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Previous: GEODYNE ENERGY INCOME LTD PARTNERSHIP II A, 8-K, 1997-01-24 |
Next: PRICE T ROWE REA INCOME FD IV AMERICAS SALE COMM FR REA EST, SC 14D9/A, 1997-01-24 |
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D C 20549
(Mark One)
([chech mark]) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 14, 1996
( ) 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)
U. S. Highway 19, 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 January 17, 1997
Common Stock, $.625 Par Value 58,630,127
<PAGE>
FLOWERS INDUSTRIES, INC.
INDEX
Page Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
December 14, 1996 and June 29, 1996 3
Consolidated Statement of Income
Twenty Four Weeks Ended December 14, 1996
and December 16, 1995 5
Consolidated Statement of Income
Twelve Weeks Ended December 14, 1996
and December 16, 1995 6
Consolidated Statement of Cash Flows
Twenty Four Weeks Ended December 14, 1996
and December 16, 1995 7
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
-2-
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
(000's Omitted)
December 14, June 29,
CURRENT ASSETS: 1996 1996
---------- --------
<S> <C> <C>
Cash and temporary investments $ 4,972 $ 25,039
-------- ---------
Accounts receivable 161,735 120,301
-------- ---------
Inventories:
Raw materials 41,259 25,939
Finished goods 27,530 25,527
Supplies 19,384 17,110
-------- ---------
88,173 68,576
-------- ---------
Deferred income taxes 11,652 10,992
Prepaid expenses 6,779 5,319
-------- ---------
273,311 230,227
PROPERTY, PLANT & EQUIPMENT:
Land 23,457 23,386
Buildings 183,909 183,502
Machinery and equipment 393,732 393,319
Furniture, fixtures and transportation equipment 23,008 21,365
Construction and capital projects in progress 100,500 63,005
-------- ---------
724,606 684,577
Less: accumulated depreciation (284,574) (264,107)
-------- ---------
440,032 420,470
-------- ---------
OTHER ASSETS AND DEFERRED CHARGES:
Notes receivable from distributors 0 61,236
Investment in unconsolidated affiliate 68,095 68,326
Other long-term assets 32,305 24,567
-------- ---------
100,400 154,129
-------- ---------
COST IN EXCESS OF NET TANGIBLE ASSETS:
Cost in excess of net tangible assets 45,286 45,962
Less: accumulated amortization (1,805) (1,345)
-------- ---------
43,481 44,617
-------- ---------
$857,224 $849,443
======== =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-3-
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(000's Omitted except share data)
December 14, June 29,
CURRENT LIABILITIES: 1996 1996
----------- ---------
<S> <C> <C>
Notes payable $ 57,002 $ 6,593
Obligations under capital leases 2,242 1,988
Accounts payable 67,793 98,796
Accrued taxes other than income taxes 4,608 5,369
Income taxes 870 1,264
Accrued compensation, interest and other liabilities 85,261 67,738
--------- --------
217,776 181,748
--------- --------
LONG-TERM NOTES PAYABLE 251,869 254,355
--------- --------
OBLIGATIONS UNDER CAPITAL LEASES 2,864 2,573
--------- --------
INDUSTRIAL REVENUE BONDS 17,570 17,770
--------- --------
DEFERRED INCOME TAXES 45,192 47,270
--------- --------
DEFERRED INCOME 0 40,403
--------- --------
COMMON STOCK:
Par value $.625 authorized 100,000,000 shares,
issued 59,090,726 36,932 36,932
Capital in excess of par value 59,137 58,783
Retained earnings 248,555 234,069
Less - common stock in treasury, 457,914
and 506,749 shares, respectively (7,512) (6,493)
Less - Restricted Stock Award and Equity
Incentive Award (15,159) (17,967)
--------- --------
Total common stockholders' equity 321,953 305,324
--------- --------
$857,224 $849,443
========= ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-4-
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(000's Omitted except share data)
For the 24 Weeks Ended
----------------------------
December 14, December 16,
1996 1995
------------ ------------
<S> <C> <C>
Sales $ 704,000 $ 560,212
Sale of distributor notes 43,244 0
Other income (expense) (1,897) 2,692
----------- -----------
745,347 562,904
----------- -----------
Materials, supplies, labor and other manufacturing costs 398,806 303,643
Selling, delivery and administrative expenses 261,590 211,526
Depreciation and amortization 20,366 18,139
Interest 12,485 4,151
----------- -----------
693,247 537,459
----------- -----------
Pre-tax income 52,100 25,445
Federal and state income taxes 19,694 9,618
Equity in net loss of unconsolidated affiliate (195) 0
----------- -----------
Net income $ 32,211 $ 15,827
=========== ===========
Net income per common share $ 0.56 $ 0.28
=========== ===========
Weighted average number of shares outstanding used in
calculation of net income per common share 57,815,744 57,298,471
Cash dividends paid per common share $0.3025 $0.2825
=========== ===========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-5-
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(000's Omitted except share data)
For the 12 Weeks Ended
----------------------------
December 14, December 16,
1996 1995
------------ -----------
<S> <C> <C>
Sales $ 381,290 $ 290,538
Other income 1,856 795
----------- -----------
383,146 291,333
----------- -----------
Materials, supplies, labor and other manufacturing costs 216,534 159,862
Selling, delivery and administrative expenses 132,078 107,357
Depreciation and amortization 10,321 9,179
Interest 5,038 2,186
----------- -----------
363,971 278,584
----------- -----------
Pre-tax income 19,175 12,749
Federal and state income taxes 7,248 4,819
Equity in net income of unconsolidated affiliate 336 0
----------- -----------
Net income $ 12,263 $ 7,930
=========== ===========
Net income per common share $0.21 $0.14
=========== ===========
Weighted average number of shares outstanding used in
calculation of net income per common share 57,948,022 57,426,161
Cash dividends paid per common share $0.1525 $0.1425
=========== ===========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-6-
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
For the 24 Weeks Ended
--------------------------
December 14, December 16,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 654,627 $555,744
Interest received 561 269
Sale of distributor notes receivable 65,954 0
Other 2,306 1,371
--------- --------
Cash provided by operating activities: 723,448 557,384
--------- --------
Cash paid to suppliers and employees 697,211 547,147
Interest paid 12,933 5,077
Income taxes paid 23,644 12,269
--------- --------
Cash disbursed from operating activities 733,788 564,493
--------- --------
Net cash flow from operating activities (See Schedule 1) (10,340) (7,109)
--------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (37,037) (27,167)
Acquisition of businesses 0 (7,311)
Divestiture of business 200 1,061
Other (1,692) 396
--------- --------
Net cash disbursed for investing activities (38,529) (33,021)
--------- --------
Cash flows from financing activities:
Dividends paid (17,725) (16,389)
Purchases of treasury stock (146) (570)
Increase in short-term notes payable 50,409 0
Increase in long-term notes payable 3,625 27,410
Payments of long-term notes payable (7,361) (1,225)
--------- --------
Net cash provided by financing activities 28,802 9,226
--------- --------
Net decrease in cash $ (20,067) $(30,904)
========= ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-7-
<PAGE>
<TABLE>
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
For the 24 Weeks Ended
------------------------------
December 14, December 16,
Schedule 1 1996 1995
- ------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Schedule reconciling earnings to net cash flow from operating activities:
Net income $ 32,211 $ 15,827
-------- --------
Noncash expenses, revenues, losses and gains included in income:
Depreciation and amortization 20,366 18,139
Deferred income taxes 0 (1)
Increase in accounts receivable (45,237) (7,362)
Increase in inventories (19,740) (3,676)
Increase in prepaids (1,396) (690)
Decrease in distributor notes receivable 65,954 0
Decrease in accounts payable (31,464) (13,702)
Increase (decrease) in accrued taxes and other liabilities 12,015 (15,644)
Decrease in deferred distributor income (43,244) 0
Equity in net income of unconsolidated affiliate 195 0
-------- --------
$(10,340) $ (7,109)
======== ========
Schedule 2
- -------------------------------------------------------------------------
Schedule of noncash financing activities:
Common stock received in connection with the exercise of employee
stock options $ 501 $ 1,007
======== ========
Stock issued and held in escrow in connection with Restricted
Stock Awards $ 94 $ 3,004
======== ========
Exercise of Equity Incentive Awards $ 2,365 $ 1,653
======== ========
Stock released from acquisition escrow $ 2,565 $ 0
======== ========
Note receivable from divestiture of business $ 1,311 $ 2,500
======== ========
Stock issued for acquisition $ 4,000 $ 1,119
======== ========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-8-
<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 December 14, 1996 and
June 29, 1996, the results of operations for the twelve and
twenty- four weeks ended December 14, 1996 and December 16, 1995
and statement of cash flows for the twenty-four weeks
ended December 14, 1996 and December 16, 1995.
2. The results of operations for the twelve and twenty-four week
periods ended December 14, 1996 and December 16, 1995, are not
necessarily indicative of the results to be expected for a full
year.
3. During September 1996, the Company accrued for certain claims by
the Internal Revenue Service ("IRS"), relating primarily to the
Company's independent distributor program. The IRS asserted that
the independent distributor program generated ordinary income
upon the initial sale of the territory.
In a related, but separate transaction, on September 20, 1996, the
Company sold $66,000,000 of notes receivable from independent
distributors to a financial institution. Of the $66,000,000 of
notes sold, $44,000,000 was initially without recourse to the
Company with the remaining $22,000,000 having limited recourse.
Concurrently, approximately $43,000,000 of deferred income was
recognized by the Company. The Company acts as a servicing
agent for the financial institution and is entitled to receive
a fee for these services.
4. 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.
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
The Company's working capital increased $7,056,000 to $55,535,000
at the end of the second quarter of fiscal 1997, with cash and
temporary investments decreasing to $4,972,000 from $25,039,000
at June 29, 1996. The working capital increase is due primarily
to increased receivables as a result of sales increases,
particularly in the new Mrs. Smith's pie business acquired during
the fourth quarter of fiscal 1996. The decrease in cash and
temporary investments was primarily due to cash expended for
capital projects throughout the Company.
At the end of the second quarter of fiscal 1997, the Company had
a total of $107,000,000 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 the third quarter of fiscal 1996.
During the second quarter of fiscal 1997, the Company entered
into a short-term $50,000,000 Commercial Paper program to finance the
seasonal build-up of frozen inventory. Borrowings outstanding
under this program at December 14, 1996 were $50,000,000.
During the first quarter of fiscal 1997, the Company sold
$66,000,000 of distributor notes receivable to a financial institution. The
proceeds from this sale were used to pay a portion of the Company's debt
outstanding at that time.
Dividends paid per share increased 7% to $.1525 in the second
quarter of fiscal 1997 from $.1425 paid in the second quarter of
fiscal 1996.
Results of Operations:
Sales increased 26% to $704,000,000 in the first half of fiscal
1997 as compared with the first half of fiscal 1996.
Acquisitions consummated subsequent to the second quarter of
fiscal 1996 contributed approximately two-thirds of the increase,
while increased volume of 8%, exclusive of the acquisitions was
also a factor in the sales increase. Sales increased 31% to
$381,290,000 in the second quarter of fiscal 1997 as compared
with the second quarter of fiscal 1996. Acquisitions consummated
subsequent to the second quarter of fiscal 1996 and increased internal volume
growth of approximately 8% were factors in the sales increase.
Pre-tax income increased 105% to $52,100,000 and 50% to
$19,175,000 in the first half and second quarter of fiscal 1997,
respectively. The sale of the distributor notes receivable
during the first quarter as discussed above generated $43,244,000
of pre-tax income during the first half of the year. The sale of
these notes was necessitated by the Company's decision to settle
claims by the Internal Revenue Service 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 Internal Revenue Service
audit and the write-down of certain idle facilities.
Operationally, income for the first half and second quarter of
fiscal 1997 was positively impacted by the new Mrs. Smith's pie
business, which the Company acquired during the fourth quarter of
fiscal 1996, as well as sales and volume gains at the remainder
of the Company's operations. The income increase was partially
offset by higher raw material costs, particularly flour, the
Company's primary raw material.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held
October 18, 1996 in Thomasville, Georgia for the following
purposes:
(1) To elect four (4) members to the Board of Directors to serve
for three years or until their successors shall be elected
and shall have qualified:
For Withheld
Joe E. Beverly 50,418,508 458,597
Russell M. Fryar 50,404,364 472,741
Amos R. McMullian 50,403,448 473,657
J. V. Shields, Jr. 50,402,910 474,195
(2) To consider and act upon a proposal to select Price
Waterhouse LLP as independent accountants for the Company
for fiscal 1997:
For 50,743,799
Against 27,185
Abstain 106,122
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings Per Common Share.
(Pages 12 and 13)
(b) Exhibit 27 - Financial Data Schedule. (Page 14)
(c) Reports on Form 8-K
No reports on Form 8-K were filed by the Company for the
second quarter ended December 14, 1996.
-11-
<PAGE>
<TABLE>
Exhibit 11
FLOWERS INDUSTRIES, INC.
COMPUTATION OF NET INCOME PER SHARE
(000's Omitted except share data)
For the 24 Weeks Ended
---------------------------------
December 14, December 16,
1996 1995
------------ ------------
<S> <C> <C>
Net income for net income per common share $ 32,211 $ 15,827
========== ==========
Number of shares used in calculation of per common
share data:
Weighted average number of common shares
outstanding during the period 58,589,507 57,814,915
Add (Deduct) - Shares issuable upon exercise of
employee stock options based on
quarter-end market price 294,223 155,729
Shares issuable upon award of
performance shares and restricted
stock award based on quarter-end
market price (1,067,986) (672,173)
---------- ----------
Weighted average number of shares used in calculation
of net income per common share 57,815,744 57,298,471
========== ==========
Net income per common share $ 0.56 $ 0.28
========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-12-
<PAGE>
Exhibit 11
<TABLE>
FLOWERS INDUSTRIES, INC.
COMPUTATION OF NET INCOME PER SHARE
(000's Omitted except share data)
For the 12 Weeks Ended
--------------------------------
December 14, December 16,
1996 1995
------------ -----------
<S> <C> <C>
Net income for net income per common share $ 12,263 $ 7,930
========== ==========
Number of shares used in calculation of per common
share data:
Weighted average number of common shares
outstanding during the period 58,632,103 57,913,335
Add (Deduct) - Shares issuable upon exercise of
employee stock options based on
quarter-end market price 305,021 151,911
Shares issuable upon award of
performance shares and restricted
stock award based on quarter-end
market price (989,102) (639,085)
---------- ----------
Weighted average number of shares used in calculation
of net income per common share 57,948,022 57,426,161
========== ==========
Net income per common share $ 0.21 $ 0.14
========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-13-
<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
January 17, 1997
Date
-14-
<PAGE>
<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 and twenty-four
weeks ended December 14, 1996 and the Flowers Industries, Inc. Consolidated
Balance Sheet at December 14, 1996 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JUN-28-1997 JUN-28-1997
<PERIOD-START> JUN-30-1996 SEP-22-1996
<PERIOD-END> DEC-14-1996 DEC-14-1996
<CASH> 4,972 4,972
<SECURITIES> 0 0
<RECEIVABLES> 161,735 161,735
<ALLOWANCES> 0 0
<INVENTORY> 88,173 88,173
<CURRENT-ASSETS> 273,311 273,311
<PP&E> 724,606 724,606
<DEPRECIATION> 284,574 284,574
<TOTAL-ASSETS> 857,224 857,224
<CURRENT-LIABILITIES> 217,776 217,776
<BONDS> 0 0
0 0
0 0
<COMMON> 36,932 36,932
<OTHER-SE> 285,021 285,021
<TOTAL-LIABILITY-AND-EQUITY> 857,224 857,224
<SALES> 704,000 381,290
<TOTAL-REVENUES> 745,347 383,146
<CGS> 398,806 216,534
<TOTAL-COSTS> 693,247 363,971
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,485 5,038
<INCOME-PRETAX> 52,100 19,175
<INCOME-TAX> 19,694 7,248
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 32,211 12,263
<EPS-PRIMARY> 0.56 0.21
<EPS-DILUTED> 0.56 0.21
</TABLE>
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