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FORM 10-K

(Mark One)

	[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 29, 2001

OR

	[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from            to

Commission file number 1-16247

FLOWERS FOODS, INC.

Registrant’s telephone number, including area code:  (229) 226-9110

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

      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 o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated herein by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

      Based on the closing sales price on the New York Stock Exchange on March 15, 2002, the aggregate market value of the voting and non-voting common stock held by nonaffiliates of the registrant was $744,043,899.61.

      On March 15, 2002, the number of shares outstanding of the registrant’s Common Stock, $.01 par value, was 29,797,513.

DOCUMENTS INCORPORATED BY REFERENCE:

      Portions of the registrant’s Proxy Statement for the 2002 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or prior to April 28, 2002, have been incorporated by reference in Items 10, 11, 12 and 13 of this Annual Report on Form 10-K.

FORM 10-K REPORT

TABLE OF CONTENTS

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PART I

Item 1.     Business

Corporate Information

      Flowers Foods, Inc. was incorporated in Georgia in October, 2000 and, prior to March 26, 2001, was a wholly-owned subsidiary of Flowers Industries, Inc. (“FII”). On October 26, 2000, FII and Kellogg Company (“Kellogg”) entered into an agreement and plan of restructuring and merger pursuant to which a wholly-owned subsidiary of Kellogg merged with FII on March 26, 2001. As a condition to the merger, FII agreed to transfer its frozen and non-frozen bakery operations, and certain other corporate assets and liabilities, to Flowers Foods and distribute all of the outstanding shares of Flowers Foods common stock to FII shareholders on March 26, 2001.

      As used herein, references to “we,” “our,” “us,” the “company” or “Flowers Foods” include the historical operating results and activities of the business operations which comprise Flowers Foods as of the date hereof.

The Company

      Flowers Foods is one of the largest producers and marketers of frozen and non-frozen bakery and dessert products in the United States. Flowers Foods consists of the following businesses:

	•	Flowers Bakeries, LLC (“Flowers Bakeries”); and
	•	Mrs. Smith’s Bakeries, LLC (“Mrs. Smith’s Bakeries”).

      Our core strategy is to be one of the nation’s leading producers and marketers of frozen and non-frozen bakery products available to customers through multiple channels of distribution. Our strategy focuses on responding to current market trends for our products and changing consumer preferences. To assist in accomplishing our core strategy, we have aggressively invested capital to modernize and expand our production and distribution capacity and efficiency and have expanded our nationally branded Mrs. Smith’s Bakeries business, which complements our traditional strengths.

      We have established a presence in all distribution channels where bakery and dessert products are sold, including traditional supermarkets and their in-store deli/bakeries, foodservice distributors, convenience stores, mass merchandisers, club stores, wholesalers, restaurants, fast food outlets, schools, hospitals and vending machines.

      Our Flowers Bakeries business focuses on the production and marketing of bakery products to customers in the super-regional 16 state area in and surrounding the southeastern United States. We have devoted significant resources to modernizing production facilities, improving our distribution capabilities and enhancing our information technology. Over the course of our history, we have acquired numerous local bakery operations that are generally within or contiguous to our existing region and which can be served with our extensive direct store delivery (“DSD”) system. This system utilizes approximately 3,100 independent distributors who own the rights to sell our branded bakery products within their respective territories. Our strategy is to continue to enable these independent distributors to better serve new and existing customers, principally by using information technology to enhance the productivity and efficiency of our production facilities and our DSD system.

      Our Mrs. Smith’s Bakeries business produces and markets frozen desserts as well as bread, rolls, buns and snack cakes for sale to retail and foodservice customers. Retail frozen pie sales are heavily concentrated in the third and fourth fiscal quarters, which is attributable to the holiday season. In an effort to enhance sales outside of the holiday season, we focus on expanding non-seasonal sales in the frozen dessert product line and frozen breads and rolls by extending the well-recognized Mrs. Smith’s brand name to existing and related retail and foodservice products. Examples of significant product line extensions include Mrs. Smith’s Restaurant Classics and Mrs. Smith’s Cookies and Cream frozen pies in the retail channel, Grand Finales frozen pies in the foodservice channel and Mrs. Freshley’s fresh snack cakes in the vending channel.

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      We have a leading presence in each of the major product categories in which we compete. Collectively, our Flowers Bakeries brands rank first in fresh packaged branded sales measured both in dollars and units in each of the 22 major metropolitan markets we serve. Our Mrs. Smith’s Bakeries business is one of the leading frozen dessert and frozen bread and roll producers and marketers in the United States, and our Mrs. Smith’s pies are the leading national brand of frozen pies sold at retail. Our major branded products include, among others, the following:

      We are committed to producing high quality products at the lowest cost in all of our operations, and we have made significant capital investments in recent years to modernize, automate and expand our production and distribution capabilities and enhance our information technology. Capital spending has been primarily directed toward expanding and modernizing existing production facilities and enhancing our technology. The most recent major production facility expenditure in our Flowers Bakeries business was the fiscal 2000 installation of a fully automated wrapping system for three production lines in a new 32,400 square foot facility in Goldsboro, North Carolina. Production capabilities at our Mrs. Smith’s Bakeries business were significantly realigned at an approximate cost of $173.3 million over the last three years. This realignment included the relocation and upgrading of 25 production lines at seven of our eight operating facilities, which offers us significantly more capacity at fewer locations. We believe these facilities will give us the ability to exploit many opportunities in the foodservice channel and continue our growth in the retail channel.

      In order to provide prompt and responsive service to customers, we tailor our distribution systems to the marketing and production aspects of our major product lines. Flowers Bakeries distributes its baked foods through its DSD system of approximately 3,100 independent distributors who, as owners of their territories, are motivated by financial incentives to maintain and build retail brand shelf space and to monitor product quality and assortment, which is essential in the marketing of short shelf life products such as fresh bread, rolls and buns. Mrs. Smith’s Bakeries distributes its frozen foods through two strategically-located frozen distribution facilities, as well as through additional commercial frozen warehouse space throughout the United States in order to accommodate demands in the retail channel for seasonal products and to provide staging to expedite distribution throughout the year. We also utilize a centralized distribution facility for Mrs. Smith’s Bakeries’ snack cake products.

Industry Overview

      The United States food industry is comprised of a number of distinct product lines and distribution channels for frozen and non-frozen bakery products and desserts. Consumer preferences for food purchases continue to move away from the traditional grocery store aisles to supermarket in-store deli/bakeries or to non-supermarket channels, such as mass merchandisers, convenience stores, club stores, restaurants and other convenience channels. Non-supermarket channels of distribution are increasingly important throughout the food industry.

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  Non-Frozen Bakery Products

      Retail sales of bakery products continue to experience modest growth, with expansion within the category occurring in a variety of premium and specialty breads. However, foodservice sales of bakery products continue to grow at a faster rate than retail sales as consumers who demand convenience increasingly are purchasing food products from non-retail distribution channels. In addition to Flowers Foods, several large baking and diversified food companies market bakery products in the United States. Competitors in this category include Interstate, Sara Lee, Weston and Pepperidge Farm. There are also a number of smaller, regional companies. We believe that the larger companies enjoy several competitive advantages over smaller operations due principally to greater brand awareness and economies of scale in areas such as purchasing, distribution, production, information technology, advertising and marketing.

      Consolidation has been a significant trend in the baking industry over the last several years. It continues to be driven by factors such as capital constraints on smaller companies that limit their ability to avoid technological obsolescence, to increase productivity or to develop new products, generational changes at family-owned businesses, and the need to serve the consolidated retail customers and the foodservice channel. We believe that the consolidation trend in the baking, food retailing and foodservice industries will continue to present opportunities for strategic acquisitions that complement our existing businesses and that extend our super-regional presence.

  Frozen Bakery Products

      Sales of frozen desserts, breads and rolls to foodservice institutions and other distribution channels, including restaurants and in-store bakeries, have grown at a rate faster than sales to retail channels. We are a preferred supplier of frozen dessert products to certain leading foodservice distributors in the United States. While retail sales of frozen desserts have experienced stable sales, Mrs. Smith’s remains the leading brand in the frozen pie category. Primary competitors in the frozen dessert market include Sara Lee, Pepperidge Farm, Edwards and Pillsbury. We believe the increase in foodservice sales of frozen desserts provides us with additional revenue opportunities.

Strategy

      Our core strategy is to be one of the nation’s leading producers and marketers of bakery products available to customers through frozen and non-frozen channels of distribution. Our Flowers Bakeries and Mrs. Smith’s Bakeries businesses each develop strategies based on the production, distribution and marketing requirements of their particular food categories. We employ the following five overall strategies:

	•	Strong Brand Recognition. We intend to capitalize on the success of our well-recognized brand names, which communicate product consistency and quality, by extending those brand names to additional products and channels of distribution. Many of our brands, including Nature’s Own bread, Cobblestone Mill bread and Mrs. Smith’s retail frozen baked pies, are the top-selling brands in their categories.
	•	Efficient Production and Distribution Facilities. We intend to maintain a continuing level of capital improvements that will permit us to fulfill our commitment to remaining among the most modern and efficient frozen and non-frozen bakery and dessert producers in the United States.
	•	Customer Service-Oriented Distribution. We intend to expand and refine our distribution systems to respond quickly and efficiently to changing customer service needs, consumer preferences and seasonal demands. We have distribution systems that are tailored to the nature of each of our food product categories and are designed to provide the highest levels of service to our retail and foodservice customers. We have a DSD system of approximately 3,100 independent distributors for delivery of our Flowers Bakeries products. Our Mrs. Smith’s Bakeries business utilizes a network of strategically located storage and distribution facilities for our frozen bakery and dessert products and a centralized distribution facility for our snack cake products.

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	•	Broad Range of Products Sold Through Multiple Distribution Channels. We intend to continue to expand our product lines and distribution channels. Our product lines now include virtually every category of frozen and non-frozen bakery and dessert products. These products generally can be found in traditional supermarkets and in-store deli/bakeries, convenience stores, mass merchandisers, club stores, wholesalers, restaurants, fast food outlets, schools, hospitals and vending machines.
	•	Strategic Acquisitions. We have consistently pursued growth in sales, geographic markets and products through strategic acquisitions. We intend to pursue growth through strategic acquisitions and investments that will complement and expand our existing markets, product lines and product categories.

Products

      We produce fresh packaged bakery, frozen dessert and frozen bakery products.

     Flowers Bakeries

      We market our fresh packaged bakery products in the super-regional 16 state area in and surrounding the southeastern United States under numerous brand names, including Nature’s Own and Cobblestone Mill. We also market fresh bread under regional franchised brands such as Sunbeam, Roman Meal, Evangeline Maid and Bunny. Nature’s Own is the best selling brand by volume of soft variety bread in the United States, despite being marketed solely in the super-regional 16 state area. Pastries, doughnuts, bakery snacks, cakes and english muffins are sold through our DSD system primarily under the BlueBird brand, as well as under the ButterKrust, Sunbeam and Holsum trademarks. Flowers Bakeries’ branded products account for approximately 70% of its sales.

      In addition to our branded products, we also produce and distribute fresh packaged bakery products under private labels for retailers such as Winn-Dixie and Kroger. While private label products carry lower margins than our branded products, we use our private label offerings to expand our total shelf space and to effectively utilize production and distribution capacity.

      We utilize our DSD system to supply bakery products to foodservice companies, including Burger King, Krystal, Hardees, Whataburger and Outback Steakhouse. In addition, we supply frozen bakery products to Wendy’s.

     Mrs. Smith’s Bakeries

      Mrs. Smith’s Bakeries’ frozen desserts are marketed throughout the United States. Our frozen pies were the number one retail frozen pie brand in the United States for 2001. Mrs. Smith’s Bakeries’ frozen desserts are sold at retail under the Mrs. Smith’s and Oronoque Orchard brand names. Frozen desserts in the foodservice channel are sold under the Grand Finales brand and under private labels for foodservice customers.

      We produce and distribute frozen bakery products such as bread, rolls and buns for sale to foodservice customers. We also produce pastries, doughnuts and bakery snack products for distribution by Flowers Bakeries’ DSD system under the BlueBird brand. In addition, we produce pastries, doughnuts and bakery snack products under the Mrs. Freshley’s brand for sale through the vending channel and under various private labels for sale through the retail channel.

Production and Distribution

      We design our production facilities and distribution systems to meet the marketing and production demands of our major product lines. Through a significant program of capital improvements and careful planning of plant locations, which, among other things, allows us to establish reciprocal baking or product transfer arrangements among our bakeries, we seek to remain a low cost producer and marketer of a full line of frozen and non-frozen bakery and dessert products on a national and super-regional basis. In addition to the independent distributor system for our fresh baked products, we also use both owned and public warehouses

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     Flowers Bakeries

      We operate 25 fresh packaged bakery product facilities in ten states. We have invested $117.0 million over the past three years, primarily to upgrade existing product lines in nine of our facilities, as well as to enhance our information technology through the implementation of an enterprise-wide information system. During this period, we also installed a fully automated wrapping system for three production lines in our new 32,400 square foot distribution facility in Goldsboro, North Carolina. We believe that these investments have made us the most efficient major producer of packaged bakery products in the United States. We believe that our capital investment yields long-term benefits in the form of more consistent product quality, highly sanitary processes, and greater production volume at a lower cost per unit. We intend to continue to invest in our production facilities and equipment to maintain high levels of efficiency.

      Distribution of fresh packaged bakery products involves determining appropriate order levels, delivering the product from the plant to the independent distributor for direct store delivery to the customer, stocking the product on the shelves, visiting the customer daily to ensure that inventory levels remain adequate, and removing stale goods. We utilize a network of approximately 3,100 independent distributors who own the rights to distribute our fresh packaged bakery products in their geographic territories. The company has sold the majority of its territories to independent distributors under long-term financing arrangements, managed and serviced by the company.

      The company leases hand-held computer hardware, which contains our proprietary software, and charges independent distributors an administrative fee for its use. The software permits distributors to track and communicate inventory data to the production facilities and to calculate recommended order levels based on historical sales data and recent trends. These orders are electronically transmitted to the appropriate production facility on a nightly basis. This system is designed to ensure that the distributor has an adequate supply of product, and the right mix of products, available to meet the retail and foodservice customers’ immediate needs. We believe our system minimizes returns of unsold goods. In addition to the hand-held computers, we have a software system that permits tracking of sales, product returns and profitability by selling location, plant, day and other bases. This provides real-time, on-line access to sales and gross margin reports on a daily basis, allowing prompt operational adjustments when appropriate.

      We believe the independent distributor system is unique in the industry both as to its size, with approximately 3,100 distributors, and with respect to its geographic coverage. The system is designed to provide retail and foodservice customers with superior service because distributors, highly motivated by financial incentives from their route ownership, strive to increase sales by maximizing service. In turn, distributors have the opportunity to benefit directly from the enhanced value of their routes resulting from higher branded sales volume.

     Mrs. Smith’s Bakeries

      We operate eight production facilities for our frozen desserts, frozen bakery products and packaged bakery products. We significantly realigned our production capabilities over the last three years, at a cost of approximately $173.3 million. This realignment included the relocation and upgrading of 25 production lines at seven of our eight operating facilities, which offers us significantly more capacity at fewer locations. We believe the production realignment will give us the ability to exploit many opportunities in the retail and foodservice channels.

      Our distribution facilities are strategically located near our production facilities to simplify distribution logistics. Our plant in Stilwell, Oklahoma was the focus of a $60.0 million capital spending project in 1999 to add production capacity and is our primary producer of frozen fruit and custard pies. This facility also serves as a principal point of distribution for our frozen desserts. Our Suwanee, Georgia facility is located on a major interstate corridor near four of our frozen dessert production facilities. This facility contains such innovations as five 78-foot tall, laser-guided cranes specifically designed for the facility, a six million cubic foot freezer and

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      In addition to our two strategically-located freezer and distribution facilities in Suwanee and Stilwell, we own and lease additional freezer and distribution facilities throughout the United States to facilitate distribution of our products nationwide. These owned and leased facilities allow us to build and store necessary inventory of raw materials and finished dessert products and to expedite the national distribution of both our seasonal and non-seasonal products.

      We distribute our packaged bakery products from a centralized distribution facility located near Knoxville, Tennessee. Centralized distribution allows us to achieve both production and distribution efficiencies. The production facilities are able to operate longer, more efficient production runs of a single product, which are then shipped to the centralized distribution facility. Products coming from different production facilities are then cross-docked and shipped directly to customer warehouses.

Customers

      Our top 10 customers in fiscal 2001 accounted for 41% of sales. During fiscal 2001, no sales to a single customer accounted for more than 10% of the company’s sales.

     Flowers Bakeries

      Our fresh baked foods have a highly diversified customer base, which includes grocery retailers, restaurants, fast-food chains, food wholesalers, institutions and vending companies. We also sell returned and surplus product through a system of thrift outlets. We supply numerous restaurants, institutions and foodservice companies with bakery products, including buns for outlets such as Burger King, Wendy’s, Krystal, Hardees, Whataburger and Outback Steakhouse. We also sell packaged bakery products to wholesale distributors for ultimate sale to a wide variety of food outlets.

     Mrs. Smith’s Bakeries

      Our frozen desserts are marketed to traditional retail outlets, such as grocery stores, as well as non-traditional outlets, ranging from club stores and mass merchandisers to wholesalers, foodservice distributors and restaurants. Our branded frozen desserts are sold primarily through grocery retailers. Our frozen bakery products are sold to foodservice distributors, institutions, retail in-store bakeries and restaurants.

      Our packaged bakery products under the Mrs. Freshley’s brand are sold primarily through vending outlets. We produce packaged bakery products for our own distribution under our BlueBird brand. In certain circumstances, we enter into co-packing arrangements with some of our competitors. Through co-packing, we have produced packaged bakery products for popular brands such as Weight Watchers, Stouffer, Lance, Pepperidge Farm and Little Debbie.

Marketing

      Our marketing and advertising campaigns are conducted through targeted television and radio advertising and printed media coupons. We also incorporate promotional tie-ins with other sponsors, on-package promotional offers and sweepstakes into our marketing efforts. Additionally, we focus our marketing and advertising campaigns on specific products throughout the year, such as buns for Memorial Day, Independence Day and Labor Day and pies during the Thanksgiving and Christmas holiday season.

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Competition

     Flowers Bakeries

      The United States packaged bakery category is intensely competitive and is comprised of large food companies, large independent bakeries with national distribution, and smaller regional and local bakeries. Primary national competitors include Interstate, Sara Lee, Pepperidge Farm and Weston. We also face competition from private label brands. Competition is based on product availability, product quality, brand loyalty, price effective promotions and the ability to target changing consumer preferences. Customer service, including frequent delivery and well-stocked shelves, is an increasingly important competitive factor. While we experience price pressure from time to time, primarily as a result of competitors’ promotional efforts, we believe that our customer relationships and the consumers’ brand loyalty, as well as our diversity within our region in terms of geographic markets, products, and sales channels, limit the effects of such competition. Recent consolidation in the industry has further enhanced the ability of the larger firms to compete with small regional bakeries. We believe we have significant competitive advantages over smaller regional bakeries due to greater brand awareness and economies of scale in areas such as purchasing, distribution, production, information technology, advertising and marketing.

     Mrs. Smith’s Bakeries

      Mrs. Smith’s Bakeries, Sara Lee, Pepperidge Farm and Pillsbury lead the frozen dessert category. Other significant competitors in the frozen baked dessert category include Edwards and private label brands. Competitors for packaged bakery products produced by Mrs. Smith’s Bakeries include Interstate (Hostess) and McKee (Little Debbie). Competition for frozen desserts depends primarily on brand recognition and loyalty, perceived product quality, effective promotions and, to a lesser extent, price. For the frozen bakery and packaged bakery products manufactured by Mrs. Smith’s Bakeries, competition is based upon the ability to meet production and distribution demands of foodservice and vending customers at a competitive price.

Intellectual Property

      We own a number of trademarks and trade names, as well as certain patents and licenses. Such trademarks and trade names are considered to be important to our business since they have the effect of developing brand identification and maintaining consumer loyalty. We are not aware of any fact that would negatively impact the continued use of any of our trademarks, trade names, patents or licenses to any material extent.

Raw Materials

      Our primary baking ingredients are flour, sugar, shortening, fruits and dairy products. We also use paper products, such as corrugated cardboard, aluminum products, such as pie plates, and films and plastics to package our baked foods. In addition, we are dependent upon natural gas and propane as fuel for firing ovens as well as gasoline and diesel as fuel for distribution vehicles. On average, baking ingredients constitute approximately 10% to 15%, and packaging represents approximately 1% to 5% of the wholesale selling price of our baked foods. We maintain diversified sources for all of our baking ingredients and packaging products.

      Commodities, such as our baking ingredients, periodically experience price fluctuations and, for that reason, we continually monitor the market for these commodities. From time to time, we enter into forward purchase agreements and derivative financial instruments to reduce the impact of volatility in raw material prices.

Research and Development

      Although not material to our operations, we engage in research and development activities that principally involve developing new products, improving the quality of existing products and improving and modernizing production processes. We also develop and evaluate new processing techniques for both current and proposed product lines.

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Regulation

      As a producer and marketer of food items, our operations are subject to regulation by various federal governmental agencies, including the Food and Drug Administration, the Department of Agriculture, the Federal Trade Commission, the Environmental Protection Agency and the Department of Commerce, as well as various state agencies, with respect to production processes, product quality, packaging, labeling, storage and distribution. Under various statutes and regulations, these agencies prescribe requirements and establish standards for quality, purity, and labeling. Failure to comply with one or more regulatory requirements can result in a variety of sanctions, including monetary fines or compulsory withdrawal of products from store shelves.

      In addition, advertising of our businesses is subject to regulation by the Federal Trade Commission, and we are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act.

      Our operations, like those of similar businesses, are subject to various federal, state, and local laws and regulations with respect to environmental matters, including air and water quality and underground fuel storage tanks, as well as other regulations intended to protect public health and the environment. Our operations and products also are subject to state and local regulation through such measures as licensing of plants, enforcement by state health agencies of various state standards and inspection of facilities. We believe that we are currently in material compliance with applicable laws and regulations.

Employees

      We employ approximately 8,000 persons, approximately 530 of whom are covered by collective bargaining agreements. We believe that we have good relations with our employees.

Executive Offices

      The address and telephone number of our principal executive offices are 1919 Flowers Circle, Thomasville, Georgia 31757, (229) 226-9110.

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Executive Officers of Flowers Foods

      The following table sets forth certain information regarding the persons who currently serve as the executive officers of Flowers Foods. Our Board of Directors elects all executive officers for one-year terms with the exception of the positions of President and Chief Operating Officer, Flowers Bakeries and President and Chief Operating Officer, Mrs. Smith’s Bakeries, which are appointed by the Chairman of the Board of Directors and Chief Executive Officer to serve until they resign or are removed.

EXECUTIVE OFFICERS

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Forward Looking Statements

      Certain statements made in this discussion are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements are subject to the safe harbor provisions of the Reform Act. Such forward-looking statements include, without limitation, statements about:

	•	the competitiveness of the baking industry;
	•	the future availability and prices of raw and packaging materials;
	•	potential regulatory obligations;
	•	our strategies; and
	•	other statements that are not historical facts.

      When used in this discussion, the words “anticipate,” “believe,” “estimate” and similar expressions are generally intended to identify forward-looking statements. 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 or business conditions (including in the baking industry);
	•	actions of competitors;
	•	our ability to retain or procure capital on terms acceptable to us;
	•	our ability to recover material costs in the pricing of our products;
	•	the extent to which we are able to develop new products and markets for our products;
	•	the time required for such development;
	•	the level of demand for such products; and
	•	changes in our business strategies.

Financial Information about Segments

      Refer to Note 16 of Notes to Consolidated Financial Statements for financial information about Flowers Bakeries and Mrs. Smith’s Bakeries.

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Item 2.     Properties

      Currently 32 of our production facilities are owned and one facility is leased. We consider that our properties are well maintained and sufficient for our present operations. Our production plant locations are:

Item 3.     Legal Proceedings

      On March 25, 2002, in Trans American Brokerage, Inc. vs. Mrs. Smith’s Bakeries, Inc., an arbitration brought before the American Arbitration Association, an arbitrator found against Mrs. Smith’s Bakeries and issued an interim award for damages. In the dispute, the claimant alleges breach of a sales brokerage agreement by Mrs. Smith’s Bakeries and seeks lost profits as well as attorneys’ fees and costs. As a result of the award, the company recorded a $10.0 million charge ($6.2 million net of tax) to its results for the fiscal year ended December 29, 2001, as required by Generally Accepted Accounting Principles (“GAAP”). The charge represents the company’s estimate of the total costs (including attorney’s fees and expenses) which it could incur in connection with this dispute. The company disagrees with the arbitrator’s award and intends to continue to vigorously contest it, including a request that the arbitrator reconsider the interim award.

      In addition to the arbitration described above, we are engaged in various legal proceedings that arise in the ordinary course of our business. We believe that the amount of the ultimate liability with respect to those proceedings will not be material to our financial position or results of operations.

Item 4.     Submission of Matters to a Vote of Security Holders

      Not applicable.

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PART II

Item 5.     Market for the Registrant’s Common Stock and Related Stockholder Matters

      Shares of Flowers Foods common stock have been quoted on the New York Stock Exchange under the symbol “FLO” since March 28, 2001. The following table sets forth for the quarters indicated the high and low closing sale prices of the company’s common stock on the New York Stock Exchange as reported in published sources.

      On November 16, 2001, the Board of Directors declared a 3 for 2 stock split payable on January 2, 2002, which resulted in the issuance of 9.9 million shares of our common stock. All references to number of shares (other than the amounts of common stock shown as issued on the December 30, 2000 Consolidated Balance Sheet and the Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for fiscal years ended December 30, 2000 and January 1, 2000) or per share amounts herein, unless otherwise noted, have been adjusted to reflect the 3 for 2 stock split on a retroactive basis.

      As of March 15, 2002, there were approximately 5,389 holders of record of our common stock.

Dividends

      We do not currently pay cash dividends on our shares of common stock. The payment of dividends is subject to the discretion of our Board of Directors. The Board of Directors bases its decisions regarding dividends on, among other things, general business conditions, our financial results, contractual, legal and regulatory restrictions regarding dividend payments and any other factors the Board may consider relevant. Under the terms of our credit agreement we were restricted from paying dividends during fiscal 2001. For fiscal years commencing after 2001, the maximum amount of dividends paid on our common stock cannot exceed $5.0 million unless certain conditions are met.

Item 6.     Selected Financial Data

      The selected consolidated historical financial data presented below as of and for the fiscal years 2001, 2000, 1999, 1998, transition period 1998 and fiscal year 1997 have been derived from the consolidated financial statements of the company which have been audited by PricewaterhouseCoopers LLP, independent accountants. The results of operations presented below are not necessarily indicative of results that may be expected for any future period and should be read in conjunction with “Matters Affecting Analysis” included in Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition, and our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements in this Form 10-K.

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		For the 52 Weeks Ended
		December 29, 2001				December 30, 2000				January 1, 2000				January 2, 1999
		(Amounts in thousands)
Statement of Income Data:
Net sales		$	1,629,004			$	1,568,934			$	1,511,386			$	1,486,980
Materials, supplies, labor and other production costs			888,824				900,198				883,882				795,084
Selling, marketing and administrative expenses			624,132				591,489				586,578				531,445
Depreciation and amortization			73,815				67,102				53,890				53,544
Unusual charges (credits)			43,898				17,704				(5,994	)			64,461
Insurance proceeds			(7,473	)			(17,193	)			—				—
Interest expense			36,466				68,373				44,691				42,225
Interest income			(4,278	)
Gain on sale of distributor notes			—				—				—				—
(Loss) income from continuing operations before income taxes, cumulative effect of changes in accounting principles and extraordinary items			(26,380	)			(58,739	)			(51,661	)			221
Income taxes			(8,137	)			(16,457	)			(16,915	)			1,429
(Loss) income from continuing operations before cumulative effect of changes in accounting principles and extraordinary items			(18,243	)			(42,282	)			(34,746	)			(1,208	)
Income from discontinued operations, less applicable taxes			—				87,809				42,040				46,238
Transaction costs less phase-out income, less applicable taxes			—				(40,482	)			—				—
(Loss) income before cumulative effect of changes in accounting principles and gain on early extinguishment of debt			(18,243	)			5,045				7,294				45,030
Gain on early extinguishment of debt, net of taxes			3,950				—				—				—
Cumulative effect of changes in accounting principles, net of tax benefit			—				—				—				(3,131	)
Net (loss) income		$	(14,293	)		$	5,045			$	7,294			$	41,899
Loss (income) from continuing operations per diluted common share			(.61	)			(1.41	)			(1.16	)			(.04	)
Cash dividends per common share			—				1.74				1.68				1.59
Balance Sheet Data:
Total assets(1)		$	1,099,691			$	1,562,646			$	1,566,963			$	1,382,877
Long-term debt(2)		$	242,057			$	247,847			$	303,955			$	215,233
Stockholders’ equity		$	621,637			$	502,460			$	538,754			$	572,961

[Additional columns below]

[Continued from above table, first column(s) repeated]

		For the				For the
		27 Weeks				52 Weeks
		Ended				Ended
		January 3, 1998				June 28, 1997
		(Amounts in thousands)
Statement of Income Data:
Net sales		$	769,489			$	1,412,942
Materials, supplies, labor and other production costs			418,926				787,799
Selling, marketing and administrative expenses			286,818				509,514
Depreciation and amortization			26,930				45,970
Unusual charges (credits)			—				—
Insurance proceeds			—				—
Interest expense			11,796				25,109
Interest income
Gain on sale of distributor notes			—				43,244
(Loss) income from continuing operations before income taxes, cumulative effect of changes in accounting principles and extraordinary items			25,019				87,794
Income taxes			9,632				33,191
(Loss) income from continuing operations before cumulative effect of changes in accounting principles and extraordinary items			15,387				54,603
Income from discontinued operations, less applicable taxes			18,061				7,721
Transaction costs less phase-out income, less applicable taxes			—				—
(Loss) income before cumulative effect of changes in accounting principles and gain on early extinguishment of debt			33,448				62,324
Gain on early extinguishment of debt, net of taxes			—				—
Cumulative effect of changes in accounting principles, net of tax benefit			(9,888)				—
Net (loss) income		$	23,560			$	62,324
Loss (income) from continuing operations per diluted common share			.58				2.06
Cash dividends per common share			.74				1.37
Balance Sheet Data:
Total assets(1)		$	898,880			$	898,187
Long-term debt(2)		$	276,211			$	275,247
Stockholders’ equity		$	348,567			$	340,012

(1)	Includes net assets of discontinued operations of $567.4 million, $496.7 million and $461.1 million at December 30, 2000, January 1, 2000 and January 2, 1999, respectively.
(2)	Excludes amounts settled by others of $540.0 million , $486.0 million and $282.0 million at December 30, 2000, January 1, 2000 and January 2, 1999, respectively.

13

Item 7.     Management’s Discussion and Analysis of Results of Operations