<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(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 10, 1998
----------------
( ) 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 of (I.R.S. Employer Identification Number)
incorporation or organization)
1919 FLOWERS CIRCLE, THOMASVILLE, GEORGIA
-----------------------------------------
(Address of principal executive offices)
31757
-----
(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 X 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 NOVEMBER 16, 1998
------------------- --------------------------------
COMMON STOCK, $.625 PAR Value 99,817,500
<PAGE> 2
FLOWERS INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
October 10, 1998 and January 3, 1998 3
Consolidated Statement of Income
Forty Weeks Ended October 10, 1998
and October 11, 1997 5
Consolidated Statement of Income
Twelve Weeks Ended October 10, 1998
and October 11, 1997 6
Consolidated Statement of Cash Flows
Forty Weeks Ended October 10, 1998
and October 11, 1997 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II. Other Information
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
-2-
<PAGE> 3
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
(Amounts in Thousands, Except Share Data and Per Share Data)
<TABLE>
<CAPTION>
October 10, January 3,
1998 1998
===============================
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 34,509 $ 3,866
Accounts and notes receivable, net 314,967 118,147
Inventories, net:
Raw materials 51,878 27,310
Packaged materials 29,969 12,648
Finished goods 222,676 44,650
Other 25,488 20,322
----------- ---------
330,011 104,930
----------- ---------
Deferred income taxes 64,865 16,024
Other 64,337 22,295
----------- ---------
808,689 265,262
----------- ---------
PROPERTY, PLANT and EQUIPMENT:
Land 42,153 20,388
Buildings 373,672 208,179
Machinery and equipment 840,598 443,739
Furniture, fixtures and transportation equipment 105,486 28,095
Construction in progress 147,405 46,262
----------- ---------
1,509,314 746,663
Less: Accumulated depreciation (477,216) (308,342)
----------- ---------
1,032,098 438,321
----------- ---------
OTHER ASSETS:
Investment in unconsolidated affiliate 0 100,663
Other 104,473 17,917
----------- ---------
104,473 118,580
----------- ---------
COST IN EXCESS OF NET TANGIBLE
ASSETS, NET 955,806 76,717
----------- ---------
$ 2,901,066 $ 898,880
=========== =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-3-
<PAGE> 4
FLOWERS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Amounts in Thousands, Except Share Data and Per Share Data)
<TABLE>
<CAPTION>
October 10, January 3,
1998 1998
=================================
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Commercial paper $ 96,314 $ 53,506
Current maturities of long-term debt 106,706 4,232
Accounts payable 208,669 72,311
Income taxes 22,932
Facility closing costs and severance 17,882 4,812
Other accrued liabilities 332,387 67,109
----------- ---------
784,890 201,970
----------- ---------
LONG-TERM DEBT 1,061,074 276,211
----------- ---------
OTHER LIABILITIES:
Deferred income taxes 159,035 39,686
Postretirement/postemployment obligations 63,832
Facility closing costs and severance 62,890 30,141
Other 38,914 2,305
----------- ---------
324,671 72,132
----------- ---------
MINORITY INTEREST 133,838
----------- ---------
COMMITMENTS AND CONTINGENCIES
----------- ---------
STOCKHOLDERS' EQUITY:
Preferred Stock - $100 par value, authorized
10,467 shares and none issued
Preferred Stock - $100 par value, authorized
249,533 shares and none issued
Common stock - $.625 par value, authorized
350,000,000 shares, issued 100,202,414 and
88,636,089 shares, respectively 62,627 55,398
Capital in excess of par value 270,984 45,200
Retained earnings 290,971 266,734
Common stock in treasury, 379,160
and 207,670 shares, respectively (6,273) (2,452)
Stock compensation related
adjustments (21,716) (16,313)
----------- ---------
596,593 348,567
----------- ---------
$ 2,901,066 $ 898,880
=========== =========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-4-
<PAGE> 5
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
For the 40 Weeks Ended
================================
October 10, October 11,
1998 1997
================================
<S> <C> <C>
Sales $ 2,776,242 $1,061,225
----------- ----------
Materials, supplies, labor and other production costs 1,243,548 597,651
Selling, marketing and administrative expenses 1,242,831 358,601
Depreciation and amortization 92,986 36,372
----------- ----------
Income from operations 196,877 68,601
Interest expense, net 46,624 14,566
----------- ----------
Income before income taxes, investment in
unconsolidated affilate, minority interest
and extraordinary loss 150,253 54,035
Income taxes 63,106 20,678
Income from investment in unconsolidated affiliate 15,034
----------- ----------
Income before minority interest and extraordinary loss 87,147 48,391
Minority interest (28,097)
----------- ----------
Income before extraordinary loss 59,050 48,391
Extraordinary loss due to early extinguishment of
debt, net of tax benefit and minority interest (938)
----------- ----------
Net income $ 58,112 $ 48,391
=========== ==========
Net Income Per Common Share:
Basic -
Income before extraordinary loss $ 0.62 $ 0.55
Extraordinary loss due to early extinguishment of
debt, net of tax benefit and minority interest (0.01) 0.00
----------- ----------
Net income per common share $ 0.61 $ 0.55
=========== ==========
Weighted average shares outstanding 95,460 88,218
=========== ==========
Diluted -
Income before extraordinary loss $ 0.62 $ 0.55
Extraordinary loss due to early extinguishment of
debt, net of tax benefit and minority interest (0.01) 0.00
----------- ----------
Net income per common share $ 0.61 $ 0.55
=========== ==========
Weighted average shares outstanding 95,907 88,646
=========== ==========
Cash dividends paid per common share $ 0.3525 $ 0.3208
=========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-5-
<PAGE> 6
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
For the 12 Weeks Ended
=================================
October 10, October 11,
1998 1997
=================================
<S> <C> <C>
Sales $ 862,784 $ 321,758
----------- ----------
Materials, supplies, labor and other production costs 382,206 188,022
Selling, marketing and administrative expenses 370,660 97,690
Depreciation and amortization 29,252 10,993
----------- ----------
Income from operations 80,666 25,053
Interest expense, net 14,131 4,108
----------- ----------
Income before income taxes, investment in
unconsolidated affiliate, minority interest
and extraordinary loss 66,535 20,945
Income taxes 27,945 8,064
Income from investment in unconsolidated affiliate 7,536
----------- ----------
Income before minority interest and extraordinary loss 38,590 20,417
Minority interest (13,035)
----------- ----------
Income before extraordinary loss 25,555 20,417
Extraordinary loss due to early extinguishment of
debt, net of tax benefit and minority interest (938)
----------- ----------
Net income $ 24,617 $ 20,417
=========== ==========
Net Income Per Common Share:
Basic -
Income before extraordinary loss $ 0.26 $ 0.23
Extraordinary loss due to early extinguishment of
debt, net of tax benefit and minority interest (0.01) 0.00
----------- ----------
Net income per common share $ 0.25 $ 0.23
=========== ==========
Weighted average shares outstanding 99,794 88,398
=========== ==========
Diluted -
Income before extraordinary loss $ 0.26 $ 0.23
Extraordinary loss due to early extinguishment of
debt, net of tax benefit and minority interest (0.01) 0.00
----------- ----------
Net income per common share $ 0.25 $ 0.23
=========== ==========
Weighted average shares outstanding 100,203 88,845
=========== ==========
Cash dividends paid per common share $ 0.1200 $ 0.1100
=========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-6-
<PAGE> 7
FLOWERS INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the 40 Weeks Ended
================================
October 10, October 11,
1998 1997
================================
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 58,112 $ 48,391
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 28,097
Income from investment in unconsolidated affiliate (15,034)
Depreciation and amortization 92,986 36,372
Deferred income taxes 1,690 1,792
Loss due to early extinguishment of debt 938
Other (1,483) 2,223
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable, net (58,544) (3,176)
Inventories, net (69,274) (44,267)
Other assets (14,196) (1,470)
Accounts payable 36,220 56,826
Facility closing costs and severance (6,696) (3,035)
Accrued taxes and other liabilities 8,937 (7,321)
----------- ----------
Net cash provided by operating activities 76,787 71,301
----------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment (81,367) (55,230)
Acquisition of majority interest in Keebler (284,436)
Acquisition of President International, Inc. by Keebler (444,818)
Acquisition of other businesses (30,206) (7,932)
Other 182 9,471
----------- ----------
Net cash disbursed for investing activities: (840,645) (53,691)
----------- ----------
Cash flows from financing activities:
Common stock offering proceeds, net of
underwriters discount and offering costs 187,930
Dividends paid (33,875) (28,246)
Treasury stock purchases (5,597) (352)
Stock compensation and warrants exercised 20,353 3,700
Debentures proceeds 199,417
Debentures issuance costs (1,750)
Increase in commercial paper 42,808 610
Increase in long-term debt 385,215 792
----------- ----------
Net cash provided by (disbursed for) financing activities 794,501 (23,496)
----------- ----------
Net increase (decrease) in cash and cash equivalents 30,643 (5,886)
Cash and cash equivalents at beginning of period 3,866 7,886
----------- ----------
Cash and cash equivalents at end of period $ 34,509 $ 2,000
=========== ==========
Schedule of noncash investing and financing activities:
Stock compensation transactions $ 9,345 $ 5,509
=========== ==========
Stock issued for acquisition $ 40,000 $
=========== ==========
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
-7-
<PAGE> 8
FLOWERS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of Flowers Industries,
Inc. (the "Company") contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
October 10, 1998 and January 3, 1998, the results of operations for the
twelve and forty weeks ended October 10, 1998 and October 11, 1997,
respectively, and statement of cash flows for the forty weeks ended October
10, 1998 and October 11, 1997. The results of operations for the twelve and
forty week periods ended October 10, 1998 and October 11, 1997,
respectively, are not necessarily indicative of the results to be expected
for a full year.
In prior years, the Company's fiscal year ended on the Saturday nearest June
30. Concurrent with the Company's purchase of the majority interest in
Keebler Foods Company ("Keebler"), as further discussed in Note 4, the
Company changed its fiscal year end to coincide with Keebler's, which
consists of thirteen four week periods (52 or 53 weeks) and ends on the
Saturday nearest December 31. The Company's quarterly reporting periods for
fiscal year 1998 are as follows: first quarter ended April 25, 1998
(sixteen weeks), second quarter ended July 18, 1998 (twelve weeks), third
quarter ended October 10, 1998 (twelve weeks) and fourth quarter ending
January 2, 1999 (twelve weeks). Unaudited condensed combined pro forma
results of operations, which assume the acquisition of the majority interest
in Keebler occurred as of the beginning of each period presented, are
included in Note 4.
The Company changed its method of presenting the statement of cash flows
from the direct method to the indirect method, beginning with the second
quarter ending July 18, 1998. This and certain other reclassifications of
prior period information have been made to conform with the current period
presentation.
2. Net Income Per Common Share - Basic net income per share is computed by
dividing net income by weighted average common shares outstanding for the
period. Diluted net income per share is computed by dividing net income by
weighted average common and dilutive common equivalent shares outstanding
for the period. Common stock equivalents consist of the incremental shares
associated with the Company's stock compensation plans, as determined under
the treasury stock method. The following table sets forth the computation of
basic and diluted net income per share (amounts in thousands, except per
share data):
<TABLE>
<CAPTION>
For the 12 Weeks Ended For the 40 Weeks Ended
------------------------------ -----------------------------
October 10, October 11, October 10, October 11,
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary loss $ 25,555 $20,417 $ 59,050 $48,391
Extraordinary loss due to early
extinguishment of debt, net of tax
benefit and minority interest (938) -- (938) --
--------- ------- -------- -------
Net income $ 24,617 $20,417 $ 58,112 $48,391
========= ======= ======== =======
Denominator:
Basic weighted average shares 99,794 88,398 95,460 88,218
Effect of dilutive securities:
Stock compensation 409 447 447 428
--------- ------- -------- -------
Diluted weighted average shares 100,203 88,845 95,907 88,646
========= ======= ======== =======
</TABLE>
-8-
<PAGE> 9
3. The Company's primary raw materials are flour, sugar, shortening, fruits and
dairy products. The Company has limited involvement with derivative
financial instruments and does not use them for trading purposes. The
Company enters into forward purchase agreements and derivative financial
instruments to reduce the impact of volatility in raw material prices.
Amounts payable or receivable under the agreements which qualify as hedges
are recognized as deferred gains or losses and charged or credited to cost
of sales as the related raw materials are used in production. Gains and
losses on agreements which do not qualify as hedges are marked to market and
recognized immediately as other income or expense. At October 10, 1998, the
Company had no material commitments outstanding relating to derivative
financial instruments.
During June 1997, the Company entered into an arrangement that allows the
Company to engage in commodity price agreements based on fixed and floating
prices of an agreed type of commodity. At October 10, 1998, the Company had
no material amounts outstanding under this arrangement.
4. Acquisitions - On February 3, 1998, the Company acquired an additional 11.5%
of the common stock of Keebler, concurrent with Keebler's initial public
offering, giving the Company a majority ownership position in Keebler of
approximately 55% (the "Keebler Acquisition"). The aggregate purchase price
of the additional interest in Keebler was approximately $311,624,000,
including transaction expenses. The acquisition was initially financed
through borrowings under the Company's $500,000,000 syndicated loan
facility. Keebler is a major producer and marketer of cookies and crackers
in the United States. The acquisition of the additional interest in Keebler
was accounted for using the purchase method of accounting, and, accordingly,
Keebler's assets and liabilities are included in the consolidated balance
sheet as of October 10, 1998. The acquisition of the majority interest
resulted in the Company consolidating Keebler's operating results effective
January 4, 1998. Keebler's operating results for the period January 4, 1998
through February 3, 1998, the date the Company acquired the majority
interest, were not materially different had they been accounted for under
the equity method, the method by which the Company previously accounted for
its investment in Keebler. The excess of the purchase price over the fair
value of the net assets underlying the additional interest acquired,
approximately $263,391,000, has been recorded as goodwill and is being
amortized over 40 years.
The purchase price has been preliminarily allocated to the assets acquired
and liabilities assumed based on the respective fair values at the date of
purchase, as summarized below (amounts in thousands):
<TABLE>
<S> <C>
Cash $ 46,989
Accounts receivable 98,963
Inventory 112,462
Other current assets 63,033
Property, plant and equipment 478,121
Cost in excess of net tangible assets 201,205
Other assets 61,879
Current liabilities 368,185
Long-term debt 272,390
Deferred income taxes 69,417
Postretirement/postemployment obligations 60,605
Other noncurrent liabilities 50,203
Minority interest 108,833
</TABLE>
-9-
<PAGE> 10
The following unaudited condensed combined pro forma results of operations
assume the Keebler Acquisition occurred as of the beginning of each period
(amounts in thousands, except per share data):
<TABLE>
<CAPTION>
For the 40 Weeks Ended
--------------------------------------
October 10, 1998 October 11, 1997
---------------- ----------------
<S> <C> <C>
Sales $ 2,776,242 $2,600,824
Income before extraordinary loss 59,050 44,339
Net income 58,112 42,858
Net Income Per Common Share:
Income before extraordinary loss - basic .62 .47
Income before extraordinary loss - diluted .62 .47
Net income - basic .61 .45
Net income - diluted .61 .45
</TABLE>
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the acquisition been
consummated as of the beginning of the period, nor are they necessarily
indicative of future operating results.
On September 28, 1998, Keebler, of which the Company owns a 55% majority
interest, acquired President International, Inc. ("PII") from President
International Trade and Investment Corporation, a company limited by shares
under the International Business Companies Ordinance of the British Virgin
Islands, for an aggregate purchase price of $446,100,000, excluding related
fees and expenses paid at closing of approximately $3,400,000. The PII
acquisition was funded in cash, with approximately $75,000,000 from existing
resources and the remainder from borrowings under the Keebler $700,000,000
Senior Credit Facility Agreement ("Credit Facility") and a $125,000,000
Bridge Facility, both dated as of September 28, 1998.
The acquisition of PII by Keebler has been accounted for as a purchase. The
total purchase price and the fair value of liabilities assumed have been
allocated to the tangible and intangible assets of PII based on a
preliminary assessment of their respective fair values. The acquisition has
resulted in a preliminary unallocated excess purchase price over fair value
of net assets acquired of approximately $325,000,000, which is being
amortized straight-line over a forty year period.
Results of operations for PII from September 28, 1998 to October 10, 1998
will be included in the consolidated statement of income for the fourth
quarter of the Company's fiscal year. The Company intends to file unaudited
pro forma financial information with the Securities and Exchange Commission
under a Form 8-K/A filing no later than December 14, 1998.
On January 30, 1998, the Company acquired the outstanding common stock of
Franklin Baking Company ("Franklin") in Goldsboro, North Carolina. Franklin
is a producer and marketer of fresh bakery products primarily to
supermarkets. Additionally, on May 1, 1998, the Company acquired the
Pet-Ritz and Oronoque Orchard frozen dessert brands from Van de Kamp's, Inc.
Both business combinations have been accounted for as purchases, and,
accordingly, the results of operations are included in the consolidated
statement of income from the date of acquisition. The Company does not
consider the effects of either of the acquisitions significant for pro forma
disclosure purposes.
-10-
<PAGE> 11
5. Other accrued liabilities consist of (amounts in thousands):
<TABLE>
<CAPTION>
October 10, 1998 January 3, 1998
---------------- ---------------
<S> <C> <C>
Employee compensation $ 99,822 $ 18,123
Self-insurance 66,200 13,429
Marketing and consumer promotions 92,497 -
Other 73,868 35,557
----------- ----------
Total $ 332,387 $ 67,109
=========== ==========
</TABLE>
6. The following table summarizes the Company's debt (amounts in thousands):
<TABLE>
<CAPTION>
October 10, 1998 January 3, 1998
---------------- ---------------
<S> <C> <C>
7.15% Debentures due 2028 $ 200,000 $ -
Private placement Senior Notes 125,000 125,000
Senior Subordinated Notes 124,400 -
Borrowings under syndicated loan facility 157,500 122,000
Term A loans 350,000 -
Commercial paper 96,314 53,506
Industrial revenue bonds 12,950 13,170
Bridge Facility 75,000 -
Revolving Facility 85,000 -
Other notes payable 37,930 20,273
----------- ----------
1,264,094 333,949
Due within one year 203,020 57,738
----------- ----------
Due after one year $ 1,061,074 $ 276,211
=========== ==========
</TABLE>
On April 27, 1998, the Company sold $200,000,000 of 7.15% debentures due
April 15, 2028. Net proceeds from the offering were used to reduce
borrowings under the $500,000,000 syndicated loan facility which were
primarily incurred to purchase the majority interest in Keebler.
In July 1998, the Company amended its Commercial Paper Agreement to increase
the limit from $75,000,000 to $100,000,000. Borrowings under this agreement
at October 10, 1998 were $96,314,000.
On September 28, 1998, Keebler entered into a new debt facility in order to
finance the acquisition of PII. The new debt structure specifically provides
for available borrowings of $825,000,000 consisting of a $350,000,000
Revolving Facility and $350,000,000 Term facility, and an additional
$125,000,000 Bridge Facility. Any unused borrowings under the Revolving
Facility are subject to a commitment fee. The current commitment fee will
vary from 0.1250% - 0.30% based on the relationship of debt to adjusted
earnings with a minimum commitment fee of 0.20% required through March 28,
1999.
In conjunction with the acquisition of PII, Term Note A was extinguished by
using $145,000,000 of borrowings under the new Credit Facility. Keebler
recorded a before-tax extraordinary charge of $2,800,000 related primarily
to expensing certain bank fees which were being amortized and which were
incurred at the time Term Note A was issued. The related after-tax charge
was $1,706,000.
-11-
<PAGE> 12
7. New Accounting Pronouncements - As of January 4, 1998, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). SFAS 130 establishes new rules for the
reporting and display of comprehensive income and its components. The
adoption of this Statement had no impact on the Company's net earnings or
stockholders' equity. During the third quarter of fiscal 1998 and the
comparable period in the prior year, total comprehensive income
substantially equaled net income.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes new
rules for accounting for derivative instruments and hedging activities. This
standard is effective for the Company's fiscal year 2000. The Company is
currently assessing the effects SFAS 133 will have on its financial position
and results of operations.
8. Equity Offering - On April 27, 1998, the Company sold 9,000,000 shares of
its common stock in a public offering at $22 per share. Net proceeds from
the offering were used to reduce borrowings under the $500,000,000
syndicated loan facility which were primarily incurred to purchase the
majority interest in Keebler.
-12-
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Matters Affecting Analysis:
From January 26, 1996, the date of the Company's initial investment in Keebler,
through January 3, 1998, the Company accounted for its investment in Keebler
using the equity method of accounting. For reporting periods beginning after
January 3, 1998, the Company has consolidated Keebler for financial reporting
purposes, due to the Keebler Acquisition.
Liquidity and Capital Resources:
Net cash provided by operating activities for the forty weeks ended October 10,
1998 was $76,787,000. Positive net cash flow of $85,441,000 was provided from
net income for the forty weeks. Net cash flows provided by operations were
negatively impacted by the build-up of inventory in anticipation of the upcoming
high selling holiday period and an increase in trade accounts receivable. Timing
of payments of accrued taxes and other liabilities had a positive impact on cash
flows.
Net cash disbursed for investing activities for the forty weeks ended October
10, 1998 of $840,645,000 was primarily used for the Keebler Acquisition, the
acquisition of PII by Keebler and capital expenditures. The capital expenditures
were made principally to update and enhance production and distribution
facilities.
For the forty weeks ended October 10, 1998, net cash provided by financing
activities of $794,501,000 resulted from the issuance of $200,000,000 of 7.15%
debentures due April 15, 2028 and the issuance of 9,000,000 shares of common
stock in a public offering at $22 per share. These transactions were consummated
on April 27, 1998. Debt incurred by Keebler to finance the acquisition of PII
and the exercise of Keebler warrants by Bermore Ltd., concurrent with Keebler's
initial public offering on February 3, 1998, also contributed to net cash
provided by financing activities.
At October 10, 1998, cash and cash equivalents were $34,509,000. As described in
Note 6 of the consolidated financial statements, long-term debt was
$1,061,074,000 and current maturities of long-term debt were $203,020,000 at
October 10, 1998. During the third quarter, the Company amended its Commercial
Paper Agreement to increase the limit to $100,000,000. In connection with the
consolidation of Keebler, the Company has recorded Keebler's indebtedness of
$654,657,000 as of October 10, 1998, however, the Company has not guaranteed
such indebtedness and it is to be repaid solely from the cash flows of Keebler.
The Company believes that, in light of its current cash position, its cash flow
from operating activities and its credit arrangements, it can adequately meet
presently foreseeable financing requirements.
For the twelve and forty weeks ended October 10, 1998, dividends paid per share
increased 9% and 10%, respectively, to $.12 and $.3525, respectively, from $.11
and $.3208 paid for the comparable periods in the prior year.
-13-
<PAGE> 14
Results of Operations:
- ----------------------
Results of operations expressed as a percentage of net sales for the twelve and
forty weeks ended October 10, 1998, and October 11, 1997 are set forth below:
<TABLE>
<CAPTION>
For the 12 Weeks Ended For the 40 Weeks Ended
---------------------------- -----------------------------
October 10, October 11, October 10, October 11,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales 100.00% 100.00% 100.00% 100.00%
Gross margin 55.70 41.56 55.21 43.68
Selling, marketing and administrative expenses 42.96 30.36 44.77 33.79
Depreciation and amortization 3.39 3.42 3.35 3.43
Interest expense, net 1.64 1.28 1.68 1.37
Income before income taxes, income from investment in
unconsolidated affiliate, minority interest and
extraordinary loss 7.71 6.51 5.41 5.09
Income taxes 3.24 2.51 2.27 1.95
Net income 2.85% 6.35% 2.09% 4.56%
</TABLE>
Sales. For the twelve weeks ended October 10, 1998, sales were $862,784,000, or
168% higher than sales for the comparable period in the prior year, which were
$321,758,000. For the forty weeks ended October 10, 1998, sales were
$2,776,242,000, or 162% higher than sales for the comparable period in the prior
year which were $1,061,225,000. Most of the increase was due to the
consolidation of Keebler's sales, following the Keebler Acquisition, in the
amount of $499,897,000 for the quarter and $1,626,685,000 year to date. Sales
increases for both the twelve and forty weeks were driven primarily by selected
price increases initiated in the first quarter of 1998 an increase in sales
volume, and a more favorable sales mix. Volume gains were a result of sales of
new products, line extensions of existing products and wider distribution in
non-supermarket channels. The Company also experienced increased sales as a
result of the acquisition of three other businesses.
Gross Margin. For the twelve weeks ended October 10, 1998, gross margin was
$480,578,000, or 259% higher than gross margin for the comparable period in the
prior year, which was $133,736,000. For the forty weeks ended October 10, 1998,
gross margin was $1,532,694,000, or 231% higher than gross margin for the
comparable period in the prior year, which was $463,574,000. The Company's gross
margin for the twelve and forty weeks includes gross margin of $301,884,000 and
$970,926,000, respectively, attributable to Keebler, a factor not present in the
prior year. Lower ingredient costs, price increases, increased volume and
production efficiencies obtained through capital investment in bakery automation
projects were also factors in the gross margin improvement.
Selling, Marketing and Administrative Expenses. Selling, marketing and
administrative expenses were $370,660,000 for the twelve weeks ended October 10,
1998, or 279% higher than its expenses of $97,690,000 for the comparable period
in the prior year. Selling, marketing and administrative expenses were
$1,242,831,000 for the forty weeks ended October 10, 1998, or 247% higher than
its expenses of $358,601,000 for the comparable period in the prior year. The
increase is due primarily to the inclusion of $232,152,000 for the quarter and
$799,789,000, year to date of such expenses for Keebler. The increase in these
expenses relative to sales was primarily due to increased marketing expenses,
somewhat offset by reduced delivery expenses.
-14-
<PAGE> 15
Depreciation and Amortization. Depreciation and amortization expense was
$29,252,000 for the twelve weeks ended October 10, 1998, an increase of 166%
over the corresponding period in the prior year, which was $10,993,000.
Depreciation and amortization expense was $92,986,000 for the forty weeks ended
October 10, 1998, an increase of 156% over the corresponding period in the prior
year, which was $36,372,000. The increase was primarily a result of the
consolidation of Keebler, increased goodwill amortization relating to the
Keebler Acquisition and increased depreciation attributable to capital
improvements.
Interest Expense. For the twelve weeks ended October 10, 1998, interest expense
was $14,131,000, or 244% higher than interest expense for the corresponding
period in the prior year of $4,108,000. For the forty weeks ended October 10,
1998, interest expense was $46,624,000, or 220% higher than interest expense for
the corresponding period in the prior year of $14,566,000. Approximately
$4,856,000 and $17,005,000 in interest expense was attributable to Keebler for
the quarter and year to date, respectively, and the remaining increase in
interest expense was due to borrowings used to fund the Keebler Acquisition.
Income Before Income Taxes, Income from Investment in Unconsolidated Affiliate,
Minority Interest and Extraordinary Loss. Income before income taxes, income
from investment in unconsolidated affiliate, minority interest and extraordinary
loss for the twelve weeks ended October 10, 1998 was $66,535,000, an increase of
218% over the comparable period in the prior year, which was $20,945,000. The
amount for the forty weeks ended October 10, 1998 was $150,253,000, an increase
of 178% over the comparable period in the prior year, which was $54,035,000.
Approximately $49,942,000 and $107,649,000 of the increase for the quarter and
year to date, respectively, were results of the consolidation of Keebler, which
was partially offset by increased goodwill amortization and interest expense, as
discussed above.
Income Taxes. Income taxes for the twelve weeks ended October 10, 1998 were
$27,945,000 an increase of 247% over the comparable period in the prior year,
which were $8,064,000. Income taxes for the forty weeks ended October 10, 1998
were $63,106,000, an increase of 205% over the comparable period in the prior
year, which were $20,678,000. This increase is due primarily to the inclusion of
$20,976,000 and $45,212,000 of income taxes attributable to Keebler for the
quarter and year to date, respectively, as well as an increase in the effective
tax rate to 42% from 38.5%. The tax rate increase is due primarily to
nondeductible goodwill amortization associated with the Keebler Acquisition.
Net Income. Net income for the twelve weeks ended October 10, 1998 was
$24,617,000, an increase of 21%, as compared to $20,417,000 reported in the
prior year. Net income for the forty weeks ended October 10, 1998 was
$58,112,000, an increase of 20%, as compared to $48,391,000 reported in the
prior year. This increase is primarily a result of the Keebler Acquisition,
offset by the increased goodwill amortization and interest expense, as discussed
above.
Year 2000 Conversion
The Company utilizes a number of computer software programs and operating
systems throughout its organization, including applications used in order
processing, shipping and receiving, accounts payable and receivable processing,
financial reporting and in various other administrative functions. The Company
recognizes the need to make every effort to ensure that its operations will not
be adversely impacted by applications and processing issues related to the
upcoming calendar year 2000 (the "Year 2000 Issue"). The Year 2000 Issue is the
result of computer programs that have been written to recognize two digit,
rather than four digit, date codes to define the applicable year. To the extent
that the Company's software applications contain source codes that are unable to
appropriately interpret a code using "00" as the upcoming year 2000 rather than
1900, the Company could experience system failures or miscalculations that could
disrupt operations and cause a temporary inability to process transactions, send
and process invoices or engage in similar normal business activities.
-15-
<PAGE> 16
Based on its ongoing assessment of its systems, the Company has determined that
it will be required to modify or replace significant portions of its software so
that its computer systems will function properly with respect to dates in the
year 2000 and thereafter. The Company presently believes that with modifications
to its existing software and certain conversions to new software, the Year 2000
Issue will not present significant operational problems for its computer
systems. In addition, the Company's systems and operations are dependent, in
part, on interaction with systems operated or provided by vendors, customers or
other third-parties, and the Company is currently surveying those parties about
their progress in identifying and addressing problems that their computer
systems may face in connection with the Year 2000 Issue. The Company believes
that it has no exposure for contingencies related to the Year 2000 Issue for the
products it has sold.
The Company's plan to resolve the Year 2000 Issue (the "Plan") identifies
exposure with respect to the Company's three operating divisions, Flowers
Bakeries, Mrs. Smith's Bakeries, and Keebler, in three different areas:
information technology, operating equipment with embedded chips or software and
third party vendors. In addition, the Plan involves the following four phases
for each of the potential exposure items: assessment, remediation, testing and
implementation. The discussion set forth below will present a current assessment
of these areas for each of the Company's operating divisions.
FLOWERS BAKERIES
With respect to information technology, Flowers Bakeries has fully completed its
assessment of this risk area. This assessment indicated that most of Flowers
Bakeries' significant information technology systems could be affected,
particularly the general ledger, billing, payables, inventory and ordering
systems. To date, Flowers Bakeries is 90% complete on the remediated phase and
expects to complete software reprogramming and replacement no later than
February 1999. Once software is reprogrammed or replaced, Flowers Bakeries will
begin testing and implementation. These phases run concurrently for different
systems. To date, Flowers Bakeries has completed 50% of its testing. Completion
of the testing phase for all significant systems is expected by June 1999, with
all remediation and implementation of systems expected to be fully tested and
operational by August 1999.
The assessment and remediation of the operating equipment with embedded chips or
software is 15% complete. The expected completion date of remediation is June
1999. Testing of this equipment is more difficult than the testing of
information technology systems; as a result, Flowers Bakeries has completed
approximately 2% of the testing of remediation of its operating equipment. Once
testing is complete, the operating equipment should be compliant. Testing and
implementation of affected equipment is expected to be complete by August 1999.
The assessment of third party vendors or customers and their exposure to the
Year 2000 Issue is 50% complete for systems that directly interface with Flowers
Bakeries. Flowers Bakeries expects to complete surveying all third parties by
August 1999. Flowers Bakeries expects to complete the testing phase for systems
interface work by August 1999. Flowers Bakeries has queried its significant
suppliers that do not share information systems with Flowers Bakeries (external
agents). To date, Flowers Bakeries is not aware of any external agent with a
Year 2000 Issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, Flowers Bakeries has no
means of ensuring that external agents will be Year 2000 compliant. The
inability of external agents to complete their Year 2000 resolution processing
in a timely fashion could materially impact Flowers Bakeries. The effect of
noncompliance by external agents is not determinable by Flowers Bakeries.
Flowers Bakeries has engaged an independent outside consultant (the
"Consultant") to review the adequacy, completeness and feasibility of its
programs to address the Year 2000 Issue. The Consultant has made recommendations
that Flowers Bakeries is currently considering regarding improvements to its
program. After Flowers Bakeries completes the review and responds to these
recommendations, the Consultant will review Flowers Bakeries' responses to these
recommendations and will monitor Flowers Bakeries' execution of remediation
efforts.
-16-
<PAGE> 17
MRS. SMITH'S BAKERIES
With respect to information technology, Mrs. Smith's Bakeries has fully
completed its assessment of this risk area. This assessment indicated that most
of Mrs. Smith's Bakeries' significant information technology systems would not
be affected. Mrs. Smith's Bakeries, Inc. has recently completed a four year
project of installing a new information technology system. This system is Year
2000 compliant and is responsible for running over 90% of the companies business
processes.
The assessment and remediation of the operating equipment with embedded chips or
software is 90% complete. The expected completion date of remediation is April
1999. Mrs. Smith's Bakeries has completed approximately 75% of the testing of
remediation of its operating equipment. Once testing is complete, the operating
equipment should be compliant. Testing and implementation of affected equipment
is expected to be complete by April, 1999.
The assessment of third party vendors or customers and their exposure to the
Year 2000 Issue is 50% complete for systems that directly interface with Mrs.
Smith's Bakeries and 80% complete for all other material exposure. Mrs. Smith's
Bakeries expects to complete surveying all third parties by January 1999. Mrs.
Smith's Bakeries expects to complete remediation's efforts on the systems by
March 1999 and is 50% complete with the testing and implementation phases. Mrs.
Smith's Bakeries expects to complete the testing phase for systems interface
work by March 1999. Mrs. Smith's Bakeries has queried its significant suppliers
that do not share information systems with Mrs. Smith's Bakeries (external
agents). To date, Mrs. Smith's Bakeries is not aware of any external agent with
a Year 2000 Issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, Mrs. Smith's Bakeries has
no means of ensuring that external agents will be Year 2000 compliant. The
inability of external agents to complete their Year 2000 resolution processing
in a timely fashion could materially impact Mrs. Smith's Bakeries. The effect of
noncompliance by external agents is not determinable by Mrs. Smith's Bakeries.
KEEBLER
Keebler utilizes software and related technologies that will be affected by the
Year 2000 Issue. Keebler has completed a comprehensive review of the computer
systems and non-information technology systems (i.e. elevators) to identify
potential problems arising from the Year 2000 Issue. As Keebler has implemented
the SAP R/3 management information system and Manugistics software, both of
which were developed/purchased as Year 2000 compliant, the impact of the Year
2000 Issue on the business is not anticipated to be material to Keebler.
Additionally, secondary information systems, which are not material to Keebler's
ability to forecast, manufacture, or deliver product, have been reviewed and
Year 2000 issues identified. Keebler is currently in the process of correcting
or upgrading these systems. Keebler intends to be Year 2000 compliant on all
critical systems by the end of April 1999.
Keebler is also undertaking efforts to verify, by no later than December 1998,
that all vendors and suppliers will be Year 2000 compliant. A comprehensive
questionnaire was sent to all of Keebler's significant suppliers and vendors
regarding their Year 2000 compliance in an attempt to identify any problem areas
with respect to these groups. As no specific issues related to third parties
have been identified to warrant a contingency plan, Keebler has not yet
developed a plan to deal with a Year 2000 failure caused by a third party, but
rather would intend to do so if a specific problem is identified through the
questionnaire. While there can be no absolute assurance that third parties will
convert their systems in a timely manner and in a way compatible with Keebler's
systems, Keebler believes that its actions with third parties detailed above
will minimize these risks.
Keebler is currently conducting a comprehensive review of the computer systems
and non-information technology systems (i.e. elevators) to identify potential
Year 2000 issues for its newly-acquired subsidiary, PII. Many of the Year 2000
risks at President International, Inc. will be mitigated through the
implementation of the SAP R/3 management information system, Manugistics
software, and Keebler's warehouse management system. This implementation is
expected to be completed during 1999.
-17-
<PAGE> 18
SUMMARY
The Company is utilizing both internal and external resources to reprogram, or
replace, and test its software for Year 2000 modifications. The total cost of
the Plan is estimated at $6-7 million and is being funded through operating cash
flow and expensed as incurred. To date, the Company has incurred approximately
one million in expenses related to the assessment of, and preliminary efforts
on, its Year 2000 modification projects, the development of the plan for the
purchase of new systems and system modifications.
The costs of the Plan and the time frame in which the Company believes
it will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third-party
modification plans and other factors. Specific factors that might result in
additional costs or time delays include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties. Based upon
the Company's current estimates, the Company does not anticipate that the cost
of compliance with the Year 2000 Issue will be material to its business,
financial condition or results of operations; however, there can be no assurance
that the Company's systems, or those of its vendors, customers or other third
parties, will be made Year 2000 compliant in a timely manner or that the impact
of the failure to achieve such compliance will not have a material adverse
effect on the Company's business, financial condition or results of operations.
Based on the progress the Company has made in addressing its Year 2000 issues
and the Company's compliance with the Year 2000 Issue on its primary business
information systems, the Company does not foresee significant risks associated
with its Year 2000 compliance at this time. As the Company plan is to address
any significant Year 2000 issues prior to being affected by them, a
comprehensive contingency plan has not been developed. However, if a significant
risk related to Year 2000 compliance or a delay in the anticipated schedule for
compliance occurs, the Company will develop contingency plans as deemed
necessary at that time.
The discussion of the Company's efforts and management's expectations
relating to Year 2000 compliance are forward-looking statements. Readers are
cautioned that forward-looking statements contained herein should be read in
conjunction with the Company's disclosures under the heading "Forward-Looking
Statements" set forth elsewhere herein.
Forward-Looking Statements
Certain statements made herein are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and are subject
to the safe harbor provisions of that Act. Such forward-looking statements
include, without limitation, the future availability and prices of raw
materials, the availability of capital on acceptable terms, the competitive
conditions in the baked foods industry, potential regulatory obligations, the
Company's strategies and other statements contained herein that are not
historical facts. Because such forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by such forward-looking
statements, including, but not limited to, changes in general economic and
business conditions (including the baked foods markets), the Company's ability
to recover its raw material costs in the pricing of its products, the
availability of capital on acceptable terms, actions of competitors, the extent
to which the Company is able to develop new products and markets for its
products, the time required for such development, the level of demand for such
products, changes in the Company's business strategies and other factors
discussed herein.
-18-
<PAGE> 19
PART II. OTHER INFORMATION
Item 5. Other Information
The following unaudited condensed combined pro forma results of operations give
effect to the purchase of the majority ownership position in Keebler on February
3, 1998, as if the transaction had occurred as of the beginning of the year
ended January 3, 1998, and the sale of 9,000,000 shares of the Company's common
stock in a public offering at $22 per share and $200,000,000 of 7.15% debentures
on April 27, 1998, as if these transactions had occurred as of the beginning of
the second quarter of the year ended January 3, 1998. The periods presented are
the comparable periods in the prior year based on the Company changing its
fiscal year end from the Saturday nearest June 30 to the Saturday nearest
December 31 (amounts in thousands, except per share data):
<TABLE>
<CAPTION>
For the 16 For the 52
Weeks Ended For the 12 Weeks Ended Weeks Ended
-------------- ---------------------- --------------
April 26, July 19, October 11, January 3, January 3,
1997 1997 1997 1998 1998
-------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Sales $ 1,010,255 $ 783,516 $ 807,053 $ 906,842 $ 3,507,666
Income before extraordinary loss and cumulative
effect of changes in accounting principles 11,135 13,420 19,784 17,437 61,776
Net income 9,654 13,420 19,784 5,397 48,255
Net Income Per Common Share:
Basic -
Income before extraordinary loss and cumulative
effect of changes in accounting principles 0.13 0.14 0.20 0.18 0.65
Net income 0.11 0.14 0.20 0.06 0.51
Diluted -
Income before extraordinary loss and cumulative
effect of changes in accounting principles 0.13 0.14 0.20 0.18 0.65
Net income $ 0.11 $ 0.14 $ 0.20 $ 0.06 $ 0.51
</TABLE>
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the transactions been consummated
as of the beginning of the period, nor are they necessarily indicative of future
operating results.
-19-
<PAGE> 20
Shareholder Proposals
Proposals by shareholders intended to be presented at the 1999 Annual Meeting of
Shareholders must be forwarded in writing and received at the principal
executive office of the Company no later than December 31, 1998, directed to the
attention of the Secretary, for consideration for inclusion in the Company's
proxy statement for the Annual Meeting of Shareholders to be held on May 28,
1999. Moreover, with regard to any proposal by a shareholder not seeking to have
such proposal included in the proxy statement but seeking to have such proposal
considered at the 1999 Annual Meeting, if such shareholder fails to notify the
Company in the manner set forth above of such proposal no later than March 15,
1999, then the persons appointed as proxies may exercise their discretionary
voting authority if the proposal is considered at the 1999 Annual Meeting
notwithstanding that shareholders have not been advised of the proposal in the
proxy statement for the 1999 Annual Meeting. Any proposals submitted by
shareholders must comply in all respects with the rules and regulations of the
Securities and Exchange Commission and the provisions of the Company's Articles
of Incorporation and Bylaws and of Georgia law.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K - The Company filed a report on Form 8-K on
October 13, 1998 to report the acquisition of President
International, Inc. by Keebler Foods Company.
-20-
<PAGE> 21
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/ Jimmy M. Woodward
------------------------------------
By: Jimmy M. Woodward
Treasurer and Chief Accounting
Officer
November 18, 1998
- -----------------
Date
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FLOWERS
INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME FOR THE FORTY WEEKS ENDED
OCTOBER 10, 1998 AND THE FLOWERS INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET AT
OCTOBER 10, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> OCT-10-1998
<CASH> 34,509
<SECURITIES> 0
<RECEIVABLES> 324,185
<ALLOWANCES> 9,218
<INVENTORY> 330,011
<CURRENT-ASSETS> 808,689
<PP&E> 1,509,314
<DEPRECIATION> 477,216
<TOTAL-ASSETS> 2,901,066
<CURRENT-LIABILITIES> 784,890
<BONDS> 0
0
0
<COMMON> 62,627
<OTHER-SE> 533,966
<TOTAL-LIABILITY-AND-EQUITY> 2,901,066
<SALES> 2,776,242
<TOTAL-REVENUES> 2,776,242
<CGS> 1,243,548
<TOTAL-COSTS> 2,579,365
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,624
<INCOME-PRETAX> 150,253
<INCOME-TAX> 63,106
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 938
<CHANGES> 0
<NET-INCOME> 58,112
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.61
</TABLE>
