SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C 20549
FORM 10-Q
| (Mark One) [x] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| For the quarterly period ended October 5, 2002 | ||
| [ ] |
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.
| GEORGIA | 58-2582379 | |
|
|
||
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
1919 FLOWERS CIRCLE, THOMASVILLE, GEORGIA
31757
229/226-9110
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 [ ]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| OUTSTANDING AT | ||||
| TITLE OF EACH CLASS | November 15 , 2002 | |||
| Common Stock, $.01 par value with Preferred Share Purchase Rights |
29,970,375 | |||
1
FLOWERS FOODS, INC.
INDEX
| PAGE | ||||
| NUMBER | ||||
| PART I. Financial Information | ||||
| Item 1. Financial Statements | ||||
| Condensed Consolidated Balance Sheet October 5, 2002 and December 29, 2001 | 3 | |||
| Condensed Consolidated Statement of Income for the Twelve and Forty Weeks Ended October 5, 2002 and October 6, 2001 | 4 | |||
| Condensed Consolidated Statement of Cash Flows for the Forty Weeks Ended October 5, 2002 and October 6, 2001 | 5 | |||
| Notes to Condensed Consolidated Financial Statements | 6 | |||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 | |||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 22 | |||
| Item 4. Controls and Procedures | 23 | |||
| PART II. Other Information | ||||
| Item 1. Legal Proceedings | 23 | |||
| Item 4. Submission of Matters to a Vote of Security Holders | 24 | |||
| Item 5. Other Information | 24 | |||
| Item 6. Exhibits and Reports on Form 8-K | 24 | |||
| SIGNATURES | 25 | |||
| CERTIFICATIONS | 26 | |||
2
| OCTOBER 5, 2002 | DECEMBER 29, 2001 | |||||||||
ASSETS |
||||||||||
Current Assets: |
||||||||||
Cash and cash equivalents |
$ | 5,542 | $ | 12,280 | ||||||
Accounts
and notes receivable, net of allowances of $2,888 and $1,271, respectively |
128,713 | 104,104 | ||||||||
Inventories, net: |
||||||||||
Raw materials |
28,810 | 18,593 | ||||||||
Packaging materials |
13,266 | 13,942 | ||||||||
Finished goods |
77,375 | 56,466 | ||||||||
| 119,451 | 89,001 | |||||||||
Spare parts and supplies |
23,219 | 20,981 | ||||||||
Assets held for sale |
17,054 | 18,025 | ||||||||
Other |
15,340 | 8,149 | ||||||||
| 309,319 | 252,540 | |||||||||
Property, Plant and Equipment: |
||||||||||
Land |
33,873 | 33,324 | ||||||||
Buildings |
269,214 | 267,184 | ||||||||
Machinery and equipment |
682,689 | 656,727 | ||||||||
Furniture, fixtures and transportation equipment |
69,419 | 67,797 | ||||||||
Construction in progress |
9,849 | 8,570 | ||||||||
| 1,065,044 | 1,033,602 | |||||||||
Less: accumulated depreciation |
(467,413 | ) | (423,170 | ) | ||||||
| 597,631 | 610,432 | |||||||||
Notes Receivable |
70,727 | 72,940 | ||||||||
Deferred Taxes |
7,166 | 16,084 | ||||||||
Other Assets |
18,440 | 22,015 | ||||||||
Cost in Excess of Net Tangible Assets: |
||||||||||
Cost in excess of net tangible assets |
175,786 | 174,913 | ||||||||
Less: accumulated amortization |
(52,585 | ) | (49,233 | ) | ||||||
| 123,201 | 125,680 | |||||||||
| $ | 1,126,484 | $ | 1,099,691 | |||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY |
||||||||||
Current Liabilities: |
||||||||||
Current maturities of long-term debt and capital leases |
$ | 21,470 | $ | 15,648 | ||||||
Accounts payable |
98,608 | 83,980 | ||||||||
Facility closing costs and severance |
6,314 | 4,830 | ||||||||
Other accrued liabilities |
90,055 | 81,756 | ||||||||
| 216,447 | 186,214 | |||||||||
Long-Term Debt and Capital Leases |
223,631 | 242,057 | ||||||||
Other Liabilities: |
||||||||||
Facility closing costs and severance |
6,804 | 11,571 | ||||||||
Postretirement/postemployment obligations |
23,954 | 25,466 | ||||||||
Other |
14,139 | 12,746 | ||||||||
| 44,897 | 49,783 | |||||||||
Shareholders’ Equity: |
||||||||||
Preferred
stock-$100 par value, 100,000 authorized and none issued |
||||||||||
Preferred stock-$.01 par value, 900,000 authorized and none issued |
||||||||||
Common stock-$.01 par value, 100,000,000 authorized
and 29,797,513 and 29,797,513 shares issued, respectively |
298 | 298 | ||||||||
Capital in excess of par value |
476,401 | 476,401 | ||||||||
Retained earnings |
165,818 | 149,842 | ||||||||
Accumulated other comprehensive loss |
(1,008 | ) | (4,904 | ) | ||||||
| 641,509 | 621,637 | |||||||||
| $ | 1,126,484 | $ | 1,099,691 | |||||||
| FLOWERS FOODS, INC. | ||||
| CONDENSED CONSOLIDATED INCOME STATEMENT | ||||
| (Amounts in thousands except per share data) | ||||
| (Unaudited) |
| FOR THE TWELVE WEEKS ENDED | FOR THE FORTY WEEKS ENDED | |||||||||||||||
| OCTOBER 5, 2002 | OCTOBER 6, 2001 | OCTOBER 5, 2002 | OCTOBER 6, 2001 | |||||||||||||
Sales |
$ | 389,839 | $ | 385,699 | $ | 1,231,792 | $ | 1,220,174 | ||||||||
Materials, supplies, labor and other production costs |
211,935 | 205,527 | 664,848 | 655,014 | ||||||||||||
Selling, marketing and administrative expenses |
142,700 | 146,689 | 470,062 | 475,573 | ||||||||||||
Depreciation and amortization |
18,130 | 17,323 | 56,688 | 56,280 | ||||||||||||
Insurance proceeds, net |
— | — | — | (7,473 | ) | |||||||||||
Severance and other closing charges |
— | — | 1,311 | 3,135 | ||||||||||||
Separation and other contractual payments |
— | — | — | 27,952 | ||||||||||||
Income from operations |
17,074 | 16,160 | 38,883 | 9,693 | ||||||||||||
Interest (income) |
(1,298 | ) | (1,286 | ) | (4,330 | ) | (2,982 | ) | ||||||||
Interest expense |
5,034 | 6,095 | 17,237 | 31,022 | ||||||||||||
Interest expense, net |
3,736 | 4,809 | 12,907 | 28,040 | ||||||||||||
Income (loss) before income taxes and extraordinary
gain |
13,338 | 11,351 | 25,976 | (18,347 | ) | |||||||||||
Income tax expense (benefit) |
5,135 | 2,875 | 10,001 | (4,846 | ) | |||||||||||
Income (loss) before extraordinary gain |
8,203 | 8,476 | 15,975 | (13,501 | ) | |||||||||||
Extraordinary gain on early extinguishment of debt |
— | — | — | 5,000 | ||||||||||||
Net income (loss) |
$ | 8,203 | $ | 8,476 | $ | 15,975 | $ | (8,501 | ) | |||||||
Net Income (Loss) Per Common Share: |
||||||||||||||||
Basic: |
||||||||||||||||
Income (loss) before extraordinary gain on early
extinguishment of debt |
$ | 0.28 | $ | 0.28 | $ | 0.54 | $ | (0.45 | ) | |||||||
Extraordinary gain on early extinguishment of debt |
— | — | — | 0.17 | ||||||||||||
Net income (loss) per share |
$ | 0.28 | $ | 0.28 | $ | 0.54 | $ | (0.28 | ) | |||||||
Weighted average shares outstanding |
29,798 | 29,798 | 29,798 | 29,798 | ||||||||||||
Diluted: |
||||||||||||||||
Income (loss) before extraordinary gain on early
extinguishment of debt |
$ | 0.27 | $ | 0.28 | $ | 0.52 | $ | (0.45 | ) | |||||||
Extraordinary gain on early extinguishment of debt |
— | — | — | 0.17 | ||||||||||||
Net income (loss) per share |
$ | 0.27 | $ | 0.28 | $ | 0.52 | $ | (0.28 | ) | |||||||
Weighted average shares outstanding |
30,218 | 30,291 | 30,579 | 29,798 | ||||||||||||
Cash Dividends Paid Per Common Share |
— | — | — | — | ||||||||||||
(See Accompanying Notes to Condensed Consolidated Financial Statements)
4
FLOWERS FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| FOR THE FORTY WEEKS ENDED WEEKS ENDED | |||||||||
| OCTOBER 5, 2002 | OCTOBER 6, 2001 | ||||||||
CASH FLOWS (DISBURSED FOR) RECEIVED FROM OPERATING
ACTIVITIES: |
|||||||||
Net income (loss) |
$ | 15,975 | $ | (8,501 | ) | ||||
Adjustments to reconcile net income (loss) to net cash
(disbursed for) received from operating activities: |
|||||||||
Extraordinary gain, net of tax |
— | (5,000 | ) | ||||||
Unusual charges |
— | 3,135 | |||||||
Depreciation and amortization |
56,688 | 56,280 | |||||||
Deferred income taxes |
11,147 | (4,846 | ) | ||||||
Inventory lower of cost or market adjustments |
2,667 | 2,904 | |||||||
Allowances for accounts receivable |
2,599 | 1,845 | |||||||
Non-cash effect of derivative instruments |
— | 6,283 | |||||||
Other |
— | (13 | ) | ||||||
Changes in assets and liabilities: |
|||||||||
Accounts and notes receivable, net |
(27,193 | ) | (16,226 | ) | |||||
Inventories, net |
(33,117 | ) | (40,251 | ) | |||||
Other assets |
(3,785 | ) | 9,810 | ||||||
Accounts payable and other accrued liabilities |
21,369 | (7,171 | ) | ||||||
Facility closing costs and severance |
(2,094 | ) | (4,483 | ) | |||||
NET CASH (DISBURSED FOR) RECEIVED FROM OPERATING ACTIVITIES |
44,256 | (6,234 | ) | ||||||
CASH FLOWS (DISBURSED FOR) RECEIVED FROM INVESTING
ACTIVITIES: |
|||||||||
Purchase of property, plant and equipment |
(39,495 | ) | (33,599 | ) | |||||
Proceeds from/(purchase of) notes receivable |
2,198 | (77,646 | ) | ||||||
Acquisitions net of divestitures |
— | (6,381 | ) | ||||||
Dividends received |
— | 5,197 | |||||||
Proceeds from property disposals |
409 | 25 | |||||||
Other |
359 | (2,951 | ) | ||||||
NET CASH (DISBURSED FOR) INVESTING ACTIVITIES |
(36,529 | ) | (115,355 | ) | |||||
CASH FLOWS (DISBURSED FOR) RECEIVED FROM FINANCING
ACTIVITIES: |
|||||||||
Stock compensation and warrants exercised |
— | 337 | |||||||
Proceeds from new credit agreement |
— | 251,000 | |||||||
Purchase of debentures |
— | (193,776 | ) | ||||||
Payment of financing fees |
— | (9,978 | ) | ||||||
Other debt and capital lease obligation payments |
(14,465 | ) | (6,225 | ) | |||||
Other net changes in debt and other liabilities in
connection with the spin-off and merger |
— | 73,099 | |||||||
NET CASH (DISBURSED FOR) RECEIVED FROM FINANCING ACTIVITIES |
(14,465 | ) | 114,457 | ||||||