<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 1998
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _________ to_________
Commission File Number: 0-19887
WORTHINGTON FOODS, INC.
(Exact name of registrant as specified in its charter)
OHIO 31-0733120
- ------------------------ -----------------------------------
(State of incorporation) IRS Employer Identification Number)
900 PROPRIETORS ROAD, WORTHINGTON, OH 43085
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 885-9511
Not Applicable
-------------------------------------------------
(Former name, former address and formal fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 2, 1998
- --------------------------- -------------------------------
Common shares, no par value 12,316,790
Exhibit Index at Page 15
Page 1 of 17
<PAGE> 2
WORTHINGTON FOODS, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets -
October 2, 1998 and December 31, 1997......................................................... 3-4
Condensed Consolidated Statements of Income -
For the three month and nine month periods ended October 2, 1998
and October 3, 1997........................................................................... 5
Condensed Consolidated Statements of Cash Flows -
For the nine month periods ended October 2, 1998 and October 3, 1997.......................... 6
Notes to Condensed Consolidated Financial Statements............................................ 7
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................................. 8-12
Item 3.Quantitative and Qualitative Disclosures About Market Risk........................................ 12
PART II OTHER INFORMATION................................................................................. 13
Item 1. Legal Proceedings............................................................................. 13
Item 2. Changes in Securities and Use of Proceeds..................................................... 13
Item 3. Defaults Upon Senior Securities............................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders........................................... 13
Item 5. Other Information............................................................................. 13
Item 6. Exhibits and Reports on Form 8-K.............................................................. 13
Signature ............................................................................................ 14
Exhibit Index............................................................................................ 15
Exhibit 11 - Computation of Earnings Per Share.................................................... 16
Exhibit 27 - Financial Data Schedule.............................................................. 17
</TABLE>
- 2 -
<PAGE> 3
ITEM 1.
FINANCIAL STATEMENTS
- --------------------
WORTHINGTON FOODS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
10/2/98 12/31/97
------- --------
(UNAUDITED) (AUDITED)
(000'S OMITTED)
<S> <C> <C>
ASSETS
Current Assets
Cash.......................................................... $ 1,694 $ 714
Accounts receivable less allowance............................ 8,046 9,755
(1998 - $172; 1997 - $100
Inventories:
Finished goods............................................ 16,282 13,875
Work in process........................................... 1,518 1,038
Raw materials............................................. 5,011 3,453
Packaging materials and supplies.......................... 2,662 1,668
-------- -------
25,473 20,034
Income taxes refundable....................................... 447 1,230
Prepaid expenses and other.................................... 7,052 3,387
-------- -------
Total Current Assets...................................... 42,712 35,120
Property, Plant and Equipment 90,589 84,652
Less accumulated depreciation and amortization............ 29,500 25,640
-------- -------
61,089 59,012
Goodwill...................................................... 433 675
Other intangible assets....................................... 656 679
-------- -------
1,089 1,354
TOTAL ASSETS........................................ $104,890 $95,486
======== =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 3 -
<PAGE> 4
WORTHINGTON FOODS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
10/2/98 12/31/97
------- --------
(UNAUDITED) (AUDITED)
(000'S OMITTED)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable (including outstanding checks of $1,690 in 1998
and $1,292 in 1997)................................................... $ 5,871 $ 4,731
Accrued compensation........................................................ 693 513
Other accrued expenses...................................................... 2,223 2,262
Current portion of long-term debt and capital lease obligations............. 1,845 2,501
-------- -------
Total Current Liabilities............................................... 10,632 10,007
Long-Term Liabilities
Long-term debt and capital lease obligations............................... 23,233 22,333
Deferred income taxes........................................................... 7,191 6,730
-------- -------
Total Long-Term Liabilities............................................ 30,424 29,063
Shareholders' Equity
Preferred shares, no par value, authorized 2,000,000 shares,
none issued............................................................ - -
Common shares, $1.00 stated value, authorized 30,000,000 shares,
issued 11,809,066 shares in 1998 and 11,580,507 in 1997 11,809 11,580
Additional paid-in capital.................................................. 10,766 10,165
Retained earnings........................................................... 41,259 34,671
-------- -------
63,834 56,416
-------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................ $104,890 $95,486
======== =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 4 -
<PAGE> 5
WORTHINGTON FOODS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
10/2/98 10/3/97 10/2/98 10/3/97
------- ------- ------- -------
(UNAUDITED)
(000'S OMITTED, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.................................. $34,838 $28,805 $102,186 $86,692
Cost of goods sold......................... 19,473 16,259 57,251 49,761
------- ------- ------- -------
Gross profit............................ 15,365 12,546 44,935 36,931
Selling and distribution expenses.......... 9,661 7,129 27,184 20,859
General and administrative expenses........ 923 765 2,748 2,549
Research and development expenses.......... 435 331 1,246 1,037
------- ------- ------- -------
11,019 8,225 31,178 24,445
------- ------- ------- -------
Income from operations..................... 4,346 4,321 13,757 12,486
Interest expense........................... 411 356 1,302 1,143
--- --- ----- -----
Income before income taxes................. 3,935 3,965 12,455 11,343
Provision for income taxes................. 1,616 1,606 5,109 4,594
------- ------- ------- -------
Net income................................. $ 2,319 $ 2,359 $ 7,346 $ 6,749
======= ======= ======= =======
Earnings per share:
Basic................................. $ 0.20 $ 0.20 $ 0.63 $ 0.59
======= ======= ======= =======
Diluted............................... $ 0.19 $ 0.19 $ 0.61 $ 0.56
======= ======= ======= =======
Dividends per share........................ $0.0215 $ 0.02 $0.0645 $ 0.06
======= ======= ======= =======
Weighted average number of common
and common equivalent shares used in
computing earnings per share
Basic.................................. 11,768,487 11,534,850 11,711,798 11,503,565
Diluted................................ 12,164,772 12,053,751 12,075,900 12,007,110
</TABLE>
Note: 1997 share amounts have been adjusted to reflect the four-for-three share
split in December, 1997.
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 5 -
<PAGE> 6
WORTHINGTON FOODS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
10/2/98 10/3/97
------- -------
(UNAUDITED)
(000'S OMITTED)
<S> <C> <C>
Operating activities:
Net income....................................................................... $ 7,346 $ 6,749
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation................................................................... 4,001 3,206
Deferred income taxes......................................................... 461 410
Amortization of intangible assets.............................................. 242 268
Cash provided by (used for) current assets and liabilities:
Accounts receivable.......................................................... 1,708 (190)
Inventories.................................................................. (5,439) (5,653)
Prepaid expenses and other................................................... (3,664) (1,531)
Accounts payable and accrued expenses........................................ 1,281 62
Income taxes................................................................. 782 815
Decrease in other assets....................................................... 24 99
------- -------
Net cash provided by operating activities........................................ 6,742 4,235
Investing activities:
Purchases of property, plant and equipment, net.................................. (6,078) (11,792)
------- -------
Net cash used for investing activities........................................... (6,078) (11,792)
Financing activities:
Proceeds from long-term borrowings............................................... 64,995 50,999
Payments on long-term borrowings............................................... (64,751) (43,017)
Proceeds from the issuance of common shares...................................... 829 532
Dividends paid................................................................... (757) (648)
------- -------
Net cash provided by financing activities....................................... 316 7,866
Net increase in cash............................................................... 980 309
Cash at beginning of period........................................................ 714 811
------- -------
Cash at end of period.............................................................. $ 1,694 $ 1,120
======= =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 6 -
<PAGE> 7
WORTHINGTON FOODS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The accompanying condensed consolidated financial statements (unaudited)
include the accounts of Worthington Foods, Inc. and Subsidiary.
The information furnished reflects all adjustments (all of which were of a
normal recurring nature) which are, in the opinion of management, necessary
to fairly present the condensed consolidated financial position, results of
operations, and cash flows on a consistent basis. Operating results for the
three month and nine month periods ended October 2, 1998 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998.
The accompanying condensed consolidated financial statements (unaudited)
are presented in accordance with the requirements for Form 10-Q and
consequently do not include all the disclosures normally required by
generally accepted accounting principles. Reference should be made to the
Company's Form 10-K for the fiscal year ended December 31, 1997 (File No.
0-19887) for additional disclosures including a summary of the Company's
accounting policies, which have not significantly changed. The Company's
policy is that each fiscal year includes four, thirteen week periods.
- 7 -
<PAGE> 8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- ---------------------------------------------------------------------------
OPERATIONS
- ----------
RESULTS OF OPERATIONS
The following table sets forth selected items from the Company's Consolidated
Statements of Income expressed as a percentage of net sales for the periods
indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
10/2/98 10/3/97 10/2/98 10/3/97
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales............................................ 100.0% 100.0% 100.0% 100.0%
Cost of goods sold................................... 55.9 56.4 56.0 57.4
---- ---- ----- ----
Gross profit....................................... 44.1 43.6 44.0 42.6
Selling and distribution expenses.................... 27.7 24.8 26.6 24.1
General and administrative expenses.................. 2.7 2.7 2.7 2.9
Research and development expenses.................... 1.2 1.1 1.2 1.2
---- ---- ---- ----
31.6 28.6 30.5 28.2
---- ---- ----- ----
Income from operations............................... 12.5 15.0 13.5 14.4
Interest expense..................................... 1.2 1.2 1.3 1.3
---- ---- ---- ----
Income before income taxes........................... 11.3 13.8 12.2 13.1
Provision for income taxes........................... 4.6 5.6 5.0 5.3
---- ---- ---- ----
Net income........................................... 6.7% 8.2% 7.2% 7.8%
==== ==== ==== ====
Provision for income taxes as a percentage
of income before income taxes........................ 41.1% 40.5% 41.0% 40.5%
==== ==== ==== ====
</TABLE>
THIRD QUARTER OF 1998 COMPARED TO 1997
Net sales for the third quarter and nine month period ended October 2, 1998
increased approximately $6,033,000 and $15,494,000 or 20.9% and 17.9% over the
similar prior year periods. Net sales for the third quarter of 1998 to the
Company's Specialty Markets (Seventh-day Adventist, Health Food, and
International) decreased approximately $338,000 or 3.9% from the similar prior
year period. This decrease is primarily attributable to lower International
sales for the quarter due to the timing of customer orders. For the nine month
period, net sales to the Company's Specialty Markets increased approximately
$685,000 or 2.5% over the similar prior year period. The nine month increase in
sales is more in line with Company expectations.
Net sales to Foodservice operations for the third quarter and nine month period
of 1998 increased approximately $1,202,000 and $3,714,000 or 33.3% and 37.5%
over the similar prior year periods. Foodservice continues to benefit from
increased sales to existing accounts as well as several new customers. Strong
business relationships that have been created by the Company's sales force with
the decision makers in foodservice operations are expected to continue to
increase sales.
- 8 -
<PAGE> 9
Net sales of Morningstar Farms(R) products to supermarkets in the third quarter
and nine month period of 1998 increased approximately $5,169,000 and $11,096,000
or 31.2% and 22.3% over the similar prior year periods. Net sales of Morningstar
Farms meat alternative products in the third quarter and nine month period of
1998 increased approximately $5,024,000 and $11,683,000 or 34.1% and 27.4% over
the similar prior year periods. The gain in sales continues to be attributed to
increased retail movement, increased distribution in supermarkets, and solid
acceptance of new and existing products. Distribution for America's Original
Veggie Dogs(TM) and Meat-free Corn Dogs continues to increase as initial
customer acceptance has been better than anticipated. The Company will be
introducing MSF Meat-free Buffalo Wings and Hard Rock Cafe(R) All Natural Veggie
Burgers during the fourth quarter. The Buffalo Wings are already appearing on
the frozen shelves of supermarkets while the Hard Rock Burger will be focused on
the younger generation of consumers. Net sales of Morningstar Farms frozen egg
substitutes for the third quarter of 1998 increased approximately $146,000 or
8.1% and for the nine month period decreased approximately $588,000 or 8.4% from
the similar prior year periods.
Gross profit as a percentage of net sales for the third quarter of 1998
increased from 43.6% in 1997 to 44.1% in 1998. For the nine month period of
1998, gross profit increased from 42.6% in 1997 to 44.0% in 1998. The increased
gross profit percentages are primarily attributable to the 3% price increase
implemented at the beginning of the second quarter, relatively stable material
prices, and ongoing efforts from the Company's consulting programs to control
variable costs and improve manufacturing efficiencies.
Selling and distribution expenses as a percentage of net sales for the third
quarter and nine month period of 1998 increased from 24.8% and 24.1% in 1997 to
27.7% and 26.6% in 1998. Aggressive marketing and advertising expenditures have
been made during 1998 to leverage the Company's market leadership position in
meat alternative products. Several significant advertising and promotional
programs were implemented during the second and third quarters of 1998 to
attempt to raise the awareness of the Company's products among consumers and
also reach the Company's target market in the most efficient manner. This
resulted in increased sales and distribution of the Company's products. The
Company anticipates that the aggressive marketing campaign will continue during
the fourth quarter and into 1999. General and administrative expenses for the
third quarter of 1998 remained comparable to the prior year percentage while the
nine month period decreased as a percentage of net sales from 2.9% in 1997 to
2.7% in 1998. This decrease is primarily the result of efficiencies gained
through higher sales volume. Research and development expenses remain comparable
to prior year percentages.
Interest expense for the third quarter and nine month period of 1998 increased
approximately $55,000 and $159,000 or 15.4% and 13.9% over the similar prior
year periods. The increase is attributed to higher average borrowing levels
associated with increased inventory levels to support future sales growth and
the $11,500,000 capital expansion project at Zanesville which was completed
during September, 1997.
Net income for the third quarter of 1998 was similar to the prior year period,
while net income for the nine month period of 1998 increased approximately
$597,000 or 8.8% over the similar prior year period. This increase is the
result of increased sales and increased gross profit percentages, partially
offset by higher selling, general and administrative expenses as a percentage of
net sales, higher interest costs and a higher tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company relies on cash generated from operations and a $25,000,000 revolving
credit facility as its principal sources of liquidity. As of November 2, 1998,
$3,200,000 of this credit facility was unused. The Company believes that this
borrowing capability plus internally generated funds will be adequate to finance
current growth levels into the foreseeable future.
- 9 -
<PAGE> 10
The Company plans on spending approximately $7,800,000 to expand the frozen
distribution center in Zanesville. This expansion will allow the Company to
maintain higher finished goods inventory to support future sales growth.
Approximately $2,000,000 of the $7,800,000 will be spent during 1998 with the
remainder being spent in 1999. The distribution center expansion is expected to
be completed in the second quarter of 1999 and will be funded through cash
generated from operations and the revolving credit facility. As of November 2,
1998, $315,000 of the $7,800,000 had been spent.
Net cash provided by operating activities for the nine month period of 1998
increased over the similar prior year period due to an increase in net income
and changes in operating assets and liabilities.
Net cash used for investing activities during the nine month period of 1998
decreased from the similar prior year period, primarily due to lower
expenditures for property, plant and equipment at Zanesville. During the first
nine months of 1997, the Company had begun the $11,500,000 expansion project at
the Zanesville facility.
Net cash provided by financing activities for the nine month period of 1998
decreased from the similar prior year period, primarily due to lower borrowings
for capital expenditures of property, plant and equipment and increased cash
from operations which was used to pay debt.
On October 16, 1998, the Company acquired the Harvest Burger(R) brand of
products from Archer-Daniels-Midland Company (ADM). The purchase price of
$9,300,000 was paid by issuing 488,750 common shares of the Company. Worthington
Foods will assume the marketing, sales and distribution of all Harvest Burger(R)
products beginning January 1, 1999 under the Morningstar Farms(R) logo. ADM has
agreed to provide to the Morningstar Farms product line, including Harvest
Burger(R), TV air-time which will be part of an expanded advertising and
promotional program for Morningstar Farms(R). This transaction includes a
five-year manufacturing agreement with renewal options under which ADM will
continue to produce Harvest Burger(R) products in its facilities.
INFLATION
Although inflation has slowed in recent years, the Company continues to seek
ways to moderate any inflationary impact. To the extent possible based on
competitive conditions, the Company passes increased costs on to its customers
by increasing sales prices over time.
The Company uses the LIFO method of accounting for raw materials, packaging
materials and the materials content of work-in-process and finished goods. Under
this method, the cost of products sold reported in the financial statements
approximates current costs.
COMPLIANCE WITH ENVIRONMENTAL PROTECTION REGULATIONS
The Company does not anticipate that compliance with federal, state, and local
regulations with respect to the discharge of materials into the environment, or
otherwise relating to the protection of the environment, will have a material
effect on capital expenditures, earnings, or the competitive position of the
Company.
- 10 -
<PAGE> 11
YEAR 2000
The YEAR 2000 issue refers to a condition in computer software where a two-digit
field rather that a four-digit field is used to distinguish a calendar year.
Unless corrected, date sensitive software may recognize a date using "00" as the
year 1900 rather that the year 2000. This could result in system failures or
miscalculations causing disruptions to various activities and operations. Such
an uncorrected condition could significantly interfere with the conduct of the
Company's business, including disruption of its supply, manufacturing,
processing, distribution and financial chains.
The Company has conducted as assessment of the YEAR 2000 issue and the potential
effect it will have on the Company and its business. The Company has also
prepared a formal plan for dealing with the YEAR 2000 issue. The plan covers
information systems, financial and administrative systems, process control and
manufacturing operating systems and significant vendors and customers. The
Company is in the process of updating much of its existing software for YEAR
2000 compliance by modifying existing software or obtaining YEAR 2000 compliant
software updates from current software providers. The Company is utilizing
internal personnel, contract programmers and vendors to identify YEAR 2000
noncompliance problems, modify code and test the modifications.
While the Company believes it has made substantial progress in resolving any
YEAR 2000 issues regarding our company-wide computer mainframe system,
sufficient testing to date has not been completed to fully validate readiness.
Additional testing is planned during the fourth quarter of 1998. The Company is
planning to complete all necessary YEAR 2000 upgrades of its systems by June 1,
1999.
The majority of the Company's manufacturing and process equipment are currently
YEAR 2000 compliant, based upon discussions with vendors. Equipment that is
non-compliant will be modified by purchasing YEAR 2000 compliant upgrades or
replacing the equipment. Compilation of documentation regarding YEAR 2000
compliance is currently underway and is scheduled to be completed by June 1,
1999, as is any equipment upgrade.
The Company may also be affected by third-party suppliers that have not modified
their systems to adequately address the YEAR 2000 issue. The Company has
initiated efforts to evaluate the status of suppliers' efforts to resolve
YEAR 2000 issues. The Company is monitoring the suppliers' efforts and
addressing options in case of non-compliance. These options include
identification of alternate suppliers and accumulation of inventory to assure
production capacity. These activities are intended to provide a means of
managing risk, but cannot eliminate the potential for disruption due to third
party failure.
The Company is also dependent upon our customers for sales and cash flow. The
Company has also sent surveys to our customers regarding YEAR 2000 compliance.
Non-compliance by our customers could result in reduced sales, higher accounts
receivable and inventory levels and reduced cash flow to the Company. The
Company believes that its customer base is broad enough to minimize the affects
of a single occurrence, however, we are taking steps to monitor the status of
our customers as a means of determining risks and alternatives.
The possibility exits that the Company could inadvertently fail to correct a
YEAR 2000 problem. However, failure to meet critical dates identified in our
readiness plan would provide advance notice and steps would be taken correct the
problem prior to January 1, 2000. The Company believes that the impact of such
an occurrence would be minor. The Company does not yet have a comprehensive
contingency plan, but plans to establish such a plan during 1999 as part of its
ongoing YEAR 2000 compliance effort.
The Company continually upgrades its personal computers as part of its annual
capital budget, therefore, the Company does not anticipate any problems
regarding operating systems and ancillary software that resides on the Company's
personal computers. As of November 2, 1998, YEAR 2000 readiness has cost the
Company an estimated $135,000 and will cost approximately $200,000 in the
aggregate to complete.
- 11 -
<PAGE> 12
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q which are not historical fact are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ
materially. Such risks, uncertainties and other factors include, but are not
limited to, changes in general economic conditions, fluctuation in interest
rates, increases in raw material costs, level of competition, market acceptance
of new and existing products, price competition, the ability to deliver products
with acceptable profit margins, risks inherent in International development,
success of the Company's new user marketing strategy, capital expenditure
amounts, uninsured product liability, technological issues associated with Year
2000, and other factors described in detail in the Company's filings with the
Securities and Exchange Commission and communication to shareholders.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ----------------------------------------------------------
Not Applicable
- 12 -
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11. Computation of Earnings Per Share
Exhibit 27. Financial Data Schedule
(b) No report on Form 8-K was filed during the fiscal
quarter ended October 2, 1998.
- 13 -
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORTHINGTON FOODS, INC.
-----------------------
(Registrant)
Date: November 12, 1998 By: /S/ WILLIAM T. KIRKWOOD
---------------------- ------------------------------
William T. Kirkwood
Executive Vice President and
Chief Financial Officer
- 14 -
<PAGE> 15
EXHIBIT INDEX
Filed with Worthington Foods, Inc. Quarterly Report on Form 10-Q for the Quarter
Ended October 2, 1998.
<TABLE>
<CAPTION>
Exhibit No. Page No.
- ----------- --------
<S> <C> <C>
11 Computation of Earnings Per Share 16
27 Financial Data Schedule 17
</TABLE>
- 15 -
<PAGE> 1
EXHIBIT 11
WORTHINGTON FOODS, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
10/2/98 10/3/97 10/2/98 10/3/97
------- ------- ------- -------
<S> <C> <C> <C> <C>
Basic:
Weighted average number of common
shares outstanding..................................... 11,768,487 11,534,850 11,711,798 11,503,565
========== ========== ========== ==========
Net income............................................. $2,319,000 $2,359,000 $7,346,000 $6,749,000
========== ========== ========== ==========
Earnings per share..................................... $ 0.20 $ 0.20 $ 0.63 $ 0.59
========== ========== ========== ==========
Diluted:
Weighted average number of common
shares outstanding................................... 11,768,487 11,534,850 11,711,798 11,503,565
Net effect of dilutive stock options based
on the treasury stock method using the
average market price during the period............... 396,285 518,901 364,102 503,545
-------- ------- ------- -------
Weighted average common and common
equivalent shares used in computing
earnings per share................................... 12,164,772 12,053,751 12,075,900 12,007,110
========== ========== ========== ==========
Net income............................................. $2,319,000 $2,359,000 $7,346,000 $6,749,000
========== ========== ========== ==========
Earnings per share..................................... $ 0.19 $ 0.19 $ 0.61 $ 0.56
========== ========== ========== ==========
</TABLE>
Note: 1997 share amounts have been adjusted to reflect the four-for-three share
split in December, 1997.
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> OCT-02-1998
<CASH> 1,694
<SECURITIES> 0
<RECEIVABLES> 8,046
<ALLOWANCES> 172
<INVENTORY> 25,473
<CURRENT-ASSETS> 42,712
<PP&E> 90,589
<DEPRECIATION> 29,500
<TOTAL-ASSETS> 104,890
<CURRENT-LIABILITIES> 10,632
<BONDS> 0
0
0
<COMMON> 11,809
<OTHER-SE> 52,025
<TOTAL-LIABILITY-AND-EQUITY> 104,890
<SALES> 102,186
<TOTAL-REVENUES> 102,186
<CGS> 57,251
<TOTAL-COSTS> 88,429
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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</TABLE>
