THOMASVILLE, Ga., May 21 /PRNewswire/ -- Flowers Industries, Inc. (NYSE: FLO) today reported record sales, net income, and earnings per share for the first quarter of fiscal 1999. Sales for the 16-week quarter, which ended on April 24, 1999, were $1,304,513,000, a 21% increase over the $1,077,034,000 reported for the same period last year. Operating margins (EBIT) expanded to 7.3% compared to 5.2% and EBITDA margins grew to 10.4% versus 8.4% a year ago. Net income for the quarter was $24,835,000, an increase of 109% over the $11,897,000 reported last year. Net income per share was $.25, an increase of 92% over the $.13 reported last year. "We are pleased with the results of the first quarter, which were exactly in line with our expectations," said Amos R. McMullian, chairman and chief executive officer. "Our strategy has been to diversify our revenue streams for Flowers Industries and to balance the product mix and seasonality of our businesses. The first quarter, henceforth, will be stronger at Keebler as its sales volumes are greatly improved by the addition of President and the Girl Scout cookie business. This volume helps offset the slower season for our fresh baked and frozen product lines." On an operating basis, results for the company's business segments were as follows: First Quarter, Fiscal 1999 (16 weeks ended April 24, 1999) Flowers Bakeries 1st Qtr 1999 1st Qtr 1998 % Increase Sales $ 295,134,000 $ 285,958,000 3.2% Operating Income (EBIT) $ 20,512,000 $ 19,995,000 2.6% Operating Margin 7.0% 7.0% EBITDA Margin 10.2% 10.7% Flowers Bakeries' results showed sales improving by 3.2% with increases in both branded and foodservice categories. After adjusting for discontinued sales at closed plants, sales were up 4.2% versus the first quarter of 1998. Volume was up approximately 1% with product mix and pricing making up the balance. As anticipated, increased administrative costs associated with Flowers Bakeries' implementation of its new management information systems and continued Y2K readiness programs reduced margins during the quarter. For the balance of the year, the company expects increased branded and foodservice sales growth and margin improvement as volume grows, despite the added administrative costs associated with the new information system installation. Mrs. Smith's Bakeries 1st Qtr 1999 1st Qtr 1998 % Increase Sales $ 158,200,000 $ 154,880,000 2.1% Operating Income (EBIT) $ 10,872,000 $ 10,056,000 8.1% Operating Margin 6.9% 6.5% EBITDA Margin 10.2% 10.0% As Mrs. Smith's Bakeries worked towards its goal of improving its product mix and margins, the seasonally weak first quarter saw overall sales up 2.1% with an 11% gain in the frozen retail, deli/bakery and foodservice categories. This gain was partially offset by a 12% decline in fresh non-branded retail and co-pack sales of bakery snack items. The final stages of the operational transition from closed facilities into new, highly automated operations were being implemented during the quarter. The automated production now being brought on line will shorten the supply chain, allowing Mrs. Smith's Bakeries to produce closer to customer orders, thereby improving quality and service as well as lowering costs on an annual basis. The second quarter at Mrs. Smith's Bakeries should be about level with the results of the first quarter, as the seasonality of the business is heavily skewed toward the third and fourth quarters. A dramatic ramp up is expected as Mrs. Smith's Bakeries leverages its automated production capacity and the seasonal increase in its frozen dessert business. Keebler Foods Company 1st Qtr 1999 1st Qtr 1998 % Increase Sales $ 852,033,000 $ 636,746,000 33.8% Operating Income (EBIT) $ 70,645,000 $ 31,676,000 123.0% Operating Margin 8.3% 5.0% EBITDA Margin 11.1% 7.5% At Keebler Foods, first quarter sales were impacted by the strong Girl Scout cookie seasonal sales promotion that occurs during the first of the year. Keebler acquired this business as part of the acquisition of President International, Inc. in October of 1998. Keebler's sales trends are positive because of its great stable of brands. Margins will continue to improve as management eliminates other non-productive costs. Keebler's second quarter will be its smallest sales quarter due to the seasonality of the Girl Scout business and the upturn it traditionally experiences in the third and fourth quarters. "Given the seasonal fluctuations of our businesses and an anticipated smaller revenue base, Flowers Industries' second quarter is expected to be about level with last year's second quarter," McMullian said. "However, our outlook for the year as a whole is for earnings to grow 25-30% over fiscal 1998 levels before the non-recurring charges. All trend lines are positive for our businesses. Our company has the brands, the product lines, the production capacity, and the distribution systems to produce and market quality fresh and frozen baked foods through every channel of distribution to every point of consumption where baked foods are sold. We see great opportunity for growth as we leverage our infrastructure to take advantage of the core competency categories that we have put in place to serve our markets. In addition, we continue to see opportunities for strategic acquisitions that will enhance shareholder value into the future." Flowers Industries, Inc., headquartered in Thomasville, Ga., is a national branded baked foods company which produces and markets a full line of fresh and frozen packaged baked foods for retail, foodservice, deli/bakery, institutional and vend providers. These products are sold under such well- known brands as Keebler, Cheez-It, Famous Amos, Mrs. Smith's, Pet-Ritz, Nature's Own, and Cobblestone Mill. Note: Flowers Industries will make a dividend announcement on May 28, 1999 following the scheduled meeting of its board of directors. Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. 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, changes in general economic and business conditions (including in the baked foods markets), the Company's ability to recover its raw materials costs in the pricing of its products, the availability of capital on acceptable terms, actions of competitors, the extent to which the Company is able to develop new products and markets for its products, and such other factors as are described in the Company's filings with the Securities and Exchange Commission. Flowers Industries, Inc. Condensed Consolidated Balance Sheet (000's omitted) April 24, 1999 April 25, 1998 Assets Current Assets $ 655,439 $ 635,900 Property, Plant & Equipment, net 1,022,715 931,916 Other Assets 87,836 86,515 Cost in Excess of Net Tangible Assets, net 996,488 552,148 Total Assets $ 2,762,478 $ 2,206,479 Liabilities and Stockholders' Equity Current Liabilities $ 637,227 $ 612,154 Long-Term Debt 1,052,775 839,742 Deferred Income Taxes 174,726 108,606 Postretirement/Postemployment Obligations 64,038 62,756 Facility Closing Costs and Severance 37,311 44,689 Other Liabilities 58,571 35,205 Minority Interest 157,171 113,811 Common Stockholders' Equity 580,659 389,516 Total Liabilities and Stockholders' Equity $ 2,762,478 $ 2,206,479 Flowers Industries, Inc. Consolidated Statement of Income (000's omitted, except per share data ) For the 16 Weeks Ended April 24, 1999 April 25, 1998 Difference Sales $ 1,304,513 100.00% $ 1,077,034 100.00% 21.12% Materials, supplies, labor and other production costs 607,944 46.60 486,290 45.15 Gross margin 696,569 53.40 590,744 54.85 17.91% Selling, marketing and administrative expenses 561,294 43.03 500,571 46.48 Depreciation and amortization 40,451 3.10 34,196 3.18 Income from operations (EBIT) 94,824 7.27 55,977 5.20 Interest expense, net 25,953 1.99 19,145 1.78 Income before income taxes, minority interest and cumulative effect of a change in accounting principle 68,871 5.28 36,832 3.42 Income taxes 29,384 2.25 15,486 1.44 Income before minority interest and cumulative effect of a change in accounting principle 39,487 3.03 21,346 1.98 Minority interest (14,652) (1.12) (6,318) (0.59) Income before extraordinary loss and cumulative effect of a change in accounting principle 24,835 1.90 15,028 1.40 65.26% Cumulative effect of a change in accounting principle, net of tax benefit 0 0.00 (3,131) (0.29) Net income $ 24,835 1.90% $ 11,897 1.10% 108.75% EBITDA $ 135,275 10.37% $ 90,173 8.37% 50.02% Diluted Net Income Per Common Share: Basic: Income before cumulative effect of a change in accounting principle, net of tax benefit $ 0.25 $ 0.17 47.06% Cumulative effect of a change in accounting principle, net of tax benefit 0.00 (0.04) Net income per share $ 0.25 $ 0.13 32.37% Weighted average shares outstanding 100,317 90,727 Cash Dividends Paid Per Common Share $ 0.1250 $ 0.1150 8.70% Flowers Industries, Inc. Segment Reporting (000's omitted) For the 16 Weeks Ended April 24, 1999 April 25, 1998 Sales: Flowers Bakeries, Inc. $ 295,134 $ 285,958 Mrs. Smith's Bakeries, Inc. 158,200 154,880 Keebler Foods Company 852,033 636,746 Other (854) (550) $ 1,304,513 $ 1,077,034 Income Before Interest and Taxes: Flowers Bakeries, Inc. $ 20,512 $ 19,995 Mrs. Smith's Bakeries, Inc. 10,872 10,056 Keebler Foods Company 70,645 31,676 Unallocated General Expenses (7,205) (5,750) $ 94,824 $ 55,977  