Flowers Foods (FLO) 8-K Flowers Foods’ Fourth Quarter and Fiscal 2004 Results

EXHIBIT 99.1

February 3, 2005 Company Press Release Flowers Foods (NYSE: FLO)

FLOWERS FOODS’ FOURTH QUARTER AND FISCAL 2004 RESULTS

THOMASVILLE, GA— Flowers Foods (NYSE: FLO) today reported net income of $7.5 million, or $.17 per share, for its 12-week fourth quarter ended January 1, 2005 compared to $17.2 million, or $.37 per share, for the company’s 13-week fourth quarter of fiscal 2003. Income from continuing operations for the fourth quarter was $7.5 million, or $.17 per share, compared to $12.7 million, or $.28 per share, for the fourth quarter last year.

For its 52-week fiscal 2004, net income was $50.8 million, or $1.13 per share, compared to $14.7 million, or $.32 per share reported for its 53-week fiscal 2003. Income from continuing operations for fiscal 2004 was $54.3 million, or $1.21 per share, compared to $52.8 million, or $1.15 per share for fiscal 2003.

The results are in line with guidance the company provided on January 10, 2005, which noted that a more than 20% increase in Flowers Foods’ stock price over the final two months of the fiscal year required higher compensation expense associated with the company’s stock appreciation rights plan. The company also experienced higher compliance and commodity costs, as noted in its previous guidance.

Reported results reflect that the fourth quarter of fiscal 2003 was a 13-week period and fiscal 2003 was a 53-week year. The fourth quarter of fiscal 2004 was a 12-week period and fiscal 2004 was a 52-week year. The company’s fiscal 2005 also will be a 52-week year.

Sales for the fourth quarter increased 3.8% to $361.4 million compared to $348.1 million for last year’s fourth quarter. Price increases and a favorable product mix accounted for 6.4% of the increase. Volume decreased 3.5% due to the 12-week fourth quarter this year compared to last year’s 13-week fourth quarter. Approximately one percent of the sales increase resulted from the consolidation of revenues of a trucking entity that provides services to the company and is a consolidated variable interest entity. The impact of this consolidation is neutral to the company’s income from continuing operations, net income, and earnings per share.

Sales for fiscal 2004 increased 6.8% to $1.55 billion compared to the $1.45 billion reported last year. Price increases and a favorable mix accounted for 3.4% of the increase. Volume increased 2.5% even though fiscal 2004 contained one less week. Approximately one percent of the sales increase resulted from the consolidation of the variable interest entity.

Gross margin as a percentage of sales declined 0.7% when comparing the fourth quarter of 2004 to the same period in 2003. Higher costs for ingredients, labor, and energy caused the decline. Selling, marketing, and administrative expenses as a percentage of sales increased by 1.0% compared to the year-ago quarter, due primarily to the higher compensation expense and compliance costs.

Commenting on the results, George E. Deese, president and chief executive officer of Flowers Foods, said the company’s fundamentals remain sound. “Our sales increase for the year shows the strength of our brands and products as well as the outstanding efforts of our team. We expect continued good performance in the marketplace, as our guidance for 2005 indicates. The company continues to generate strong cash flow, which allows us to pay dividends, repurchase shares when appropriate, make acquisitions, and fund internal growth as we work to build long-term value for our shareholders,” Deese said.

The company this week extended until 2010 its lease for the Suwanee, Ga., facility where it operates two frozen bread and roll lines, and therefore, will not be required to move the equipment as had earlier been announced.

For fiscal 2005, the company reaffirms its prior guidance of $1.60 billion to $1.625 billion in sales and net income of approximately 3.75% to 4.0% of sales. The company’s guidance represents management’s estimates and targets only and is subject to risks and uncertainties as referenced below.

During the fourth quarter, the company acquired 153,113 shares of its common stock for $4.4 million, an average of $28.58 per share. Since the inception of the stock repurchase plan and through the fiscal 2004 year end, the company has acquired approximately 2.3 million shares of its common stock for $57.5 million, an average of $25.48 per share. These shares were purchased in accordance with the share repurchase plan approved by the board of directors in 2002, which authorizes the company to repurchase up to 7.5 million shares of common stock.

The board of directors will consider the dividend at its regularly scheduled meeting. Any action taken will be announced following that meeting.

Flowers Foods will broadcast its quarterly conference call over the Internet at 10:30 a.m. (Eastern) February 3, 2005 at http://www.flowersfoods.com/webcasts.asp. The call will be archived on Flowers’ Web site, www.flowersfoods.com, and can be accessed by clicking on “Investor Center.”

Company Information
Headquartered in Thomasville, Ga., Flowers Foods is one of the nation’s leading producers and marketers of packaged bakery foods for retail and foodservice customers. Flowers operates 34 bakeries that produce a wide

range of bakery products marketed throughout the Southeastern, Southwestern, and mid-Atlantic states via an extensive direct-store-delivery network and nationwide through other delivery systems. Among the company’s top brands are Nature’s Own, Cobblestone Mill, Sunbeam, BlueBird, and Mrs. Freshley’s. For more information, visit www.flowersfoods.com.

Statements contained in this press release that are not historical facts are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. Other factors that may cause actual results to differ from the forward-looking statements contained in this release and that may affect the company’s prospects in general include, but are not limited to, (a) competitive conditions in the baked foods industry, including promotional and price competition, (b) changes in consumer demand for our products, (c) the success of productivity improvements and new product introductions, (d) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer’s business, (e) fluctuations in commodity pricing and (f) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value. In addition, our results may also be affected by general factors such as economic and business conditions (including the baked foods markets), interest and inflation rates and such other factors as are described in the company’s filings with the Securities and Exchange Commission.

Contact:
 
Jimmy M. Woodward, Senior VP and Chief Financial Officer, (229) 227-2266
 
Marta J. Turner, Senior VP/Corporate Relations, (229) 227-2348

Flowers Foods

Consolidated Statement of Income
(000’s omitted, except per share data)

	For the 12 - Week Period			For the 13 - Week Period
	Ended			Ended
	January 1, 2005			January 3, 2004
Sales	$	361,432		$	348,075
Materials, supplies, labor and other production costs		182,835			173,577
Selling, marketing and administrative expenses		153,239			144,261
Depreciation and amortization		13,945			11,677
Income from continuing operations before interest, income taxes and minority interest (EBIT)		11,413			18,560
Interest income, net		2,090			2,031
Income from continuing operations before income taxes and minority interest (EBT)		13,503			20,591
Income tax expense		5,776			7,932
Income from continuing operations before minority interest		7,727			12,659
Minority interest in variable interest entity		(264	)		0
Income from continuing operations		7,463			12,659
Discontinued operations, net of tax		0			4,544
Net income	$	7,463		$	17,203
Per share amounts:
Income from continuing operations	$	0.17		$	0.28
Discontinued operations		0.00			0.09
Net income	$	0.17		$	0.37
Diluted weighted average shares outstanding		44,407			45,888

Flowers Foods

Consolidated Statement of Income
(000’s omitted, except per share data)

	For the 52 - Week Period			For the 53 - Week Period
	Ended			Ended
	January 1, 2005			January 3, 2004
Sales	$	1,551,308		$	1,452,995
Materials, supplies, labor and other production costs		779,437			720,162
Selling, marketing and administrative expenses		632,895			601,013
Depreciation and amortization		56,702			53,935
Income from continuing operations before interest, income taxes and minority interest (EBIT)		82,274			77,885
Interest income, net		8,826			7,982
Income from continuing operations before income taxes and minority interest (EBT)		91,100			85,867
Income tax expense		35,071			33,063
Income from continuing operations before minority interest		56,029			52,804
Minority interest in variable interest entity		(1,769	)		0
Income from continuing operations		54,260			52,804
Discontinued operations, net of tax		(3,486	)		(38,146	)
Net income	$	50,774		$	14,658
Per share amounts:
Income from continuing operations	$	1.21		$	1.15
Discontinued operations		(0.08	)		(0.83	)
Net income	$	1.13		$	0.32
Diluted weighted average shares outstanding		44,970			45,768

Flowers Foods
Segment Reporting

(000’s omitted)

	For the 12 - Week			For the 13 - Week			For the 52 - Week			For the 53 - Week
	Period Ended			Period Ended			Period Ended			Period Ended
	January 1, 2005			January 3, 2004			January 1, 2005			January 3, 2004
Sales:
Flowers Bakeries Group	$	284,507		$	274,558		$	1,218,656		$	1,145,279
Flowers Specialty Group		76,925			73,517			332,652			307,716
	$	361,432		$	348,075		$	1,551,308		$	1,452,995
EBITDA from Continuing Operations:
Flowers Bakeries Group	$	28,974		$	31,635		$	143,486		$	136,411
Flowers Specialty Group		7,944			7,546			31,550			27,814
Flowers Foods		(11,560	)		(8,944	)		(36,060	)		(32,405	)
	$	25,358		$	30,237		$	138,976		$	131,820
Depreciation and Amortization:
Flowers Bakeries Group	$	11,446		$	9,695		$	45,718		$	44,411
Flowers Specialty Group		2,645			2,126			11,520			9,777
Flowers Foods		(146	)		(144	)		(536	)		(253	)
	$	13,945		$	11,677		$	56,702		$	53,935
EBIT from Continuing Operations:
Flowers Bakeries Group	$	17,528		$	21,940		$	97,768		$	92,000
Flowers Specialty Group		5,299			5,420			20,030			18,037
Flowers Foods		(11,414	)		(8,800	)		(35,524	)		(32,152	)
	$	11,413		$	18,560		$	82,274		$	77,885

Flowers Foods

Condensed Consolidated Balance Sheet
(000’s omitted)

	January 1, 2005
Assets
Cash and Cash Equivalents	$	47,458
Other Current Assets		220,530
Property, Plant & Equipment, net		438,848
Distributor Notes Receivable (includes $8,074 current portion)		82,139
Other Assets		2,322
Cost in Excess of Net Tangible Assets, net		77,552
Total Assets	$	868,849
Liabilities and Stockholders’ Equity
Current Liabilities	$	154,768
Bank Debt		0
Other Debt and Capital Leases (includes $1,228 current portion)		27,711
Other Liabilities		113,797
Minority Interest in Variable Interest Entity		2,836
Common Stockholders’ Equity		569,737
Total Liabilities and Stockholders’ Equity	$	868,849

Flowers Foods

Condensed Consolidated Statement of Cash Flows
(000’s omitted)

	For the 12 - Week			For the 52 - Week
	Period Ended			Period Ended
	January 1, 2005			January 1, 2005
Cash flows from operating activities:
Net income	$	7,463		$	50,774
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		13,945			56,702
Discontinued operations		0			5,099
Minority interest in variable interest entity		264			1,769
Changes in assets and liabilities		22,712			8,299
Net cash provided by operating activities		44,384			122,643
Cash flows from investing activities:
Purchase of property, plant and equipment		(6,021	)		(46,029	)
Consolidation of variable interest entity		0			1,527
Acquisitions net of cash acquired		0			(8,599	)
Other		(1,628	)		(705	)
Net cash disbursed for investing activities		(7,649	)		(53,806	)
Cash flows from financing activities:
Dividends paid		(5,398	)		(20,767	)
Stock options exercised		367			1,182
Stock repurchases		(4,377	)		(35,296	)
Increase in book overdraft		(13,272	)		(5,457	)
Other debt and capital lease obligation payments		(2,205	)		(3,457	)
Net cash disbursed for financing activities		(24,885	)		(63,795	)
Net increase in cash and cash equivalents		11,850			5,042
Cash and cash equivalents at beginning of period		35,608			42,416
Cash and cash equivalents at end of period	$	47,458		$	47,458