<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 1, 1999
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 4, 1999
--------------------------- -------------------------------
Common shares, no par value 12,387,164
Exhibit Index at Page 14
Page 1 of 16
<PAGE> 2
WORTHINGTON FOODS, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page No.
--------
<S> <C>
Item 1.Financial Statements
Condensed Consolidated Balance Sheets -
October 1, 1999 and December 31, 1998............................................ 3-4
Condensed Consolidated Statements of Income -
For the three month and nine month periods ended October 1, 1999
and October 2, 1998.............................................................. 5
Condensed Consolidated Statements of Cash Flows -
For the nine month periods ended October 1, 1999 and October 2, 1998............. 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 ................................................................... 12
Item 1. Legal Proceedings................................................................ 12
Item 2. Changes in Securities and Use of Proceeds........................................ 12
Item 3. Defaults Upon Senior Securities.................................................. 12
Item 4. Submission of Matters to a Vote of Security Ho1ders.............................. 12
Item 5. Other Information................................................................ 12
Item 6. Exhibits and Reports on Form 8-K................................................. 12
Signature................................................................................... 13
Exhibit Index............................................................................... 14
Exhibit 11 - Computation of Earnings Per Share ................................... 15
Exhibit 27 - Financial Data Schedule................................................. 16
</TABLE>
- 2 -
<PAGE> 3
ITEM 1.
FINANCIAL STATEMENTS
- --------------------
WORTHINGTON FOODS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
10/1/99 12/31/98
------- --------
(UNAUDITED) (AUDITED)
(000'S OMITTED)
ASSETS
<S> <C> <C>
Current Assets
Cash ............................................. $ 1,650 $ 1,054
Accounts receivable less allowance ............... 10,996 13,109
(1999 - $190; 1998 - $100)
Inventories:
Finished goods ............................... 22,700 18,032
Work in process .............................. 2,209 1,690
Raw materials ................................ 6,754 4,872
Packaging materials and supplies ............. 3,092 2,357
-------- --------
34,755 26,951
Income taxes refundable .......................... 539 1,686
Prepaid expenses and other ....................... 8,566 4,936
-------- --------
Total Current Assets ......................... 56,506 47,736
Property, Plant and Equipment .................... 104,639 93,397
Less accumulated depreciation and amortization 35,001 30,860
-------- --------
69,638 62,537
Goodwill ......................................... 111 352
Trade name ....................................... 8,094 8,409
Intangible pension asset ......................... 1,227 1,227
Other intangible assets .......................... 849 688
-------- --------
10,281 10,676
TOTAL ASSETS ........................... $136,425 $120,949
======== ========
</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>
10/1/99 12/31/98
------- --------
(UNAUDITED) (AUDITED)
(000'S OMITTED)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable (including outstanding checks of $1,695 in 1999
and $2,634 in 1998) ...................................... $ 5,086 $ 7,959
Accrued compensation ........................................... 760 765
Other accrued expenses ......................................... 4,437 2,658
Current portion of long-term debt .............................. 800 800
--------- ---------
Total Current Liabilities .................................. 11,083 12,182
Long-Term Liabilities
Long-term debt ................................................. 38,283 26,583
Minimum pension liability ...................................... 1,395 1,395
Deferred income taxes .......................................... 8,461 8,000
--------- ---------
Total Long-Term Liabilities ................................ 48,139 35,978
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 12,385,576 shares in 1999 and 12,356,440 in 1998 ... 12,386 12,356
Additional paid-in capital ..................................... 19,030 18,931
Accumulated other comprehensive income ......................... (168) (168)
Retained earnings .............................................. 45,955 41,670
--------- ---------
77,203 72,789
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................. $ 136,425 $ 120,949
========= =========
</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
-------------------- --------------------
10/1/99 10/2/98 10/1/99 10/2/98
------- ------- ------- -------
(UNAUDITED)
(000'S OMITTED, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales ......................... $ 38,888 $ 34,838 $121,647 $102,186
Cost of goods sold ................ 21,492 19,473 68,281 57,251
-------- -------- -------- --------
Gross profit ................... 17,396 15,365 53,366 44,935
Selling and distribution expenses . 12,857 9,661 37,870 27,184
General and administrative expenses 1,676 923 4,107 2,748
Research and development expenses . 412 435 1,258 1,246
-------- -------- -------- --------
14,945 11,019 43,235 31,178
-------- -------- -------- --------
Income from operations ............ 2,451 4,346 10,131 13,757
Interest expense .................. 506 411 1,516 1,302
-------- -------- -------- --------
Income before income taxes ........ 1,945 3,935 8,615 12,455
Provision for income taxes ........ 1,106 1,616 3,531 5,109
-------- -------- -------- --------
Net income ........................ $ 839 $ 2,319 $ 5,084 $ 7,346
======== ======== ======== ========
Earnings per share:
Basic ........................ $ 0.07 $ 0.20 $ 0.41 $ 0.63
======== ======== ======== ========
Diluted ...................... $ 0.07 $ 0.19 $ 0.41 $ 0.61
======== ======== ======== ========
Dividends per share ............... $ 0.0215 $ 0.0215 $ 0.0645 $ 0.0645
======== ======== ======== ========
Weighted average number of common
and common equivalent shares used in
computing earnings per share
Basic.............................. 12,385,580 11,768,487 12,379,350 11,711,798
Diluted............................ 12,563,385 12,164,772 12,524,280 12,075,900
</TABLE>
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
----------------------
10/1/99 10/2/98
------- -------
(UNAUDITED)
(000'S OMITTED)
<S> <C> <C>
Operating activities:
Net income .................................................. $ 5,084 $ 7,346
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation .............................................. 4,522 4,001
Deferred income taxes .................................... 461 461
Amortization of intangible assets ......................... 557 242
Cash provided by (used for) current assets and liabilities:
Accounts receivable ..................................... 2,113 1,708
Inventories ............................................. (7,804) (5,439)
Prepaid expenses and other .............................. (3,630) (3,664)
Accounts payable and accrued expenses ................... (1,099) 1,281
Income taxes ............................................ 1,147 782
(Increase)/Decrease in other assets ....................... (162) 24
-------- --------
Net cash provided by operating activities ................... 1,189 6,742
Investing activities:
Purchases of property, plant and equipment, net ............. (11,623) (6,078)
-------- --------
Net cash used for investing activities ...................... (11,623) (6,078)
Financing activities:
Proceeds from long-term borrowings .......................... 53,665 64,995
Payments on long-term borrowings ............................ (41,965) (64,751)
Proceeds from the issuance of common shares ................. 129 829
Dividends paid .............................................. (799) (757)
-------- --------
Net cash provided by financing activities ................... 11,030 316
Net increase in cash .......................................... 596 980
Cash at beginning of period ................................... 1,054 714
-------- --------
Cash at end of period ......................................... $ 1,650 $ 1,694
======== ========
</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 Specialty Foods
Investment Company, its consolidated 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 1, 1999 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1999.
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, 1998 (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.
2. On September 30, 1999, the Company entered into an Agreement and Plan of
Merger, (the "Merger Agreement") with Kellogg Company. Subject to the terms
and conditions of the Merger Agreement, at the effective time of the
merger, a wholly-owned subsidiary of Kellogg will be merged into
Worthington and become a wholly-owned subsidiary of Kellogg and each
outstanding share of Worthington (other than common shares held by
shareholders of Worthington who have properly exercised dissenters' rights
under Ohio law) will be converted into the right to receive $24 in cash. A
Special Meeting of Shareholders to vote on the merger is scheduled for
November 29, 1999 and it is anticipated that if the shareholders adopt the
Merger Agreement, the merger will become effective promptly following the
meeting.
-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
------------------ -----------------
10/1/99 10/2/98 10/1/99 10/2/98
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales ................................ 100.0% 100.0% 100.0% 100.0%
Cost of goods sold ....................... 55.3 55.9 56.1 56.0
----- ----- ----- -----
Gross profit ........................... 44.7 44.1 43.9 44.0
Selling and distribution expenses ........ 33.1 27.7 31.1 26.6
General and administrative expenses ...... 4.3 2.7 3.5 2.7
Research and development expenses ........ 1.0 1.2 1.0 1.2
----- ----- ----- -----
38.4 31.6 35.6 30.5
----- ----- ----- -----
Income from operations ................... 6.3 12.5 8.3 13.5
Interest expense ......................... 1.3 1.2 1.2 1.3
----- ----- ----- -----
Income before income taxes ............... 5.0 11.3 7.1 12.2
Provision for income taxes ............... 2.8 4.6 2.9 5.0
----- ----- ----- -----
Net income ............................... 2.2% 6.7% 4.2% 7.2%
===== ===== ===== =====
Provision for income taxes as a percentage
of income before income taxes ............ 56.9% 41.1% 41.0% 41.0%
===== ===== ===== =====
</TABLE>
THIRD QUARTER OF 1999 COMPARED TO 1998
Net sales for the third quarter and nine month period ended October 1, 1999
increased approximately $4,050,000 and $19,461,000 or 11.6% and 19.0% over the
similar prior year periods. Net sales for the third quarter of 1999 to the
Company's Specialty Markets (Seventh-day Adventist, Health Food, and
International) increased approximately $96,000 or 1.1% from the similar prior
year period. For the nine month period, net sales to the Company's Specialty
Markets increased approximately $1,756,000 or 6.1% over the similar prior year
period. These increases are primarily attributable to increased International
sales.
Net sales to Foodservice operations for the third quarter and nine month period
of 1999 increased approximately $219,000 and $598,000 or 4.8% and 4.7% over the
similar prior year periods. The Company anticipates that this growth level will
continue for the remainder of the year.
Net sales of Morningstar Farms(R) products to supermarkets in the third quarter
and nine month period of 1999 increased approximately $3,735,000 and $17,107,000
or 17.2% and 28.2% over the similar prior year periods. Net sales of Morningstar
Farms meat alternative products in the third quarter and nine month period of
1999 increased approximately $4,036,000 and $17,824,000 or 20.4% and 32.8% over
the similar prior year periods.
- 8 -
<PAGE> 9
The gain in sales continues to be attributed to an extensive line of meatless
products, expanded distribution and the addition of Harvest Burgers(R) along
with a slight price increase that was taken earlier in the year. Sales of
Harvest Burgers products accounted for 8.6% and 10.7% of the MSF supermarket
sales for the third quarter and first nine months of 1999 and also represented
55% and 49% of the sales increase for the third quarter and nine month period,
respectively. Sales of America's Original Veggie Dogs(TM), MeatFree Buffalo
Wings, and MeatFree Corn Dogs, which were introduced in 1998, continue to
experience growth as the national roll-out for these products continues. Due to
strong trade acceptance, the Company has decided to delay the introduction of
MSF Meat-Free Mini Corn Dogs(TM) and MSF Stuffed Sandwiches to the first quarter
of 2000 in order to build adequate inventory to handle a national launch
program. The Mini Corn Dogs are another addition to our popular hot dog line
while the hand-held stuffed sandwiches will be offered in three varieties. Net
sales of Morningstar Farms frozen egg substitutes for the third quarter and nine
month period of 1999 decreased approximately $300,000 and $717,000 or 15.5% and
11.1% from the similar prior year periods. The Company expects this downward
trend to continue as consumer trends move from frozen to refrigerated egg
substitutes.
Gross profit as a percentage of net sales for the third quarter of 1999
increased from 44.1% in 1998 to 44.7% in 1999. For the first nine months of
1999, gross profit as a percentage of net sales was slightly lower than the same
period in 1998.
Selling and distribution expenses as a percentage of net sales for the third
quarter and nine month period of 1999 increased from 27.7% and 26.6% in 1998 to
33.1% and 31.1% in 1999. A national advertising campaign targeted to print and
broadcast media was introduced in May 1999 and continued throughout the third
quarter. Particular emphasis was placed on increasing the awareness of the
Company's products and building brand loyalty. General and administrative
expenses for the third quarter and nine months of 1999 increased as a percentage
of net sales from 2.7% and 2.7% in 1998 to 4.3% and 3.5% in 1999. This increase
can be attributed to additional costs related to the Harvest Burgers purchase
and the costs associated with the acquisition by Kellogg Company. Research and
development expenses decreased from prior year percentages due to efficiencies
gained through higher sales volume.
Interest expense for the third quarter and nine month period of 1999 increased
approximately $95,000 and $214,000 or 23.1% and 16.4% over the similar prior
year periods. The increases are attributable to higher average borrowing levels
associated with increased inventory levels to support future sales growth.
The Company had previously recognized a $309,000 State of Ohio investment tax
credit during the second quarter of 1999. Due to the delay of planned fourth
quarter capital spending at our Zanesville facility, this credit has been
reversed during the third quarter.
Net income for the third quarter and nine month period of 1999 decreased
approximately $1,400,000 and $2,262,000 or 63.8% and 31.1% over the similar
prior year periods. These decreases reflect the facts that higher selling,
general and administrative expenses as a percentage of net sales, higher
interest costs and a higher tax rate more than offset the increase in net sales.
LIQUIDITY AND CAPITAL RESOURCES
The Company relies on cash generated from operations and a $50,000,000 revolving
credit facility as its principal sources of liquidity. As of November 4, 1999,
$14,650,000 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.
Net cash provided by operating activities for the nine months of 1999 decreased
over the similar prior year period due to a decrease in net income and changes
in operating assets and liabilities, especially an increase in inventory.
- 9 -
<PAGE> 10
Net cash used for investing activities during the first nine months of 1999
increased from the similar prior year period, primarily due to higher
expenditures for property, plant and equipment including the distribution center
expansion at Zanesville facility.
Net cash provided by financing activities for the first nine months of 1999
increased from the similar prior year period, primarily due to increased
borrowings for capital expenditures on property, plant and equipment and higher
inventory levels to support future sales growth.
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.
YEAR 2000
The Company intends this information to constitute notice under the Year 2000
Information and Readiness Disclosure Act as "Year 2000 Readiness Disclosure."
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 an 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 has completed the majority of its updates to its existing software for
YEAR 2000 compliance by either 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 codes and test the modifications.
The Company completed the testing of the YEAR 2000 upgrades and successfully
converted its company-wide computer mainframe system during June 1999. Certain
non-critical components of the software were updated to become YEAR 2000
compliant during the third quarter.
- 10 -
<PAGE> 11
The majority of the Company's manufacturing and process equipment is 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. The Company is in the process of completing the
updating of non-compliant manufacturing systems. The Company estimates that
these systems will be 100% compliant by November 30, 1999.
Third-party suppliers that have not modified their systems to adequately address
the YEAR 2000 issue may also affect the Company. The Company has completed
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. All of
the Company's critical suppliers have been contacted regarding YEAR 2000
compliance and we have either ascertained that they will be YEAR 2000 or
initiated for new suppliers that will be YEAR 2000 compliant. 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 its 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 effects
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 exists 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 to correct
the problem prior to January 1, 2000. The Company believes that the impact of
such an occurrence would be minor. The Company is in the final stages of
developing a comprehensive contingency plan, and has identified a vendor that
can provide remote processing in the event of a YEAR 2000 problem.
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 4, 1999, YEAR 2000 readiness efforts have
cost the Company approximately $225,000 and are expected to cost an estimated
$250,000 in the aggregate to complete, not including internal resources.
CAUTIONARY STATEMENT 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
and uncertainties that may cause actual results to differ materially from those
expressed or implied by the statements. Among the factors that could cause
actual results to differ materially are changes in general economic conditions,
fluctuation in interest rates, increases in raw material costs, level of
competition, market acceptance of new and existing products, capital expenditure
amounts, uninsured product liability, the effective detection and remediation of
Year 2000 issues by the Company and its key third party vendors, suppliers and
customers and other risks 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
- ----------------------------------------------------------
No response required
- 11 -
<PAGE> 12
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 2. Agreement and Plan of Merger dated as of
September 30, 1999 by and among Kellogg Company, WF
Acquisition Inc. and Worthington Foods, Inc.
Exhibit 4. First Amendment to Rights Agreement dated
as of September 30, 1999 between Worthington Foods,
Inc. and National City Bank
Exhibit 11. Computation of Earnings Per Share
Exhibit 27. Financial Data Schedule
(b) No Current Reports on Form 8-K were filed during the
fiscal quarter ended October 1, 1999.
A Current Report on Form 8-K, dated October 4, 1999,
was filed on October 5, 1999 in order to report under
Item 1 the entering into on September 30, 1999 of the
Agreement and Plan of Merger with Kellogg Company.
The Form 8-K also reported that in connection with
the Merger Agreement, the Board of Directors of
Worthington amended Worthington's Rights Agreement to
render in inapplicable to the Merger Agreement and
the Merger.
- 12 -
<PAGE> 13
SIGNATURES
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, 1999 By: /S/ WILLIAM T. KIRKWOOD
----------------- -----------------------------
William T. Kirkwood
Executive Vice President and
Chief Financial Officer
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<PAGE> 14
EXHIBIT INDEX
Filed with Worthington Foods, Inc. Quarterly Report on Form 10-Q for the
Quarter Ended October 1, 1999.
<TABLE>
<CAPTION>
Exhibit No. Page No.
----------- --------
<S> <C>
2 Agreement and Plan of Merger dated as of September 30, 1999 by
and among Kellogg Company, WF Acquisition Inc. and Worthington
Foods, Inc. (Incorporated by reference to Exhibit 2 to
Worthington's Current Report on Form 8-K, dated October 4, 1999
and filed with the Securities and Exchange Commission on
October 5, 1999 (the October 1999 Form 8-K"))
4 First Amendment to Rights Agreement dated as of September 30,
1999 between Worthington Foods, Inc. and National City Bank
(Incorporated herein by reference to Exhibit 4 to Worthington's
October 1999 Form 8-K).
11 Computation of Earnings Per Share 15
27 Financial Data Schedule 16
</TABLE>
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<PAGE> 1
EXHIBIT 11
WORTHINGTON FOODS, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------- -----------------------
10/1/99 10/2/98 10/1/99 10/2/98
------- ------- ------- -------
Basic:
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding ....................... 12,385,580 11,768,487 12,379,350 11,711,798
=========== =========== =========== ===========
Net income ............................... $ 839,000 $ 2,319,000 $ 5,084,000 $ 7,346,000
=========== =========== =========== ===========
Earnings per share ....................... $ 0.07 $ 0.20 $ 0.41 $ 0.63
=========== =========== =========== ===========
Diluted:
Weighted average number of common
shares outstanding ..................... 12,385,580 11,768,487 12,379,350 11,711,798
Net effect of dilutive stock options based
on the treasury stock method using the
average market price during the period . 177,805 396,285 144,930 364,102
----------- ----------- ----------- -----------
Weighted average common and common
equivalent shares used in computing
earnings per share ..................... 12,563,385 12,164,772 12,524,280 12,075,900
=========== =========== =========== ===========
Net income ............................... $ 839,000 $ 2,319,000 $ 5,084,000 $ 7,346,000
=========== =========== =========== ===========
Earnings per share ....................... $ 0.07 $ 0.19 $ 0.41 $ 0.61
=========== =========== =========== ===========
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
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