FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D C 20549
(Mark One)
(CHECK MARK) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 20, 1997
( ) 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 1-9787
Flowers Industries, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-0244940
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1919 Flowers Circle, P O Box 1338, Thomasville, Georgia
(Address of principal executive offices)
31799
(Zip Code)
912/226-9110
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former 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 CHECK MARK No __________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
Yes _________ No __________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title of Each Class Outstanding at October 17, 1997
Common Stock, $.625 Par Value 88,421,065
<PAGE>
FLOWERS INDUSTRIES, INC.
INDEX
Page Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
September 20, 1997 and June 28, 1997 3
Consolidated Statement of Income
Twelve Weeks Ended September 20, 1997
and September 21, 1996 5
Consolidated Statement of Cash Flows
Twelve Weeks Ended September 20, 1997
and September 21, 1996 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
(000's Omitted Except Share Data)
September 20, 1997 June 28, 1997
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,991 $ 31,080
--------- ---------
Accounts receivable 115,439 113,628
--------- ---------
Inventories:
Raw materials 47,958 37,979
Finished goods 59,579 47,314
Supplies 21,116 19,284
--------- ---------
128,653 104,577
--------- ---------
Deferred income taxes 15,047 14,421
Prepaid expenses 7,928 7,825
--------- ---------
275,058 271,531
--------- ---------
PROPERTY, PLANT & EQUIPMENT:
Land 20,692 20,692
Buildings 206,469 206,469
Machinery and equipment 446,016 446,016
Furniture, fixtures and transportation equipment 24,774 24,774
Construction and capital projects in progress 63,589 49,062
--------- ---------
761,540 747,013
Less: accumulated depreciation (310,052) (299,014)
--------- ---------
451,488 447,999
OTHER ASSETS AND DEFERRED CHARGES:
Investment in unconsolidated affiliate 82,931 77,071
Other long-term assets 32,984 33,133
--------- ---------
115,915 110,204
--------- ---------
COST IN EXCESS OF NET TANGIBLE ASSETS:
Cost in excess of net tangible assets 70,939 70,939
Less: accumulated amortization (2,700) (2,486)
--------- ---------
68,239 68,453
--------- ---------
$ 910,700 $ 898,187
========= =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(000's Omitted Except Share Data)
September 20, 1997 June 28, 1997
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable - commercial paper $ 50,119 $ 40,792
Notes payable 1,625 6,625
Obligations under capital leases 2,489 2,608
Accounts payable 74,001 78,451
Accrued taxes other than income taxes 5,110 6,276
Income taxes 5,564 220
Accrued compensation, interest and other liabilities 92,792 107,497
-------- --------
231,700 242,469
-------- --------
LONG-TERM NOTES PAYABLE 274,611 259,884
-------- --------
OBLIGATIONS UNDER CAPITAL LEASES 3,772 2,413
-------- --------
INDUSTRIAL REVENUE BONDS 12,950 12,950
-------- --------
DEFERRED INCOME TAXES 40,216 38,886
-------- --------
DEFERRED INCOME 2,121 1,573
-------- --------
COMMON STOCK:
Par value $.625 authorized 100,000,000 shares,
issued 88,636,089 55,398 55,398
Capital in excess of par value 45,111 43,147
Retained earnings 264,950 260,094
Less - common stock in treasury, 252,851
and 989,606 shares, respectively (2,892) (6,567)
Less - Restricted Stock Award and Equity
Incentive Award (17,237) (12,060)
-------- --------
Total common stockholders' equity 345,330 340,012
-------- --------
$910,700 $898,187
======== ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(000's Omitted Except Share Data)
For the 12 Weeks Ended
September 20, 1997 September 21, 1996
<S> <C> <C>
Sales $308,387 $322,710
Sale of distributor notes 0 43,244
Other income (loss) 1,676 (3,753)
--------- ---------
310,063 362,201
--------- ---------
Materials, supplies, labor and other manufacturing costs 165,476 182,272
Selling, delivery and administrative expenses 112,165 129,512
Depreciation and amortization 11,750 10,045
Interest 5,308 7,447
--------- ---------
294,699 329,276
--------- ---------
Pre-tax income 15,364 32,925
Federal and state income taxes 5,992 12,446
Net income (loss) from investment in
unconsolidated affiliate 5,157 (531)
--------- ---------
Net income $ 14,529 $ 19,948
========= =========
Net income per common share $ 0.17 $ 0.23
========= =========
Weighted average number of shares outstanding used in
calculation of net income per common share 87,595,989 86,467,659
Cash dividends paid per common share $ 0.1100 $ 0.1000
========= =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
For the 12 Weeks Ended
September 20, 1997 September 21, 1996
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $303,687 $317,825
Interest received 106 390
Sale of distributor notes receivable 0 65,954
Other 1,134 (1,010)
-------- --------
304,927 383,159
-------- --------
Cash provided by operating activities:
Cash paid to suppliers and employees 316,235 361,481
Interest paid 7,889 7,567
Income taxes paid 648 4,365
-------- --------
Cash disbursed from operating activities 324,772 373,413
-------- --------
Net cash flow from operating activities (See Schedule 1) (19,845) 9,746
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (15,226) (15,820)
Decrease in divestiture receivables 2,399 165
Divestiture of business 0 200
Other (918) (1,918)
-------- --------
Net cash disbursed for investing activities (13,745) (17,373)
Cash flows from financing activities:
Dividends paid (9,672) (8,764)
Purchases of treasury stock (121) 0
Increase in short-term notes payable 4,208 0
Increase in long-term notes payable 20,000 17,625
Payments of notes payable (3,914) (6,376)
-------- --------
Net cash provided by financing activities 10,501 2,485
-------- --------
Net (decrease) in cash and cash equivalents $(23,089) $ (5,142)
======== ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
For the 12 Weeks Ended
September 20, 1997 September 21, 1996
<S> <C> <C>
Schedule 1
Schedule reconciling earnings to net cash flow from operating activities:
Net income $ 14,529 $ 19,948
-------- --------
Noncash expenses, revenues, losses and gains included in income:
Depreciation and amortization 11,750 10,045
Increase in accounts receivable (1,811) (11,390)
Increase in inventories (24,076) (31,102)
Increase in prepaids (103) (437)
Decrease in accounts payable (4,450) (17,440)
Increase (decrease) in accrued taxes and other liabilities (10,527) 16,881
Net income from investment in unconsolidated affiliate (5,157) 531
Decrease in deferred distributor notes receivable 0 65,954
Decrease in deferred distributor income 0 (43,244)
-------- --------
$(19,845) $ 9,746
======== ========
Schedule 2
Schedule of noncash financing activities:
Stock issued and held in escrow in connection with Restricted Stock Awards $ 5,760 $ 0
======== ========
Stock received from Richter's escrow $ 0 $ 2,565
======== ========
Note receivable from divestiture of business $ 0 $ 1,311
======== ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
<PAGE>
FLOWERS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position as of September 20, 1997
and June 28, 1997, the results of operations for the twelve weeks
ended September 20, 1997 and September 21, 1996 and statement of
cash flows for the twelve weeks ended September 20, 1997 and
September 21, 1996.
2. The results of operations for the twelve week periods ended
September 20, 1997 and September 21, 1996, are not necessarily
indicative of the results to be expected for a full year.
3. Net Income Per Common Share - Net income per common share is
computed by dividing (a) net income by (b) the average number of
common shares outstanding, increased by common equivalent shares
(options and Restricted Shares) determined using the treasury
stock and if converted methods.
4. The Company's primary raw materials are flour, sugar, shortening
and raw fruits and vegetables. The Company has only limited
involvement with derivative financial instruments and does not
use them for trading purposes. The Company enters into various
forward purchase agreements and derivative financial instruments
to reduce the impact of volatility in raw materials ingredients
prices. Amounts payable or receivable under the agreements which
qualify as hedges are recognized as deferred gains or losses and
included in other assets or other liabilities. These deferred
amounts are charged or credited to cost of sales as the related
raw materials costs are charged to operations. Gains and losses
on agreements which do not qualify as hedges are recognized
immediately as other income or expense. At September 20, 1997,
the Company had no material commitments outstanding relating to
derivative financial instruments.
During June 1997, the Company entered into an arrangement that
allows for the Company to engage in commodity price agreements
based on fixed and floating prices of an agreed type of
commodity. At September 20, 1997, no amounts were outstanding
under this arrangement.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
The Company's working capital increased $14,296,000 to $43,358,000 at
the end of the first quarter of fiscal 1998, with cash and cash
equivalents decreasing to $7,991,000 from $31,080,000 at June 28,
1997. The working capital increase is primarily due to the seasonal
build-up of inventories, particularly in the frozen food area. The
decrease in cash and cash equivalents was primarily due to cash
expended for capital projects throughout the Company.
At the end of the first quarter of fiscal 1998 the Company had a total
of $137,000,000 borrowed under a five-year $300,000,000 syndicated
loan facility. Also, currently outstanding are $125,000,000 of
long-term Senior Notes issued through a private placement completed
during fiscal 1996. The Company has in place a $75,000,000 short-term
Commercial Paper program to finance the build-up of frozen inventory.
Borrowings outstanding under this program at September 20, 1997 were
$50,119,000.
Dividends paid per share increased 10% to $.11 in the first quarter of
fiscal 1998 from $.10 paid in the first quarter of fiscal 1997.
Results of Operations:
Sales for the first quarter of fiscal 1998 were $308,387,000, a
decrease of 4% from $322,710,000 for the first quarter of fiscal 1997.
This decrease was primarily the result of two factors. First, there
was a change in promotional practices to enhance the profitability of
the Company's frozen retail dessert business, and this change resulted
in a shifting of approximately $12,000,000 of sales to future
quarters. Secondly, the divestiture of two operating units by the
Company's fresh bakery business contributed approximately $4,000,000
to the sales decrease.
Pre-tax income for the first quarter of fiscal 1998 decreased 53% to
$15,364,000 from $32,925,000 in the first quarter of fiscal 1997.
This decrease is the result of $43,244,000 of pre-tax income generated
in the first quarter of fiscal 1997 relating to the sale of the
Company's distributor notes receivable. The sale of these notes was
necessitated by the Company's decision to settle claims by the
Internal Revenue Service (IRS) that the notes constituted current
rather than deferred income. The gain generated by the sale of the
notes was partially offset primarily by approximately $19,000,000 of
expenses relating to the IRS audit and the write-down of certain idle
facilities. Operationally, income for the first quarter of fiscal
1998 was positively impacted by improved raw material costs,
particularly flour, the Company's primary raw material. During the
first quarter of fiscal 1998, the Company reported an after-tax profit
of $5,157,000 as a result of its equity investment in the Keebler
Corporation.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3(a) - Amendment to Second Restated Articles of
Incorporation
Exhibit 3(b) - Second Restated Articles of Incorporation
as amended
Exhibit 11 - Computation of Earnings Per Common Share.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company for the
first quarter ended September 20, 1997 or during the period
from the close of the first quarter to the date of this
report.
<PAGE>
EXHIBIT 3(a)
ARTICLES OF AMENDMENT
TO THE
SECOND RESTATED ARTICLES OF INCORPORATION
OF
FLOWERS INDUSTRIES, INC.
Pursuant to the provisions of the Georgia Business Corporation
Code Section 14-2-1006, the undersigned corporation adopts the
following amendment to its Second Restated Articles of Incorporation:
1. The name of the corporation is Flowers Industries, Inc. (the
"Corporation").
2. The Second Restated Articles of Incorporation of the
Corporation are hereby amended by deleting the first paragraph of the
Second Article in its entirety and substituting in lieu thereof the
following:
SECOND. The total number of shares of stock which the
corporation shall have the authority to issue is Three Hundred
Fifty Million Two Hundred Sixty Thousand (350,260,000) shares; of
which stock Ten Thousand Four Hundred Sixty-Seven (10,467) shares
of the par value of One Hundred Dollars ($100.00) each, amounting
in the aggregate to One Million Forty-Six Thousand Seven Hundred
Dollars ($1,046,700), shall be preferred stock convertible into
common stock; and of which Two Hundred Forty-Nine Thousand Five
Hundred Thirty-Three (249,533) shares of the par value of One
Hundred Dollars ($100.00) each, amounting in the aggregate to
Twenty-Four Million Nine Hundred Fifty-Three Thousand Three
Hundred Dollars ($24,953,300), shall be preferred stock which may
be made convertible or non-convertible in the discretion of the
Board of Directors when such preferred stock is issued; and of
which Three Hundred Fifty Million (350,000,000) shares of the par
value of Sixty-Two and One-Half Cents ($.625) each, amounting in
the aggregate to Two Hundred Eighteen Million Seven Hundred Fifty
Thousand Dollars ($218,750,000) shall be common stock. Each
share of common stock shall be entitled to one (1) vote.
<PAGE>
3. These Articles of Amendment were adopted by the Board of
Directors of the Corporation on August 1, 1997, which action was duly
approved by the shareholders of the Corporation in the manner
prescribed by Section 14-2-1003 of the Georgia Business Corporation
Code on October 17, 1997.
FLOWERS INDUSTRIES, INC.
By:/s/ Amos R. McMullian
Name: Amos R. McMullian
Title: Chairman of the Board and
C.E.O.
Attest:
/s/ G.A. Campbell
Name: G.A. Campbell
Title: Secretary and General Counsel
<PAGE>
EXHIBIT 3(b)
FLOWERS INDUSTRIES, INC.
SECOND RESTATED ARTICLES OF INCORPORATION
(as amended October 28, 1997)
FIRST. The name of the corporation is FLOWERS INDUSTRIES, INC.
SECOND. The total number of shares of stock which the
corporation shall have the authority to issue is Three Hundred Fifty
Million Two Hundred Sixty Thousand (350,260,000) shares; of which
stock Ten Thousand Four Hundred Sixty-Seven (10,467) shares of the
par value of One Hundred Dollars ($100.00) each, amounting in the
aggregate to One Million Forty-Six Thousand Seven Hundred Dollars
($1,046,700), shall be preferred stock convertible into common
stock; and of which Two Hundred Forty-Nine Thousand Five Hundred
Thirty-Three (249,533)shares of the par value of One Hundred Dollars
($100.00) each, amounting in the aggregate to Twenty-Four Million Nine
Hundred Fifty-Three Thousand Three Hundred Dollars ($24,953,300),
shall be preferred stock which may be convertible or non-convertible
in the discretion of the Board of Directors when such preferred stock
is issued; and of which Three Hundred Fifty Million (350,000,000)
shares of the par value of Sixty-Two and One-Half Cents ($.625) each,
amounting in the aggregate to Two Hundred Eighteen Million Seven
Hundred Fifty Thousand Dollars ($218,750,000) shall be common stock.
Each share of common stock shall be entitled to one (1) vote.
No holder of shares of any class of the stock of the corporation
shall have preemptive rights, and the corporation shall have the right
to issue and to sell to any person or persons any shares of its stock
or any option rights or any securities having conversion or option
rights, without first offering such shares, rights or securities to
any holders of shares of any class of stock of the corporation.
Further designations and powers, preferences and rights and
qualifications, limitations or restrictions shall be determined by the
Board of Directors as follows:
It is expressly granted to the Board of Directors of the
corporation, pursuant to the authority vested in it hereby, in this,
the corporation's Second Restated Articles of Incorporation,
to issue the above-described preferred stock in classes and in one or
more series within each class,which classes or series may receive
dividends or no dividends and have such designations, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof as shall be stated
in the resolution or resolutions providing for the issue of such stock
adopted by the Board of Directors from time to time. The preferred
stock shall have such voting powers, full or limited, or no voting
powers, as the Board of Directors may determine. The Board of
Directors may determine, in their discretion, whether or not the
<PAGE>
Two Hundred Forty-Nine Thousand Five Hundred Thirty-Three (249,533)
shares of preferred stock, which is not presently designated as
convertible, shall be convertible into common stock or into
any other securities of the corporation. The Board of Directors, in
resolutions providing for the issuance of said stock, shall have all
of the powers authorized by the Georgia Business Corporation Code.
As to any such resolution or resolutions adopted by the Board of
Directors pursuant to the authority hereby expressly vested in it, a
statement setting forth a copy of such resolution or resolutions and
the number of shares of such class or series shall be filed with the
Secretary of State in accordance with the Georgia Business Corporation
Code.
Pursuant to the authority granted hereby, the Board of Directors
has created a series of One Hundred Thousand (100,000) shares of
preferred stock designated as Series A Junior Participating Preferred
Stock and having voting powers, relative, participating, optional and
other special rights, preferences and limitations thereof, and the
qualifications, limitations or restrictions thereof as follows:
1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting such
series shall be 100,000.
2. Dividends and Distributions.
(i) The holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock and of any other junior
stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the payment date of any
quarterly dividend for the Common Stock, or if there should be no such
payment date, then on the 45th day after the end of each fiscal
quarter (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $50 or (b) subject to
the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of
Common Stock of the Company or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share
of Series A Preferred Stock. In the event the Company shall at any
time after the date hereof declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled
<OAGE>
immediately, prior to such event under clause (b) of the preceding
sentence shall be automatically adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(ii) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in subparagraph (i) of this
paragraph 2 immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period between
any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $50 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series A Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Company. In the event the Company shall at any
time after the date hereof declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be automatically
adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of
<PAGE>
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(ii) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Company
having general voting rights shall vote together as one voting group
on all matters submitted to a vote of shareholders of the Company.
(iii) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock and any other capital stock of the
Company having general voting rights as set forth herein) for taking
any corporate action.
4. Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Company shall not:
(a) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(b) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, provided that the Company may at
any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(d) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual
<PAGE>
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(ii) The Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any shares
of stock of the Company unless the Company could, under subsection (i)
of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution
shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $1,000 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series A Preferred
Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal
to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock, or (b) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions
made ratably on the Series A Preferred Stock and all other such parity
stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding
up. In the event the Company shall at any time after the date hereof
declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such
event under the proviso in clause (a) of the preceding sentence shall
be automatically adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in
any such case the shares of Series A Preferred Stock shall at the same
time be similarly
<PAGE>
exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the
Company shall at any time after the date hereof declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
9. Rank. The Series A Preferred Stock shall rank junior with
respect to payment of dividends and on liquidation to all other series
of the Company's preferred stock outstanding on the date hereof and to
all such other series that specifically provide that they shall rank
senior to the Series A Preferred Stock.
10. Amendment. The Articles of Incorporation of the Company
shall not be amended in any manner that would materially alter or
change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds of the outstanding shares of Series
A Preferred Stock, voting together as a single class.
THIRD. A Director shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of
duty of care or other duty as a director, except for liability:
(i) For any appropriation, in violation of his duties,
of any business opportunity of the corporation;
(ii) For acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law;
(iii) For the types of liability set forth in Paragraph
14-2-831 of the Georgia Business Corporation Code; or
(iv) For any transaction from which the director
derived an improper personal benefit.
FOURTH. The Board of Directors shall be divided into three
classes, each of which shall be as nearly equal in number as possible.
At the annual shareholders' meeting in 1989, one class,
<PAGE>
consisting of five directors shall be elected for a one-year term, one
class, consisting of four directors for a two-year term and one class,
consisting of four directors for a three-year term. Commencing with
the annual shareholders' meeting in 1990 and at each succeeding annual
shareholders' meeting, successors to the class of directors whose term
expires at such annual shareholders' meeting shall be elected for a
three year term. If the number of directors shall be changed, any
such increase or decrease shall be apportioned among the classes so as
to maintain the number of directors comprising each class as nearly
equal as possible. Directors may be removed by the shareholders only
for cause. This Article may not be repealed or amended unless
such repeal or amendment is approved by the affirmative vote of
holders of at least 66-2/3% of the outstanding shares of stock of the
corporation entitled to vote generally in the election of
directors.
FIFTH. Any action required or permitted to be taken at any
annual or special meeting of the shareholders of the corporation may
be taken without a meeting only if a consent in writing, setting forth
the action so taken, shall be signed by the holders of all of the
outstanding shares of the corporation entitled to vote on such action.
This Article may not be repealed or amended unless such repeal or
amendment is approved by the affirmative vote of holders of at least
66-2/3% of the outstanding shares of stock of the corporation entitled
to vote generally in the election of directors.
SIXTH. The Board of Directors shall consist of not less than ten
(10) or more than sixteen (16) members. The exact number of directors
shall be as fixed by resolution of the Board of Directors and may be
changed from time to time within the maximum and minimum provided
above, by resolution of the Board of Directors. This Article may not
be repealed or amended unless such repeal or amendment is approved by
the affirmative vote of holders of at least 66-2/3% of the outstanding
shares of stock of the corporation entitled to vote generally in the
election of directors.
SEVENTH. Special meetings of the shareholders may be called at
any time by the Chairman of the Board, Vice Chairman of the Board, the
President or by a majority of the Board of Directors. Special
meetings of the shareholders shall be called by the President or the
Secretary at the written demand of the holder or holders of not less
than 66-2/3% of the outstanding shares of stock of the corporation
entitled to vote generally in the election of directors. Written
demands delivered pursuant to this Article must be signed, dated and
delivered to the Secretary, and must describe the purpose or purposes
of the special meeting. No action shall be taken, whether by
amendment to the Articles or otherwise, to reduce the percentage of
shareholders required to join in a shareholder demand for a special
meeting as provided in this Article, unless such action is approved by
the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of stock of the corporation entitled to vote
generally in the election of directors.
EIGHTH . In addition to the requirements of law, the affirmative
vote of the holders of at least 66-2/3% of the outstanding shares of
stock of the corporation entitled to vote generally in
<PAGE>
the election of directors (whether or not the holders of such shares
are present or represented at any meeting) shall be required for the
following transactions:
(A) Any plan of merger, share exchange or consolidation of the
corporation with another corporation, with respect to which a
shareholder vote is required by law;
(B) Any sale, lease, transfer, exchange or other disposition of
all or substantially all of the property and assets of the
corporation, with respect to which a shareholder vote is required by
law;
(C) Any dissolution of the corporation;
(D) Shareholder adoption of any amendment to, repeal of or
establishment of, a by-law; or
(E) Any amendment to, or repeal of, all or any portion of this
Article Eighth;
provided, however, that if: (i) the Continuing Directors of the
corporation shall, by majority vote of the Continuing Directors then
in office, have adopted a resolution approving one of the enumerated
matters and have determined to recommend it for approval by the
holders of voting stock of the corporation; and (ii) at the time of
adoption of such resolution, Continuing Directors shall have comprised
at least a majority of the Board of Directors, then the vote required
shall be the affirmative vote of the holders of at least a majority of
the outstanding shares of stock of the corporation entitled to vote
generally in the election of directors. For purposes of this Article
Eighth, "Continuing Director" shall mean the then current members of
the Board of Directors who were also members of the Board of Directors
on December 7, 1987, plus any new directors whose nominations were
approved by at least three quarters of the Continuing Directors in
office at the time of the election of any such new directors, other
than a nomination of an individual whose initial assumption of office
is in connection with an actual or threatened solicitation with
respect to the "election or removal of the Board of Directors," as
such terms are used in Rule 14a-11 of the Securities Exchange Act of
1934, as amended.
NINTH. All shares of stock previously or hereafter reacquired by
the corporation pursuant to the power of the corporation to purchase
its own shares of stock conferred generally by-law shall continue to
be or become treasury shares of the corporation, and shall remain such
unless and until resold or cancelled by action of the Board of
Directors.
<PAGE>
<TABLE>
Exhibit 11
FLOWERS INDUSTRIES, INC.
COMPUTATION OF NET INCOME PER SHARE
(000's Omitted Except Share Data)
For the 12 Weeks Ended
September 20, 1997 September 21, 1996
<S> <C> <C>
Net income for net income per common share $ 14,529 $ 19,948
========== ==========
Number of shares used in calculation of per common share data:
Weighted average number of common shares outstanding during the period 88,310,374 87,760,922
Add (Deduct) - Shares issuable upon exercise of employee stock
options based on quarter-end market price 443,492 429,381
Shares issuable upon award of performance shares and
restricted stock award based on quarter-end market price (1,157,877) (1,722,644)
---------- ----------
Weighted average number of shares used in calculation of net income per
common share 87,595,989 86,467,659
========== ==========
Net income per common share $ 0.17 $ 0.23
========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
<PAGE>
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.
FLOWERS INDUSTRIES, INC.
/s/ Amos R. McMullian
By: Amos R. McMullian
Chairman of the Board
/s/ Russell M. Fryar
By: Russell M. Fryar
Vice President, Treasurer
and Chief Accounting
Officer
October 27, 1997
Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Flowers
Industries, Inc. Consolidated Statement of Income for the twelve weeks ended
September 20, 1997 and the Flowers Industries, Inc. Consolidated Balance Sheet
at September 20, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-START> JUN-29-1997
<PERIOD-END> SEP-20-1997
<CASH> 7,991
<SECURITIES> 0
<RECEIVABLES> 115,439
<ALLOWANCES> 0
<INVENTORY> 128,653
<CURRENT-ASSETS> 275,058
<PP&E> 761,540
<DEPRECIATION> 310,052
<TOTAL-ASSETS> 910,700
<CURRENT-LIABILITIES> 231,700
<BONDS> 0
0
0
<COMMON> 55,398
<OTHER-SE> 289,932
<TOTAL-LIABILITY-AND-EQUITY> 910,700
<SALES> 308,387
<TOTAL-REVENUES> 310,063
<CGS> 165,476
<TOTAL-COSTS> 294,699
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,308
<INCOME-PRETAX> 15,364
<INCOME-TAX> 5,992
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,529
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
