<PAGE> 1
EXHIBIT 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.
<PAGE> 2
KEEBLER FOODS COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
OCTOBER 7, 2000 January 1, 2000
--------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,469 $ 20,717
Trade accounts and notes receivable, net 52,367 65,052
Inventories, net:
Raw materials 28,120 34,243
Package materials 17,170 13,907
Finished goods 137,273 126,954
Other 2,080 1,176
---------- ----------
184,643 176,280
Deferred income taxes 34,668 46,252
Other 38,583 27,278
---------- ----------
Total current assets 330,730 335,579
PROPERTY, PLANT AND EQUIPMENT, NET 610,337 553,031
GOODWILL, NET 527,611 370,188
TRADEMARKS, TRADE NAMES AND OTHER INTANGIBLES, NET 239,177 211,790
PREPAID PENSION 30,914 33,240
ASSETS HELD FOR SALE 1,159 6,662
OTHER ASSETS 17,140 17,693
---------- ----------
Total assets $1,757,068 $1,528,183
========== ==========
</TABLE>
KEEBLER FOODS COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
OCTOBER 7, 2000 January 1, 2000
------------------ ------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 50,660 $ 37,283
Trade accounts payable 146,750 147,862
Other liabilities and accruals 237,406 237,447
Income taxes payable 1,138 23,603
Plant and facility closing costs and severance 12,232 11,290
----------- -----------
Total current liabilities 448,186 457,485
LONG-TERM DEBT 546,104 419,160
OTHER LIABILITIES:
Deferred income taxes 127,544 124,389
Postretirement/postemployment obligations 63,546 64,383
Plant and facility closing costs and severance 7,397 12,062
Deferred compensation 26,312 24,581
Other 20,398 16,808
----------- -----------
Total other liabilities 245,197 242,223
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock ($.01 par value; 100,000,000 shares authorized and
none issued) -- --
Common stock ($.01 par value; 500,000,000 shares authorized and
86,348,001 and 84,655,874 shares issued, respectively) 863 846
Additional paid-in capital 207,492 182,686
Retained earnings 349,238 255,813
Treasury stock (40,012) (30,030)
----------- -----------
Total shareholders' equity 517,581 409,315
----------- -----------
Total liabilities and shareholders' equity $ 1,757,068 $ 1,528,183
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
1
<PAGE> 3
KEEBLER FOODS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWELVE TWELVE FORTY FORTY
WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
OCTOBER 7, 2000 OCTOBER 9, 1999 OCTOBER 7, 2000 OCTOBER 9, 1999
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET SALES $ 642,203 $ 615,844 $ 2,111,635 $ 2,055,724
COSTS AND EXPENSES:
Cost of sales 254,237 261,244 870,967 899,296
Selling, marketing and administrative expenses 301,752 284,375 983,999 952,066
Other 10,569 7,265 20,797 22,025
Restructuring and impairment charge -- -- (996) 69,208
--------- --------- ----------- -----------
INCOME FROM OPERATIONS 75,645 62,960 236,868 113,129
Interest (income) (1,517) (249) (3,002) (1,190)
Interest expense 11,568 7,346 37,189 29,687
--------- --------- ----------- -----------
INTEREST EXPENSE, NET 10,051 7,097 34,187 28,497
--------- --------- ----------- -----------
INCOME BEFORE INCOME TAX EXPENSE 65,594 55,863 202,681 84,632
Income tax expense 24,644 23,742 80,767 41,204
--------- --------- ----------- -----------
NET INCOME $ 40,950 $ 32,121 $ 121,914 $ 43,428
========= ========= =========== ===========
BASIC NET INCOME PER SHARE $ 0.48 $ 0.38 $ 1.44 $ 0.52
WEIGHTED AVERAGE SHARES OUTSTANDING 84,994 83,708 84,365 83,785
DILUTED NET INCOME PER SHARE $ 0.46 $ 0.37 $ 1.39 $ 0.50
WEIGHTED AVERAGE SHARES OUTSTANDING 88,240 87,423 87,728 87,741
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
2
<PAGE> 4
KEEBLER FOODS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FORTY FORTY
WEEKS ENDED WEEKS ENDED
OCTOBER 7, 2000 OCTOBER 9, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES
Net income $ 121,914 $ 43,428
Adjustments to reconcile net income to cash from
operating activities:
Depreciation and amortization 72,547 62,651
Deferred income taxes 22,367 (11,018)
(Gain) loss on sale of property, plant and equipment (1,623) 249
Gain on sale of value brands assets (5,700) --
Restructuring and impairment charge (615) 46,071
Income tax benefit related to stock options exercised 18,875 8,838
Changes in assets and liabilities:
Trade accounts and notes receivable, net 10,890 (35,241)
Inventories, net (211) (10,853)
Income taxes payable (21,329) (4,651)
Other current assets (10,202) (7,827)
Trade accounts payable and other current liabilities (17,313) 27,016
Plant and facility closing costs and severance (17,592) 11,554
Other, net 2,819 7,622
--------- ---------
Cash provided from operating activities 174,827 137,839
CASH FLOWS USED BY INVESTING ACTIVITIES
Capital expenditures (53,174) (68,637)
Proceeds from property disposals 8,617 2,833
Purchase of Sesame Street license (10,000) --
Proceeds from sale of value brands assets 17,000 --
Purchase of Austin Quality Foods, Inc., net of cash acquired (253,797) --
--------- ---------
Cash used by investing activities (291,354) (65,804)
CASH FLOWS PROVIDED FROM (USED BY) FINANCING ACTIVITIES
Purchase of treasury stock (9,982) (21,350)
Exercise of employee stock options 5,948 2,741
Proceeds from receivables securitization 13,000 125,000
Long-term debt repayments (34,198) (103,861)
Revolving facility, net 170,000 (77,800)
Dividends paid (28,489) --
--------- ---------
Cash provided from (used by) financing activities 116,279 (75,270)
--------- ---------
Decrease in cash and cash equivalents (248) (3,235)
Cash and cash equivalents at beginning of period 20,717 23,515
--------- ---------
Cash and cash equivalents at end of period $ 20,469 $ 20,280
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE> 5
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
INTERIM FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements included herein were
prepared pursuant to the rules and regulations for interim reporting under the
Securities Exchange Act of 1934. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements were omitted.
The interim consolidated financial statements and notes should be read in
conjunction with the annual audited consolidated financial statements and notes
thereto. The accompanying unaudited interim consolidated financial statements
contain all adjustments, consisting only of normal adjustments, which in the
opinion of management were necessary for a fair statement of the results for the
interim periods. Results for the interim periods are not necessarily indicative
of results for the full year.
FISCAL YEAR
Keebler's fiscal year consists of thirteen four week periods (fifty-two or
fifty-three weeks) and ends on the Saturday nearest December 31. The first
quarter consists of four four-week periods.
RECLASSIFICATIONS
Certain reclassifications of prior period data have been made to conform with
the current period reporting.
2. ACQUISITION OF AUSTIN QUALITY FOODS, INC.
On March 6, 2000, Keebler Foods Company ("Keebler") acquired Austin Quality
Foods, Inc. ("Austin") from R&H Trust Co. (Jersey) Limited, as Trustee, HB
Marketing & Franchising L.P., 697163 Alberta Ltd., and William C. Burkhardt, for
a purchase price, net of cash acquired, of $253.7 million, excluding related
fees and expenses paid of approximately $3.0 million. The acquisition of Austin
was a cash transaction funded with approximately $235.0 million from borrowings
under the $700.0 million Senior Credit Facility Agreement dated as of September
28, 1998, and the remainder from cash received on additional sales of accounts
receivable under Keebler's Receivables Purchase Agreement.
The acquisition of Austin by Keebler has been accounted for as a purchase. The
total purchase price and the fair value of liabilities assumed have been
allocated to the tangible and intangible assets of Austin based on respective
fair values. The acquisition has resulted in an unallocated excess purchase
price over fair value of net assets acquired of $168.5 million, which is being
amortized on a straight-line basis over a forty year period.
Results of operations for Austin from March 6, 2000 to October 7, 2000 have been
included in the consolidated statements of operations. The following unaudited
pro forma information has been prepared assuming the acquisition had taken place
at the beginning of each respective fiscal year reported. The unaudited pro
forma information includes adjustments for interest expense that would have been
incurred related to financing the purchase, additional depreciation of the
property, plant and equipment acquired and amortization of the trademarks, trade
names, other intangibles and goodwill arising from the acquisition. The
unaudited pro forma consolidated results of operations are not necessarily
indicative of the results that would have been reported had the Austin
acquisition been effected on the first day of the year reported.
4
<PAGE> 6
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. ACQUISITION OF AUSTIN QUALITY FOODS, INC. (CONTINUED)
<TABLE>
<CAPTION>
Unaudited
(IN THOUSANDS EXCEPT PER SHARE DATA) For the Forty Weeks Ended
------------------------------------
October 7, 2000 October 9, 1999
----------------- -----------------
<S> <C> <C>
Net sales....................................................................... $ 2,139,130 $ 2,217,917
Net income...................................................................... $ 117,478 $ 42,148
Diluted net income per share.................................................... $ 1.35 $ .48
</TABLE>
3. ASSETS HELD FOR SALE
On May 2, 2000, the Sayreville, New Jersey manufacturing facility, which had
been held for sale after its closure, was sold for $7.5 million. The sale
resulted in a pre-tax gain of approximately $2.0 million, which was recorded in
other income during the first half of the year. Disposition of the remaining
assets held for sale is expected to occur within the next thirty-three months
without a significant gain or loss.
4. DEBT
Long-term debt consisted of the following at October 7, 2000:
<TABLE>
<CAPTION>
(IN THOUSANDS) Interest Rate Final Maturity OCTOBER 7,2000
------------- -------------- --------------
<S> <C> <C> <C>
Revolving Facility.................................. 6.845% September 28, 2004 $ 170,000
Term Facility....................................... 6.827% September 28, 2004 287,000
Senior Subordinated Notes........................... 10.750% July 1, 2006 124,400
Other Senior Debt................................... Various 2001-2005 8,840
Capital Lease Obligations........................... Various 2002-2042 6,524
---------
596,764
Less: Current maturities............................ 50,660
---------
Total.......................................... $ 546,104
=========
</TABLE>
On March 6, 2000, Keebler utilized existing credit facilities in order to
finance the acquisition of Austin. The additional borrowings were under the
Revolving Facility, which was originally entered into on September 28, 1998. At
October 7, 2000, the outstanding balance on the Revolving Facility was $170.0
million, with an available balance of $180.0 million.
5. RESTRUCTURING AND IMPAIRMENT CHARGE
In May of 1999, Keebler closed its manufacturing facility in Sayreville, New
Jersey, which resulted in a pre-tax restructuring and impairment charge, in
1999, to operating income of $66.3 million in total. In the second quarter of
2000, the charge was reduced by an adjustment of $1.0 million. The adjustment
related to severance and other exit costs from the facility closure due to
lower-than-expected severance costs and the earlier-than-expected sale of the
facility. The restructuring and impairment charge included $19.2 million for
cash costs related to severance and other exit costs from the Sayreville
facility. The remaining $46.1 million were non-cash charges for asset
impairments related to the Sayreville closing, including write-downs of
property, plant and equipment at Sayreville and equipment at other locations,
and a proportionate reduction of goodwill acquired in the Sunshine Biscuits,
Inc. acquisition in June 1996. Approximately 650 employees were terminated as a
result of the closing of the Sayreville facility, of which approximately 600
employees were represented by unions.
5
<PAGE> 7
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. RESTRUCTURING AND IMPAIRMENT CHARGE (CONTINUED)
The following table sets forth the activity related to the liabilities accrued
in conjunction with the restructuring and impairment charge:
<TABLE>
<CAPTION>
(IN THOUSANDS) January 1, 2000 Provision Spending Adjustment OCTOBER 7, 2000
--------------- ----------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Severance................... $2,037 $ -- $(1,196) $ (140) $ 701
Facility closure............ 2,567 -- (852) (1,556) 159
Other....................... 1,717 -- 56 700 2,473
------ --------- ------- ------- ------
Total................... $6,321 $ -- $(1,992) $ (996) $3,333
====== ========= ======= ======= ======
</TABLE>
At October 7, 2000, $3.2 million remained for plant and facility closing costs
and severance accruals and $.1 million for other liabilities and accruals. Only
costs related to the settlement of worker's compensation claims (included in
other above), and health and welfare payments are expected to extend beyond the
year ended December 30, 2000.
6. PLANT AND FACILITY CLOSING COSTS AND SEVERANCE
In conjunction with the March 6, 2000 Austin acquisition, Keebler has recognized
estimated costs pursuant to a plan to exit certain activities of the acquired
company. These exit costs, for which there is no future economic benefit, were
provided for in the purchase price allocation and were equal to $14.5 million.
Spending equal to $8.8 million has occurred through October 7, 2000. Staff
reductions of approximately 80 non-union employees are expected as part of the
exit plan. Approximately 75 employees had been terminated at October 7, 2000.
The remaining terminations are expected to occur by February 23, 2001. Spending
on exit costs is expected to be substantially complete before the end of 2001,
with primarily health and welfare payments extending beyond that timeframe.
During 1998, as part of acquiring President International, Inc. ("President"),
Keebler provided for $12.8 million in exit costs in the allocation of the
purchase price. At January 1, 2000, there remained $7.4 million in reserves of
which $2.8 million was spent during the first three quarters of 2000. There were
260 employees at January 1, 2000, still expected to be terminated as part of the
exit plan, of which approximately 175 were represented by a union. Throughout
the first forty weeks of 2000, approximately 150 employees under union contract
and approximately 35 employees not under union contract had been terminated. The
remaining terminations are scheduled to occur in the fourth quarter of 2000.
In the second quarter of the current year, Keebler adjusted accruals previously
established in the accounting for the Keebler and Sunshine acquisitions by
reducing goodwill and other intangibles by $0.5 million and $1.1 million,
respectively, to recognize exit costs that are now expected to be less than
initially anticipated.
6
<PAGE> 8
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. PLANT AND FACILITY CLOSING COST AND SEVERANCE (CONTINUED)
The following table sets forth the activity in Keebler's plant and facility
closing costs and severance liabilities exclusive of the liabilities resulting
from the restructuring and impairment charge recorded during 1999:
<TABLE>
<CAPTION>
January 1, OCTOBER 7,
(IN THOUSANDS) 2000 Provision Spending Adjustment 2000
---------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
KEEBLER COMPANY
Severance .................... $ 24 $ -- $ -- $ -- $ 24
Facility closure ............. 7,829 -- (1,430) (500) 5,899
------- ------- -------- ------- -------
Subtotal ................. 7,853 -- (1,430) (500) 5,923
------- ------- -------- ------- -------
SUNSHINE BISCUITS, INC
Severance .................... $ 63 $ -- $ (17) $ -- $ 46
Facility closure ............. 1,962 -- (689) (1,116) 157
------- ------- -------- ------- -------
Subtotal ................. 2,025 -- (706) (1,116) 203
------- ------- -------- ------- -------
PRESIDENT INTERNATIONAL, INC
Severance .................... $ 2,829 $ -- $ (2,235) $ -- $ 594
Facility closure ............. 4,596 -- (569) -- 4,027
Other ........................ 10 -- (10) -- --
------- ------- -------- ------- -------
Subtotal ................. 7,435 -- (2,814) -- 4,621
------- ------- -------- ------- -------
AUSTIN QUALITY FOODS, INC
Severance .................... $ -- $13,979 $ (8,398) $ -- $ 5,581
Facility closure ............. -- 479 (408) -- 71
Other ........................ -- 28 (5) -- 23
------- ------- -------- ------- -------
Subtotal ................. -- 14,486* (8,811) -- 5,675
------- ------- -------- ------- -------
Total .................. $17,313 $14,486 $(13,761) $(1,616) $16,422
======= ======= ======== ======= =======
</TABLE>
* Recorded as part of the purchase price allocation.
7. SEGMENT INFORMATION
Keebler has adopted Statement of Financial Standards No. 131 "Disclosures about
Segments of an Enterprise and Related Information" for reporting segment
information. Keebler's reportable segments are Branded and Specialty. The
reportable segments were determined using Keebler's method of internal
reporting, which divides and analyzes the business by sales channel. The nature
of the customers, products and method of distribution can vary by sales channel.
The reportable segments represent an aggregation of similar sales channels. The
Branded segment is comprised of sales channels that principally market brand
name cookie and cracker products to retail outlets. Either a Keebler sales
employee or a distributor sells products in the Branded segment. The sales
channels in the Specialty segment primarily sell cookie, cracker and brownie
products that are manufactured on a made-to-order basis or that are produced in
individual packs to be used in various institutions (i.e., restaurants,
hospitals, etc.), as well as cookies manufactured for the Girl Scouts of the
U.S.A. Many of the products sold by the Specialty segment are done so through
the use of brokers.
7
<PAGE> 9
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. SEGMENT INFORMATION (CONTINUED)
Keebler evaluates the performance of the reportable segments and allocates
resources based on the segment's profit contribution, defined as earnings before
certain functional support costs, amortization, interest and income taxes. While
the accounting policies for each reportable segment are the same as for the
total company, the cost of sales used to determine a segment's profit
contribution is calculated using standard costs for each product, whereas actual
cost of sales is used to determine consolidated income from operations.
There are no intersegment transactions that result in revenue or profit. Asset
information by reportable segment is not presented, as Keebler does not report
or generate such information internally. However, depreciation expense included
in the determination of a segment's profit contribution has been presented. The
depreciation expense for each reportable segment reflects the amount absorbed in
the standard cost of products sold, as well as the depreciation that relates to
assets used entirely by the respective segment. The following table presents
certain information included in the profit contribution of each segment for the
twelve weeks ended October 7, 2000 and October 9, 1999 and the forty weeks ended
October 7, 2000 and October 9, 1999. Prior year amounts have been restated for
reclassifications between reportable segments.
<TABLE>
<CAPTION>
Branded Specialty
Segment Segment Other (a) Total
---------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
TWELVE WEEKS ENDED OCTOBER 7, 2000:
NET SALES TO EXTERNAL CUSTOMERS ........ $ 512,412 $129,791 $ -- $ 642,203
DEPRECIATION EXPENSE ................... 5,205 2,404 9,475 17,084
PROFIT CONTRIBUTION .................... 92,896 23,108 -- 116,004
TWELVE WEEKS ENDED OCTOBER 9, 1999:
Net sales to external customers ........ $ 479,598 $136,246 $ -- $ 615,844
Depreciation expense ................... 5,297 2,034 7,673 15,004
Profit contribution .................... 83,362 17,759 -- 101,121
FORTY WEEKS ENDED OCTOBER 7, 2000:
NET SALES TO EXTERNAL CUSTOMERS ........ $1,597,553 $514,082 $ -- $2,111,635
DEPRECIATION EXPENSE ................... 19,194 9,216 25,743 54,153
PROFIT CONTRIBUTION .................... 264,305 103,594 -- 367,899
FORTY WEEKS ENDED OCTOBER 9, 1999:
Net sales to external customers ........ $1,533,543 $522,181 $ -- $2,055,724
Depreciation expense ................... 15,804 6,275 25,510 47,589
Profit contribution .................... 240,905 90,148 -- 331,053
</TABLE>
(a) Represents expenses incurred by the functional support departments that
are not allocated to the reportable segments.
The net sales to external customers from the reportable segments equal the
consolidated net sales of Keebler. A reconciliation of segment profit
contribution to total consolidated income from continuing operations before
income tax expense for the twelve weeks ended October 7, 2000 and October 9,
1999 and the forty weeks ended October 7, 2000 and October 9, 1999 is as
follows:
8
<PAGE> 10
KEEBLER FOODS COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
--------------------------------- ------------------------------------
OCTOBER 7, 2000 October 9, 1999 OCTOBER 7, 2000 October 9, 1999
--------------- --------------- --------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME BEFORE INCOME TAX EXPENSE:
Reportable segment's profit contribution .... $116,004 $101,121 $ 367,899 $331,053
Unallocated functional support costs (b) .... 40,359 38,161 132,027 148,716
Restructuring and impairment charge ......... -- -- (996) 69,208
Interest expense, net ....................... 10,051 7,097 34,187 28,497
-------- -------- --------- --------
Income before Income Tax Expense ......... $ 65,594 $ 55,863 $ 202,681 $ 84,632
======== ======== ========= ========
</TABLE>
(b) Includes support costs such as distribution, research and development,
corporate administration and other (income) expense, which are not
allocated internally to reportable segments.
8. SALE OF VALUE BRANDS ASSETS
On January 4, 2000, Keebler sold its Birmingham, Alabama, and North Little Rock,
Arkansas bakeries and the SUNNY and GREGS brands to Consolidated Biscuit
Company. As a result of the sale, Keebler recorded a $5.7 million pre-tax gain
in other income during the first quarter of 2000.
9. INCOME TAXES
During the quarter, Keebler decreased the annual effective tax rate from 41.0%
to 39.8%. The effective tax rate declined due to increased earnings, the
adoption of a change in the tax basis of the assets acquired and liabilities
assumed in the Keebler acquisition, in accordance with the Internal Revenue Code
Section 338, and a satisfactory resolution of certain income tax contingencies.
Partially offsetting the reduction in the effective tax rate was the increase in
intangible amortization expense as a result of the Austin acquisition. The
effective tax rate remains above the federal statutory rate due to nondeductible
expenses, primarily the amortization of intangibles, resulting from the
Sunshine, President and Austin acquisitions.
10. SUBSEQUENT EVENTS
On October 26, 2000, Kellogg Company announced it reached an agreement to
acquire Keebler Foods Company in a transaction entered into with Keebler and
with Flowers Industries, Inc., the majority shareholder of Keebler. Completion
of the merger is subject to customary closing conditions and regulatory
approvals. There can be no assurance that such approvals will be obtained. The
transaction is expected to close during the first quarter of 2001.
On November 7, 2000, the Board of Directors of Keebler declared a quarterly cash
dividend of $0.1125 per common share payable on December 20, 2000, to
stockholders of record on December 6, 2000.
9
