EXHIBIT 99.1
AUGUST 19, 2004 COMPANY PRESS RELEASE FLOWERS FOODS (NYSE: FLO)
FLOWERS FOODS' SECOND QUARTER AND FIRST HALF RESULTS
THOMASVILLE, GA--Flowers Foods (NYSE: FLO) today reported net income of $15.0
million, or $.33 per share, for the second quarter ended July 17, 2004, compared
to a loss of $9.3 million, or $.20 per share, for the second quarter of 2003.
For the first half of the year, the company reported net income of $28.7
million, or $.63 per share, compared to a loss of $15.0 million, or $.33 per
share for the first half of 2003.
SALES
Sales for the second quarter increased 7.0% to $360.7 million compared to
$337.2 million for last year's second quarter. Volume accounted for 4.2% of the
sales increase as the company further penetrated existing markets and expanded
its geographic coverage with new direct-store-delivery routes. Pricing made up
2.3% of the sales increase. The favorable results were slightly offset by a 0.5%
product mix shift. The balance of the increase is due to consolidation of a
variable interest entity under FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities."
Sales for the first half of the year increased 6.1% to $818.5 million compared
to $771.7 million for last year's first half, of which 0.8% was related to the
consolidation of the variable interest entity.
INCOME FROM CONTINUING OPERATIONS
Income from continuing operations for the second quarter was $15.0 million, or
$.33 per share, an 8.7% increase over the $13.8 million, or $.30 per share,
reported for the second quarter of 2003. Income from continuing operations for
the first half of the year was $32.2 million, or $.71 per share, a 17.5%
increase from the $27.4 million or $.60 per share, reported for the first half
of 2003.
During the second quarter, gross margin as a percentage of sales declined
slightly compared to the prior year quarter due to higher ingredient, labor and
utility costs as well as start-up costs for a new bakery in Denton, Texas.
Selling, marketing and administrative expenses declined as a percentage of sales
compared to the second quarter of 2003 due to higher sales and reduced
administrative expense. Depreciation and amortization expense was relatively
flat as was net interest income. Consolidation of the variable interest entity
slightly lowered the effective income tax rate, however, the consolidation has
no effect on income from continuing operations.
MANAGEMENT'S DISCUSSION
George E. Deese, president and chief executive officer of Flowers Foods, said
that the second quarter results are indicative of Flowers Foods' strengths. "Our
sales growth -- in both established and new territories -- is possible because
of our execution in the marketplace, the strength of our brands, and the quality
of our products. Nature's Own breads continue to drive our sales growth as
consumers seek foods with health-related attributes."
During the quarter, the company announced the pending acquisition from Sara Lee
Bakery Group of a closed bakery in Houston as well as a customer list. Deese
said he expects the acquisition will add approximately $40 million in annual
sales. The company's new bakery in Denton, Texas started production of buns and
rolls during the quarter and will produce much of the additional volume
associated with the customer list acquired from Sara Lee.
"The company continues to generate strong cash flow with which we will 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.
REVISED GUIDANCE FOR 2004
The company now forecasts sales for fiscal 2004 of $1.505 billion to $1.520
billion. This represents a $10 million increase in the range due to additional
sales expected in Texas. The company expects the additional sales in Texas will
be earnings neutral for the year, as cost incurred to establish distribution
will offset the gross margin from the added sales. The company expects income
from continuing operations to remain at the level previously forecast of 3.9% to
4.0% of sales, or $1.28 to $1.32 per share.
The guidance provided reflects management's best estimate of the market factors
related to last week's hurricane in Florida. The company does not expect those
factors to have a material impact on its second half 2004 results. The company's
guidance represents management's estimates and targets only and is subject to
risks and uncertainties as described below.
STOCK REPURCHASES
During the second quarter, the company acquired 345,100 shares of its common
stock for $8.5 million, an average of $24.72 per share. Since the inception of
the stock repurchase plan, the company has acquired approximately 1.5 million
shares of its common stock for $38.5 million, an average of $25.24 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 stock.
DIVIDEND
The board of directors will consider the dividend at its regularly scheduled
meeting. Any action taken will be announced following that meeting.
CONFERENCE CALL
Flowers Foods will broadcast its quarterly conference call over the Internet at
10:30 a.m. (Eastern) August 19, 2004 at http://www.firstcallevents.com/service/
ajwz409584010gf12.html. 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
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CONSOLIDATED STATEMENT OF INCOME
(000's omitted, except per share data)
FOR THE For the
12 - WEEK 12 - Week
PERIOD ENDED Period Ended
JULY 17, July 12,
2004 2003
------------ ------------
Sales $ 360,686 $ 337,193
Materials, supplies, labor and other production costs 181,974 165,565
Selling, marketing and administrative expenses 143,386 138,657
Depreciation and amortization 12,597 12,489
------------ ------------
Income from continuing operations before interest, income
taxes and minority interest (EBIT) 22,729 20,482
Interest income, net 1,916 1,915
------------ ------------
Income from continuing operations before income taxes and
minority interest (EBT) 24,645 22,397
Income tax expense 9,363 8,623
------------ ------------
Income from continuing operations before minority interest 15,282 13,774
Minority interest in variable interest entity (324) 0
------------ ------------
Income from continuing operations 14,958 13,774
Discontinued operations, net of tax 0 (23,118)
------------ ------------
Net income (loss) $ 14,958 $ (9,344)
============ ============
Per share amounts:
Income from continuing operations $ 0.33 $ 0.30
Discontinued operations 0.00 (0.50)
------------ ------------
Net income (loss) $ 0.33 $ (0.20)
============ ============
Diluted weighted average shares outstanding 45,046 45,861
============ ============
FLOWERS FOODS
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CONSOLIDATED STATEMENT OF INCOME
(000's omitted, except per share data)
FOR THE For the
28 - WEEK 28 - Week
PERIOD ENDED Period Ended
JULY 17, July 12,
2004 2003
------------ ------------
Sales $ 818,525 $ 771,745
Materials, supplies, labor and other production costs 410,028 379,202
Selling, marketing and administrative expenses 329,820 322,359
Depreciation and amortization 29,499 29,651
------------ ------------
Income from continuing operations before interest, income
taxes and minority interest (EBIT) 49,178 40,533
Interest income, net 4,593 4,064
------------ ------------
Income from continuing operations before income taxes and
minority interest (EBT) 53,771 44,597
Income tax expense 20,137 17,170
------------ ------------
Income from continuing operations before minority interest 33,634 27,427
Minority interest in variable interest entity (1,466) 0
------------ ------------
Income from continuing operations 32,168 27,427
Discontinued operations, net of tax (3,486) (42,431)
------------ ------------
Net income (loss) $ 28,682 $ (15,004)
============ ============
Per share amounts:
Income from continuing operations $ 0.71 $ 0.60
Discontinued operations (0.08) (0.93)
------------ ------------
Net income (loss) $ 0.63 $ (0.33)
============ ============
Diluted weighted average shares outstanding 45,288 45,691
============ ============
FLOWERS FOODS
SEGMENT REPORTING
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(000's omitted)
FOR THE For the FOR THE For the
12 - WEEK 12 - Week 28 - WEEK 28 - Week
PERIOD ENDED Period Ended PERIOD ENDED Period Ended
JULY 17, 2004 July 12, 2003 JULY 17, 2004 July 12, 2003
-------------- -------------- -------------- --------------
Sales:
Flowers Bakeries Group $ 280,541 $ 261,031 $ 631,696 $ 599,046
Flowers Specialty Group 80,145 76,162 186,829 172,699
-------------- -------------- -------------- --------------
$ 360,686 $ 337,193 $ 818,525 $ 771,745
============== ============== ============== ==============
EBITDA from Continuing Operations:
Flowers Bakeries Group $ 34,990 $ 34,305 $ 77,802 $ 72,878
Flowers Specialty Group 6,243 7,055 16,888 14,003
Flowers Foods (5,907) (8,389) (16,013) (16,697)
-------------- -------------- -------------- --------------
$ 35,326 $ 32,971 $ 78,677 $ 70,184
============== ============== ============== ==============
Depreciation and Amortization:
Flowers Bakeries Group $ 9,857 $ 10,130 $ 22,848 $ 23,679
Flowers Specialty Group 2,862 2,480 6,801 5,968
Flowers Foods (122) (121) (150) 4
-------------- -------------- -------------- --------------
$ 12,597 $ 12,489 $ 29,499 $ 29,651
============== ============== ============== ==============
EBIT from Continuing Operations:
Flowers Bakeries Group $ 25,133 $ 24,175 $ 54,954 $ 49,199
Flowers Specialty Group 3,381 4,575 10,087 8,035
Flowers Foods (5,785) (8,268) (15,863) (16,701)
-------------- -------------- -------------- --------------
$ 22,729 $ 20,482 $ 49,178 $ 40,533
============== ============== ============== ==============
FLOWERS FOODS
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CONDENSED CONSOLIDATED BALANCE SHEET
(000's omitted)
JULY 17, 2004
-------------
ASSETS
Cash and Cash Equivalents $ 39,077
Other Current Assets 219,641
Property, Plant & Equipment, net 433,399
Distributor Notes Receivable (includes $7,989 current portion) 81,273
Other Assets 3,799
Cost in Excess of Net Tangible Assets, net 72,155
-------------
Total Assets $ 849,344
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 149,386
Bank Debt 0
Other Debt and Capital Leases (includes $4,237 current portion) 20,034
Other Liabilities 100,378
Minority Interest in Variable Interest Entity 2,719
Common Stockholders' Equity 576,827
-------------
Total Liabilities and Stockholders' Equity $ 849,344
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FLOWERS FOODS
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(000's omitted)
FOR THE FOR THE
12 - WEEK 28 - WEEK
PERIOD ENDED PERIOD ENDED
JULY 17, 2004 JULY 17, 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,958 $ 28,682
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 12,597 29,499
Discontinued operations 0 5,099
Minority interest in variable interest entity 324 1,466
Other 8,690 19,227
Changes in assets and liabilities (5,263) (42,751)
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 31,306 41,222
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (11,732) (27,112)
Consolidation of variable interest entity 0 1,527
Other (124) 216
------------- -------------
NET CASH DISBURSED FOR INVESTING ACTIVITIES (11,856) (25,369)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (5,481) (9,917)
Stock options exercised 0 471
Stock repurchases (8,529) (16,303)
Increase in book overdraft 4,629 7,069
Other debt and capital lease obligation payments (395) (512)
------------- -------------
NET CASH DISBURSED FOR FINANCING ACTIVITIES (9,776) (19,192)
------------- -------------
Net increase (decrease) in cash and cash equivalents 9,674 (3,339)
Cash and cash equivalents at beginning of period 29,403 42,416
------------- -------------
Cash and cash equivalents at end of period $ 39,077 $ 39,077
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