstanding shares of Flowers Foods common stock on a pro rata basis to its
shareholders.

MANNER OF EFFECTING THE SPIN-OFF

Flowers Industries will effect the spin-off on or about January , 2001
and will deliver all of the outstanding shares of Flowers Foods common stock to
First Union National Bank, as transfer agent and registrar, for distribution to
the holders of record of Flowers Industries common stock as of the close of
business on that date. Shareholders of Flowers Industries will receive shares of
Flowers Foods common stock in an amount equal to their proportionate interest in
Flowers Industries. The distribution of Flowers Foods common stock will be made
based on a ratio of one share of Flowers Foods common stock for every
shares of Flowers Industries common stock held by Flowers Industries
shareholders as of the close of business on the record date. The actual number
of shares of Flowers Foods common stock to be distributed will depend on the
number of shares of Flowers Industries common stock outstanding as of the record
date. Any Flowers Industries shareholder who transfers his or her Flowers
Industries common stock prior to January , 2001 will not receive shares of
Flowers Foods even though he or she may have been a shareholder of record for
purposes of voting at the Flowers Industries special meeting to approve the
merger.

Flowers Industries currently intends to distribute the Flowers Foods shares
by book entry. If you are a record holder of Flowers Industries common stock,
instead of physical stock certificates, you will receive a statement of your
book entry account for the Flowers Foods shares distributed to you. Following
the spin-off, you may request physical stock certificates if you wish, and
instructions for making that request will be furnished with your book entry
account statement.

If you hold your Flowers Industries shares through a stockbroker, bank or
other nominee, your shares are likely held in "street name," and you are
probably not a shareholder of record. In such a case, your receipt of the
Flowers Foods common stock depends on your arrangements with the nominee that
holds your Flowers Industries shares for you.

NO ISSUANCE OF FRACTIONAL SHARES

No certificates representing fractional interests in shares of Flowers
Foods common stock will be issued to Flowers Industries shareholders as part of
the spin-off. After the spin-off, when regular trading in Flowers Foods common
stock has begun, the distribution

16
<PAGE> 25

agent, First Union National Bank, acting as agent for Flowers Industries
shareholders otherwise entitled to receive certificates representing fractional
shares of Flowers Foods common stock, will aggregate and sell all fractional
shares in the open market at then prevailing market prices and distribute to
each Flowers Foods shareholder who is entitled to payment in respect of such
fractional shares his or her proportionate interest in the proceeds from the
sale of the aggregated fractional shares.

PRINCIPAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the material United States federal
income tax consequences of the distribution to Flowers Industries shareholders
of Flowers Foods common stock in the spin-off concurrent with the exchange of
shares of Flowers Industries common stock for cash in the merger. We will refer
to the spin-off and merger, collectively, as the "transaction." This discussion
is based on currently operative provisions of the Internal Revenue Code of 1986,
Treasury regulations under the Code and administrative rulings and court
decisions, all of which are subject to change. Any such change, which may or may
not be retroactive, could alter the tax consequences to Flowers Industries,
Flowers Foods or the Flowers Industries shareholders as described herein.

Flowers Industries shareholders should be aware that this discussion does
not address all federal income tax considerations that may be relevant to
particular shareholders of Flowers Industries in light of their particular
circumstances, such as shareholders who are banks, insurance companies, pension
funds, tax-exempt organizations, dealers in securities or foreign currencies,
shareholders who are not United States persons, as defined in the Code,
shareholders who acquired their shares in connection with stock option or stock
purchase plans or in other compensatory transactions, shareholders who hold
Flowers Industries common stock as part of an integrated investment (including a
"straddle") comprised of shares of Flowers Industries common stock and one or
more other positions, or shareholders who have previously entered into a
constructive sale of Flowers Industries common stock. In addition, the following
discussion does not address the tax consequences of the transaction under
foreign, state or local tax laws or the tax consequences of transactions
effectuated prior or subsequent to or concurrently with the transaction (whether
or not such transactions are in connection with the transaction), including,
without limitation, transactions in which Flowers Industries common stock is
acquired or Flowers Foods common stock is disposed of.

ACCORDINGLY, FLOWERS INDUSTRIES SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE SPECIFIC TAX CONSEQUENCES, INCLUDING THE APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES, TO THEM OF THE TRANSACTION
IN THEIR PARTICULAR CIRCUMSTANCES.

For United States federal income tax purposes, the transaction is intended
to constitute a single integrated transaction with respect to Flowers Industries
and its shareholders in which the spin-off will be treated as a distribution in
redemption of outstanding common stock of Flowers Industries in connection with
the complete termination of the Flowers Industries shareholders' interest in
Flowers Industries. Although Flowers Industries believes that the foregoing
description correctly characterizes the transaction for United States federal
income tax purposes and, therefore, that the spin-off should qualify under
Section 302(b) of the Code, either because the integrated combination of the
spin-off and the merger results in a complete termination of the

17
<PAGE> 26

Flowers Industries shareholders' interests in Flowers Industries or because the
spin-off, in conjunction with the merger, is not essentially equivalent to a
dividend, there is no specific authority on this point and the issue is not free
from doubt.

Assuming the spin-off qualifies as an exchange within the meaning of
Section 302(b) of the Code and that the shares of Flowers Industries common
stock surrendered in the transaction were held as capital assets, then, subject
to the assumptions, limitations and qualifications referred to in this
information statement, the transaction would result in the following federal
income tax consequences:

- Each holder of Flowers Industries common stock will generally recognize
gain, if any, only to the extent of the excess of (i) the sum of the fair
market value, on the date of the spin-off, of the Flowers Foods common
stock distributed in the spin-off plus the cash proceeds received
pursuant to the merger over (ii) the holder's adjusted basis immediately
prior to the transaction in the Flowers Industries common stock
surrendered. Such gain generally should be capital gain, and generally
should be long-term capital gain if the Flowers Industries common stock
exchanged in the transaction has been held for more than one year. In the
event that a holder's adjusted basis in the Flowers Industries common
stock exceeds the sum of the fair market value of the Flowers Foods stock
and the amount of cash received by the holder in the transaction, the
holder will recognize a loss. Such loss generally should be capital loss,
and generally should be long-term capital loss if the Flowers Industries
common stock exchanged in the transaction has been held for more than one
year.

- The tax basis of the Flowers Foods common stock received by Flowers
Industries shareholders in the transaction will be equal to the fair
market value of such stock on the date of the spin-off. One reasonable
method of determining this would be to use the weighted average trading
price of Flowers Foods common stock on the first full day of trading
ending after the spin-off; however, please consult with your own tax
advisor with respect to your particular circumstances.

- The holding period of the Flowers Foods common stock received in the
spin-off will commence on the day after the spin-off.

No ruling has been or will be obtained from the Internal Revenue Service in
connection with the transaction, and the Internal Revenue Service could
challenge the status of the transaction as a single integrated transaction for
United States federal income tax purposes. Such a challenge, if successful,
could result in Flowers Industries shareholders being treated as receiving a
"dividend" distribution of Flowers Foods common stock in respect of their
Flowers Industries common stock in the spin-off and as selling, in a separate
transaction, their Flowers Industries common stock to Kellogg immediately after
the spin-off. The amount treated as distributed in the spin-off would be equal
to the fair market value of the Flowers Foods common stock on the date of the
spin-off and generally would be (1) treated as a dividend taxable as ordinary
income to the Flowers Industries shareholders to the extent of Flowers
Industries current or accumulated earnings and profits, (2) to the extent such
amount exceeded Flowers Industries earnings and profits, it would be applied to
reduce, but not below zero, each Flowers Industries shareholder's adjusted basis
in such shareholder's Flowers Industries stock, and (3) would be taxable as
capital gain to each Flowers Industries shareholder to the extent the amount
treated as received by such shareholder in the spin-off exceeded the amount
described in (1) and (2) hereof. Flowers Industries shareholders would have a
basis in the Flowers Foods

18
<PAGE> 27

common stock equal to its fair market value on the date of the spin-off, and the
holding period of such stock would commence on the day after the spin-off.
Flowers Industries shareholders generally would recognize gain on the sale of
their Flowers Industries common stock to Kellogg in the merger in an amount
equal to the excess, if any, of the amount of cash received from Kellogg in the
merger over their adjusted basis in the Flowers Industries common stock
immediately prior to the merger, taking into account the effect of the spin-off
of Flowers Foods common stock on such adjusted basis as described above. Such
gain generally would be capital gain and generally would be long-term capital
gain if the Flowers Industries common stock exchanged in the merger had been
held for more than one year. In the event that a holder's adjusted basis in the
Flowers Industries common stock, taking into account the effect of the spin-off
of Flowers Foods common stock on such adjusted basis as described above,
exceeded the amount of cash received from Kellogg in the merger, the holder
would recognize a loss. Such loss generally would be a capital loss and
generally would be a long-term capital loss if the Flowers Industries common
stock exchanged in the merger had been held for more than one year.

You may be subject to "backup withholding" at a rate of 31% on payments
(including the distribution of Flowers Foods common stock) received in
connection with the transaction unless you (1) provide a correct taxpayer
identification number (which, if you are an individual, is your social security
number) and any other required information to the exchange agent, or (2) are a
corporation or otherwise qualify under certain exempt categories and, when
required, demonstrate this fact, all in accordance with the requirements of the
backup withholding rules. If you do not provide a correct taxpayer
identification number, you may be subject to penalties imposed by the Internal
Revenue Service. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against your United States federal income
tax liability. You should consult with your own tax advisor as to your
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. You may prevent backup withholding by completing a W-9
or substitute W-9 and submitting it to the exchange agent for the merger when
you submit your stock certificate(s) following the effective time of the merger.

THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT
THERETO. THUS, FLOWERS INDUSTRIES SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE
TRANSACTION, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABLE TAX
LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.

19
<PAGE> 28

AGREEMENTS BETWEEN FLOWERS INDUSTRIES AND
FLOWERS FOODS RELATING TO THE SPIN-OFF

We have entered into the agreements described in this section with Flowers
Industries to facilitate an orderly transition and govern the ongoing
relationship between the companies after completion of the spin-off and the
merger. The following descriptions include a summary of all material terms of
such agreements but are qualified in their entirety by reference to the
agreements, which are filed as exhibits to Flowers Foods' registration statement
on Form 10 of which this information statement is a part. We urge all
shareholders to read these agreements carefully.

DISTRIBUTION AGREEMENT

Flowers Foods and Flowers Industries have entered into a distribution
agreement which, in general, provides that:

- Flowers Industries will transfer its Flowers Bakeries and Mrs. Smith's
Bakeries businesses and certain other corporate assets and liabilities to
Flowers Foods;

- Flowers Industries will distribute all of the outstanding shares of
Flowers Foods common stock to its shareholders on a pro rata basis;

- following the spin-off, Flowers Foods will indemnify Flowers Industries
for liabilities incurred by Flowers Industries, whether arising before or
after the spin-off, relating to tax liabilities of Flowers Industries
arising out of the spin-off or relating to the operations of the Flowers
Bakeries and Mrs. Smith's Bakeries businesses or otherwise, except for
any liabilities relating to debt to be retained by Flowers Industries and
up to $16.0 million of advisory fees payable in connection with the
merger and spin-off; and

- following the spin-off, Flowers Industries will indemnify Flowers Foods
for liabilities incurred by Flowers Foods relating to certain liabilities
retained by Flowers Industries.

TRANSFER OF ASSETS. Under the distribution agreement, Flowers Industries
will transfer the Flowers Bakeries and Mrs. Smith's Bakeries businesses and
certain other corporate assets to Flowers Foods prior to the spin-off. As a
result of these transfers, upon completion of the spin-off, Flowers Foods will
consist of the traditional bakery businesses currently owned and operated by
Flowers Industries.

ALLOCATION OF LIABILITIES. Following the spin-off, Flowers Industries
(which will then be a wholly-owned subsidiary of Kellogg) will generally be
responsible for, and has agreed to indemnify Flowers Foods, its affiliates and
their respective officers, directors, employees, successors and assigns from and
against, the following liabilities whether arising before or after the spin-off:

- any debt retained by Flowers Industries; and

- certain advisory fees payable in connection with the merger and spin-off
not to exceed $16.0 million.

20
<PAGE> 29

Except for the liabilities retained by Flowers Industries, Flowers Foods
will be generally responsible for, and has agreed to indemnify Flowers
Industries, its affiliates (including Kellogg) and their respective officers,
directors, employees, successors and assigns from and against, all liabilities
whether arising before, at or after the spin-off, of or relating to Flowers
Industries, Flowers Foods or any subsidiary of Flowers Foods, whether arising
from the conduct of or relating to the business of Flowers Foods, discontinued
or divested businesses or operations of Flowers Industries or Flowers Foods or
otherwise. Included in these liabilities are the following:

- liabilities (including tax liabilities) of Flowers Industries or any
subsidiary to the extent arising from the conduct of, in connection with
or relating to, any of Flowers Foods' assets or bakery businesses or the
ownership or use thereof or any business or operations which Flowers
Industries or Flowers Foods has discontinued or divested prior to the
spin-off;

- any environmental liabilities of or relating to Flowers Industries,
Flowers Foods or any business or operations which Flowers Industries or
Flowers Foods has discontinued or divested prior to the spin-off;

- the debt to be assumed by Flowers Foods, which is anticipated to total
approximately $250.0 million;

- advisory fees payable in connection with the merger and spin-off in
excess of $16.0 million;

- litigation matters in which Flowers Industries or its officers, directors
or employees are defendants;

- taxes, as discussed below; and

- employee benefits related liabilities allocated to Flowers Foods in the
employee benefits agreement referred to below.

In addition, Flowers Foods has agreed to indemnify Kellogg, its affiliates
(including Flowers Industries) and their respective directors, officers,
employees, controlling persons, agents and representatives and their successors
and assigns, from and against all liabilities arising out of, or relating to or
resulting from the breach or failure of any representation, warranty, obligation
or agreement of Flowers Industries contained in the agreement and plan of
restructuring and merger to be true and correct when made or at the closing of
the merger.

TAXES. Flowers Foods will be responsible for filing consolidated federal
and consolidated, combined or unitary state tax returns that include Flowers
Industries for periods through completion of the spin-off and pay the related
taxes to the Internal Revenue Service or other relevant taxing authority.
Flowers Industries shall be responsible for filing consolidated federal and
consolidated, combined or unitary state tax returns with respect to Flowers
Industries for periods following the spin-off and paying the related taxes to
the Internal Revenue Service or other relevant taxing authority.

In addition, the distribution agreement specifies the tax liabilities
against which each of Flowers Industries and Flowers Foods will indemnify the
other. In general, Flowers Foods will indemnify Flowers Industries against:

- any tax liabilities attributable to Flowers Industries for periods ending
on or prior to the spin-off;

21
<PAGE> 30

- any tax liabilities relating to or resulting from the spin-off; and

- any tax liabilities resulting from the breach by Flowers Foods of its
obligations under the distribution agreement.

In general, Flowers Industries will indemnify Flowers Foods for tax
liabilities attributable to Flowers Industries for periods beginning after
completion of the spin-off except for any tax liabilities relating to the
spin-off or to Flowers Foods and its businesses.

TRADEMARKS; TRADENAMES. The distribution agreement provides in general
that, when the spin-off is completed, Flowers Industries and its affiliates will
not use the name "Flowers," marks or names derived therefrom or other specified
marks and names.

CONDITIONS TO THE SPIN-OFF. The spin-off will not occur unless the
following conditions are satisfied or waived:

- effectiveness of Flowers Foods' registration statement on Form 10, of
which this information statement is a part;

- mailing of this information statement to the Flowers Industries
shareholders;

- approval of the Flowers Foods common stock for listing on the New York
Stock Exchange;

- effectiveness of our restated articles of incorporation;

- execution and delivery of the employee benefits agreement referred to
below;

- effectiveness of the contribution of the Flowers Bakeries and Mrs.
Smith's Bakeries capital stock to Flowers Foods and the assumption of the
liabilities set forth above by Flowers Foods; and

- the conditions to the Flowers Industries/Kellogg merger shall have been
satisfied or waived.

EMPLOYEE BENEFITS AGREEMENT

Below is a summary of material terms and conditions of the employee
benefits agreement entered into between Flowers Industries and Flowers Foods on
October 26, 2000.

Although the employment of all employees at Flowers Industries will be
terminated by Flowers Industries at the completion of the spin-off, the employee
benefits agreement provides that Flowers Foods will offer employment to all
people who were employees of Flowers Industries immediately prior to the
spin-off. Flowers Foods will be responsible for all obligations to employees
arising out of or related to their employment with Flowers Industries, including
as a result of the spin-off and any liabilities arising from an employee's
acceptance or rejection of an offer of employment from Flowers Foods.

Following the completion of the spin-off, Flowers Foods will assume
sponsorship of certain employee benefit plans of Flowers Industries. In
addition, Flowers Foods will be responsible for any liabilities of Flowers
Industries under the three multiemployer pension plans currently covering
employees of affiliates of Flowers Industries other than the employees of
Keebler and its subsidiaries.

22
<PAGE> 31

The agreement provides that all share equivalents held by employees that
have been issued under the Flowers Industries 1982 Incentive Stock Option Plan
and the Flowers Industries 1989 Executive Stock Incentive Plan, whether vested
or non-vested, shall remain outstanding according to their terms and be
unaffected by the spin-off. All outstanding share equivalents will be cancelled
at or immediately prior to the effective time of the merger and none will be
outstanding following the merger. Kellogg will pay, for each cancelled share
equivalent issued under the 1989 Executive Stock Incentive Plan, an amount
determined as set forth in the agreement and plan of restructuring and merger
between Flowers Industries and Kellogg.

23
<PAGE> 32

CAPITALIZATION

The following table sets forth the consolidated debt and capitalization at
October 7, 2000 of Flowers Industries on a historical basis and of Flowers Foods
on a pro forma basis to give effect to the spin-off and the merger. You should
read this table in conjunction with the information located under the heading
"Pro Forma Financial Data" and the consolidated financial statements of Flowers
Industries and the related notes. You should not construe this pro forma
information to be indicative of our capitalization at the time of the spin-off
and the merger. This pro forma information also does not project the
capitalization for any future period or date.

<TABLE>
<CAPTION>
OCTOBER 7, 2000
--------------------------
(IN THOUSANDS, EXCEPT
SHARE DATA)
FLOWERS
INDUSTRIES FLOWERS FOODS
HISTORICAL PRO FORMA
---------- -------------
<S> <C> <C>
Current maturities of long term debt and capital lease
obligations.......................................... $ 58,309 $ 7,649
Long term debt and capital lease obligations........... 1,374,105 203,001
SHAREHOLDERS' EQUITY:
Flowers Industries, Inc. Stock
Preferred stock -- $100 par value, authorized 10,467
shares and none issued...............................
Preferred stock -- $100 par value, authorized 249,533
shares and none issued...............................
Common stock -- $0.625 par value, authorized
350,000,000 shares, 100,527,893 shares issued........ 62,830
Treasury Stock......................................... (8,272)
Stock compensation adjustments......................... (13,900)
Flowers Foods, Inc. Stock
Preferred stock -- $100 par value, authorized 100,000
shares and none issued...............................
Preferred stock -- $0.01 par value, authorized 900,000
shares and none issued...............................
Common Stock -- $0.01 par value, authorized 100,000,000
shares, 20,105,579 shares issued..................... 201(1)
Capital in excess of par value......................... 289,127 500,926(1)
Retained earnings...................................... 215,285 133,577
---------- --------
Total capitalization................................... $1,977,484 $845,354
========== ========
</TABLE>

---------------

(1) We have assumed the issuance of one share of Flowers Foods common stock for
every five shares of Flowers Industries common stock. However, the exact
stock distribution ratio will be determined by the Flowers Industries board
of directors prior to the spin-off.

24
<PAGE> 33

DIVIDEND POLICY

Our Board of Directors has not yet determined whether to declare and pay
dividends on Flowers Foods common stock. The Board will base its decisions on,
among other things, general business conditions, our financial results,
contractual, legal and regulatory restrictions regarding dividend payments and
any other factors the Board may consider relevant.

25
<PAGE> 34

SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table sets forth selected historical financial data of
Flowers Industries, the predecessor of Flowers Foods. The selected historical
financial data as of and for the 52 weeks ended January 1, 2000, January 2,
1999, the 27 week transition period ended January 3, 1998 and for the 52 weeks
ended June 28, 1997 have been derived from the consolidated financial statements
of Flowers Industries, which have been audited by PricewaterhouseCoopers, LLP,
independent accountants. The selected historical financial data as of and for
the 40 weeks ended October 7, 2000 and October 9, 1999 are derived from the
unaudited consolidated financial statements of Flowers Industries, which, in the
opinion of management, include all adjustments necessary for a fair
presentation. Operating results for the 40 weeks ended October 7, 2000 are not
necessarily indicative of the results that may be achieved for the year ending
December 30, 2000.

The selected historical statement of income data set forth below do not
reflect the many significant changes that will occur in the operations and
capitalization of our company as a result of the spin-off and the merger. Before
the spin-off, we operated as part of Flowers Industries. Because the data
reflect periods during which we did not operate as an independent company, the
data may not reflect the results of operations or the financial position that
would have resulted if we had operated as a separate, independent company during
the periods shown. In addition, the data may not necessarily be indicative of
our future results of operations or financial position. Such historical data
should be read in conjunction with Flowers Industries' "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Flowers
Industries' consolidated financial statements and the related notes thereto,
which are incorporated by reference herein and have been filed as exhibits to
Flowers Foods' registration statement on Form 10, of which this information
statement is a part.

26
<PAGE> 35

FLOWERS INDUSTRIES, INC.
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE 52 WEEKS ENDED FOR THE 27 FOR THE 52 FOR THE 40 WEEKS ENDED
--------------------------------- WEEKS ENDED WEEKS ENDED ---------------------------------
JANUARY 1, 2000 JANUARY 2, 1999 JANUARY 3, 1998 JUNE 28, 1997 OCTOBER 7, 2000 OCTOBER 9, 1999
--------------- --------------- --------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF
INCOME DATA:
Sales.................. $4,236,010 $3,765,367 $784,097 $1,437,713 $3,317,466 $3,222,157
Materials, supplies,
labor and other
production costs..... 2,001,956 1,702,581 418,926 787,799 1,505,245 1,548,311
Selling, marketing and
administrative
expenses............. 1,845,101 1,633,319 301,426 534,285 1,445,318 1,408,420
Depreciation and
amortization......... 144,619 128,765 26,930 45,970 129,145 107,240
Non-recurring charge
(credit)............. 60,355 68,313 (2,424) 69,208
Insurance proceeds..... (4,774)
Gain on sale of
distributor notes
receivable........... (43,244)
Interest expense....... 82,565 72,840 12,144 25,691 89,239 63,595
Interest income........ (1,700) (4,115) (348) (582) (3,002) (1,190)
Income before income
taxes, investment in
unconsolidated
affiliate, minority
interest,
extraordinary loss
and cumulative effect
of changes in
accounting
principles........... 103,114 163,664 25,019 87,794 158,719 26,573
Income taxes........... 56,260 74,391 9,632 33,191 68,115 19,102
Income from investment
in unconsolidated
affiliate............ 18,061 7,721
Income before minority
interest,
extraordinary loss
and cumulative effect
of changes in
accounting
principles........... 46,854 89,273 33,448 62,324 90,604 7,471
Minority interest...... (39,560) (43,305) (55,359) (19,473)
Income (loss) before
extraordinary loss
and cumulative effect
of changes in
accounting
principles........... 7,294 45,968 33,448 62,324 35,245 (12,002)
Extraordinary loss due
to early
extinguishment of
debt................. (938)
Cumulative effect of
changes in accounting
principles, net of
tax benefit.......... (3,131) (9,888)
Net income (loss)...... $ 7,294 $ 41,899 $ 23,560 $ 62,324 $ 35,245 $ (12,002)
Diluted net income
(loss) per common
share................ $ 0.07 $ 0.43 $ 0.27 $ 0.71 $ 0.35 $ (0.12)
Weighted average shares
outstanding.......... 100,420 96,801 88,773 88,401 100,372 100,388
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets........... $2,900,478 $2,860,900 $898,880 $ 898,187 $3,134,622 $2,845,579
Long-term debt......... $1,208,630 $1,038,998 $276,211 $ 275,247 $1,374,105 $1,115,982
Stockholders' equity... $ 538,754 $ 572,961 $348,567 $ 340,012 $ 545,070 $ 521,646
</TABLE>

27
<PAGE> 36

PRO FORMA FINANCIAL DATA

The following unaudited pro forma condensed consolidated income statements
for the fiscal year ended January 1, 2000 and, January 2, 1999, the 27 week
transition period ended January 3, 1998, the 52 weeks ended June 28, 1997 and
the 40 weeks ended October 7, 2000 and October 9, 1999 and the unaudited pro
forma condensed consolidated balance sheet as of October 7, 2000 present our
combined results of operations and financial position assuming that the
transactions contemplated by the spin-off and merger had been completed as of
the beginning of the respective periods. In the opinion of management, these
statements include all material adjustments necessary to reflect, on a pro forma
basis, the impact of the transaction contemplated by the spin-off and the merger
on the historical financial information of Flowers Industries. The adjustments
are described in the Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information and are set forth in the "Pro Forma Adjustments" column.

Following the spin-off, Flowers Foods will consist of the traditional
bakery businesses of Flowers Industries. For accounting purposes, we will treat
the transactions as a disposal of Keebler Foods Company. Consequently, the
financial statements of Flowers Foods will consist of the historical financial
statements of Flowers Industries, with Keebler presented as a discontinued
operation. Accordingly, the following unaudited pro forma financial information
reflects the exclusion of the assets and liabilities and the results of
operations of Keebler from the Flowers Industries consolidated financial
statements. The pro forma financial information for the fiscal year ended
January 1, 2000 and the 40 weeks ended October 7, 2000 and October 9, 1999 also
reflect the estimated reduction in interest expense and amortization of
intangibles that would have occurred had the transactions occurred at the
beginning of the respective periods. As described in the notes to the unaudited
pro forma financial information, certain costs related to the transaction will
be charged to the operations of Flowers Foods. Since these costs will be
reimbursed by Kellogg or deducted from the proceeds to Flowers Industries'
shareholders, the costs charged to operations will be credited to capital in
excess of par value.

Our unaudited pro forma condensed consolidated financial information should
be read in conjunction with the selected condensed consolidated historical
financial data of Flowers Industries and the related notes. The unaudited pro
forma condensed consolidated financial information has been presented for
informational purposes only and does not reflect the results of operations or
financial position of Flowers Foods that would have existed had we operated as a
separate, independent company for the periods presented. Actual results may have
differed from pro forma results if we had operated independently. The unaudited
pro forma condensed consolidated financial information should not be relied upon
as being indicative of results we would have had or of our future results after
the spin-off and the merger.

28
<PAGE> 37

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

The table below shows the unaudited pro forma condensed consolidated
balance sheet of Flowers Foods. This balance sheet is based on the historical
consolidated balance sheet of Flowers Industries at October 7, 2000 and assumes
that the spin-off and the merger had occurred on that date. It is intended to
give you an idea of what Flowers Foods' business would have looked like had the
spin-off and the merger already occurred.

It is important that you read this unaudited pro forma condensed
consolidated balance sheet together with Flowers Industries' consolidated
financial statements, which are incorporated by reference herein and have been
filed as exhibits to Flowers Foods' registration statement on Form 10, of which
this information statement is a part. You should not rely on this balance sheet
as being indicative of the financial position of Flowers Foods that would have
resulted if the spin-off and the merger had occurred on October 7, 2000.

<TABLE>
<CAPTION>
OCTOBER 7, 2000
-------------------------------- PRO FORMA ADJUSTMENTS PRO FORMA
FLOWERS KEEBLER FOODS ---------------------- FLOWERS
INDUSTRIES, INC. COMPANY(A) DEBIT CREDIT FOODS, INC.
---------------- ------------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents................... $ 23,766 $ 20,469 $ 3,297
Accounts receivable......................... 191,140 52,367 138,773
Inventories................................. 302,401 184,643 117,758
Deferred income taxes....................... 69,289 34,668 34,621
Prepaid and other........................... 99,765 38,583 61,182
---------- ---------- ----------
686,361 330,730 355,631
Net property plant and equipment............ 1,195,007 610,337 584,670
Other assets and deferred charges........... 1,253,254 816,001 272,652(b) 164,601
---------- ---------- ----------
$3,134,622 $1,757,068 $1,104,902
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES
Current portion of long term debt and
capital leases............................ $ 58,309 $ 50,660 $ 7,649
Accounts payable............................ 252,352 146,750 105,602
Income taxes................................ 1,138 1,138
Facility closing cost and severance......... 17,539 12,232 5,307
Other accrued liabilities................... 344,156 237,406 106,750
---------- ---------- ----------
673,494 448,186 225,308
Long term debt and capital leases........... 1,374,105 546,104 625,000(c) 203,001
OTHER LONG-TERM LIABILITIES
Deferred income taxes....................... 158,456 127,544 8,197(b) 22,715
Postretirement/postemployment obligations... 64,038 63,546 492
Facility closing cost and severance......... 22,204 7,397 14,807
Other....................................... 60,772 46,710 10,187(d) 3,875
Minority interest........................... 236,483 236,483(b)
STOCKHOLDERS' EQUITY
Common stock................................ 62,830 283(f) 201
62,346(f)
Capital in excess of par value.............. 289,127 517,581 27,972(b) 625,000(c) 500,926
1,303(f) 24,809(d)
46,500(e)
62,346(f)
Retained earnings........................... 215,285 28,522(d) 133,577
46,500(e)
6,686(f)
Less: treasury stock........................ (8,272) 8,272(f)
Stock compensation adjustments.............. (13,900) 13,900(d)
---------- ---------- ----------
545,070 517,581 634,704
---------- ---------- ----------
$3,134,622 $1,757,068 $1,104,902
========== ========== ==========
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Balance Sheet are
an integral part of the pro forma financial information presented.

29
<PAGE> 38

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The table below shows the unaudited pro forma condensed consolidated
statement of income of Flowers Foods for the 52 weeks ended January 1, 2000, and
the 40 weeks ended October 7, 2000 and October 9, 1999. This statement of income
is based on the historical consolidated statement of income of Flowers
Industries and assumes that the spin-off and the merger occurred at the
beginning of the respective periods. It is intended to give you an idea of what
Flowers Foods' business would have looked like had the spin-off and the merger
already occurred. Weighted average shares outstanding used to calculate diluted
net income or loss from continuing operations per common share included in the
unaudited pro forma condensed consolidated statement of income assumes the
issuance of one share of Flowers Foods common stock for every five shares of
Flowers Industries common stock outstanding. However, the exact stock
distribution ratio will be determined by the Flowers Industries board of
directors prior to the spin-off. Flowers Industries' historical weighted average
shares outstanding for the respective periods have been adjusted accordingly.

It is important that you read this unaudited pro forma condensed
consolidated statement of income together with Flowers Industries' consolidated
financial statements, which are incorporated by reference herein and have been
filed as exhibits to Flowers Foods' registration statement on Form 10, of which
this information statement is a part. You should not rely on this statement of
income as being indicative of the historical results that Flowers Foods would
have had if the spin-off and the merger had already occurred, or the results
that Flowers Foods will experience after the spin-off and the merger.

<TABLE>
<CAPTION>
52 WEEKS ENDED JANUARY 1, 2000 PRO FORMA ADJUSTMENTS
-------------------------------- ----------------------
KEEBLER PRO FORMA
FLOWERS FOODS FLOWERS
INDUSTRIES, INC. COMPANY(G) DEBIT CREDIT FOODS, INC.
---------------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Sales.................... $4,236,010 $2,667,771 $1,568,239
Materials, supplies,
labor and other
production costs....... 2,001,956 1,118,074 883,882
Selling, marketing and
administrative
expenses............... 1,845,101 1,201,669 643,432
Depreciation and
amortization........... 144,619 84,125 $ 6,604(h) 53,890
Non-recurring charge
(credit)............... 60,355 66,349 (5,994)
---------- ---------- ----------
Income (loss) from
operations............. 183,979 197,554 (6,971)
Interest expense......... 82,565 37,874 39,335(i) 5,356
Interest income.......... (1,700) (1,700)
---------- ---------- ----------
Interest expense, net.... 80,865 36,174 5,356
---------- ---------- ----------
Income (loss) before
income taxes and
minority interest...... 103,114 161,380 (12,327)
Income taxes............. 56,260 73,175 $ 13,765(j) (3,150)
---------- ---------- ----------
Income (loss) before
minority interest...... 46,854 88,205 (9,177)
Minority interest........ (39,560) (39,560)
---------- ---------- ----------
Net income (loss) from
continuing
operations............. $ 7,294 $ 48,645 $ (9,177)
========== ========== ==========
Diluted net income (loss)
from continuing
operations per common
share.................. $ 0.36 $ (0.46)
========== ==========
Weighted average shares
outstanding............ 20,084 20,084
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Statement of Income
are an integral part of the pro forma financial information presented.

30
<PAGE> 39
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
40 WEEKS ENDED OCTOBER 7, 2000
--------------------------------
KEEBLER PRO FORMA ADJUSTMENTS PRO FORMA
FLOWERS FOODS ---------------------- FLOWERS
INDUSTRIES, INC. COMPANY(G) DEBIT CREDIT FOODS, INC.
---------------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Sales................... $3,317,466 $2,111,635 $1,205,831
Materials, supplies,
labor and other
production costs...... 1,505,245 842,207 663,038
Selling, marketing and
administrative
expenses.............. 1,445,318 961,009 484,309
Depreciation and
amortization.......... 129,145 72,547 $ 5,307(h) 51,291
Proceeds from insurance
claims................ (4,774) (4,774)
Non-recurring charge
(credit).............. (2,424) (996) (1,428)
---------- ---------- ----------
Income from
operations............ 244,956 236,868 13,395
Interest expense........ 89,239 37,189 37,796(i) 14,254
Interest income......... (3,002) (3,002)
---------- ---------- ----------
Interest expense, net... 86,237 34,187 14,254
---------- ---------- ----------
Income (loss) before
income taxes and
minority interest..... 158,719 202,681 (859)
Income taxes............ 68,115 80,767 $ 12,462(j) (190)
---------- ---------- ----------
Income (loss) before
minority interest..... 90,604 121,914 (669)
Minority interest....... (55,359) (55,359)
---------- ---------- ----------
Net income (loss) from
continuing
operations............ $ 35,245 $ 66,555 $ (669)
========== ========== ==========
Diluted net income
(loss) from continuing
operations per common
share................. $ 1.76 $ (0.03)
========== ==========
Weighted average shares
outstanding........... 20,074 20,074
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Statement of Income
are an integral part of the pro forma financial information presented.

31
<PAGE> 40
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
40 WEEKS ENDED OCTOBER 9, 1999
-------------------------------
KEEBLER PRO FORMA ADJUSTMENTS PRO FORMA
FLOWERS FOODS --------------------- FLOWERS
INDUSTRIES, INC. COMPANY(G) DEBIT CREDIT FOODS, INC.
---------------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Sales..................... $3,222,157 $2,055,724 $1,166,433
Materials, supplies, labor
and other production
costs................... 1,548,311 875,130 673,181
Selling, marketing and
administrative
expenses................ 1,408,420 935,606 472,814
Depreciation and
amortization............ 107,240 62,651 $ 5,080(h) 39,509
Non-recurring charge...... 69,208 69,208
---------- ---------- ----------
Income (loss) from
operations.............. 88,978 113,129 (19,071)
Interest expense.......... 63,595 29,687 31,063(i) 2,845
Interest income........... (1,190) (1,190)
---------- ---------- ----------
Interest expense, net..... 62,405 28,497 2,845
---------- ---------- ----------
Income (loss) before
income taxes and
minority interest....... 26,573 84,632 (21,916)
Income taxes.............. 19,102 41,204 $ 16,503(j) (5,599)
---------- ---------- ----------
Income (loss) before
minority interest....... 7,471 43,428 (16,317)
Minority interest......... (19,473) (19,473)
---------- ---------- ----------
Net (loss) income from
continuing operations... $ (12,002) $ 23,955 $ (16,317)
========== ========== ==========
Diluted net loss from
continuing operations
per common share........ $ (0.60) $ (0.81)
========== ==========
Weighted average shares
outstanding............. 20,078 20,078
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Statement of Income
are an integral part of the pro forma financial information presented.

32
<PAGE> 41
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The table below shows the unaudited pro forma condensed consolidated
statement of income of Flowers Foods for the 52 weeks ended January 2, 1999, the
27 week transition period ended January 3, 1998 and for the 52 weeks ended June
28, 1997. This statement of income is based on the historical consolidated
statement of income of Flowers Industries and assumes that the spin-off and the
merger occurred at the beginning of each period presented. It is intended to
give you an idea of what Flowers Foods' business would have looked like had the
spin-off and the merger already occurred. This unaudited pro forma condensed
consolidated statement of income also differs from the unaudited pro forma
condensed consolidated statement of income on the preceding pages in that it
does not give effect to (1) the reduction of debt and accordingly assumed
decreased interest expense, which will occur in the transaction or (2) the
reduction in amortization expense related to cost in excess of net tangible
assets paid for the controlling interest in Keebler. Weighted average shares
outstanding used to calculate diluted net income or loss from continuing
operations per common share included in the unaudited pro forma condensed
consolidated statement of income assumes the issuance of one share of Flowers
Foods common stock for every five shares of Flowers Industries common stock
outstanding. However, the exact stock distribution ratio will be determined by
the Flowers Industries board of directors prior to the spin-off. Flowers
Industries' historical weighted average shares outstanding for the respective
periods have been adjusted accordingly.

It is important that you read this pro forma condensed consolidated
statement of income together with Flowers Industries' consolidated financial
statements, which has been filed as exhibits to Flowers Foods' registration
statement on Form 10, of which this information statement is a part. You should
not rely on this statement of income as being indicative of the historical
results that would actually have resulted for Flowers Foods had the spin-off and
the merger occurred at the beginning of the respective periods.

33
<PAGE> 42
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
52 WEEKS ENDED JANUARY 2, 1999
--------------------------------------------------
PRO FORMA
FLOWERS KEEBLER FLOWERS
INDUSTRIES, INC. FOODS COMPANY(G) FOODS, INC.
---------------- ----------------- -----------
<S> <C> <C> <C>
Sales................................ $3,765,367 $2,226,480 $1,538,887
Materials, supplies, labor and other
production costs................... 1,702,581 907,497 795,084
Selling, marketing and administrative
expenses........................... 1,633,319 1,049,967 583,352
Depreciation and amortization........ 128,765 69,125 59,640
Non-recurring charge................. 68,313 3,852 64,461
---------- ---------- ----------
Income from operations............... 232,389 196,039 36,350
Interest expense..................... 72,840 30,263 42,577
Interest income...................... (4,115) (3,763) (352)
---------- ---------- ----------
Interest expense, net................ 68,725 26,500 42,225
---------- ---------- ----------
Income (loss) before income taxes,
minority interest extraordinary
loss and cumulative effect of
changes in accounting principles... 163,664 169,539 (5,875)
Income taxes......................... 74,391 72,962 1,429
---------- ---------- ----------
Income (loss) before minority
interest........................... 89,273 96,577 (7,304)
Minority interest.................... (43,305) (43,305)
---------- ---------- ----------
Income (loss) before extraordinary
loss and cumulative effect of
changes in accounting principles... 45,968 53,272 (7,304)
Extraordinary loss due to early
extinguishment of debt, net of
tax................................ (938) (938)
Cumulative effect of changes in
accounting principles, net of
tax................................ (3,131) (3,131)
---------- ---------- ----------
Net income (loss) from continuing
operations......................... $ 41,899 $ 52,334 $ (10,435)
========== ========== ==========
Diluted net income (loss) from
continuing operations per share.... $ 2.16 $ (0.54)
========== ==========
Weighted average shares
outstanding........................ 19,360 19,360
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Statement of Income
are an integral part of the pro forma financial information presented.

34
<PAGE> 43
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
27 WEEKS ENDED JANUARY 3, 1998
--------------------------------------------------
PRO FORMA ADJUSTMENTS
---------------------
FLOWERS FLOWERS
INDUSTRIES, INC. DEBIT CREDIT FOODS, INC.
---------------- ------- ------ -----------
<S> <C> <C> <C> <C>
Sales................................. $784,097 $784,097
Materials, supplies, labor and other
production costs.................... 418,926 418,926
Selling, marketing and administrative
expenses............................ 301,426 301,426
Depreciation and amortization......... 26,930 26,930
-------- --------
Income from operations................ 36,815 36,815
Interest expense...................... 12,144 12,144
Interest income....................... (348) (348)
-------- --------
Interest expense, net................. 11,796 11,796
-------- --------
Income before income taxes and
cumulative effect of changes in
accounting principles............... 25,019 25,019
Income taxes.......................... 9,632 9,632
Income from investment in
unconsolidated affiliate............ 18,061 $18,061(k)
--------
Net income before cumulative effect of
changes in accounting principles.... 33,448 15,387
Cumulative effect of changes in
accounting principles, net of tax... (9,888) (9,888)
-------- --------
Net income from continuing
operations.......................... $ 23,560 $ 5,499
======== ========
Diluted net income from continuing
operations per share................ $ 1.33 $ 0.31
======== ========
Weighted average shares outstanding... 17,755 17,755
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Statement of Income
are an integral part of the pro forma financial information presented.

35
<PAGE> 44
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF INCOME -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
52 WEEKS ENDED JUNE 28, 1997
-------------------------------------------------
PRO FORMA ADJUSTMENTS
---------------------
FLOWERS FLOWERS
INDUSTRIES, INC. DEBIT CREDIT FOODS, INC.
---------------- ------ ------ -----------
<S> <C> <C> <C> <C>
Sales................................. $1,437,713 $1,437,713
Materials, supplies, labor and other
production costs.................... 787,799 787,799
Selling, marketing and administrative
expenses............................ 534,285 534,285
Depreciation and amortization......... 45,970 45,970
---------- ----------
Income from operations................ 69,659 69,659
Interest expense...................... 25,691 25,691
Interest income....................... (582) (582)
---------- ----------
Net interest expense.................. 25,109 25,109
---------- ----------
Gain on sale of distributor notes..... 43,244 43,244
---------- ----------
Income before income taxes............ 87,794 87,794
Income taxes.......................... 33,191 33,191
Income from investment in
unconsolidated affiliate............ 7,721 $7,721(k)
---------- ----------
Net income from continuing
operations.......................... $ 62,324 $ 54,603
========== ==========
Diluted net income from continuing
operations per share................ $ 3.53 $ 3.09
========== ==========
Weighted average shares outstanding... 17,680 17,680
</TABLE>

The notes to this Unaudited Pro Forma Condensed Consolidated Statement of Income
are an integral part of the pro forma financial information presented.

36
<PAGE> 45

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENTS
OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(a) Reflects the separation of the assets and liabilities of Keebler that are
included in Flowers Industries' consolidated balance sheet as of October 7,
2000. Amounts have been derived from the Keebler unaudited interim financial
statements as of October 7, 2000 filed with the Securities and Exchange
Commission on Form 10-Q on November 21, 2000 and incorporated herein by
reference and Flowers Industries' unaudited interim financial statements as
of October 7, 2000 filed as an exhibit to Flowers Foods' registration
statement on Form 10, of which this information statement is a part.

(b) Reflects the elimination of (i) cost in excess of Keebler net tangible
assets acquired, (ii) Flowers Industries' minority interest in Keebler and
(iii) deferred taxes provided on (a) unremitted earnings prior to
consolidation by Flowers Industries and (b) Keebler stock transactions, as
follows:

<TABLE>
<CAPTION>
DR/(CR)
---------
<S> <C>
Goodwill and other intangible assets.................... $(272,652)
Minority interest....................................... 236,483
Deferred taxes.......................................... 8,197
---------
Capital in excess of par value.......................... $ 27,972
=========
</TABLE>

<TABLE>
<CAPTION>
DR/(CR)
---------
<S> <C>
Long-term debt.......................................... $ 625,000
---------
Capital in excess of par value.......................... $(625,000)
---------
</TABLE>

At the effective date of the spin-off and merger, Flowers Foods'
liabilities will include approximately $250.0 million of debt. In order to
achieve this debt level, we estimate that Flowers Industries will retain
approximately $625.0 million of debt.

(d) In connection with the spin-off and merger, various separation agreements
and other employee costs will be incurred by Flowers Industries. These costs
will reduce the proceeds received by Flowers Industries shareholders. The
estimated payments expected to be made are as follows:

<S> <C>
Separation agreements..................................... $13,583
Other contractual payments under benefit programs......... 28,919*
-------
Total estimated cash payments................... $42,502
=======
</TABLE>

---------------

* Based on an estimated stock price of $16.6875 per share.

37
<PAGE> 46

Of the total estimated cash payments, $10.2 million is already accrued in
Flowers Industries' liabilities and $3.8 million reflects equity
compensation in the form of value of stock options which has no effect on
the results of operations, as follows:

<TABLE>
<S> <C>
Total estimated cash payments............................ $ 42,502
Amount accrued........................................... (10,187)
Equity compensation...................................... (3,793)
--------
$ 28,522**
========
</TABLE>

---------------

** The $28.5 million will be charged to income from continuing operations
in the Flowers Foods statement of income when a measurement date is reached
under discontinued operations accounting.

Accordingly, $28.5 million is reflected as a decrease in retained earnings
in the unaudited pro forma condensed consolidated balance sheet. The $28.5
million is not reflected in the unaudited pro forma condensed consolidated
statement of income because it is of a non-recurring nature. The pro forma
entry is outlined as follows:

<TABLE>
<CAPTION>
DR/(CR)
--------
<S> <C>
Decrease in retained earnings............................ $ 28,522
Decrease in other liabilities............................ 10,187
Stock compensation adjustments........................... (13,900)
--------
Net increase in capital in excess of par value........... $(24,809)
========
</TABLE>

Stock compensation adjustments represent the termination of the 1989
Flowers Industries Executive Stock Incentive Plan as follows:

<S> <C>
Reversal of notes receivable to capital in excess of par
value................................................... $10,102
Accelerated vesting of restricted stock awards............ 3,798+
-------
$13,900
=======
</TABLE>

---------------

+ Accelerated vesting of restricted stock awards is included in the $28.5
million decrease in retained earnings.

(e) In connection with the spin-off and merger, various transaction and other
costs of approximately $41.0 million will be incurred by Flowers Industries
and approximately $10.0 million by Keebler. Of the $41.0 million incurred by
Flowers Industries, $16.0 million will be borne by Kellogg and the balance
will reduce the proceeds received by Flowers Industries' shareholders.
Estimated costs reflected on the unaudited pro forma condensed consolidated
balance sheet are outlined as follows:

<S> <C>
Investment banking fees................................... $32,000
Legal and accounting...................................... 5,000
Debt prepayment penalty................................... 4,000
55% of Keebler transaction fees*.......................... 5,500
-------
$46,500
=======
</TABLE>

This $46.5 million will be included in discontinued operations when a
measurement date is reached.
---------------

* Represents the year to date weighted average ownership interest of
Flowers Industries in Keebler

38
<PAGE> 47

(f) Represents adjustments necessary to par value of common stock and capital in
excess of par value to (i) reflect the retirement of Flowers Industries
treasury stock upon completion of the merger and (ii) reflect the assumed
issuance of one share of Flowers Foods common stock for every five shares of
Flowers Industries common stock outstanding by adjusting Flowers Industries
$0.625 par value common stock to newly issued Flowers Foods $0.01 par value
common stock as follows:

<TABLE>
<CAPTION>
DR/(CR)
--------
<S> <C> <C>
(i) Retained earnings................................... $ 6,686
Capital in excess of par value...................... 1,303
Common stock........................................ 283
--------
Treasury stock...................................... $ (8,272)
========

(ii) Common stock........................................ $ 62,346
--------
Capital in excess of par value...................... $(62,346)
--------
</TABLE>

The exact stock distribution ratio will be determined by the Flowers
Industries board of directors prior to the spin-off.

(g) Represents the exclusion of the results of operations of Keebler that are
included in Flowers consolidated statements of income for the periods
presented.

(h) Reflects the change in amortization expense resulting from the elimination
of intangible assets related to the acquisition of Keebler. As a result of
Flowers Industries' acquisition of Keebler, Flowers Industries recorded cost
in excess of net tangible assets of approximately $272.7 million which was
being amortized over 40 years.

(i) Reflects the change in interest expense resulting from the elimination of
$625.0 million of debt as described in (c) above. The change in interest
expense for the respective periods is based on the average debt outstanding
after reflecting the reduction of $625.0 million, using interest rates in
effect during the applicable periods.

(j) Represents the tax effect of the adjustments in (g), (h) and (i).

(k) Represents elimination of the results of operations of Keebler included in
the consolidated statements of income prior to acquisition by Flowers
Industries of a controlling ownership interest in Keebler which occurred on
February 3, 1998.

39
<PAGE> 48

BUSINESS

OUR COMPANY

- Flowers Bakeries; and

- Mrs. Smith's Bakeries.

Our core strategy is to be the country's leading producer and marketer of a
full line of frozen and non-frozen bakery and dessert products serving all
categories of customers through all channels of distribution. Our strategy
focuses on responding to current market trends for our products and changing
consumer preferences, which increasingly favor purchases of ready-made
convenience food products as opposed to traditional foods to be prepared at
home. To assist in accomplishing our core strategy, we have aggressively
invested capital to modernize and expand our production and distribution
capacity and have expanded a nationally branded business which complements our
traditional strengths. We have established a presence in all distribution
channels where bakery and dessert products are sold, including traditional
supermarkets and their in-store deli/bakeries, foodservice distributors,
convenience stores, mass merchandisers, club stores, wholesalers, restaurants,
fast food outlets, schools, hospitals and vending machines.

Our Flowers Bakeries business focuses on the production and marketing of
bakery products to customers in the super-regional 16 state area in and
surrounding the southeastern United States. We have devoted significant
resources to modernizing production facilities, improving our distribution
capabilities and enhancing our information technology. We have acquired numerous
local bakery operations which are generally within or contiguous to our existing
region and which can be served with our extensive direct store door delivery
system. Our strategy is to continue to better serve new and existing customers,
principally by using information technology to enhance the productivity and
efficiency of our production facilities and by extending our direct store door
delivery system. This system utilizes approximately 3,300 independent
distributors who own the right to sell our bakery products within their
respective territories.

Our Mrs. Smith's Bakeries business produces and markets frozen desserts as
well as bread, rolls and buns for sale to retail and foodservice customers.
Traditionally, retail frozen pie sales are heavily concentrated in the year-end
holiday season. In an effort to enhance sales outside of the holiday season, we
launched "Operation 365," a strategy aimed at significantly expanding
non-seasonal sales in the frozen dessert product line by extending the
well-recognized Mrs. Smith's brand name to existing and related retail and
foodservice products. Examples of significant retail product line extensions
include Mrs. Smith's Restaurant Classics and Mrs. Smith's Cookies and Cream
frozen pies, while the Grand Finales frozen pie product line was introduced in
the foodservice channel.

40
<PAGE> 49

We have a leading presence in each of the major product categories in which
we compete. Our Flowers Bakeries brands rank first in branded sales measured in
dollars and units in the 22 major metropolitan markets we serve. Our Mrs.
Smith's Bakeries business is one of the leading frozen dessert producers and
marketers in the United States, and our Mrs. Smith's pies are the leading
national brand of frozen pies sold at retail. Our major branded products
include, among others, the following:

<TABLE>
<CAPTION>
FLOWERS BAKERIES MRS. SMITH'S BAKERIES
---------------- ---------------------
<S> <C>
Flowers Mrs. Smith's
Nature's Own Mrs. Freshley's
Cobblestone Mill Oregon Farms
BlueBird European Bakers
Regional Franchised Brands: Stilwell
Sunbeam Our Special Touch
Roman Meal Danish Kitchen
Evangeline Maid Pour a Quiche
Bunny Grand Finales
ButterKrust Pet-Ritz
Oronoque Orchard
</TABLE>

We are committed to producing high quality products at the lowest price in
all of our operations and we have made significant capital investments in recent
years to modernize, automate and expand our production and distribution
capabilities and enhance our information technology. Capital spending has been
primarily directed toward expanding and modernizing existing production
facilities. The most recent production facility expenditure in our Flowers
Bakeries business was the installation of a fully automated wrapping system for
three production lines in a new 6,000 square foot facility at our Goldsboro,
North Carolina facility. Production capabilities at our Mrs. Smith's Bakeries
business were significantly realigned at an approximate cost of $230.0 million.
This realignment included the relocation and upgrading of 25 production lines at
seven of our 10 operating facilities, which offers us significantly more
capacity at fewer locations. We believe these facilities will give us the
ability to exploit many opportunities in the foodservice segment as well as
continue our growth in the retail market.

In order to provide prompt and responsive service to customers, we tailor
our distribution systems to the marketing and production aspects of our major
product lines. Flowers Bakeries distributes its baked foods through an extensive
direct store door delivery system of approximately 3,300 independent
distributors who, as owners of their territories, are motivated to maintain and
build retail brand shelf space and to monitor product freshness, which is
essential in the marketing of short shelf life products such as fresh bread,
rolls and buns. Mrs. Smith's Bakeries frozen foods are distributed through our
two strategically-located frozen distribution facilities, as well as through
additional commercial frozen warehouse space throughout the United States, in
order to accommodate demands in the retail channel for seasonal products and to
provide staging to expedite distribution throughout the year.

41
<PAGE> 50

INDUSTRY OVERVIEW

The United States food industry is comprised of a number of distinct
product lines and distribution channels for frozen and non-frozen bakery
products and desserts. Changes in consumer preferences have shifted food
purchases away from the traditional grocery store aisles for home preparation
and consumption, and toward home meal replacement purchases, either in
supermarket in-store deli/bakeries or in non-supermarket channels, such as mass
merchandisers, convenience stores, club stores, restaurants and other
convenience channels. Non-supermarket channels of distribution are extremely
important throughout the food industry.

NON-FROZEN AND FROZEN BAKERY PRODUCTS

Retail sales of bakery products continue to experience modest growth, with
expansion within the category occurring in a variety of premium and specialty
breads. However, foodservice sales of bakery products continue to grow at a rate
faster than retail sales as consumers who demand convenience increasingly are
purchasing food products away from home. In addition to Flowers Foods, several
large baking and diversified food companies market bakery products in the United
States. Competitors in this category include Interstate, Earthgrains, Bestfoods
and Pepperidge Farm. There are also a number of smaller, regional companies. We
believe that the larger companies enjoy several competitive advantages over
smaller operations due principally to economies of scale in areas such as
information technology purchasing, production, advertising, marketing and
distribution, as well as through greater brand awareness.

A significant trend in the baking industry over the last several years has
been the consolidation of smaller bakeries into larger baking businesses.
Consolidation continues to be driven by factors such as capital constraints on
smaller companies that limit their ability to avoid technological obsolescence,
to increase productivity or to develop new products, generational changes at
family-owned businesses, and the need to serve the consolidated retail customers
and the foodservice channel. We believe that the consolidation trend in the
baking, food retailing and foodservice industries will continue to present
opportunities for strategic acquisitions that complement our existing businesses
and that extend our super-regional presence.

FROZEN DESSERT PRODUCTS

Sales of frozen desserts to foodservice institutions and other distribution
channels, including restaurants and in-store bakeries have grown at a rate
faster than sales to retail channels. We are a preferred supplier of frozen
dessert products to the leading foodservice distributors in the United States.
While retail sales of frozen desserts have experienced declining sales, Mrs.
Smith's remains the leading brand in the frozen pie category. Primary
competitors in the frozen dessert market include Sara Lee, Pepperidge Farm,
Edwards and Pillsbury. We believe the increase in foodservice sales in the
frozen dessert industry will provide us with additional revenue opportunities.

STRATEGY

42
<PAGE> 51

businesses each develop strategies based on the production, distribution and
marketing requirements of their particular food categories. We employ the
following five overall strategies:

- STRONG BRAND RECOGNITION. We intend to capitalize on the success of our
well-recognized brand names, which communicate product consistency and
quality, by extending those brand names to additional products and
channels of distribution. Many of our brands, including Nature's Own
bread and Mrs. Smith's retail frozen baked pies are the top-selling
brands in their categories.

- EFFICIENT PRODUCTION AND DISTRIBUTION FACILITIES. We intend to maintain
a continuing level of capital improvements that, while substantially
lower than our level of capital improvements in recent years, will permit
us to fulfill our commitment to remaining among the most modern and
efficient frozen and non-frozen bakery and dessert producers in the
United States.

- CUSTOMER SERVICE-ORIENTED DISTRIBUTION. We intend to expand and refine
our distribution systems to respond quickly and efficiently to changing
customer service needs, consumer preferences and seasonal demands. We
have distribution systems that are tailored to the nature of each of our
food product categories and are designed to provide the highest levels of
service to our retail and foodservice customers. We have developed a
direct store door delivery network of approximately 3,300 independent
distributors for our Flowers Bakeries bakery products. Our Mrs. Smith's
Bakeries business utilizes a network of strategically located storage and
distribution facilities for our frozen bakery and dessert products and a
centralized distribution facility for our snack cake products.

- BROAD RANGE OF PRODUCTS SOLD THROUGH MULTIPLE DISTRIBUTION
CHANNELS. Recognizing that consumers are increasingly seeking home meal
replacements and other convenience food products, we intend to continue
to emphasize expansion of our product lines and distribution channels to
meet those preferences. Our product lines now include virtually every
category of fresh and frozen bakery and dessert products. These products
generally can be found in traditional supermarkets and their in-store
deli/bakeries, convenience stores, mass merchandisers, club stores,
wholesalers, restaurants, fast food outlets, schools, hospitals and
vending machines.

- STRATEGIC ACQUISITIONS. We have consistently pursued growth in sales,
geographic markets and products through strategic acquisitions. We intend
to pursue growth through strategic acquisitions and investments that will
complement and expand our existing markets, product lines and product
categories.

PRODUCTS

We produce packaged bakery, frozen dessert and frozen bakery products.

FLOWERS BAKERIES

We market our packaged bakery products in the super-regional 16 state area
in and surrounding the southeastern United States.

We market our packaged bakery products under numerous brand names,
including Nature's Own and Cobblestone Mill. We also market fresh bread under
regional franchised brands such as Sunbeam, Roman Meal, Evangeline Maid, Bunny
and ButterKrust trademarks. Nature's Own is the best selling brand by volume of
soft variety bread in the

43
<PAGE> 52

United States, despite being marketed solely in the super-regional 16 state area
in and surrounding the southeastern United States. Pastries, doughnuts, bakery
snacks, cakes and english muffins are sold through our direct store door
distribution system primarily under the BlueBird brand, as well as under the
ButterKrust, Sunbeam, and Holsum trademarks. Our branded products account for
approximately 65% of sales by Flowers Bakeries.

In addition to our branded products, we also produce and distribute
packaged bakery products under private labels for such retailers as Winn-Dixie
and Kroger. While private label products carry lower margins than our branded
products, we use our private label offerings to expand our total shelf space and
to effectively utilize production and distribution capacity.

We utilize our direct store door distribution system to supply foodservice
companies, including Burger King, Krystal, Arby's, Hardees, Whataburger and
Outback Steakhouse, with bakery products. In addition, we supply frozen bakery
products to Wendy's.

MRS. SMITH'S BAKERIES

Mrs. Smith's frozen desserts are marketed throughout the United States and
our frozen pies were the number one retail frozen pie brand in the United States
for 1999.

Mrs. Smith's frozen desserts are sold at retail under the Mrs. Smith's,
Pet-Ritz, Oregon Farms and Oronoque Orchard brand names. Frozen desserts in the
foodservice channel are sold under the Grand Finales brand and under private
labels for foodservice customers, such as Sysco.

We produce and distribute frozen bakery products such as bread, rolls and
buns for sale to foodservice customers. We also produce packaged bakery products
for distribution by Flowers Bakeries direct store door distribution network
under the BlueBird brand. In addition, we produce packaged bakery products under
the Mrs. Freshley's brand for sale to the vending channel and under various
private labels for sale through the retail channel.

PRODUCTION AND DISTRIBUTION

We design our production facilities and distribution systems to meet the
marketing and production demands of our major product lines. Through a
significant program of capital improvements and careful planning of plant
locations, which, among other things, allows us to establish reciprocal baking,
or product transfer arrangements among our bakeries. In addition to the
independent distributor system for our fresh baked products, we also use both
owned and public warehouses and distribution centers in central locations for
the distribution of certain of our Mrs. Smith's products.

FLOWERS BAKERIES

We operate 27 packaged bakery product facilities in 10 states. We have
invested approximately $130.0 million over the past three years, primarily to
build new state-of-the-art baking facilities and to significantly upgrade
existing facilities. During this period, we also added 13 new highly-automated
production lines in eight of our facilities, and a fully automated wrapping
system for three production lines was installed in a new 6,000 square foot
facility at our Goldsboro, North Carolina facility. We believe that these
investments will make us the most efficient major producer of packaged bakery
products in the United States. We believe that our capital investment yields
long-term benefits in the form of

44
<PAGE> 53

more consistent product quality, highly sanitary processes, and greater
production volume at a lower cost per unit. While our major capital improvement
program is largely complete, we intend to continue to invest in our production
facilities and equipment to maintain high levels of efficiency.

Distribution of packaged bakery products involves determining appropriate
order levels, delivering the product from the plant to the independent
distributor for direct store door delivery to the customer, stocking the product
on the shelves, visiting the customer daily to ensure that inventory levels
remain adequate, and removing stale goods. We utilize a network of approximately
3,300 independent distributors who own the rights to distribute our packaged
bakery products in their geographic territory. Distributor purchase arrangements
generally are made directly with a financial institution, and, pursuant to an
agreement, we manage and service these arrangements.

The distributors lease hand-held computers from us, which contain our
proprietary software. The software permits distributors to track and communicate
inventory data to the production facilities and to calculate recommended order
levels based on historical sales data and recent trends. These orders are
electronically transmitted to the appropriate production facility on a nightly
basis. This system, which we believe is more sophisticated than comparable
tracking programs currently used in the industry, is designed to ensure that
adequate product, and the right mix of products, are available to meet the
retail and foodservice customers' immediate needs. We believe our system
minimizes returns of unsold goods. In addition to the hand-held distributor
units, our main computer system permits tracking of sales, product returns and
profitability by customer location, plant, day and other bases. Managers receive
sales and profitability reports on a weekly basis, allowing prompt operational
adjustments when appropriate.

We believe the independent distributor system is unique in the industry as
to its size, with approximately 3,300 distributors, and with respect to its
geographic coverage. The program is designed to provide retail customers with
superior service because distributors, highly motivated by route ownership,
strive to increase sales by maximizing service. In turn, distributors have the
opportunity to benefit directly from the enhanced value of their routes
resulting from higher sales volume.

MRS. SMITH'S BAKERIES

We operate 10 production facilities with 43 production lines for our frozen
desserts, frozen bakery products and packaged bakery products. We significantly
realigned our production capabilities over the last three years, spending
approximately $230.0 million. This realignment included the relocation and
upgrading of 25 production lines at seven of our 10 operating facilities, which
offers us significantly more capacity at fewer locations. We believe product
realignment will give us the ability to exploit many opportunities in the retail
and foodservice channels.

Our distribution facilities are strategically located near our production
facilities to simplify distribution logistics. Our plant in Stilwell, Oklahoma
was the focus of a $60.0 million capital spending project in 1999 to add
production capacity and will be the primary producer of frozen fruit and custard
pies. This facility also serves as a principal point of distribution for our
frozen desserts. Our Suwanee, Georgia facility is located on a major interstate
corridor near four of our frozen dessert production facilities. This facility
contains such innovations as five 78-foot tall, laser-guided cranes specifically
designed for the facility, a six million cubic foot freezer, and
computer-controlled bar-coding and

45
<PAGE> 54

inventorying. The automation of this facility enables us to move extremely large
volumes of product without a significant labor component and enables the
facility to operate with extremely cold temperatures that preserve high product
quality. These features allow our Suwanee facility to better serve customers by
processing customer orders much more quickly than conventional freezer
facilities. Production capacity was added to this facility as part of the
overall realignment project, increasing our production capacity and enhancing
operating efficiencies by having contiguous production and frozen storage and
distribution.

In addition to our two strategically-located freezer and distribution
facilities in Suwanee and Stilwell, we lease additional freezer and distribution
facilities throughout the United States to facilitate distribution of our
products nationwide. These owned and leased facilities allow us to build and
store necessary inventory of raw materials and finished dessert products and to
expedite the national distribution of both our seasonal and non-seasonal
products.

We distribute our packaged bakery products from a centralized distribution
facility located near Knoxville, Tennessee. Centralized distribution allows us
to achieve both production and distributing efficiencies. The production
facilities are able to operate longer, more efficient production runs of a
single product, which are then shipped to the centralized distribution facility.
Products coming from different production facilities are then cross-docked and
shipped directly to customer warehouses.

CUSTOMERS

Our top 10 customers in 1999 accounted for 41.0% of Flowers Foods sales.
Winn Dixie accounted for approximately 10.2% of sales during 1999.

FLOWERS BAKERIES

Our fresh baked foods have a highly diversified customer base, which
includes grocery retailers, restaurants, fast-food chains, food wholesalers,
institutions, and vending companies. We also sell returned and surplus product
through a system of thrift outlets.

We supply numerous restaurants, institutions and foodservice companies with
bakery products, including buns for fast-food outlets such as Burger King,
Wendy's, Krystal, Hardees, Whataburger, Arby's and Outback Steakhouse. We also
sell packaged bakery products to wholesale distributors for ultimate sale to a
wide variety of food outlets.

MRS. SMITH'S BAKERIES

Our frozen desserts are marketed to traditional retail outlets, such as
grocery stores, as well as non-traditional outlets, ranging from club stores and
mass merchandisers to wholesalers, foodservice distributors and restaurants. Our
branded frozen desserts are sold primarily through grocery retailers. Our frozen
bakery products are sold to foodservice distributors, institutions, retail
in-store bakeries and restaurants.

Our packaged bakery products under the Mrs. Freshley's brand are sold
primarily through vending outlets. We produce packaged bakery products for our
own distribution under our BlueBird brand. In certain circumstances, we enter
into co-packing arrangements with some of our competitors. Through co-packing,
we have produced packaged bakery

46
<PAGE> 55

products for popular brands such as Weight Watchers, Stouffer, Lance, Pepperidge
Farm and Little Debbie.

COMPETITION

FLOWERS BAKERIES

The United States packaged bakery category is intensely competitive and is
comprised of large food companies, large independent bakeries with national
distribution, and smaller regional and local bakeries. Primary national
competitors include Interstate, Earthgrains and Bestfoods. We also face
competition from private label brands. Competition is based on product
availability, product quality, brand loyalty, price effective promotions and the
ability to target changing consumer preferences. Customer service, including
frequent delivery and well-stocked shelves, is an increasingly important
competitive factor. While we experience price pressure from time to time,
primarily as a result of competitors' promotional efforts, we believe that our
customer relationships and the consumer's brand loyalty, as well as our
diversity within our region in terms of geographic markets, products, and sales
channels, limit the effects of such competition. Recent consolidation in the
industry has further enhanced the ability of the larger firms to compete with
small regional bakeries. We believe we have significant competitive advantages
over smaller regional bakeries due to economies of scale in areas such as
information technology, purchasing, production, advertising, marketing and
distribution as well as greater brand awareness.

MRS. SMITH'S BAKERIES

Mrs. Smith's Bakeries, Sara Lee, Pepperidge Farm and Pillsbury lead the
frozen dessert category. Other significant competitors in the frozen baked
dessert category include Edwards and private label brands. Competitors for
packaged bakery products produced by Mrs. Smith's Bakeries include Interstate
(Hostess) and McKee (Little Debbie).

Competition for frozen desserts depends primarily on brand recognition and
loyalty, perceived product quality, effective promotions and, to a lesser
extent, price. For the frozen bakery and packaged bakery products manufactured
by Mrs. Smith's Bakeries, competition is based upon the ability to meet
production and distribution demands of foodservice and vending customers at an
excellent price.

INTELLECTUAL PROPERTY

We own a number of trademarks and trade names, as well as certain patents
and licenses. Such trademarks and trade names are considered to be important to
our business since they have the effect of developing brand identification and
maintaining consumer loyalty. We are not aware of any fact that would negatively
impact the continuing use of any of our trademarks, trade names, patents or
licenses. Following the spin-off we will have the exclusive use of the "Flowers"
name and any trademark or tradename derived therefrom to the extent currently
owned, licensed or sublicensed by Flowers Industries or its subsidiaries
(including Flowers Foods) but excluding any intellectual property rights owned,
licensed or sublicensed by Keebler. Flowers Industries will change its name,
which is expected to be Keebler Holding Corp.

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<PAGE> 56

RAW MATERIALS

Our primary baking ingredients are flour, sugar, shortening and fruit. We
also use paper products, such as corrugated cardboard, aluminum products, such
as pie plates, and films and plastics to package our baked foods. In addition,
we are also dependent upon natural gas and propane as a fuel for firing ovens as
well as gasoline and diesel as fuel for distribution vehicles. On average,
baking ingredients constitute approximately 10% to 15%, and packaging represents
approximately 1% to 5%, of the wholesale selling price of our baked foods. We
maintain diversified sources for all of our baking ingredients and packaging
products.

Commodities, such as our baking ingredients, periodically experience price
fluctuations and, for that reason, the market for these commodities is
continuously monitored. From time to time, we enter into forward purchase
agreements and derivative financial instruments to reduce the impact of
volatility in raw materials prices.

RESEARCH AND DEVELOPMENT

We engage in research and development activities, which principally involve
developing new products, improving the quality of existing products and
improving and modernizing production processes. We also develop and evaluate new
processing techniques for both current and proposed product lines.

LEGAL PROCEEDINGS

We are engaged in various legal proceedings which arise in the ordinary
course of our business. We believe that the amount of the ultimate liability
with respect to those proceedings will not be material to our financial position
or results of operations.

REGULATION

As a producer and marketer of food items, our operations are subject to
regulation by various federal governmental agencies, including the Food and Drug
Administration, the Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency, and the Department of Commerce, as well as
various state agencies, with respect to production processes, product quality,
packaging, labeling, storage and distribution. Under various statutes and
regulations, such agencies prescribe requirements and establish standards for
quality, purity, and labeling. The finding of a failure to comply with one or
more regulatory requirements can result in a variety of sanctions, including
monetary fines or compulsory withdrawal of products from store shelves.

In addition, advertising of our businesses is subject to regulation by the
Federal Trade Commission, and we are subject to certain health and safety
regulations, including those issued under the Occupational Safety and Health
Act.

Our operations, like those of similar businesses, are subject to various
federal, state, and local laws and regulations with respect to environmental
matters, including air and water quality, underground fuel storage tanks, and
other regulations intended to protect public health and the environment. Our
operations and products also are subject to state and local regulation through
such measures as licensing of plants, enforcement by state health agencies of
various state standards and inspection of facilities. We believe that we are
currently in material compliance with applicable laws and regulations.

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<PAGE> 57

PROPERTIES

Currently 30 of our production facilities are owned, four facilities are
leased and three facilities are owned by local industrial development
authorities under terms of industrial revenue bond financing agreements. The
leased properties are leased for terms of 10 to 15 years with certain renewal
options. Under the terms of the industrial revenue bond financing agreements,
title to these properties pass to us at maturity for little or no consideration.
We expect these bonds to be repaid in connection with the completion of the
spin-off and merger, and title to the facilities will be conveyed to us. We
consider that our properties are well maintained and sufficient for our present
operations. Our production plant locations are:

<TABLE>
<CAPTION>
FLOWERS BAKERIES
----------------
<S> <C>
Birmingham, Alabama Baton Rouge, Louisiana
Opelika, Alabama Lafayette, Louisiana
Tuscaloosa, Alabama New Orleans, Louisiana
Ft. Smith, Arkansas Goldsboro, North Carolina
Pine Bluff, Arkansas Jamestown, North Carolina
Texarkana, Arkansas Memphis, Tennessee
Bradenton, Florida Morristown, Tennessee
Jacksonville, Florida El Paso, Texas
Miami, Florida Houston, Texas
Atlanta, Georgia San Antonio, Texas
Chamblee, Georgia Tyler, Texas
Thomasville, Georgia Lynchburg, Virginia
Villa Rica, Georgia Bluefield, West Virginia
Charleston, West Virginia
</TABLE>

<TABLE>
<CAPTION>
MRS. SMITH'S BAKERIES
---------------------
<S> <C>
Montgomery, Alabama London, Kentucky
Atlanta, Georgia Pembroke, North Carolina
Forest Park, Georgia Stilwell, Oklahoma
Suwanee, Georgia Spartanburg, South Carolina
Tucker, Georgia Crossville, Tennessee
</TABLE>

EMPLOYEES

We employ approximately 7,300 persons, approximately 535 of whom are
covered by collective bargaining agreements. We believe that we have good
relations with our employees.

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<PAGE> 58

EXECUTIVE OFFICES

The address and telephone number of our principal executive offices are
1919 Flowers Circle, Thomasville, Georgia 31757, (229) 226-9110.

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<PAGE> 59

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information as of October 7, 2000
regarding the persons who are currently serving or will serve as the executive
officers and directors of Flowers Foods after the spin-off. The proposed
directors listed below are expected to begin serving as directors at the time
the merger and the spin-off are completed, assuming approval of the merger by
Flowers Industries shareholders. Our board of directors elects all executive
officers for one-year terms with the exception of the positions of President and
Chief Operating Officer, Flowers Bakeries, President and Chief Operating
Officer, Mrs. Smith's Bakeries and Vice President of Communications and Investor
Relations, which are appointed offices.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Amos R. McMullian......................... 63 Chairman of the Board of Directors and
Chief Executive Officer

Robert P. Crozer.......................... 53 Vice Chairman of the Board of Directors

G. Anthony Campbell....................... 47 Director, Secretary and General Counsel

Edward L. Baker........................... 65 Proposed Director

Joe E. Beverly............................ 59 Proposed Director

Franklin L. Burke......................... 59 Proposed Director

Langdon S. Flowers........................ 78 Proposed Director

Joseph L. Lanier, Jr...................... 68 Proposed Director

J.V. Shields, Jr.......................... 62 Proposed Director

Jackie M. Ward............................ 62 Proposed Director

C. Martin Wood, III....................... 57 Proposed Director

George E. Deese........................... 54 President and Chief Operating Officer of
Flowers Bakeries

Gary L. Harrison.......................... 62 President and Chief Operating Officer of
Mrs. Smith's Bakeries

Jimmy M. Woodward......................... 39 Vice President and Chief Financial
Officer

Marta Jones Turner........................ 46 Vice President of Communications and
Investor Relations
</TABLE>

AMOS R. MCMULLIAN is Chairman of the Board of Directors and Chief Executive
Officer of Flowers Industries and Flowers Foods. He will cease to serve as
Chairman of the Board and Chief Executive Officer of Flowers Industries upon
completion of the spin-off and merger. Mr. McMullian has served as Chairman of
the Board of Flowers Industries since 1985 and as its Chief Executive Officer
since 1981. He joined Flowers Industries in 1963. Mr. McMullian also has served
as a director of Keebler since 1996 and will cease to

51
<PAGE> 60

serve as a director of Keebler upon the completion of the spin-off and merger.
Mr. McMullian is a director of Lanier Worldwide, Inc. (NYSE).

ROBERT P. CROZER is the Vice Chairman of the Board of Directors of Flowers
Industries and Flowers Foods. Mr. Crozer joined Flowers Industries in 1973 and
became a director in 1979. He has served as Vice Chairman of the Board of
Flowers Industries since 1983 and Vice Chairman of the Board of Flowers Foods
since it was formed in October, 2000. Mr. Crozer will cease to serve as Vice
Chairman of the Board of Flowers Industries upon completion of the spin-off and
merger. Mr. Crozer has served as a director of Keebler since 1996 and as
Chairman of the Board of Keebler Foods Company since 1998 and will resign as
Chairman of the Board of Keebler Foods Company upon completion of the spin-off
and merger.

G. ANTHONY CAMPBELL joined Flowers Industries in 1983 and is currently
General Counsel and Secretary of Flowers Industries and Flowers Foods. Mr.
Campbell has served as a director of Keebler since 1998 and will resign as a
director of Keebler upon the completion of the merger and spin-off. He has
served as a director of Flowers Industries since 1991 and will cease to serve as
Secretary and General Counsel and director of Flowers Industries upon completion
of the spin-off and merger. Mr. Campbell has been a director of Flowers Foods
since it was formed in October, 2000.

EDWARD L. BAKER is Chairman of the Board of Directors of Florida Rock
Industries, Inc. (NYSE), a construction materials company based in Jacksonville,
Florida, which produces and markets sand, gravel, crushed stock, concrete blocks
and other building materials throughout the Southeast. He is also Chairman of
the Board of Directors of Patriot Transportation Holding, Inc. (OTC) (formerly
FRP Properties, Inc.). He has served as a director of Flowers Industries since
1992 and will cease to serve as a director of Flowers Industries upon completion
of the spin-off and merger.

JOE E. BEVERLY is Chairman of the Board of Commercial Bank in Thomasville,
Georgia, a wholly-owned subsidiary of Synovus Financial Corp. (NYSE), the former
Vice Chairman of the Board of Synovus Financial Corp, and a director of Synovus
Financial Corp. He was President of Commercial Bank from 1973 to 1989. Mr.
Beverly has served as a director of Flowers Industries since August 1996 and
will cease to serve as a director of Flowers Industries upon completion of the
spin-off and merger.

FRANKLIN L. BURKE, a private investor since 1991, is the former Senior
Executive Vice President and Chief Operating Officer of Bank South Corp.,
Atlanta, Georgia, and the former Chairman and Chief Executive Officer of Bank
South, N.A., the principal subsidiary of Bank South Corp. Mr. Burke has served
as a director of Keebler since 1998 and will cease to serve as a director of
Keebler upon completion of the merger and spin-off. He has served as a director
of Flowers Industries since 1994 and will cease to serve as a director of
Flowers Industries upon completion of the spin-off and merger.

LANGDON S. FLOWERS retired as Chairman of the Board of Directors of Flowers
Industries in 1985. He has served as a director of Flowers Industries since 1968
and will cease to serve as a director of Flowers Industries upon completion of
the spin-off and merger.

JOSEPH L. LANIER, JR. has been Chairman of the Board of Directors and Chief
Executive Officer of Dan River Inc. (NYSE), Danville, Virginia, a textile
company, since 1989. He is also a director of Dimon, Inc. (NYSE), SunTrust
Banks, Inc. (NYSE), Torchmark Corp. (NYSE) and Waddell & Reed Financial, Inc.
(NYSE). Mr. Lanier has

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<PAGE> 61

served as a director of Flowers Industries since 1977 and will cease to serve as
a director of Flowers Industries upon completion of the spin-off and merger.

J.V. SHIELDS, JR. is Chairman of the Board of Directors and Chief Executive
Officer of Shields & Company, New York, New York, a diversified financial
services company and member of the New York Stock Exchange, Inc. Mr. Shields
also is the Chairman of the Board of Directors and Chief Executive Officer of
Capital Management Associates, Inc., a registered investment advisor, and the
Chairman of the Board of Trustees of The 59 Wall Street Trust, the Brown
Brothers Harriman mutual funds group. He has served as a director of Flowers
Industries since 1989 and will cease to serve as a director of Flowers
Industries upon completion of the spin-off and merger.

JACKIE M. WARD is Chairman of the Board of Directors of Computer Generation
Incorporated, a telecommunications company based in Atlanta, Georgia. She is
also a director of Bank of America Corporation (NYSE), Equifax, Inc. (NYSE),
Matria Healthcare, Inc. (Nasdaq), PTEK Holdings, Inc. (Nasdaq), Profit Recovery
Group International, Inc. (Nasdaq), SCI Systems, Inc. (NYSE), and Trigon
Healthcare, Inc. (NYSE). She has served as a director of Flowers Industries
since March 1999 and will cease to serve as a director of Flowers Industries
upon completion of the spin-off and merger.

C. MARTIN WOOD III retired as Senior Vice President and Chief Financial
Officer of Flowers Industries on January 1, 2000. Mr. Wood has continued to
serve on Flowers Industries Board of Directors, to which he was elected in 1975
and will cease to serve as a director of Flowers Industries upon completion of
the spin-off and merger. Mr. Wood also has served as a director of Keebler since
1996 and will cease to serve as a director of Keebler upon the completion of the
spin-off and merger.

GEORGE E. DEESE is President and Chief Operating Officer of Flowers
Bakeries. He has previously served as President and Chief Operating Officer,
Baked Products Group of Flowers Industries from 1983 to 1997, Regional Vice
President, Baked Products Group of Flowers Industries from 1981 to 1983 and
President of Atlanta Baking Company from 1980 to 1981. Mr. Deese joined Flowers
Industries in 1964.

GARY L. HARRISON is President and Chief Operating Officer of Mrs. Smith's
Bakeries, Inc. He previously served as President and Chief Operating Officer,
Specialty Foods Group of Flowers Industries from 1989 to 1997, Executive Vice
President, Baked Products Group of Flowers Industries from 1987 to 1989,
Regional Vice President, Baked Products Group of Flowers Industries from 1977 to
1987 and President of Flowers Baking Company of Thomasville from 1976 to 1977.
Mr. Harrison joined Flowers Industries in 1954.

JIMMY M. WOODWARD is Vice President and Chief Financial Officer of Flowers
Industries and Flowers Foods and will cease to serve as Vice President and Chief
Financial Officer of Flowers Industries upon completion of the spin-off and
merger. Mr. Woodward previously served as Treasurer and Chief Accounting Officer
of Flowers Industries from 1997 to 2000 and Assistant Treasurer of Flowers
Industries for more than five years prior to that time. He joined Flowers
Industries in 1985. Mr. Woodward also has served as a director of Keebler since
1998 and will cease to serve as a director of Keebler upon completion of the
spin-off and merger. Mr. Woodward also serves as a director of Integrity, Inc.
(Nasdaq).

MARTA JONES TURNER is Vice President of Communications and Investor
Relations of Flowers Industries and Flowers Foods and will cease to serve as
Vice President of

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<PAGE> 62

Communications and Investor Relations of Flowers Industries upon completion of
the spin-off and merger. She previously served as Vice President of Public
Affairs of Flowers Industries from May, 1997 until January, 2000 and Director of
Public Affairs of Flowers Industries for more than five years prior to that
time. She joined Flowers Industries in 1978.

Robert P. Crozer, J.V. Shields, Jr. and C. Martin Wood III are married to
sisters, all of whom are nieces of Langdon S. Flowers.

BOARD OF DIRECTORS

The Flowers Foods Board of Directors currently has three members. Prior to
the spin-off, Flowers Foods will change the size and composition of the Flowers
Foods Board of Directors and committees of the Board of Directors will be
established. At that time, it is expected that the eight proposed directors
listed above, each of whom currently is a director of Flowers Industries, will
join the Flowers Foods Board of Directors and we will have eleven directors.

The Flowers Foods Board intends to hold four regularly scheduled meetings
each year.

COMMITTEES OF THE BOARD OF DIRECTORS

The Flowers Foods Board of Directors is expected to establish certain
standing committees, which include the audit, nominating, and compensation
committees. The functions and responsibilities of the standing committees of our
Board of Directors are expected to be as described below.

The functions of the audit committee shall be: (a) recommending to the
Board of Directors the engagement or discharge of independent auditors; (b)
reviewing investigations into matters relating to audit functions; (c) reviewing
with independent auditors the plan for and results of the audit engagement; (d)
reviewing the scope and results of our internal auditing procedures; (e)
reviewing the independence of the auditors; (f) considering the range of audit
and non-audit fees and (g) reviewing the adequacy of our system of internal
accounting controls.

The functions of the nominating committee shall be: (a) selecting or
recommending to the Board of Directors nominees for election as directors; and
(b) considering the performance of incumbent directors in determining whether to
nominate them for reelection.

The functions of the compensation committee shall be: (a) approving or
recommending to the Board of Directors approval of compensation plans for
officers and directors; (b) approving, or recommending to the Board of Directors
approval of, remuneration arrangements for directors and senior management; and
(c) granting benefits under compensation plans.

DIRECTOR'S FEES

Flowers Foods was formed in October, 2000. None of the directors of Flowers
Foods has received compensation from Flowers Foods since it was formed. Once the
Board has been expanded after the spin-off, each non-employee member of our
Board of Directors is

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<PAGE> 63

expected to receive payments pursuant to a standard arrangement. Flowers Foods
expects to adopt compensation arrangements for its directors prior to the
spin-off.

POSSIBLE STOCK INCENTIVE PLAN

We expect to enter into a stock incentive plan designed to encourage
ownership of Flowers Foods stock by employees and directors to align the
interests of our employees and directors with Flowers Foods shareholders. The
terms and conditions of the possible plan have not yet been determined.

SEPARATION AGREEMENTS

We expect to enter into separation agreements with certain of our executive
officers to provide certain additional benefits in the event of termination of
employment following a change of control. Our Board of Directors has not yet
determined which executives will be offered such separation agreements or the
proposed terms and conditions of any such agreements.

EXECUTIVE COMPENSATION

We were formed in October, 2000 and none of our executive officers has
received compensation or been granted stock options or otherwise awarded
securities by Flowers Foods since our formation. Accordingly, the information in
this section relates to compensation paid by Flowers Industries to certain of
its executive officers for the periods presented. Compensation of executive
officers of Flowers Foods for the periods following the spin-off will be
determined by the Flowers Foods Board of Directors or authorized committee
thereof and can be expected to take into account factors such as the size and
operating performance of Flowers Foods.

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<PAGE> 64

The following table provides certain summary information for the periods
indicated concerning compensation of the Chief Executive Officer and each of the
four other most highly compensated executive officers of Flowers Industries. All
compensation described below has been paid by Flowers Industries.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------------------------
------------------------------------- RESTRICTED LONG TERM
OTHER STOCK OPTION INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION AT FISCAL SALARY BONUS COMP. AWARDS AWARDS(3) PAYOUTS COMP.
FLOWERS INDUSTRIES YEAR $ $ $ $ # $ $
------------------------------ ------ ------- ------- ----- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amos R. McMullian............ 1999 850,000 0 0 908,392 0 0 0
Chairman of the Board and 1998 736,000 552,000 0 730,509 198,000 0 0
Chief Executive Officer 1997T(1) 313,096 187,858 0 498,593 0 0 0
1997(2) 505,680 505,680 0 0 0 0 0
Robert P. Crozer............. 1999 725,000 0 0 531,160 0 0 0
Vice Chairman of the 1998 579,616 405,731 0 279,399 146,000 0 0
Board 1997T(1) 211,327 105,663 0 190,698 0 0 0
1997(2) 389,235 311,388 0 0 0 0 0
Jimmy M. Woodward............ 1999 260,000 25,000 0 123,576 0 0 0
Vice President and 1998 238,462 90,769 0 39,200 28,000 0 0
Chief Financial Officer 1997T(1) 62,831 34,400 0 26,750 0 0 0
1997(2) 109,846 71,585 0 0 0 0 0
George E. Deese.............. 1999 353,600 0 0 1,413,044 0 0 0
President and Chief 1998 345,700 156,900 0 192,249 47,500 0 0
Operating Officer, Flowers 1997T(1) 162,623 73,180 0 131,215 0 0 0
Bakeries 1997(2) 268,695 188,087 0 0 0 0 0
Gary L. Harrison............. 1999 353,600 0 0 1,413,044 0 0 0
President and Chief 1998 345,700 0 0 192,249 0 0 0
Operating Officer, 1997T(1) 162,623 73,180 0 131,215 47,500 0 0
Mrs. Smith's Bakeries 1997(2) 268,695 263,087 0 0 0 0 0
</TABLE>

-------------------------

(1) Represents the twenty-seven week transition period ended January 3, 1998.

(2) Represents the fifty-two week fiscal year ended June 28, 1997.

(3) Reflects restricted stock awards and options to acquire shares of Flowers
Industries granted pursuant to Flowers Industries 1989 Executive Stock
Incentive Plan. No Flowers Industries options will be outstanding following
the spin-off and merger.

The individuals set forth in the table above held the following aggregate
shares under the Flowers Industries 1989 Executive Stock Incentive Plan, subject
to the restrictions of each grant, and valued at the 1999 fiscal year end
closing market price ($15.9375) of Flowers Industries common stock, less the
price required to be paid by the individual at the time the restrictions lapse:
Messrs. McMullian 197,764 shares, $1,014,370; Crozer 92,588 shares, $474,365;
Woodward 27,359 shares, $201,012; Deese 149,092 shares, $639,646; and Harrison
149,092 shares, $639,646. The shares are entitled to receive any dividends paid
on Flowers Industries common stock.

No options to purchase Flowers Industries common stock were granted in
fiscal 1999. The following table provides information on option exercises of
Flowers Industries common stock during fiscal 1999 by the named executive
officers included in the summary compensation table above and the value, at the
1999 fiscal year end closing price

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<PAGE> 65

($15.9375), of unexercised options for Flowers Industries common stock held by
each named executive officer.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
AT YEAR END OPTIONS
SHARES ACQUIRED ON VALUE (#) AT YEAR END
EXERCISE REALIZED EXERCISABLE/ ($)
NAME (#) ($) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------ -------- --------------- -------------------------
<S> <C> <C> <C> <C>
Amos R. McMullian...... 0 0 None/198,000 None/None
Robert P. Crozer....... 0 0 269,294/146,000 2,388,656/None
Jimmy M. Woodward...... 0 0 None/28,000 None/None
George E. Deese........ 0 0 90,000/47,500 674,775/None
Gary L. Harrison....... 0 0 145,544/47,500 1,229,316/None
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Under the terms of an agreement between Flowers Industries and Merrily
Plantation, Inc., Flowers Industries was granted the use of approximately 6,000
acres of land owned by Merrily, together with the use of lodging, dining, and
conference room facilities located thereon. The facilities were used primarily
for the entertainment of customers. During fiscal 1999, Flowers Industries paid
Merrily $92,370. Flowers Foods expects to assume the agreement and continue with
those arrangements. We have surveyed facilities comparable to Merrily to assess
the relative quality and cost of such facilities and have determined that the
amount paid to Merrily for the use of its facilities is competitive with that
charged for the use of comparable facilities. We have further determined that
the use of the Merrily facilities in the past has been beneficial to the
business of Flowers Industries, that it will be beneficial to our business and
that its continued use for the entertainment of customers is in our best
interest. All of the outstanding capital stock of Merrily is owned by the
spouses of J. V. Shields, Jr., who is a proposed director of Flowers Foods,
Robert P. Crozer, who is currently the Vice Chairman of the Board of Directors
of Flowers Foods, C. Martin Wood III, who is a proposed director of Flowers
Foods, and by the Fontaine Flowers McFadden Trust, a trust formed for the
benefit of Ms. McFadden's descendants. The spouses of Messrs. Shields, Crozer
and Wood are the nieces of Langdon S. Flowers, who is a proposed director of
Flowers Foods.

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<PAGE> 66

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the Flowers Foods common stock is currently owned by Flowers
Industries and thus none of the executive officers, directors or director
nominees of Flowers Foods will own any Flowers Foods common stock prior to the
spin-off. To the extent executive officers, directors and proposed directors of
Flowers Foods own shares of Flowers Industries common stock at the time of the
spin-off, they will receive shares of Flowers Foods common stock in the spin-off
on the same basis as all other holders of Flowers Industries common stock. The
following table sets forth the number of shares of Flowers Industries common
stock beneficially owned by each director, proposed director and each executive
officer of Flowers Foods and by all directors, proposed directors and executive
officers as a group, consisting of 15 persons, as of October 7, 2000. Any
options to acquire shares of Flowers Industries stock that are unexercised at
the time of the Flowers Industries/Kellogg merger will not represent the right
to acquire shares of Flowers Foods stock after the spin-off.

We are not aware of any person who will beneficially own more than five
percent of the Flowers Foods common stock as of the date of the spin-off.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ----------- ---------
<S> <C> <C>
Edward L. Baker.......................................... 73,302(1) *
Joe E. Beverly........................................... 52,584(2) *
Franklin L. Burke........................................ 28,807(3) *
G. Anthony Campbell...................................... 392,692(4) *
Robert P. Crozer......................................... 1,669,741(5) 1.66%
George E. Deese.......................................... 393,496(6) *
L. S. Flowers............................................ 356,146(7) *
Gary L. Harrison......................................... 454,018(8) *
Joseph L. Lanier, Jr. ................................... 73,115(9) *
Amos R. McMullian........................................ 943,878(10) *
J. V. Shields, Jr. ...................................... 2,206,652(11) 2.20%
Marta J. Turner.......................................... 12,781(12) *
Jackie M. Ward........................................... 6,250 *
C. Martin Wood III....................................... 568,761(13) *
Jimmy M. Woodward........................................ 27,870(14) *
All directors and executive officers as a group (15
persons)............................................... 7,260,093(15) 7.22%
</TABLE>

-------------------------

* Represents beneficial ownership of less than 1% of Flowers Industries
common stock.

(1) Includes unexercised stock options for 17,340 shares and 23,300 shares
owned by a family trust for which Mr. Baker is a co-trustee.

(2) Includes unexercised stock options for 7,584 shares. Does not include
45,982 shares owned by the spouse of Mr. Beverly and 11,164 shares owned by
a trust for which his spouse is co-trustee, as to which shares Mr. Beverly
disclaims any beneficial ownership.

(3) Includes unexercised stock options for 16,353 shares and 8,750 shares owned
by the spouse of Mr. Burke, over which shares Mr. Burke has investment
authority.

(4) Includes restricted stock awards of 21,117 shares, all of which are subject
to forfeiture.

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(5) Includes: (i) restricted stock awards of 70,794 shares, all of which are
subject to forfeiture; (ii) unexercised stock options for 135,000 shares;
and (iii) 982,780 shares held by limited partnerships in which Mr. Crozer
and his spouse are the general partners. Does not include the following
shares as to which Mr. Crozer disclaims any beneficial ownership: (i) 7,593
shares held by Mr. Crozer and his spouse as custodians for their minor son;
(ii) 209,038 shares held by trusts for the benefit of Mr. Crozer's minor
children; and (iii) 1,965,936 shares owned by the spouse of Mr. Crozer.

(6) Includes restricted stock awards of 134,096 shares, all of which are
subject to forfeiture, and unexercised stock options for 90,000 shares.
Does not include the following shares as to which Mr. Deese disclaims any
beneficial ownership: 22,080 shares owned by the spouse of Mr. Deese; and
1,194 shares held by Mr. Deese as custodian for his minor grandchildren.

(7) Includes unexercised stock options for 10,432 shares. Does not include
355,598 shares owned by the spouse of Mr. Flowers, as to which shares Mr.
Flowers disclaims any beneficial ownership.

(8) Includes: (i) restricted stock awards of 134,096 shares, all of which are
subject to forfeiture; (ii) unexercised stock options for 145,544 shares;
and (iii) 30,000 shares held by a limited partnership in which Mr. Harrison
is a general partner. Does not include 40,000 shares owned by the spouse of
Mr. Harrison, as to which shares Mr. Harrison disclaims any beneficial
ownership.

(9) Includes unexercised stock options for 17,340 shares. Does not include
23,890 shares owned by the spouse of Mr. Lanier, as to which shares Mr.
Lanier disclaims any beneficial ownership.

(10) Includes restricted stock awards of 140,782 shares, all of which are
subject to forfeiture.

(11) Includes: (i) unexercised stock options for 16,353 shares; and (ii)
2,170,299 shares held by investment advisory clients of Capital Management
Associates, Inc., of which Mr. Shields is Chairman of the Board of
Directors and Chief Executive Officer. Does not include 3,241,503 shares
owned by the spouse of Mr. Shields, as to which shares Mr. Shields
disclaims beneficial ownership.

(12) Includes restricted stock awards of 2,962 shares, all of which are subject
to forfeiture.

(13) Includes: (i) restricted stock awards of 8,818 shares, all of which are
subject to forfeiture; (ii) unexercised stock options for 28,000 shares;
(iii) 51,300 shares held by a trust of which Mr. Wood is co-trustee; and
(iv) 5,591 shares owned by a trust for which Mr. Wood serves as a trustee.
Does not include the following shares, as to which Mr. Wood disclaims
beneficial ownership: (i) 2,880,633 shares owned by the spouse of Mr. Wood
and (ii) 25,650 shares held by Mr. Wood as custodian for his nephew.

(14) Includes restricted stock awards of 14,457 shares, all of which are subject
to forfeiture.

(15) Includes restricted stock awards of 527,112 shares, all of which are
subject to forfeiture, and unexercised stock options for 483,946 shares.
Does not include the shares with respect to which beneficial ownership is
disclaimed as indicated in the preceding footnotes.

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DESCRIPTION OF CAPITAL STOCK

The following discussion of our articles of incorporation, bylaws, rights
agreement and Georgia law is a summary of the material terms thereof and is
qualified in its entirety by the actual terms of such documents and Georgia law.
Copies of our restated articles of incorporation, restated bylaws and rights
agreement have been filed with the Securities and Exchange Commission as
exhibits to the registration statement on Form 10 of which this information
statement is a part.

INTRODUCTION

Our articles of incorporation provide that the authorized capital of
Flowers Foods consists of 100,000,000 shares of common stock having a par value
of $.01 per share and 1,000,000 shares of preferred stock, of which (a) 100,000
shares have been designated by our Board of Directors as Series A Junior
Participating Preferred Stock, having a par value per share of $100 and (b)
900,000 shares of preferred stock, having a par value per share of $.01, have
not been designated by the Board of Directors.

As a result of the spin-off, we expect there to be approximately
million shares of Flowers Foods common stock outstanding held by
approximately holders of record. No shares of preferred stock
have been issued by Flowers Foods and no shares of preferred stock will be
issued in the spin-off.

COMMON STOCK

The holders of Flowers Foods common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of shareholders. Subject
to preferential rights of any issued and outstanding preferred stock, including
the Series A Preferred Stock, holders of Flowers Foods common stock are entitled
to receive ratably such dividends, if any, as may be declared by our Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding-up of Flowers Foods, holders of Flowers
Foods common stock are entitled to share ratably in all assets of Flowers Foods,
if any, remaining after payment of liabilities and the liquidation preferences
of any issued and outstanding preferred stock, including the Series A Preferred
Stock. Holders of Flowers Foods common stock have no preemptive rights, no
cumulative voting rights and no rights to convert their shares of Flowers Foods
common stock into any other securities of Flowers Foods or any other person. The
common stock is not subject to redemption or sinking fund redemption.

PREFERRED STOCK

Our Board of Directors has the authority to issue up to 1,000,000 shares of
preferred stock in one or more series and to fix the designations, relative
powers, preferences, rights, qualifications, limitations and restrictions of all
shares of each such series, including without limitation, dividend rates,
conversion rights, voting rights, redemption and sinking fund provisions,
liquidation preferences and the number of shares constituting each such series,
without any further vote or action by the holders of Flowers Foods common stock.
Pursuant to such authority, the board of directors has designated 100,000 shares
of preferred stock as Series A Junior Participating Preferred Stock in
connection with the adoption of our rights agreement. Although our Board of
Directors does not presently intend to do so, it could issue from the 900,000
undesignated preferred shares, additional

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series of preferred stock, with rights that could adversely affect the voting
power and other rights of holders of Flowers Foods common stock without
obtaining the approval of Flowers Foods shareholders. In addition, the issuance
of preferred shares could delay or prevent a change in control of Flowers Foods
without further action by its shareholders.

ANTITAKEOVER EFFECTS OF GEORGIA LAW PROVISIONS

We have elected in our bylaws to be subject to the fair price provisions of
the Georgia Business Corporation Code, referred to in this information statement
as the GBCC. These provisions require that, in addition to any vote otherwise
required by law or our articles of incorporation, unless certain fair price
provisions are satisfied, a business combination must be:

- unanimously approved by continuing directors, if such continuing
directors constitute at least three members of the board of directors at
the time of the approval; or

- recommended by at least two-thirds of the continuing directors and
approved by a majority of the votes entitled to be cast by holders of
voting shares, other than voting shares beneficially owned by the
interested shareholder, unless fair price criteria are met.

INTERESTED SHAREHOLDERS UNDER THE FAIR PRICE PROVISIONS

An interested shareholder is defined by the GBCC to include any person
other than Flowers Foods or our subsidiaries that:

- with its affiliates, beneficially owns or has the right to own 10% or
more of the outstanding voting power of Flowers Foods; or

- is an affiliate of Flowers Foods and has, at any time within the
preceding two-year period, been the beneficial owner of 10% or more of
the voting power of Flowers Foods.

For purposes of determining whether a person is an interested shareholder,
the number of voting shares deemed to be outstanding shall not include any
unissued voting shares that may be issuable pursuant to any agreement,
arrangement or understanding or upon exercise of conversion rights, warrants or
options or otherwise.

CONTINUING DIRECTORS UNDER THE FAIR PRICE PROVISIONS

A continuing director means:

- any director who is not an affiliate or associate of an interested
shareholder or its affiliates other than Flowers Foods or our
subsidiaries and who was a director prior to the date the shareholder
became an interested shareholder, called the determination date; and

- any successor to that director who is not an affiliate or associate of an
interested shareholder or its affiliates other than Flowers Foods or our
subsidiaries and who is recommended or elected by a majority of all the
continuing directors.

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BUSINESS COMBINATIONS UNDER THE FAIR PRICE PROVISIONS

For the purposes of these provisions, a business combination includes:

- any merger of Flowers Foods or our subsidiaries with an interested
shareholder or any other corporation that is, or after the merger would
be, an affiliate of an interested shareholder that was an interested
shareholder prior to the completion of the transaction;

- any share exchange with an interested shareholder or any other
corporation that is, or after the merger would be, an affiliate of an
interested shareholder that was an interested shareholder prior to the
completion of the transaction;

- any sale, lease, transfer or other disposition of assets by us or any of
our subsidiaries to any interested shareholder or any affiliate of any
interested shareholder (other than Flowers Foods or any of our
subsidiaries) in a transaction or series of transactions occurring within
a twelve-month period and having an aggregate book value equal to 10% or
more of our net assets;

- the issuance or transfer by us or any of our subsidiaries of any equity
securities of Flowers Foods or any subsidiary in a transaction or series
of transactions occurring within a twelve-month period to any interested
shareholder or any affiliate of any interested shareholder (other than
Flowers Foods or any of our subsidiaries) and having an aggregate market
value of 5% or more of the total market value of our outstanding stock,
except through the exercise of warrants or rights offered pro rata to all
holders of our voting securities;

- the adoption of any plan or proposal for our liquidation or dissolution
in which anything other than cash will be received by an interested
shareholder or its affiliates; and

- any reclassification of securities or merger or share exchange with any
subsidiary, which has the effect, in a transaction or series of
transactions occurring within a twelve-month period, of increasing by 5%
or more the proportionate amount of the outstanding shares of any class
or series of equity securities of Flowers Foods or any of our
subsidiaries that is beneficially owned by an interested shareholder or
its affiliates.

WHEN THE FAIR PRICE PROVISIONS DO NOT APPLY

The fair price provisions do not restrict a business combination if:

- the aggregate amount of the cash, and fair market value of any non-cash
property, to be received per share by the shareholders in the business
combination is at least equal to the highest of:

- the highest per share price, including brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by the interested shareholder
for any shares of the same class or series acquired by it within two
years before the public announcement of the business combination,
referred to as the announcement date, or in the transaction in which it
became an interested shareholder, whichever is higher;

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- the higher of the fair market value per share as determined on the
announcement date or the determination date; or

- in the case of shares other than common shares, the highest amount per
share to which holders of such shares are entitled in the event of
liquidation, dissolution or winding up of the corporation, but only if
the interested shareholder acquired like shares within the two-year
period immediately before the announcement date;

- shareholders receive cash or the form of consideration used by the
interested shareholder to purchase the largest number of shares of the
same class or series previously acquired by such interested shareholder.

- During the period after the shareholder became an interested shareholder
and before the consummation of the business combination, without the
approval of a majority of the continuing directors, there generally shall
have been:

- no failure to declare and pay, at the regular date therefor, any full
periodic dividends on Flowers Foods' outstanding preferred shares unless
(i) the interested shareholder or its affiliate or associate did not
vote as a director in a manner inconsistent with this requirement, and
(ii) the interested shareholder notified the Board of Directors in
writing within ten days of such action or failure to act that it
disapproves of the action and that it requests the Board to rectify such
act or failure to act;

- no reduction in the annual rate of dividends paid on common shares,
except to reflect any subdivision of the shares unless (i) the
interested shareholder or its affiliate or associate did not vote as a
director in a manner inconsistent with this requirement, and (ii) the
interested shareholder notified the Board of Directors in writing within
ten days of such action or failure to act that it disapproves of the
action and that it requests the Board to rectify such act or failure to
act;

- an increase the annual rate of dividends to reflect any reclassification
of shares which has the effect of reducing the number of outstanding
shares; and

- no increase by more than 1% in the interested shareholder's ownership of
any class or series of Flowers Foods' shares in any twelve-month period;

- The interested shareholder has not received a direct or indirect benefit,
except proportionately as a shareholder, of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantages provided by the corporation or its subsidiaries.

The fair price provisions do not apply if the shareholder has been an
interested shareholder continuously and has not increased its percentage
interest in any class or series of Flowers Foods shares by more than 1% in any
twelve-month period, for the three year period immediately preceding
consummation of the business combination.

Repeal of the bylaw subjecting Flowers Foods to the fair price provisions
of the GBCC requires the affirmative vote of: (i) at least 2/3 of the continuing
directors, (ii) a majority of the shares of Flowers Foods other than shares
beneficially owned by any interested shareholder and affiliates and associates
of any interested shareholder, and (iii) 66 2/3% of the voting power of the then
outstanding shares of Flowers Foods common

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stock and preferred stock voting together, to the extent shares of preferred
stock have been afforded voting rights.

BUSINESS COMBINATION PROVISIONS

We have also elected in our bylaws to be subject to the business
combination provisions of the GBCC. These provisions prohibit business
combinations between a Georgia corporation with at least 100 beneficial owners
in Georgia and that meets other criteria and an interested shareholder or its
affiliates for a period of five years after the shareholder becomes an
interested shareholder of the corporation. During that five-year period, these
provisions prohibit any business combination with an interested shareholder
unless:

- prior to such time, the board of directors approved either the business
combination or the transaction in which the shareholder became an
interested shareholder;

- in the transaction that resulted in the shareholder becoming an
interested shareholder, the interested shareholder became the beneficial
owner of at least 90% of the outstanding voting stock of the corporation
which was not held by directors, officers, their affiliates, subsidiaries
or specified employee stock plans of the corporation; or

- after becoming an interested shareholder, that shareholder acquired
additional shares resulting in that shareholder owning at least 90% of
the outstanding voting stock of the corporation, excluding shares held by
directors, officers, their affiliates, subsidiaries or specified employee
stock plans of the corporation, and the business combination was approved
by a majority of voting stock not held by the interested shareholder,
directors, officers, their affiliates, subsidiaries or specified employee
stock plans of the corporation.

BUSINESS COMBINATIONS

For the purposes of these provisions, a business combination includes:

- any merger or consolidation of Flowers Foods or any of our subsidiaries
with an interested shareholder or any other corporation that is, or after
the merger or consolidation would be, an affiliate of an interested
shareholder that was an interested shareholder prior to consummation of
the transaction other than as a result of its ownership of Flowers Foods
stock;

- any sale, lease, transfer or other disposition of our assets or those of
any of our subsidiaries to an interested shareholder or its affiliates or
associates other than Flowers Foods or our subsidiaries in a transaction
or series of transactions having an aggregate book value of 10% or more
of our net assets;

- the issuance or transfer by us or any of our subsidiaries of any of our
or their equity securities to an interested shareholder or its affiliates
or associates other than Flowers Foods or our subsidiaries in a
transaction or series of transactions having an aggregate market value of
5% or more of the total market value of our outstanding stock, except
through the exercise of warrants or rights offered pro rata to all
holders of voting securities, or the exercise or conversion of securities
outstanding before the shareholder became an interested shareholder;

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- the adoption of any plan or proposal for our liquidation or dissolution;

- any reclassification of securities or merger of Flowers Foods with our
subsidiaries that has the effect of increasing by 5% or more the
proportionate amount of shares of any class or series of our equity
securities that is beneficially owned by the interested shareholder or
its affiliates;

- other than in the ordinary course of business, the receipt by an
interested shareholder, except proportionally as a shareholder, of any
benefit from any loan, advance, guarantee, pledge, financial benefit, tax
credit or tax advantage from us; and

- any share exchange with an interested shareholder or any other
corporation that is, or after the share exchange would be, an affiliate
of an interested shareholder that was an interested shareholder prior to
consummation of the transaction.

WHEN THE BUSINESS COMBINATION PROVISIONS DO NOT APPLY

The restrictions on business combinations do not apply to:

- any person who was an interested shareholder before the adoption of the
bylaw that made the provisions applicable to the corporation; or

- any person who becomes an interested shareholder inadvertently,
subsequently divests as soon as practicable sufficient shares so that the
shareholder ceases to be an interested shareholder and would not, at any
time within the five-year period immediately before the business
combination, have been an interested shareholder but for the inadvertent
acquisition.

Repeal of the bylaw subjecting Flowers Foods to the business combination
provisions of the GBCC requires the affirmative vote of: (i) at least 2/3 of the
continuing directors, (ii) a majority of the shares of Flowers Foods other than
shares beneficially owned by any interested shareholder and affiliates and
associates of any interested shareholder, and (iii) 66 2/3% of the voting power
of the then outstanding shares of Flowers Foods common stock and preferred stock
voting together, to the extent shares of preferred stock have been afforded
voting rights. However, any such repeal would not be effective until 18 months
after the shareholder vote to effect such repeal and would not exempt any
business combination with an interested shareholder who became an interested
shareholder prior to such repeal.

FLOWERS FOODS RIGHTS AGREEMENT

Our Board of Directors has determined that a dividend of one right will be
paid in respect of each outstanding share of Flowers Foods common stock to the
record holder of such share as of the record date of the spin-off. Pursuant to
the rights agreement, each right entitles the registered holder thereof to
purchase from Flowers Foods one thousandth of a share of series A preferred
stock, par value $100 per share, of Flowers Foods at a price of $ per
one thousandth of a preferred share, subject to adjustment.

Under the rights agreement, the rights will be evidenced by the
certificates evidencing Flowers Foods common stock until the distribution date,
which is the earlier of: (i) the close of business on the tenth calendar day
following the first date of public announcement

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that a person or group (other than Flowers Foods, a subsidiary or employee
benefit or stock ownership plan of Flowers Foods or any of its affiliates or
associates), together with its affiliates and associates, has acquired
beneficial ownership of 15% or more of the outstanding Flowers Foods common
stock (any such person or group being hereinafter called an acquiring person) or
(ii) the close of business on the tenth business day (or such later date as may
be specified by the directors) following the commencement of a tender offer or
exchange offer by a person (other than Flowers Foods, a subsidiary or employee
benefit or stock ownership plan of Flowers Foods or any of its affiliates or
associates), the consummation of which would result in beneficial ownership by
such person of 15% or more of the outstanding Flowers Foods common stock.

The rights agreement provides that, until the distribution date, the rights
may be transferred with and only with the Flowers Foods common stock. Until the
distribution date (or earlier redemption, exchange or expiration of the rights),
any certificate evidencing Flowers Foods common stock issued upon transfer or
new issuance of the Flowers Foods common stock will contain a notation
incorporating the rights agreement by reference. Until the distribution date (or
earlier redemption, exchange or expiration of the rights), the surrender for
transfer of any certificates evidencing Flowers Foods common stock will also
constitute the transfer of the rights associated with such certificates. As soon
as practicable following the distribution date, separate certificates evidencing
the rights will be mailed to holders of record of Flowers Foods common stock as
of the close of business on the distribution date and such separate right
certificates alone will evidence the rights. No right is exercisable at any time
prior to the distribution date. The rights will expire on the tenth anniversary
of the record date unless earlier redeemed, exchanged or amended by Flowers
Foods as described below. Until a right is exercised, the holder thereof, as
such, will have no rights as a shareholder of Flowers Foods, including the right
to vote or to receive dividends.

The purchase price payable, and the number of the series A preferred stock
or other securities issuable, upon exercise of the rights will be subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the preferred
shares, (ii) upon the grant to holders of series A preferred stock of certain
rights or warrants to subscribe for or purchase the series A preferred stock at
a price, or securities convertible into the series A preferred stock with a
conversion price, less than the then-current market price of the series A
preferred stock, or (iii) upon the distribution to holders of the series A
preferred stock of evidences of indebtedness, cash (excluding regular periodic
cash dividends), assets, stock (excluding dividends payable on the series A
preferred stock) or subscription rights or warrants (other than those referred
to above). The number of outstanding rights and the number of one thousandths of
the series A preferred stock issuable upon exercise of each right will be
subject to adjustment in the event of a stock dividend on the Flowers Foods
common stock payable in Flowers Foods common stock or a subdivision, combination
or reclassification of Flowers Foods common stock occurring, in any such case,
prior to the distribution date.

Rights will be exercisable to purchase series A preferred stock only after
the distribution date occurs and prior to the occurrence of a flip-in event as
described below. A distribution date resulting from the commencement of a tender
offer or exchange offer described in clause (ii) of the second paragraph of this
summary could precede the occurrence of a flip-in event and thus result in the
rights being exercisable to purchase series A preferred stock. A distribution
date resulting from any occurrence described in clause (i) of the second
paragraph of this summary would necessarily follow the

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occurrence of a flip-in event and thus result in the rights being exercisable to
purchase Flowers Foods common stock or other securities as described below.

Under the rights agreement, in the event, referred to as a flip-in event,
that (i) any person or group, together with its affiliates and associates,
becomes an acquiring person, (ii) any acquiring person or any affiliate or
associate thereof merges into or combines with Flowers Foods and Flowers Foods
is the surviving corporation, (iii) any acquiring person or any affiliate or
associate thereof effects certain other transactions with Flowers Foods, or (iv)
during such time as there is an acquiring person, Flowers Foods effects certain
transactions, in each case as described in the rights agreement, then, in each
such case, proper provision will be made so that, from and after the latest of
the share acquisition date, the distribution date and the date of the occurrence
of such flip-in event, each holder of a right, other than rights that are or
were owned beneficially by an acquiring person (which, from and after the date
of a flip-in event, will be void), will have the right to receive, upon exercise
thereof at the then-current exercise price of the right, that number of shares
of Flowers Foods common stock (or, under certain circumstances, an economically
equivalent security or securities of Flowers Foods) that at the time of such
flip-in event has a market value of two times the exercise price of the right.

In the event referred to as a flip-over event, that, at any time after a
person has become an acquiring person, (i) Flowers Foods merges with or into any
person and Flowers Foods is not the surviving corporation, (ii) any person
merges with or into Flowers Foods and Flowers Foods is the surviving
corporation, but all or part of the Flowers Foods common stock is changed or
exchanged for stock or other securities of any other person or cash or any other
property, or (iii) 50% or more of our assets or earning power, including
securities creating obligations of Flowers Foods, are sold, in each case as
described in the rights agreement, then, and in each such case, proper provision
will be made so that from and after the latest of the share acquisition date,
the distribution date and the date of the occurrence of such flip-over event,
each holder of a right, other than rights which have become void, will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the right, that number of shares of Flowers Foods
common stock (or, under certain circumstances, an economically equivalent
security or securities) of such other person that at the time of such flip-over
event has a market value of two times the exercise price of the right.

From and after the later of the first date of public announcement that a
person or group has acquired beneficial ownership of 15% or more of the
outstanding shares of Flowers Foods common stock, which is called the share
acquisition date and the distribution date, rights (other than any rights that
have become void) will be exercisable as described above, upon payment of the
aggregate exercise price in cash. In addition, at any time after the later of
the share acquisition date and the distribution date and prior to the
acquisition by any person or group of affiliated or associated persons of 50% or
more of the outstanding Flowers Foods common stock, we may exchange the rights
(other than any rights that have become void), in whole or in part, at an
exchange ratio of one share of Flowers Foods common stock per right (subject to
adjustment). Notwithstanding the foregoing, a majority of the continuing
directors on the Board (defined to include incumbent directors of Flowers Foods
and their successors who are nominated for election by a majority of the
incumbent directors, but specifically excluding representatives of acquiring
persons) must concur with the exchange of any of the rights on or following the
date (i) a person becomes an acquiring person as defined in the rights
agreement, or (ii) a

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majority of the Board is replaced due to the actions of any person or persons
who may become an acquiring person or who may cause a flip-in event or flip-over
event.

With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment in the purchase
price of at least 1%. We will not be required to issue fractional shares of
series A preferred stock (other than fractions that are integral multiples of
one thousandth of a share of series A preferred stock, which may, at our option,
be evidenced by depositary receipts) or fractional shares of Flowers Foods
common stock or other securities issuable upon the exercise of rights. In lieu
of issuing such securities, we may make a cash payment, as provided in the
rights agreement.

We may, at our option, redeem the rights in whole, but not in part, at a
price of $.01 per right, subject to adjustment, at any time prior to the close
of business on the later of the distribution date and the share acquisition
date. Immediately upon any redemption of the rights, the right to exercise the
rights will terminate and the only right of the holders of rights will be to
receive the redemption price. Notwithstanding the foregoing, a majority of the
continuing directors on the Board (defined to include incumbent directors of
Flowers Foods and their successors who are nominated for election by a majority
of the incumbent directors, but specifically excluding representatives of
acquiring persons) must concur with the redemption of the rights on or following
the date (i) a person becomes an acquiring person or (ii) a majority of the
board is replaced due to the actions of any person or persons who may become an
acquiring person or who may cause a flip-in event or flip-over event.

The rights agreement may be amended in certain instances so long as there
are continuing directors and a majority of such continuing directors votes in
favor of the proposed amendment. The rights agreement may be amended without the
approval of any holders of rights certificates, including amendments that
increase or decrease the purchase price, that add other events requiring
adjustment to the purchase price payable and the number of shares of series A
preferred stock or other securities issuable upon the exercise of the rights or
that modify procedures relating to the redemption of the rights, except that no
amendment may be made that decreases the stated redemption price to an amount
less than $.01 per right.

Our directors will have the exclusive power and authority to administer the
rights agreement and to exercise all rights and powers specifically granted to
the directors or to Flowers Foods therein, or as may be necessary or advisable
in the administration of the rights agreement, including without limitation, the
right and power to interpret the provisions of the rights agreement and to make
all determinations deemed necessary or advisable for the administration of the
rights agreement (including any determination to redeem or not redeem the rights
or to amend or not amend the rights agreement). All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the directors in good faith will be
final, conclusive and binding on Flowers Foods, the rights agent, the holders of
the rights and all other parties and will not subject the directors to any
liability to any person, including without limitation, the rights agent and the
holders of the rights.

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ANTITAKEOVER EFFECTS OF THE PROVISIONS OF OUR ARTICLES AND BYLAWS

Our articles of incorporation and bylaws contain a number of provisions
relating to corporate governance and the rights of shareholders that could have
a potential anti-takeover effect. These provisions may delay or prevent a change
of control of Flowers Foods. These provisions include:

- the classification of our Board of Directors into three classes, each
class serving for a staggered three-year term;

- the requirement that shareholders may remove directors only for cause and
only by the affirmative vote of at least 66 2/3% of our outstanding
voting stock;

- the authority of our Board of Directors to issue series of preferred
stock with voting rights and other provisions as the Board of Directors
may determine;

- the requirement that shareholder action can be taken only at an annual or
special meeting of shareholders or by written consent of holders of at
least 75% of the common stock;

- an advance notice procedure in order for shareholders to nominate
candidates for election as directors;

- the power of the Board of Directors to consider constituencies other than
Flowers Foods shareholders in discharging their duties;

- the requirement that a special shareholders' meeting may only be called
by the chairman of the board or at the direction of the majority of the
Board of Directors, and not by shareholders; and

- a requirement that a vote of at least 66 2/3% of our voting stock is
required to amend provisions of the articles of incorporation and bylaws
relating to:

- the classification of the Board of Directors and removal of directors;

- special meetings of shareholders and the order of business of
shareholder meetings;

- nominations of directors to fill vacancies or newly created
directorships;

- the election to be subject to the fair price and business combination
provisions of the GBCC; or

- the power of the Board of Directors to make, amend or repeal bylaws.

These provisions have some anti-takeover effects and may discourage
proposals that could be viewed as favorable to shareholders. The description
above is intended only as a summary of the material provisions. You should refer
to our articles of incorporation and bylaws, which have been filed as exhibits
to the registration statement for a more complete description.

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LIMITED LIABILITY AND INDEMNIFICATION PROVISIONS

LIMITATION ON LIABILITY

Our articles of incorporation provide that a director of Flowers Foods
shall not be liable to Flowers Foods or its shareholders for or with respect to
any acts or omissions in the performance of his duties as a director, except to
the extent such exemption from liability or limitation thereof is not permitted
under the GBCC as currently in effect or as the same may be amended or under any
other applicable law.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our articles of incorporation and bylaws provide that each person who is or
was or had agreed to become a director or officer of Flowers Foods, or each such
person who is or was serving or who had agreed to serve at the request of the
Board of Directors or an officer as an employee or agent of Flowers Foods or as
a director, officer, employee or agent of another entity, shall be indemnified
by us to the fullest extent permitted by the GBCC or any other applicable law as
presently or hereafter in effect. This right of indemnification includes the
advancement of expenses incurred in defending a proceeding. We may, by action of
the Board of Directors, provide indemnification to other employees and agents of
Flowers Foods with the same scope and effect as the foregoing indemnification of
our directors and officers.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for Flowers Foods common stock will be
First Union National Bank.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed a registration statement on Form 10 to register our shares
being issued to you in the spin-off. This information statement is a part of
that registration statement and, as allowed by Securities and Exchange
Commission rules, does not include all of the information you can find in the
registration statement or the exhibits to the registration statement. For
additional information relating to us and the spin-off, reference is made to the
registration statement and the exhibits to the registration statement.
Statements contained in this information statement as to the contents of any
contract or document referred to are not necessarily complete and in each
instance, if the contract or document is filed as an exhibit to the registration
statement, reference is made to the copy of the contract or other document filed
as an exhibit to the registration statement. Each statement is qualified in all
respects by the relevant reference.

After the spin-off, we will file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission. We intend to furnish our shareholders with annual reports containing
consolidated financial statements certified by an independent public accounting
firm. The registration statement is, and any of these future filings with the
Securities and Exchange Commission will be, available to the public over the
Internet at the Securities and Exchange Commission's website at
http://www.sec.gov. You may read and copy any filed document at the Securities
and Exchange Commission's public reference rooms in Washington, D.C. at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D. C. 20549, and at the
Securities and Exchange

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Commission's regional offices in New York at 7 World Trade Center, 13th Floor,
New York, NY 10048, and in Chicago at Suite 1400, Northwestern Atrium Center,
14th Floor, 500 W. Madison Street, Chicago, IL 60661. Please call the Securities
and Exchange Commission at 1-800-SEC-0330 for further information about the
public reference rooms.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

Flowers Foods incorporates by reference into this Registration Statement
(i) certain portions of the Annual Report on Form 10-K for the fiscal year ended
January 1, 2000 of Flowers Industries, Inc. (File No. 1-9787) filed with the
Securities and Exchange Commission on March 31, 2000 and certain portions of the
Quarterly Report on Form 10-Q for the forty weeks ended October 7, 2000 of
Flowers Industries, Inc. filed with the Securities and Exchange Commission on
November 21, 2000, (ii) the financial statements of Keebler Foods Company for
the fiscal year ended January 1, 2000 filed as an exhibit to the Flowers
Industries, Inc. Annual Report on Form 10-K on March 31, 2000 and (iii) certain
portions of the Quarterly Report on Form 10-Q for the forty weeks ended October
7, 2000 of Keebler Foods Company filed with the Securities and Exchange
Commission on November 21, 2000.