<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 333-36841
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
WORTHINGTON FOODS, INC.
900 PROPRIETORS ROAD
WORTHINGTON, OH 43085
Index to Exhibits appears on Page 14
Page 1 of 15 pages
<PAGE> 2
REQUIRED INFORMATION
--------------------
The following financial statements and schedules for The Worthington Foods Tax
Savings and Profit Sharing Plan are being filed herewith:
<TABLE>
<CAPTION>
Description Page No.
----------- --------
<S> <C>
Signature 3
Report of Independent Auditors 4
Financial Statements:
Statements of Assets Available for Plan Benefits
as of December 31, 1997 and 1996 5 - 6
Statements of Changes in Assets Available for Plan Benefits 7 - 8
for the years ended December 31, 1997 and 1996
Notes to the Financial Statements 9 - 11
Supplemental Schedules:
Line 27(a) - Schedule of Assets Held for Investment Purposes
as of December 31, 1997 12
Line 27(d) - Schedule of Reportable Transactions for the year 13
ended December 31, 1997
Note: Supplemental schedules required by the Employee Retirement Income Security Act of 1974 that have not
been included here are not applicable to The Worthington Foods Tax Savings and Profit Sharing Plan.
Index to Exhibits 14
Exhibit 1 - Consent of Ernst & Young LLP, Independent Auditors 15
</TABLE>
Page 2
<PAGE> 3
SIGNATURES
----------
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE WORTHINGTON FOODS TAX SAVINGS AND
PROFIT SHARING PLAN
Date: June 26, 1998 /s/Dale E. Twomley
------------- ---------------------------------------------
President and Chief Executive Officer
Page 3
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
Board of Directors
The Worthington Foods Tax Savings and Profit Sharing Plan
We have audited the accompanying statements of assets available for plan
benefits of The Worthington Foods Tax Savings and Profit Sharing Plan (the Plan)
as of December 31, 1997 and 1996, and the related statements of changes in
assets available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Plan at December
31, 1997 and 1996, and the changes in its assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997 and reportable transactions
for the year then ended, are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974, and are not a required part
of the financial statements. The fund information in the statements of assets
available for plan benefits and the statements of changes in assets available
for plan benefits is presented for purposes of additional analysis rather than
to present the assets available for benefits and changes in assets available for
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
June 5, 1998
Page 4
<PAGE> 5
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
GROWTH RETIREMENT
MAGELLAN BALANCED AND INCOME MONEY INTERMEDIATE BLUE CHIP
TOTAL FUND FUND FUND MARKET FUND BOND FUND FUND
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $7,074,771 $1,509,319 $ 829,046 $2,004,475 $ 478,052 $ 20,353 $2,184,164
Worthington Foods, Inc.
common stock 151,222 - - - - - -
Loans to participants 133,462 - - - - - -
Receivables:
Contribution--employer 312,590 52,345 39,709 79,408 49,613 5,574 74,861
Contribution--employee 52,958 8,916 6,916 15,993 4,186 830 14,843
----------------------------------------------------------------------------------------
Assets available for plan benefits $7,725,003 $1,570,580 $ 875,671 $2,099,876 $ 531,851 $ 26,757 $2,273,868
========================================================================================
<CAPTION>
EMERGING
OVERSEAS LOW-PRICED GROWTH WORTHINGTON LOAN
FUND STOCK FUND FUND FOODS FUND FUND
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $ 991 $ 19,012 $ 29,359 $ - $ -
Worthington Foods, Inc.
common stock - - - 151,222 -
Loans to participants - - - - 133,462
Receivables:
Contribution--employer - 1,021 470 9,589 -
Contribution--employee - 293 169 812 -
--------------------------------------------------------------------
Assets available for plan benefits $ 991 $ 20,326 $ 29,998 $ 161,623 $ 133,462
=====================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5
<PAGE> 6
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
RETIREMENT
MAGELLAN BALANCED GROWTH AND MONEY
TOTAL FUND FUND INCOME FUND MARKET FUND
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $5,199,733 $1,162,597 $ 669,469 $1,306,619 $ 458,156
Loans to participants 110,600 - - - -
Receivables:
Contribution-employer 53,909 10,092 8,237 12,597 8,058
Contribution-employee 40,085 7,498 5,303 10,795 3,128
----------------------------------------------------------------------
Assets available for plan benefits $5,404,327 $1,180,187 $ 683,009 $1,330,011 $ 469,342
======================================================================
<CAPTION>
INTERMEDIATE BLUE CHIP
BOND FUND FUND LOAN FUND
--------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
Mutual funds $ 14,107 $1,588,785 $ -
Loans to participants - - 110,600
Receivables:
Contribution-employer 653 14,272 -
Contribution-employee 493 12,868 -
--------------------------------------
Assets available for plan benefits $ 15,253 $1,615,925 $ 110,600
======================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE> 7
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
GROWTH RETIREMENT
MAGELLAN BALANCED AND INCOME MONEY INTERMEDIATE
TOTAL FUND FUND FUND MARKET FUND BOND FUND
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Employee $ 802,516 $ 198,399 $ 90,055 $ 233,119 $ 54,208 $ 12,648
Employer 445,545 78,524 58,404 112,769 64,270 7,851
------------------------------------------------------------------------------------------------
1,248,061 276,923 148,459 345,888 118,478 20,499
Investment income 438,598 101,212 100,889 93,401 23,138 1,356
DEDUCTIONS
Benefits paid (334,691) (53,144) (34,086) (21,202) (163,624) (141)
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 968,708 222,037 52,093 347,467 - 181
Fund transfers - (156,635) (74,693) 4,311 84,517 (10,391)
------------------------------------------------------------------------------------------------
Net increase 2,320,676 390,393 192,662 769,865 62,509 11,504
Assets available for plan
benefits at beginning of year 5,404,327 1,180,187 683,009 1,330,011 469,342 15,253
------------------------------------------------------------------------------------------------
Assets available for plan
benefits at end of year $ 7,725,003 $ 1,570,580 $ 875,671 $ 2,099,876 $ 531,851 $ 26,757
================================================================================================
<CAPTION>
EMERGING
BLUE CHIP OVERSEAS LOW-PRICED GROWTH WORTHINGTON LOAN
FUND FUND STOCK FUND FUND FOODS FUND FUND
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Employee $ 211,309 $ - $ 581 $ 322 $ 1,875 $ -
Employer 112,137 - 1,070 492 10,028 -
------------------------------------------------------------------------------------------
323,446 - 1,651 814 11,903 -
Investment income 111,997 49 449 5,860 247 -
DEDUCTIONS
Benefits paid (62,494) - - - - -
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 348,528 (58) (284) (5,955) 4,699 -
Fund transfers (63,534) 1,000 18,510 29,279 144,774 22,862
------------------------------------------------------------------------------------------
Net increase 657,943 991 20,326 29,998 161,623 22,862
Assets available for plan
benefits at beginning of year 1,615,925 - - - - 110,600
------------------------------------------------------------------------------------------
Assets available for plan
benefits at end of year $ 2,273,868 $ 991 $ 20,326 $ 29,998 $ 161,623 $ 133,462
==========================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE> 8
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
RETIREMENT
MAGELLAN BALANCED GROWTH AND MONEY
TOTAL FUND FUND INCOME FUND MARKET FUND
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Employee $ 635,084 $ 132,363 $ 78,040 $ 168,756 $ 53,265
Employer 156,961 30,544 24,055 37,077 20,196
------------------------------------------------------------------------------
792,045 162,907 102,095 205,833 73,461
Investment income 392,186 158,774 31,101 65,331 23,266
DEDUCTIONS
Benefits paid (257,772) (14,442) (48,713) (54,624) (79,402)
Net realized and unrealized
appreciation (depreciation)
in fair value of investments 226,612 (39,337) 27,689 144,905 -
Fund transfers - 3,296 (32,289) 18,825 (7,722)
------------------------------------------------------------------------------
Net increase 1,153,071 271,198 79,883 380,270 9,603
Assets available for plan benefits
at beginning of year 4,251,256 908,989 603,126 949,741 459,739
------------------------------------------------------------------------------
Assets available for plan benefits
at end of year $ 5,404,327 $ 1,180,187 $ 683,009 $ 1,330,011 $ 469,342
==============================================================================
<CAPTION>
INTERMEDIATE BLUE CHIP
BOND FUND FUND LOAN FUND
-------------------------------------------
<S> <C> <C> <C>
ADDITIONS
Contributions:
Employee $ 4,954 $ 197,706 $ -
Employer 1,464 43,625 -
-------------------------------------------
6,418 241,331 -
Investment income 499 113,215 -
DEDUCTIONS
Benefits paid - (60,591) -
Net realized and unrealized
appreciation (depreciation)
in fair value of investments (162) 93,517 -
Fund transfers 2,851 (2,929) 17,968
-------------------------------------------
Net increase 9,606 384,543 17,968
Assets available for plan benefits
at beginning of year 5,647 1,231,382 92,632
-------------------------------------------
Assets available for plan benefits
at end of year $ 15,253 $ 1,615,925 $ 110,600
===========================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 8
<PAGE> 9
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
The accounts of The Worthington Foods Tax Savings and Profit Sharing Plan
(the Plan) are maintained on the accrual basis of accounting.
Investments are accounted for at market value based on the closing market
price for investments on the last day of the year. Realized gains or losses
on investments is the difference between the proceeds received and the
average cost of investments sold. Unrealized appreciation in fair value of
investments is the net change in the difference between fair value and the
cost of investments and is reflected in the statement of changes in assets
available for plan benefits as realized and unrealized appreciation in fair
value of investments. Individual investments that represent 5% or more of
the fair value of Plan assets are displayed separately in the financial
statements.
All administrative expenses are borne by Worthington Foods, Inc. (the
Company).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information.
Participants should refer to The Worthington Foods Tax Savings and Profit
Sharing Summary Plan Description for a complete description of the Plan.
The Plan was amended and restated as of October 1, 1997. Significant
changes made to the Plan include the addition of the Worthington Foods
fund, a unitized employer stock fund, as an investment option; an increase
in the employer matching contribution; and changes in the vesting
provisions for employer discretionary contributions. The amendments did not
have a significant effect on plan assets.
The Plan is a defined contribution plan covering all employees except those
covered by a collective bargaining agreement retirement plan. Full time
employees 21 years of age or older are eligible to participate on the first
day of the calendar quarter following their date of employment.
Page 9
<PAGE> 10
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Participating employees may contribute up to 15% of their salaries or wages
to the Plan. Worthington Foods, Inc. makes matching contributions equal to
50% of the participating employee's elective deferral. This company match
is limited to the first 4% of each participant's salary or wages that is
deferred. Upon the discretion of Worthington Foods, Inc., all eligible
employees may also receive a discretionary profit-sharing contribution.
Plan participants have the ability to direct their contributions to various
Fidelity Management Trust Company investment funds, including the
Worthington Foods fund, a fund which invests primarily in the stock of
Worthington Foods, Inc., the Plan sponsor. The matching contributions and
discretionary profit sharing contributions are allocated to the various
funds in the same proportion as the participant contributions.
Earnings of the Plan are allocated to individual participants' accounts
based on the ratio of the participant's account balance in the respective
fund to the total fund balance as of the valuation date.
Employee and employer matching contributions are 100% vested. Employer
discretionary profit sharing contributions are 100% vested if the employee
was employed by Worthington Foods prior to October 1, 1997. If the employee
was hired after October 1, 1997, the following vesting schedule applies:
<TABLE>
<CAPTION>
PERCENTAGE VESTED
YEARS OF SERVICE AND NONFORFEITABLE
---------------------------------------------------------
<S> <C> <C>
Less the 3 years 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 or more years 100%
</TABLE>
Upon retirement, death, disability or termination of service, or plan
termination, participants' accounts will be distributed in the form of a
lump sum payment.
Employees are not subject to federal income tax on employer contributions
and matching contributions, investment income and gains (losses) on
investments credited to the employees' accounts, until such accounts are
withdrawn pursuant to Section 401(k) of the Internal Revenue Code. In some
cases, if funds are distributed prior to retirement there may be a 10%
distribution penalty.
Page 10
<PAGE> 11
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INCOME TAX STATUS
The Internal Revenue Service (IRS) ruled on March 27, 1995 that the Plan
qualifies under Section 401(a) of the Internal Revenue Code (IRC) and,
therefore, the related trust is not subject to tax under present income tax
law. Once qualified, the Plan is required to operate in conformity with the
IRC to maintain its qualification. The Plan sponsor is not aware of any
course of action or series of events that have occurred that might
adversely affect the Plan's qualified status. The Plan sponsor has
requested a determination letter from the IRS to rule on the October 1,
1997 amendment and restatement of the Plan.
4. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
At December 31, 1997 and 1996 the amount of assets allocated to
participants who have elected to withdraw from the plan but have not been
paid is $10,494 and $580,803, respectively.
5. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical
data processing systems. The project also includes determining whether
third party service providers have reasonable plans in place to become year
2000 compliant. The Plan Sponsor currently expects the project to be
substantially complete by early 1999. The Plan Sponsor does not expect this
project to have a significant effect on plan operations.
Page 11
<PAGE> 12
THE WORTHINGTON FOODS TAX SAVINGS AND PROFIT SHARING PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF CURRENT
LESSOR OR SIMILAR PARTY INVESTMENT COST VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity Management Trust Company,
Boston, Massachusetts Magellan Fund
15,843 shares $1,218,601 $1,509,319
Balanced Fund
54,292 shares 735,913 829,046
Growth and Income Fund
52,611 shares 1,375,439 2,004,475
Retirement Money Market Fund
478,052 shares 478,052 478,052
Intermediate Bond Fund
2,001 shares 20,126 20,353
Blue Chip Fund
55,351 shares 1,596,507 2,184,164
Overseas Fund
30 shares 1,049 991
Low-Priced Stock Fund
765 shares 19,926 19,012
Emerging Growth Fund
1,236 shares 35,314 29,359
Worthington Foods, Inc.
10,040 shares common stock
146,061 151,222
Loans to participants, maturing from Various interest rates
May 1998 to June 2007 ranging from 8% to 12.95%
- 133,462
-------------------------------------
$5,626,988 $7,359,455
=====================================
</TABLE>
Page 12
<PAGE> 13
THE WORTHINGTON FOODS, INC. TAX SAVINGS AND PROFIT SHARING PLAN
LINE 27D--SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
DESCRIPTION PURCHASE SELLING LEASE
IDENTITY OF PARTY INVOLVED OF ASSET PRICE PRICE RENTAL
- -----------------------------------------------------------------------------------------------------------------
Category (iii)--Series of transactions in excess of 5% of plan assets.
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Management Trust Co., Magellan Fund
Boston, Massachusetts 42 purchases $374,427 $ - $ -
19 sales - 249,741 -
Growth and Income Fund
47 purchases 509,313 - -
22 sales - 158,924 -
Balanced Fund
35 purchases 236,396 - -
18 sales - 128,912 -
Blue Chip Fund
40 purchases 422,792 - -
21 sales - 175,941 -
Retirement Money Market Fund
40 purchases 241,950 - -
23 sales - 222,054 -
<CAPTION>
CURRENT VALUE
EXPENSES OF ASSET ON
DESCRIPTION INCURRED WITH TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED OF ASSET TRANSACTION COST OF ASSET DATE (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
Category (iii)--Series of transactions in excess of 5% of plan assets.
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Management Trust Co., Magellan Fund
Boston, Massachusetts 42 purchases $ - $374,427 $374,427 $ -
19 sales - 209,473 249,741 40,268
Growth and Income Fund
47 purchases - 509,313 509,313 0
22 sales - 120,024 158,924 38,900
Balanced Fund
35 purchases - 236,396 236,396 -
18 sales - 113,388 128,912 15,524
Blue Chip Fund
40 purchases - 422,792 422,792 -
21 sales - 129,862 175,941 46,079
Retirement Money Market Fund
40 purchases - 241,950 241,950 -
23 sales - 222,054 222,054 -
</TABLE>
There were no category (i), (ii) or (iv) reportable transactions during 1997.
Page 13
<PAGE> 14
THE WORTHINGTON FOODS
TAX SAVINGS AND PROFIT SHARING PLAN
ANNUAL REPORT ON FORM 11-K
For fiscal year ended December 31, 1997
INDEX TO THE EXHIBITS
---------------------
<TABLE>
<CAPTION>
Exhibit Number Description Page Number
-------------- ----------- -----------
<S> <C> <C> <C>
1 Consent of Ernst & Young LLP, Independent Auditors 15
</TABLE>
Page 14
<PAGE> 1
Exhibit 1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-36841) pertaining to The Worthington Foods Tax Savings and Profit
Sharing Plan and in the related Prospectus of our report dated June 5, 1998,
with respect to the financial statements and schedules of The Worthington Foods
Tax Savings and Profit Sharing Plan included in this Annual Report (Form 11-K)
for the year ended December 31, 1997.
ERNST & YOUNG LLP
Columbus, Ohio
June 19, 1998
Page 15
