EXHIBIT 99.1
MAY 15, 2003 COMPANY PRESS RELEASE FLOWERS FOODS (NYSE: FLO)
FLOWERS FOODS' FIRST QUARTER RESULTS
THOMASVILLE, GA--Flowers Foods (NYSE: FLO) today reported a net loss of $5.7
million, or $.18 per share, for the first quarter ended April 19, 2003. The
results for the quarter include charges of $19.3 million, or $.62 per share,
related to discontinued operations representing Mrs. Smith's frozen dessert
business, which was sold to The Schwan Food Company on April 24, 2003.
SALES FROM CONTINUING OPERATIONS
Sales from continuing operations for the first quarter increased 9.7% to $434.6
million compared to $396.2 million for last year's first quarter. Acquisitions
and volume increases, primarily related to new products introduced under the
Nature's Own brand, each contributed 3.6% of the sales increase.
NET INCOME FROM CONTINUING OPERATIONS
Net income from continuing operations for the first quarter was $13.7 million,
or $.44 per share, compared to $13.1 million, or $.43 per share, in the first
quarter of 2002. Net income from continuing operations was impacted by higher
cost of goods sold as a percentage of sales, due primarily to increased
ingredient and employee costs. Other costs remained relatively constant as a
percentage of sales, compared to the same quarter last year. Going forward,
continuing operations will report no interest expense for the senior secured
credit facilities or obligations under equipment leases since those debts were
repaid on April 24, 2003, with proceeds from the sale of Mrs. Smith's and cash
on hand. Although a tax rate of 38.5% was reported for the quarter, the company
has tax loss carry-forwards that should result in no federal taxes being paid
for the year. Since the transaction closed during the second quarter, certain
additional transaction related charges will be reported in the second quarter
results.
MANAGEMENT'S DISCUSSION
Amos R. McMullian, chairman of the board and chief executive officer of Flowers
Foods, said, "With the sale of Mrs. Smith's completed and the debt repaid,
Flowers Foods' balance sheet is stronger than ever. We intend to preserve the
strength of our balance sheet while investing our cash flow to enhance near and
long-term shareholder value. We intend to pay dividends and effect share
repurchases when shares are available at prices we consider attractive. For the
longer term, we intend to make investments that will preserve our position as
one of the most efficient bakers in the nation, growing by acquisition and
through internal development."
McMullian said that the strength of Flowers Foods is evident in the first
quarter results. "During the quarter, our Bakeries Group continued to do very
well, with overall sales growth of about 7%. This growth occurred despite a
slight downturn in foodservice sales primarily at quick-serve restaurants,
reflecting a national trend. Sales growth in our Specialty Group during the
quarter was due to internal growth in snacks and the acquisition of Bishop
Baking Company at the beginning of fiscal 2003.
"We expect our highly efficient bakeries and strong independent
direct-store-delivery system to help keep our costs competitive. In addition,
our broad product offering and Nature's Own, Cobblestone Mill, and other brands
are a strength in the marketplace. Finally, our renewed financial strength will
allow us to maintain a level of capital investment to ensure that our plants and
our information technologies remain at the forefront of our industry. All of
these competitive advantages are the result of long-term operating strategies
that Flowers Foods' management team has developed over decades," McMullian
continued.
COMPANY STRUCTURE
Following the sale of the dessert business, the company formed a new sales
group, Flowers Foods Specialty Group, which includes the snack cake business as
well as the frozen bread and roll business that was part of Mrs. Smith's
Bakeries. Flowers Foods' core business, the Bakeries Group, continues to serve
the Sun Belt states with fresh breads and rolls through its independent
distributor system. Certain reclassifications of prior year information were
made to conform with the current presentation and with the company's new sales
group structure.
GUIDANCE FOR 2003
The continuing operations fiscal 2002 pro forma net sales was $1.33 billion as
reported on SEC Form 8-K filed on May 9, 2003. For fiscal 2003, which will be a
53-week fiscal year, sales are expected to be $1.4 billion to $1.45 billion. Net
income from continuing operations should be approximately 3.25% to 3.75% of net
sales. The company's guidance represents management's estimates and targets only
and is subject to risks and uncertainties as referenced below.
CONFERENCE CALL
Flowers Foods will broadcast its quarterly conference call over the Internet at
8:30 a.m. (Eastern) May 15, 2003 at
http://www.firstcallevents.com/service/ajwz381054635gf12.html. The call will be
archived on Flowers' Web site, www.flowersfoods.com, and can be accessed by
clicking on "Investor Center."
DISCLOSURE PROGRAM
Flowers Foods intends that its disclosure program ensure that all investors and
the marketplace have a balanced and equally accessible view of our business
strategies and expectations. The company intends to post its disclosure policy
on Flowers Foods' Web site: www.flowersfoods.com in the near future. In brief,
the company's plans are to focus on the long term and to issue only annual
guidance for sales and earnings rather than manage on a quarter-by-quarter
basis. As always, all events will be broadcast over the Internet and accessible
live and archived on Flowers Foods' Web site.
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 33 bakeries that produce a wide range of bakery
products that are marketed through the Sun Belt 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, BlueBird,
Mrs. Freshley's, and European Bakers. For more information on the company, 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.
CONSOLIDATED STATEMENT OF INCOME
(000's omitted, except per share data)
FOR THE 16 - WEEK PERIOD ENDED
--------------------------------
APRIL 19, 2003 April 20, 2002
-------------- --------------
Sales $ 434,552 $ 396,158
Materials, supplies, labor and other production costs 213,637 190,392
Selling, marketing and administrative expenses 182,485 167,834
Depreciation and amortization 17,162 17,429
--------- ---------
Income from continuing operations before interest and income taxes 21,268 20,503
Interest income, net 932 839
--------- ---------
Income from continuing operations before income taxes (EBT) 22,200 21,342
Income tax expense 8,547 8,217
--------- ---------
Income from continuing operations 13,653 13,125
Discontinued operations (19,313) (34,480)
--------- ---------
Net loss $ (5,660) $ (21,355)
========= =========
Per share amounts:
Income from continuing operations $ 0.44 0.43
Discontinued operations (0.62) (1.12)
--------- ---------
Net loss $ (0.18) $ (0.69)
========= =========
Diluted weighted average shares outstanding 31,124 30,878
========= =========
SEGMENT REPORTING
(000's omitted)
For the 16 - Week Period Ended
------------------------------------
April 19, 2003 April 20, 2002
-------------- --------------
Sales:
Flowers Bakeries Group $ 338,015 $ 315,672
Flowers Specialty Group 96,537 80,486
--------- ---------
$ 434,552 $ 396,158
========= =========
EBITDA from Continuing Operations:
Flowers Bakeries Group $ 39,790 $ 39,681
Flowers Specialty Group 6,948 5,279
Flowers Foods (8,308) (7,028)
--------- ---------
$ 38,430 $ 37,932
========= =========
Depreciation and Amortization:
Flowers Bakeries Group $ 13,549 $ 13,492
Flowers Specialty Group 3,488 3,879
Flowers Foods 125 58
--------- ---------
$ 17,162 $ 17,429
========= =========
EBIT from Continuing Operations:
Flowers Bakeries Group $ 26,241 $ 26,189
Flowers Specialty Group 3,460 1,400
Flowers Foods (8,433) (7,086)
--------- ---------
$ 21,268 $ 20,503
========= =========
CONDENSED CONSOLIDATED BALANCE SHEET
(000's omitted)
APRIL 19,
2003
----------
ASSETS
Cash and Cash Equivalents $ 27,008
Assets to be Disposed Of - Discontinued Operations 244,338
Other Current Assets 188,323
Property, Plant & Equipment, net 429,125
Distributor Notes Receivable (includes $7,797 current portion) 79,321
Other Assets 30,491
Cost in Excess of Net Tangible Assets, net 71,330
----------
Total Assets $1,069,936
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 162,958
Liabilities Related to Assets to be Disposed Of - Discontinued Operations 2,902
Senior Secured Credit Facilities (all current) 173,388
Obligations under Equipment Leases (all current) 54,987
Other Debt (includes $7,449 current portion) 12,730
Other Liabilities 77,714
Common Stockholders' Equity 585,257
----------
Total Liabilities and Stockholders' Equity $1,069,936
==========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(000's omitted)
FOR THE 16 WEEKS
ENDED
----------------
APRIL 19, 2003
----------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (5,660)
Adjustments to reconcile net loss to net cash
disbursed for operating activities:
Depreciation and amortization 17,162
Discontinued operations 6,170
Other 5,170
Changes in assets and liabilities (29,513)
--------
NET CASH DISBURSED FOR OPERATING ACTIVITIES (6,671)
--------
CASH FLOWS PROVIDED BY (DISBURSED FOR) INVESTING ACTIVITIES:
Purchase of property, plant and equipment (11,037)
Acquisition net of cash acquired (14,534)
Other 182
--------
NET CASH DISBURSED FOR INVESTING ACTIVITIES (25,389)
--------
CASH FLOWS DISBURSED FOR FINANCING ACTIVITIES:
Dividends paid (1,499)
Other debt and capital lease obligation payments (9,259)
--------
NET CASH DISBURSED FOR FINANCING ACTIVITIES (10,758)
--------
Net decrease in cash and cash equivalents (42,818)
Cash and cash equivalents at beginning of period 69,826
--------
Cash and cash equivalents at end of period $ 27,008
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CONTACT:
Jimmy M. Woodward, Senior VP and Chief Financial Officer, (229) 227-2266
Marta J. Turner, VP Communications and Investor Relations, (229) 227-2348
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