<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K
  (Mark one)

  (X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 (FEE REQUIRED)

  For the fiscal year ended  September 29, 1996  or
                            -------------------

  ( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

  For the transition period from               to
                                ---------------   --------------

  Commission file number: 1-11420
                          -------

                     SAVANNAH FOODS & INDUSTRIES, INC.
                     ---------------------------------
          (Exact name of Registrant as specified in its Charter)

            Delaware                                        58-1089367
            --------                                        ----------
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                         identification No.)

                  P.O. Box 339, Savannah, Georgia 31402
                  -------------------------------------
          (Address of principal executive offices with zip code)

  Registrant's telephone number, including area code (912)234-1261
                                                     -------------

  Securities registered pursuant to Section 12(b) of the Act:

                 Common Stock - Par Value: $.25 per share
                 ----------------------------------------
                             (Title of Class)

  Securities registered pursuant to Section 12(g) of the Act:

                                   None
                                   ----
                             (Title of Class)

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 and (2) has been subject to such filing requirements for
the past 90 days.  Yes   X        No
                       -----         -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )

At November 30, 1996, there were 26,238,196 shares of Common Stock outstanding.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant on November 30, 1996 was $373,894,293.

Documents Incorporated by Reference: Portions of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on February 20, 1997
are incorporated by reference in Part III hereof.



<PAGE>   2


                              TABLE OF CONTENTS

                                    PART I

Item 1.   Business ................................................  3
          Statement on Business Risks and Forward Looking
           Information ............................................  5
Item 2.   Properties ..............................................  6
Item 3.   Legal Proceedings .......................................  7
Item 4.   Submission of Matters to a Vote of Security Holders .....  7

                                   PART II

Item 5.   Market for the Registrant's Common Stock and Related
           Stockholder Matters ....................................  8
Item 6.   Selected Financial Data .................................  8
Item 7.   Management's Discussion and Analysis of Financial
           Condition and Results of Operations .................... 10
Item 8.   Financial Statements and Supplementary Data ............. 15
Item 9.   Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure .................... 37

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant ...... 39
Item 11.  Executive Compensation .................................. 39
Item 12.  Security Ownership of Certain Beneficial Owners and
           Management ............................................. 39
Item 13.  Certain Relationships and Related Transactions .......... 39

                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports
           on Form 8-K............................................  40



              FORWARD LOOKING STATEMENTS-SAFE HARBOR PROVISIONS

        Any statements in this Form 10-K regarding future market prices or
operating results or any other statements that are not historical facts
constitute "forward looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All forward looking statements involve risks and uncertainties. Any forward
looking statements in this document are intended to be subject to the safe
harbor protection provided by Sections 27A and 21E. For a discussion identifying
some important factors that could cause actual results to vary materially from
those anticipated in forward looking statements, see the "Competition" and
"Statement on Business Risks and Forward Looking Information" sections on pages
5 and 6 of this Form 10-K.



                                       2

<PAGE>   3


                                       PART I

Item 1.  Business

        Savannah Foods & Industries, Inc. (the "Registrant") was incorporated in
Delaware on February 19, 1969, as the successor to Savannah Sugar Refining
Corporation, which was originally incorporated in New York in 1916.

        The Registrant and its subsidiaries collectively comprise one business
segment and are engaged in the production, marketing, and distribution of food
products, primarily refined sugar.

        The Registrant and its wholly-owned subsidiaries, Savannah Foods
Industrial, Inc. and Dixie Crystals(R) Brands, Inc., are engaged in the refining
and marketing of a complete line of bulk and liquid sugars and sugar products,
including edible molasses and liquid animal feeds. They also produce and market
a complete line of packaged sugars and portion control items consisting of sugar
envelopes, artificial sweeteners, salt, pepper, non-dairy creamer, and certain
other products. Industrial and grocery products are marketed primarily in the
southeastern portion of the United States, Louisiana, and Texas, but are also
widely distributed into other states generally east of the Mississippi and south
of New England. Foodservice products are marketed throughout the United States.
Products are marketed under the trade names Dixie Crystals(R), Evercane(R),
Savannah Gold(R), and Quick'n Sweet(TM) but are also sold under the Registrant's
other controlled labels and under customers' private label brands. The
Registrant's saccharin-based sweetener is marketed under the trade name Sweet
Thing(R) and its aspartame-based sweetener is marketed under the trade name
Sweet Thing II(R). These products are marketed both by means of direct sales and
through brokers and are primarily distributed directly to the customer by common
carrier truck or railcar, including Registrant-owned vehicles.

        Michigan Sugar Company, a wholly-owned subsidiary of the Registrant, and
its wholly-owned subsidiary, Great Lakes Sugar Company, are engaged in the
processing of sugarbeets into refined sugar and the production of beet pulp and
molasses. The refined sugar is marketed primarily in the states of Michigan and
Ohio, but is also distributed in the midwestern and eastern parts of the United
States. Packaged sugar is marketed under the trade name PIONEER(R), but is also
sold under customers' private label brands. These products are marketed both by
means of direct sales and through brokers and are primarily distributed
directly to the customer by common carrier truck or railcar, including
Registrant-owned vehicles. Most of the beet pulp is pelletized and sold for
export. The balance is sold in the domestic market. The majority of the
molasses is normally sold to the 




                                       3

<PAGE>   4

Registrant's beet molasses desugarization facility for further processing to
recover additional sugar.

        Due to a significant decrease in the number of sugarbeet acres
contracted to be grown in 1996 in the Ohio sugarbeet growing areas, the
Registrant has decided not to operate Great Lakes Sugar Company's beet
processing facility in Fremont, Ohio during fiscal 1997. In conjunction with
this decision, due to the lack of availability of reasonably priced molasses,
the Registrant has also decided not to operate its molasses desugarization
facility which is also located in Fremont.

        King Packaging Company, Inc., a wholly-owned subsidiary of Dixie
Crystals(R) Brands, Inc., packs custom made meal kits for the food service
industry and provides complementary products to the sugar and portion control
products manufactured at the Registrant's other locations. These products are
marketed to the foodservice trade through-out the United States both by means
of direct sales and through brokers and are primarily shipped directly to
customers by common carrier truck.

        During fiscal 1996, the Registrant sold the property, plant and
equipment and certain other operating assets of Raceland Sugars, Inc., its raw
sugar mill.

        Raw Materials. A large portion of the raw sugar for the Registrant's
Port Wentworth, GA refinery, and all the raw sugar for the Clewiston, FL
refinery, is normally supplied by cane sugar producers in the state of Florida.
A large portion of the raw sugar for the Registrant's Gramercy, LA refinery is
normally supplied by cane sugar producers in the state of Louisiana. In the case
of the Savannah and Gramercy refineries, the remaining raw sugar requirements
are purchased on the open market, and consist of off-shore cargoes purchased
directly and through raw sugar trade houses. The Registrant uses the futures
market as a hedging and purchasing mechanism, as circumstances warrant.

        Michigan Sugar Company and its subsidiary, Great Lakes Sugar Company,
process sugarbeets under annual contracts from Michigan and Ohio farmers. The   
land around the processing plants of the company is well suited to growing 
sugarbeets. Until 1996, the company had not experienced difficulty in obtaining
a sufficient quantity of beets to support successful operation of its plants.
However, because of unusually high grain prices during the Spring 1996 planting
season, the company was unable to contract for a sufficient number of beet
sugar acres in Ohio to make operation of the Fremont, Ohio beet facility
economical. Also, the acreage contracted in Michigan has decreased from prior
years for the same reason, but the company has 




                                       4


<PAGE>   5

been able to contract enough acres to profitably operate the beet processing
plants in Michigan. Under the contracts with the farmers, certain sales expenses
and other non-processing expenses are first deducted from the proceeds of
refined sugar, pulp, and molasses sales after which the balance is divided
between the company and the farmers.

        Competition. All phases of the refined sugar business and all geographic
markets of the business engaged in by the Registrant and its subsidiaries are
highly competitive. This competition is not only with other cane sugar refiners
and beet sugar processors, but also with corn sweeteners, artificial sweeteners,
and with resellers who purchase all of these sweeteners. Competing cane sugar
refineries are located in Florida, Louisiana, Maryland, New York, Texas, and
California. Competing beet sugar processors are located in California, Colorado,
Idaho, Michigan, Minnesota, Montana, Nebraska, North Dakota, Oregon, Texas, and
Wyoming.

        Competition is primarily based upon price, but is also based upon
product quality and customer service. At times, the cane sugar refiners are at a
competitive disadvantage to the beet sugar producers due to differing methods by
which raw materials are purchased. In the beet industry, the beet farmers
participate in any increase or decrease in the selling price of refined sugar.
However, in the cane industry, refiners purchase raw sugar at prices which are
kept artificially high by United States policy to support sugar farmers, and
which do not fluctuate in tandem with refined sugar selling prices.
Consequently, when competitive pressures reduce refined sugar prices, the
margins of cane sugar refiners are affected more adversely that those of beet
sugar producers.

        Number of Employees. At September 29, 1996, Registrant and its
subsidiaries had 1,898 full-time employees. In addition, Michigan Sugar Company
and Great Lakes Sugar Company employ a number of seasonal workers during the
beet processing campaigns.

        Statement on Business Risks and Forward Looking Information. The
Registrant generally does not make specific projections about future income or
provide other specific forward looking information. However, due to changes
brought about by the Private Securities Litigation Reform Act of 1995, we
believe it is appropriate to outline several key factors which impact the
Registrant's future performance.

        All phases of the Registrant's business are very competitive with the
primary competitors being other sugar cane refiners and beet sugar processors.
Because sugar is a commodity, competition is based primarily upon price, but is
also based upon product quality and customer service. The Registrant is
diversified into all marketing 



                                       5

<PAGE>   6

and production (i.e. cane and beet) phases of the refined sugar industry, but
the majority of its capacity, approximately 85%, is cane sugar, with the
remaining 15% being beet sugar. Thus, its operating results are influenced
mostly by factors which affect the cane sugar industry.

        Cane sugar refiners operate on large volumes and small margins.
Consequently, a small percentage change in sales prices or in the cost of raw
materials or manufacturing costs can result in a large percentage change in
income from operations.

        In today's market, the primary driver of refined sugar sales prices is
the amount of beet sugar produced. A large amount of beet sugar generally means
lower prices as beet producers sell their larger production by undercutting the
prices of cane sugar refiners. The amount of beet sugar produced not only
affects selling prices, but also affects the per unit manufacturing costs of the
sugar industry. Many of the costs in the manufacturing process, whether beet or
cane, are fixed and must be divided among the actual production. As volume
increases or decreases, per unit manufacturing costs decrease or increase,
respectively. Thus, forecasting the amount of beet sugar which will be produced
is an essential element in predicting the Company's profitability.

        In addition to sales prices and per unit manufacturing costs, the other
primary factor in determining operating income is the cost of raw sugar, which
is by far the largest single cost of producing refined cane sugar. Raw sugar is
a commodity, and while the Registrant purchases it using many different pricing
methods, the price is always based in some manner on the market price of raw
sugar as determined by the commodities market. Thus, its price is subject to the
numerous variables that affect the price of any commodity. In general, however,
the price of raw sugar is supported at an artificially high level through the
sugar program portion of the U.S. Government's Farm Bill.

        Forward looking information affecting the Registrant and the sugar
industry should be considered within this context.

Item 2.  Properties.

        Registrant and its wholly-owned subsidiaries own and operate three cane
sugar refineries, two sugar melt and transfer facilities, five sugarbeet
processing plants, a beet molasses desugarization facility, and four foodservice
production facilities.

        The three cane sugar refineries are located in Port Wentworth, Georgia;
Gramercy, Louisiana and Clewiston, Florida and are owned by





                                       6

<PAGE>   7

Savannah Foods Industrial, Inc. The Port Wentworth facility borders the Savannah
River and the Gramercy facility borders the Mississippi River. Both of these
locations include a deep water dock with facilities for shipping and receiving
ocean-going vessels.

        Savannah Foods Industrial, Inc. also owns sugar melt and transfer
facilities in St. Louis, Missouri and Ludlow, Kentucky. The St. Louis facility
borders on the Mississippi River and has a dock for receiving sugar and molasses
shipments.

        Michigan Sugar Company owns and operates four sugarbeet processing
plants which are located in Caro, Carrollton, Sebewaing, and Croswell, Michigan.
Great Lakes Sugar Company owns and operates a sugarbeet processing plant in
Fremont, Ohio and a storage facility in Findlay, Ohio. The beet molasses
desugarization facility, which is owned by Registrant, is located in Fremont,
Ohio.

        Dixie Crystals(R) Brands, Inc. owns production facilities in Perrysburg,
Ohio; Visalia, California and Savannah, Georgia. Also, King Packaging Company,
Inc. owns and operates a packaging facility in Bremen, Georgia.

        The facilities listed above provide Registrant with sufficient
productive capacity to meet the demands of its current markets.

Item 3.  Legal Proceedings.

     Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.

        No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1996.




                                       7

<PAGE>   8


                                   PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder  Matters.

        Registrant's common stock, par value $.25 per share ("Common Stock"), is
listed and traded on the New York Stock Exchange ("NYSE") under the symbol
"SFI". The following table sets forth for the periods indicated the high and low
sales prices on the NYSE composite tape. The information provided has been
adjusted to the nearest 1/8 and was compiled from quotations furnished by the
New York Stock Exchange. Registrant has paid cash dividends on its Common Stock
every year since 1924. The following information is for the twelve-month periods
ended September 29, 1996 and October 1, 1995:

<TABLE>
<CAPTION>
                 Quarter                            Dividends
                 Ended     High      Low            Paid
                 -------   ----      ---            ---------
                 <S>       <C>       <C>            <C>   
                 12/31/95  $13.875   $11.375        $.025
                 03/31/96   13.000    10.500         .025
                 06/30/96   13.625    10.750         .025
                 09/29/96   14.000    11.250         .025
                                                    -----
                                                    $.100
                                                    =====

                 01/01/95  $14.750   $10.750        $.135
                 04/02/95   14.625    10.375         .135
                 07/02/95   11.875     9.000         .025
                 10/01/95   14.125    10.375         .025
                                                    -----
                                                    $.320
                                                    =====
</TABLE>

            As of September 29, 1996, the following indicates the number of
       holders of record of equity securities:
<TABLE>
<CAPTION>
                 Title of Class      Number of Record Holders
                 --------------      ------------------------
                 <S>                           <C>
                 Common Stock                  2,984
</TABLE>
Item 6.  Selected Financial Data.

            See following page.




                                       8
<PAGE>   9
SAVANNAH FOODS & INDUSTRIES, INC.
Summary of Operations

(In Thousands except for per share amounts and ratios)

<TABLE>
<CAPTION>
                                                                              Fiscal Period Ended
                                                      --------------------------------------------------------------------
                                                      September 29,   October 1,    October 2,    October 3,    January 3,
                                                          1996           1995          1994        1993 (1)        1993
--------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>           <C>           <C>           <C>
OPERATIONS FOR THE FISCAL PERIOD
   Net sales......................................... $1,146,332      $1,098,544    $1,074,367    $  818,116    $1,138,114
   Income from operations............................     21,799           7,401        19,432        11,839        49,143
   Income (loss) before change in accounting                                                                  
     principle and extraordinary item................      6,943          (3,493)        5,743         1,986        27,340
   Net income (loss) (2).............................      5,972          (3,493)        5,743         2,586         9,170
   Other income statement information -                                                                       
     Depreciation and amortization expense...........     27,994          28,314        28,972        19,362        23,705
     Interest expense................................     12,355          14,847        13,380        10,226        10,526
     Provision for (benefit from) income taxes.......      2,738          (2,585)        2,863         1,155        13,628
   Cash dividends declared...........................      2,624           8,396        14,169        10,627        13,890
   Capital expenditures (3)..........................      7,916          17,303        22,218        39,877        45,301
--------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT THE END OF THE FISCAL PERIOD
   Current assets.................................... $  180,552      $  197,802    $  198,880    $  269,990    $  371,387
   Current liabilities...............................     85,946         114,740        85,140       154,760       233,519
   Working capital...................................     94,606          83,062       113,740       115,230       137,868
   Property, plant and equipment - gross.............    406,729         436,991       421,312       407,924       355,435
   Accumulated depreciation..........................    220,183         206,100       180,810       159,111       129,306
   Total assets......................................    398,261         476,507       486,127       567,852       635,755
   Long-term debt....................................     59,754         106,864       140,224       142,078       126,464
   Stockholders' equity..............................    173,727         169,649       188,174       194,714       210,620
--------------------------------------------------------------------------------------------------------------------------
PER SHARE
   Weighted average shares outstanding...............     26,238          26,238        26,238        26,238        26,491
   Shares outstanding at end of fiscal period........     26,238          26,238        26,238        26,238        26,238
   Income (loss) per weighted average share
   outstanding -
      Income (loss) before change in accounting
        principal and extraordinary item.............   $   0.27      $    (0.13)   $     0.22    $     0.08    $     1.03
      Net income (loss)..............................       0.23           (0.13)         0.22          0.10          0.35
    Dividends declared per share.....................       0.10            0.32          0.54         0.405         0.525
    Stockholders' equity per share (4)...............       6.62            6.47          7.17          7.42          8.03
--------------------------------------------------------------------------------------------------------------------------
RATIOS
   Current assets divided by current liabilities.....       2.10            1.72          2.34          1.74          1.59
   Long-term debt divided by long-term debt
      and stockholders' equity.......................       25.6%           38.6%         42.7%         42.2%         37.5%
   Provision for (benefit from) income taxes divided
      by pre-tax income (loss).......................       28.3%           42.5%         33.3%         33.8%         33.3%
</TABLE>

(1)    During the fiscal period ended October 3, 1993, the Company changed its
       year end from the Sunday closest to December 31 to the Sunday closest to
       September 30.  As a result, the fiscal period ended October 3, 1993
       represents a 39 week period.

(2)    The Company recorded an extraordinary item for penalties incurred on the
       prepayment of long-term debt during the fiscal period ended September 29,
       1996.  For more information, see Note 5 to the accompanying consolidated
       financial statements.  The Company adopted FAS 109, "Accounting for
       Income Taxes" during the fiscal period ended October 3, 1993 and adopted
       FAS 106, "Employers' Accounting for Postretirement Benefits Other Than
       Pensions" during the fiscal period ended January 3, 1993.

(3)    Includes acquisition of Reckitt & Colman, Inc. fixed assets in January
       1995 totalling $1,000,000, and King Packaging Company, Inc. fixed assets
       in July 1993 totalling $4,757,000.

(4)    Based on shares outstanding at end of fiscal period.





                                       9
<PAGE>   10
Item 7.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations.

Fiscal 1996 Highlights:

        During 1996, the Company recorded an impairment loss and other costs of
$13,654,000 against "Income from operations" as discussed in Notes 2 and 11 and
to the consolidated financial statements. The majority of this amount was the   
impairment loss of $10,280,000 on a facility the Company cannot operate
profitably due to a shortage of sugarbeets and molasses. The Company also
recorded an extraordinary after-tax charge in 1996 of $971,000 related to the
prepayment of debt. These charges had a significant one-time negative impact on
the Company's net income.

        Regarding the Company's financial position and operating results, the
management of Savannah Foods has been aggressively executing the following 
steps.

Improving asset efficiency and strengthening the balance sheet -

            During 1996, the Company used its cash provided by operations
            and the cash generated by the items mentioned below to reduce total
            long-term debt from $113,164,000 at the end of 1995 to $61,924,000
            at the end of 1996. Management has been concentrating on reducing
            working capital, selling non-operating and under-performing
            operating assets, and reinvesting in its business to increase the
            Company's value-added products. In this regard, the Company sold
            Raceland Sugars, Inc. in 1996 for $12,500,000, reduced operating
            working capital (working capital, excluding cash and interest
            bearing debt) by $11,112,000 from the end of 1995 to the end of
            1996, surrendered company owned life insurance for $13,869,000, and
            reinvested in its business $7,916,000 of the $27,994,000
            depreciation and amortization recorded in 1996.

            In addition, the Company established a Benefit Trust as discussed
            in Note 7 with 2,500,000 shares of treasury stock to enhance the
            Company's financial flexibility to provide funds to satisfy its
            obligations under various employee benefit plans and agreements.

Streamlining the Company's cost structure -

            Management is committed to maintaining its roughly 20% share of the
            U.S. sugar market. To do this, the Company must remain competitive
            by eliminating costs which are not necessary to serve its customers.


                                      10
<PAGE>   11


            The debt reduction discussed above reduced interest expense in 1996
            as compared to 1995 by $2,492,000. Additionally, during 1996 the
            Company reduced costs by $8,500,000 and took actions that are
            expected to reduce costs by an additional $11,500,000 in 1997.
            Major actions taken in 1996 were a reduction in sugar production
            costs of $2,650,000 compared to 1995; the sale of the Company's
            plane and other reductions in travel expenses which saved $960,000
            in 1996 as compared to 1995; and a reduction in headcount of 109
            people, or 5%.

            During 1996, the Company also modified retirement plans as
            discussed in Notes 8 and 9 which reduced the projected benefit
            obligation of its pension and SERP plans by a present value of
            $6,698,000 and froze the Company's compensation deferral plans.

Results of Operations:

Fiscal 1996 compared to fiscal 1995

        The Company's net income for fiscal 1996 was $5,972,000, or $.23 per
share, on sales of $1,146,332,000, compared to a net loss ($3,493,000), or
($.13) per share, on sales of $1,098,544,000 for fiscal 1995. Fiscal 1996 net
income includes an after-tax extraordinary charge of $971,000, or $.04 per
share, for the prepayment of long-term debt. Domestic sugar sales volumes
increased 5% over fiscal 1995, but overall sugar sales volume was flat as export
volume decreased significantly from fiscal 1995. Domestic sugar sales prices
increased 4% and average raw sugar costs decreased 2%.

        Fiscal 1996 income from operations includes three significant
transactions which affect the comparability between fiscal 1996 and fiscal 1995.
First, in the first quarter of 1996, the Company sold its plane resulting in a
gain of $2,289,000. Second, in the second quarter of fiscal 1996, the Company
sold the property, plant and equipment and certain other assets of Raceland
Sugars, Inc., its raw sugar mill subsidiary, for $12,500,000 cash and recognized
a loss on the sale of $3,800,000. This amount is included in the caption "Other
costs" in the accompanying Consolidated Statement of Operations. After
liquidation of the inventories and other working capital accounts, the Company
received net proceeds of approximately $15,000,000 on the sale of Raceland.
Third, in accordance with Statement of Financial Accounting Standards No. 121 -
Accounting for the Impairment of Long-Lived Assets and for Assets to be Disposed
Of, the Company recorded a non-cash charge in the fourth quarter of 1996
of $10,280,000 ($6,476,000, or $.25 per share, net of tax) for the impairment of
long-lived assets located at the Company's Fremont, Ohio beet sugar
manufacturing facility. A decision was made not to run the Fremont facility
during fiscal 1997 due to a lack of a viable supply 




                                      11
<PAGE>   12

of sugarbeets and molasses. Future operation of the facility is dependent on an
adequate supply of sugarbeets and molasses. However, the projected future cash
flows from this facility are less than the carrying value of the assets;
therefore, an impairment loss has been recognized. These amounts are included in
the caption "Impairment of long-lived assets" in the accompanying Consolidated
Statement of Operations.

        Fiscal 1996 income from operations before the above transactions was
$33,590,000, up $26,189,000 from fiscal 1995. The large increase resulted from
smaller domestic beet sugar production of 3.9 million tons in fiscal 1996
compared to 4.5 million tons in fiscal 1995. The reduction in beet sugar
improved refined sugar selling prices and, therefore, the Company's
profitability. Additionally, average raw sugar costs have decreased from fiscal
1995 which has also increased profitability.

        The Company's cane sugar divisions experienced significant domestic
volume and margin increases over fiscal 1995 as the reduced domestic beet crop
and increased sugar consumption provided more sales opportunities for cane
refiners.

        The Company's beet sugar division benefited from the higher refined
sales prices, but reported much lower operating profit due to significantly
reduced sugar production. The sugarbeet crop was smaller and of lesser quality
due to poor growing conditions and an insect infestation.

        Selling, general and administrative expenses decreased $1,199,000 in
fiscal 1996 from fiscal 1995 despite a $1,177,000 increase in advertising costs
related to the Company's new products.

        Interest expense decreased compared to fiscal 1995 as a result of lower
long-term debt levels throughout the year resulting from the prepayment of the
Senior Notes.

        In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 - Accounting for
Stock-Based Compensation, which the Company is required to adopt next fiscal
year. Management has not decided whether the Company will adopt the accounting
requirements or the alternative disclosure requirements. Management does not
expect this statement to have a material impact on the Company's results of
operations.


        Management expects that fiscal 1997 will be a good year for the Company
because refined sugar sales margins and volumes are expected to be higher than
in fiscal 1996.




                                      12

<PAGE>   13


Fiscal 1995 compared to fiscal 1994

        The Company's results of operations for the fiscal year ended October 1,
1995 was a net loss of ($3,493,000), or ($.13) per share, on sales of
$1,098,544,000, compared to income of $5,743,000, or $.22 per share, on sales of
$1,074,367,000 for the fiscal year ended October 2, 1994. Sugar sales volume was
flat compared to fiscal 1994 while sugar sales prices increased slightly.
Average raw sugar costs increased dramatically in fiscal 1995, from $22.07 per
cwt. in fiscal 1994, to $23.03 per cwt. in fiscal 1995. Raw sugar shortages in
the summer of 1995 pushed raw sugar costs as high as $25.70 per cwt. in late
July 1995.

        This rise in raw sugar costs primarily affected the cane refining
divisions which, as a result, reported an operating loss for fiscal 1995.
Focused selling of higher value-added sugar and non-sugar products, along with
lower operating costs, helped somewhat offset the higher raw sugar costs. The
cane refining division's loss also included a $1,615,000 charge for the
settlement of litigation, a $1,472,000 charge for a workforce reduction, and a
$1,197,000 charge related to capital projects which were not pursued because of
changing business circumstances. Fiscal 1994 also included a $2,950,000
charge for the same litigation referenced above.

        The beet sugar division's sales volume decreased 3% in fiscal 1995 due
to marketing allotments imposed by the U. S. Department of Agriculture which
restricted the amount of sugar sold. However, higher sugar content in the
beets resulted in lower processing costs per cwt., and operating income in this
division increased substantially over fiscal 1994. Higher molasses and beet pulp
prices also contributed to the increased earnings.

        Selling, general and administrative expenses increased 5% in fiscal 1995
from fiscal 1994 primarily due to higher advertising and selling costs.

        Interest expense increased as a result of higher interest rates on
short-term borrowings for working capital.

Liquidity and Capital Resources:

        The Company maintains revolving credit facilities, as discussed below,
to provide liquidity for short-term operating needs. The Company also has the
ability to fund seasonal increases in inventory through borrowings from the
Commodity Credit Corporation.  These two sources of short-term funds provide
ample liquidity to the Company to meet its operating cash requirements.




                                      13
<PAGE>   14



        During April 1996, the Company entered into a new revolving credit
agreement aggregating $120,000,000, of which $7,500,000 was outstanding as
short-term debt at year end. Under this agreement, a Standby Letter of Credit
(SLC) is drawn in favor of the Senior Note lenders. The SLC is maintained at
105% of the Senior Notes outstanding and was $26,250,000 at September 29, 1996.
In connection with the execution of this agreement, the Senior Note agreement
was amended to remove all of the financial ratio covenants. The remaining
available balance of the revolving credit agreement of $86,250,000 is intended
to meet working capital and other cash needs as they arise. All of the
$120,000,000 of available facilities are committed through January 1, 2000. The
Company also has available a $10,000,000 discretionary line of credit with a
bank.

        Long-term debt, including the current portion, decreased $51,240,000
during fiscal 1996. The debt payments were funded with the liquidation of
non-current assets discussed above and cash provided by operations. Changes in
debt and equity resulted in a decrease in the ratio of long-term debt to total
capital from 39% to 26%.

        At September 29, 1996, stockholders' equity was $173,727,000 compared to
equity at October 1, 1995, of $169,649,000. Equity primarily increased by net
income of $5,972,000, and decreased by dividends of $2,624,000.

        Fixed asset additions of $7,916,000 during fiscal 1996 were primarily
made to upgrade and install packaging and production equipment. These projects
are expected to benefit the Company through new packaging, increased
efficiency, improved quality control, and expanded operational capabilities.
The Company expects that expenditures for fixed assets in fiscal 1997,
exclusive of any acquisitions, will approximate $17,000,000 and that
depreciation and amortization for fiscal 1997 will be lower than that of
1996 because of the asset write-downs and disposals discussed above, and should
approximate $23,000,000.





                                      14


<PAGE>   15


Item 8.  Financial Statements and Supplementary Data.

(a)  Financial Statements:                                 Page

     Report of Independent Accountants                       16

     Consolidated Balance Sheets at September 29, 1996
     and October 1, 1995                                     17

     Consolidated Statements of Operations for the
     fiscal years ended September 29, 1996,
     October 1, 1995, and October 2, 1994                    18

     Consolidated Statements of Changes in Stockholders'
     Equity for the fiscal years ended September 29, 1996,
     October 1, 1995, and October 2, 1994                    19

     Consolidated Statements of Cash Flows for the fiscal
     years ended September 29, 1996, October 1, 1995,
     and October 2, 1994                                     20

     Notes to Consolidated Financial Statements              21

(b)  Financial Statement Schedules for the fiscal years ended September
     29, 1996, October 1, 1995, and October 2, 1994:

     Schedules are omitted because they are not applicable, or the required
information is shown in the financial statements or notes thereto.




                                      15
<PAGE>   16


                      Report of Independent Accountants


November 18, 1996

To the Stockholders and Board of Directors
of Savannah Foods & Industries, Inc.

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Savannah Foods & Industries, Inc. and its subsidiaries at September
29, 1996 and October 1, 1995, and the results of their operations and their
cash flows for the fifty-two weeks ended September 29, 1996, October 1, 1995
and October 2, 1994, in conformity with generally accepted accounting
principles.  These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis 
for the opinion expressed above.


PRICE WATERHOUSE LLP
Atlanta, Georgia




                                     16

<PAGE>   17



                       SAVANNAH FOODS & INDUSTRIES, INC.
                          Consolidated Balance Sheets
             (In thousands except for shares and per share amounts)


<TABLE>
<CAPTION>
                                                           September 29,    October 1,
                                                               1996            1995
Assets                                                    --------------   ------------
<S>                                                       <C>              <C>
Current assets:
  Cash and cash equivalents                                $     15,300    $     11,574
  Accounts receivable                                            76,109          66,991
  Inventories (net of LIFO reserve of $8,018 in 1996 and
    $10,460 in 1995) (Note 3)                                    83,929         103,121
  Other current assets                                            5,214          16,116
                                                           ------------    ------------
      Total current assets                                      180,552         197,802
Property, plant and equipment (Note 4)                          186,546         230,891
Other assets                                                     31,163          47,814
                                                           ------------    ------------
                                                           $    398,261    $    476,507
                                                           ============    ============
Liabilities and Stockholders' Equity

Current liabilities:
  Short-term borrowings (Note 5)                           $      7,500    $     22,300
  Current portion of long-term debt (Note 5)                      2,170           6,300
  Trade accounts payable                                         52,701          63,259
  Other liabilities and accrued expenses                         23,575          22,881
                                                           ------------    ------------
    Total current liabilities                                    85,946         114,740
                                                           ------------    ------------
Long-term debt (Note 5)                                          59,754         106,864
                                                           ------------    ------------
Deferred employee benefits                                       78,834          85,254
                                                           ------------    ------------
Stockholders' equity (Note 7):
  Common stock $.25 par value; $.55 stated value;
   64,000,000 shares authorized; 31,306,800 shares issued        17,365          17,365
  Capital in excess of stated value                              31,764          12,190
  Retained earnings                                             193,524         190,176
  Treasury stock, at cost (2,568,604 shares in 1996 and
    5,068,604 shares in 1995)                                   (15,849)        (31,275)
  Minimum pension liability adjustment                          (14,038)        (14,842)
  Stock held by benefit trust, at market (2,500,000 shares
    in 1996)                                                    (35,000)              -
  Other                                                          (4,039)         (3,965)
                                                           ------------    ------------
      Total stockholders' equity                                173,727         169,649
                                                           ------------    ------------
Commitments and contingencies (Note 10)                               -               -
                                                           ------------    ------------
                                                           $    398,261    $    476,507
                                                           ============    ============
</TABLE>



(The accompanying notes are an integral part of the consolidated financial
statements.)



                                      17


<PAGE>   18

                       SAVANNAH FOODS & INDUSTRIES, INC.
                     Consolidated Statements of Operations
             (In thousands except for shares and per share amounts)



<TABLE>
<CAPTION>
                                                         Fiscal Year Ended
                                          -----------------------------------------------
                                          September 29,      October 1,       October 2,
                                              1996             1995             1994
                                          -------------    -------------    -------------
<S>                                       <C>              <C>              <C>
Net sales                                 $   1,146,332    $   1,098,544    $   1,074,367
                                          -------------    -------------    -------------
Operating expenses:
  Cost of sales and operating expenses        1,028,218        1,002,679          969,621
  Selling, general and
    administrative expenses                      54,667           55,866           53,392
  Depreciation and amortization                  27,994           28,314           28,972
  Impairment of long-lived assets (Note 2)       10,280                -                -
  Other costs (Note 11)                           3,374            4,284            2,950
                                          -------------    -------------    -------------
                                              1,124,533        1,091,143        1,054,935
                                          -------------    -------------    -------------
Income from operations                           21,799            7,401           19,432
                                          -------------    -------------    -------------
Other income and (expenses):
  Interest and other investment income              847            1,258            2,170
  Interest expense                              (12,355)         (14,847)         (13,380)
  Other income (expense)                           (610)             110              384
                                          -------------    -------------    -------------
                                                (12,118)         (13,479)         (10,826)
                                          -------------    -------------    -------------
Income (loss) before income taxes
  and extraordinary item                          9,681           (6,078)           8,606
Provision for (benefit from)
  income taxes (Note 6)                           2,738           (2,585)           2,863
                                          -------------    -------------    -------------
Income (loss) before extraordinary
  item                                            6,943           (3,493)           5,743
Extraordinary item, net of tax (Note 5)            (971)               -                -
                                          -------------    -------------    -------------
Net income (loss)                         $       5,972    $      (3,493)   $       5,743
                                          =============    =============    =============
Per share:
  Income (loss) before
    extraordinary item                    $        0.27    $       (0.13)   $        0.22
  Extraordinary item (Note 5)                     (0.04)               -                -
                                          -------------    -------------    -------------
  Net income (loss)                       $        0.23    $       (0.13)   $        0.22
                                          =============    =============    =============

  Dividends                               $        0.10    $        0.32    $        0.54
                                          =============    =============    =============
Weighted average shares outstanding          26,238,196       26,238,196       26,238,196
                                          =============    =============    =============
</TABLE>

(The accompanying notes are an integral part of the consolidated financial
statements.)





                                      18


<PAGE>   19

                       SAVANNAH FOODS & INDUSTRIES, INC.
           Consolidated Statements of Changes in Stockholders' Equity
                                 (In thousands)




<TABLE>
<CAPTION>
                                           Capital in                          Minimum
                                           Excess of                           Pension    Stock Held
                                Common      Stated     Retained    Treasury   Liability   By Benefit
                                Stock       Value      Earnings      Stock    Adjustment     Trust       Other      Total
                                --------   ---------  ---------   ----------  ----------  ----------  ---------  ---------
<S>                             <C>        <C>        <C>         <C>         <C>         <C>         <C>        <C>       
Balance at October 3, 1993      $ 17,365   $ 12,190   $ 210,491   $ (31,275)  $  (9,453)  $      -    $ (4,604)  $ 194,714
  Net income                                              5,743                                                      5,743
  Cash dividends declared                               (14,169)                                                   (14,169)
  Decrease in minimum pension
    liability adjustment                                                          1,243                              1,243
  Decrease in note receivable
    from employee stock
    ownership plan                                                                                         643         643
                                --------   --------   ---------   ----------  ----------  ---------   ---------  ---------
Balance at October 2, 1994        17,365     12,190     202,065     (31,275)     (8,210)          -     (3,961)    188,174  
  Net loss                                               (3,493)                                                    (3,493)
  Cash dividends declared                                (8,396)                                                    (8,396)
  Increase in minimum pension
    liability adjustment                                                         (6,632)                            (6,632)
  Increase in cumulative
    translation adjustment                                                                                (425)       (425)
  Decrease in note receivable
    from employee stock
    ownership plan                                                                                         421         421
                                --------   --------   ---------   ----------  ----------  ---------   ---------  ---------
Balance at October 1, 1995        17,365     12,190     190,176     (31,275)    (14,842)          -     (3,965)    169,649 
  Net income                                              5,972                                                      5,972
  Cash dividends declared                                (2,624)                                                    (2,624)
  Decrease in minimum pension
    liability adjustment                                                            804                                804
  Establish benefit trust with
    treasury stock (Note 7)                  11,449                  15,426                 (26,875)                     -
  Increase in fair market
    value of stock held by
    benefit trust (Note 7)                    8,125                                          (8,125)                     -
  Increase in cumulative
    translation adjustment                                                                                 (74)        (74)
                                --------   --------   ---------   ----------  ----------  ---------   ---------  ---------
Balance at September 29, 1996   $ 17,365   $ 31,764   $ 193,524   $ (15,849)  $ (14,038)  $ (35,000)  $ (4,039)  $ 173,727  
                                ========   ========   =========   ==========  ==========  =========   =========  =========
</TABLE>



(The accompanying notes are an integral part of the consolidated financial
statements.)





                                      19
<PAGE>   20

                       SAVANNAH FOODS & INDUSTRIES, INC.
                     Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                Fiscal Year Ended
                                                     ----------------------------------------
                                                     September 29,   October 1,    October 2,
                                                         1996          1995          1994
                                                     -------------  ------------   ----------
<S>                                                  <C>           <C>           <C>
Cash flows from operations:
  Net income (loss)                                  $    5,972    $   (3,493)   $    5,743
  Adjustments to reconcile net income (loss) to
    net cash provided by operations -
      Depreciation and amortization                      27,994        28,314        28,972
      Impairment of long-lived assets (Note 2)           10,280             -             -
      Extraordinary item, net of tax, related to
        financing activities                                971             -             -
      Provision for deferred income taxes                (5,173)         (207)       (5,283)
      Net loss on disposal of assets                      2,595           674           460
      Decreases (increases) in working capital -
        Accounts receivable                              (9,118)        8,785        11,254
        Inventories                                      20,565       (17,781)       60,299
        Other current assets                              7,924        (6,952)        2,657
        Trade accounts payable                          (10,558)        6,306       (49,457)
        Other liabilities and accrued expenses            1,110          (777)        3,373
      Other                                              (2,713)        1,122         1,431
                                                     ----------    ----------    ----------
Cash provided by operations                              49,849        15,991        59,449
                                                     ----------    ----------    ----------
Cash flows from investing activities:
  Additions to property, plant and equipment             (7,916)      (16,303)      (22,218)
  Proceeds from sale of property, plant and
    equipment                                             2,538           784         3,309
  Sale of investments                                    13,869         3,615        18,559
  Business sales and (acquisitions)                      12,500        (7,050)            -
  Use of escrowed industrial revenue bond funds
    for additions to property, plant and equipment        3,253             -         3,669
  Other                                                    (182)       (2,182)       (2,930)
                                                     ----------    ----------    ----------
Cash provided by (used for) investing activities         24,062       (21,136)          389
                                                     ----------    ----------    ----------
Cash flows from financing activities:
  (Decrease) increase in short-term borrowings          (14,800)       22,300       (26,300)
  Payments of long-term debt                            (51,240)      (28,703)       (2,632)
  Debt prepayment charge, net of tax                       (971)            -             -
  Liquidation of unused industrial revenue
    bond escrow balances                                      -         5,742             -
  Dividends paid                                         (3,280)      (11,282)      (10,627)
  Other                                                     106           226           676
                                                     ----------    ----------    ----------
Cash used for financing activities                      (70,185)      (11,717)      (38,883)
                                                     ----------    ----------    ----------
Cash flows for year                                       3,726       (16,862)       20,955
Cash and cash equivalents, beginning of year             11,574        28,436         7,481
                                                     ----------    ----------    ----------
Cash and cash equivalents, end of year               $   15,300    $   11,574    $   28,436
                                                     ==========    ==========    ==========
</TABLE>


(The accompanying notes are an integral part of the consolidated financial
statements.)



                                      20
<PAGE>   21

                      SAVANNAH FOODS & INDUSTRIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of Significant Accounting Policies:

        Nature of operations - The Company is engaged in the production,
marketing and distribution of food products, primarily refined sugar. The
Company produces a complete line of bulk and liquid sugars, packaged sugar,
sugar envelopes and sugar products, including edible molasses and liquid animal
feeds. The Company also packages and distributes other products such as custom
made meal kits, salt, pepper, artificial sweetener, non-diary creamer and
certain other products which complement its sugar business. Industrial and
grocery markets served by the Company are the southeastern, midwestern and
eastern parts of the United States, as well as Louisiana and Texas. Products for
the foodservice market are distributed throughout the United States. The Company
has one primary business segment - Sugar Products.

        Fiscal year - The Company's fiscal year ends on the Sunday closest to
September 30. Fiscal 1996, 1995 and 1994 each included 52 weeks.

        Principles of consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. Business
entities in which the Company owns 50% or less are accounted for using the
equity method.

        Cash and cash equivalents - Cash and cash equivalents include all
investments purchased with an original maturity of 90 days or less which have
virtually no risk of loss of the principal value of the investment.

        Inventories - Inventories are valued at the lower of cost or market.
Cost is determined by the last-in, first-out (LIFO) method for sugar, packaging
materials, and certain other items. Costs for maintenance parts and other
non-sugar products are determined using the first-in, first-out (FIFO) and
moving average methods.

        Futures transactions and interest rate swaps - The Company uses futures,
options and interest rate swaps as hedges in its inventory purchasing and cash
management programs. Gains and losses on such transactions related to inventory
are matched to specific inventory purchases and charged or credited to cost of
sales as such inventory is sold. The net cash paid or received on interest rate
swaps is included in interest expense. 




                                      21
<PAGE>   22

        Amortization of intangibles - The Company has intangible assets included
in "Other assets" aggregating $9,529,000 and $11,912,000 at September 29, 1996
and October 1, 1995, respectively. Goodwill of $5,378,000 at September 29, 1996,
and $5,781,000 at October 1, 1995, is being amortized over fifteen years on a
straight-line basis, and other intangible assets are being amortized over five
years on a straight-line basis. Amortization expense was $2,341,000, $2,169,000
and $2,617,000 for fiscal 1996, 1995 and 1994, respectively.

        Property, plant and equipment - Property, plant and equipment is valued
at cost, less accumulated depreciation and amortization. For financial reporting
purposes, depreciation is computed on the straight-line method over the
estimated useful lives of the assets. In general, buildings are depreciated over
20 years, machinery and equipment over 3 to 15 years and leasehold improvements
over 10 years.

        Accrued expenses related to beet operations - The Company's beet
processing plants are generally operated from October through February and then,
from March through September, are repaired for the next processing cycle. As
sugar is processed from October through February, the Company accrues estimated
repair costs and other costs to be incurred in March through September and
includes such costs in inventory and, as the sugar is sold, in cost of sales. In
contrast, certain other sugarbeet processors capitalize such costs and include
them as prepaid expenses related to the next processing cycle.

        Fair value of financial instruments - For cash, cash equivalents,
accounts receivable, trade accounts payable, other liabilities and accrued
expenses and short-term borrowings, the carrying amounts approximate fair value
because of the short maturities of these instruments.

        Revenue recognition - The Company recognizes revenue as product is
shipped.

        Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

        Reclassifications - Certain prior year amounts have been reclassified to
conform to current year presentation.





                                      22
<PAGE>   23

Note 2 - Impairment Loss:

        In the fourth quarter of fiscal 1996, the Company recorded a non-cash
impairment loss of $10,280,000 ($6,476,000, or $.25 per share, net of tax)
related to a write-down of the property, plant and equipment of the Company's
Fremont, Ohio beet sugar facility. A decision was made in 1996 not to run the
Fremont facility during fiscal 1997 due to the lack of a viable supply of
sugarbeets and beet molasses. As a result, the projected future cash flows from
this facility are less than the carrying value of the assets; therefore, an
impairment loss has been recognized. The impaired assets include buildings and
machinery and equipment used to manufacture, ship, and store refined sugar and
its by-products. These assets were written down to their fair value based on the
salvage value of the assets. The recognition of this impairment was in
accordance with the provisions of Statement of Financial Accounting Standards
No. 121 - Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and is not materially different than the amount that
would have been recognized under the Company's previous policies.

Note 3 - Inventories:

        A summary of inventories by method of pricing and class is as follows:

<TABLE>
<CAPTION>

                                                 September 29,    October 1,
                                                     1996           1995
                                                 -------------    ----------
                                                        (In thousands)
            <S>                                     <C>            <C>   
            Last-in, first-out                      $35,311        $ 64,642
            First-in, first-out                       9,682           9,807
            Moving average                           29,462          28,672
            Specific identification                   9,474               -
                                                    -------        --------
                                                    $83,929        $103,121
                                                    =======        ========

            Raw materials and work-in-process       $17,693        $ 46,533
            Packaging materials, parts and supplies  20,713          26,245
            Finished goods                           36,049          30,343
            Payments related to future inventory
             purchases                                9,474               -
                                                    -------        --------
                                                    $83,929        $103,121
                                                    =======        ========
</TABLE>

        The replacement cost of inventories exceeded reported cost by
approximately $8,233,000 at September 29, 1996 and $11,101,000 at October 1,
1995. In fiscal 1994 there was a LIFO liquidation which decreased cost of goods
sold by $1,762,000 and increased net income by $1,097,000, or $.04 per share.




                                      23

<PAGE>   24


Note 4 - Property, Plant and Equipment:

            Property, plant and equipment is summarized as follows:

<TABLE>
<CAPTION>
                                             September 29,    October 1,
                                                 1996            1995
                                             -------------    ----------
                                                    (In thousands)
            <S>                                <C>            <C> 
            Land                               $  7,498       $  8,143
            Buildings                            89,194         94,670
            Machinery and equipment             305,717        326,842
            Leasehold improvements                1,201          1,201
            Projects-in-process                   3,119          6,135
                                               --------       --------
                                                406,729        436,991
            Less -
             Accumulated depreciation
              and amortization                 (220,183)      (206,100)
                                               --------       --------
                                               $186,546       $230,891
                                               ========       ========
</TABLE>

        Repairs and maintenance expense was $31,699,000, $35,241,000 and
$31,584,000 for fiscal 1996, 1995 and 1994, respectively.

Note 5 - Long-term Debt, Credit Arrangements and Leases:

        Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                 September 29,      October 1,
                                                     1996              1995
                                                 -------------      ----------
                                                         (In thousands)
            <S>                                      <C>            <C> 
            Senior Notes - Series A at 8.35% of 
              $19,941 and $47,857, respectively, 
              and Series B at 7.15% of                 
              $5,059 and $12,143,
              respectively                           $25,000        $ 60,000
            Long-term debt supported by revolving
              credit facilities with banks                 -          10,000
            Notes payable to banks related to
              the ESOP                                 9,815          14,100
            Industrial revenue bonds                  22,500          22,500
            Other long-term debt                       4,609           6,564
                                                     -------        --------
                                                      61,924         113,164
            Less - Current portion                    (2,170)         (6,300)
                                                     -------        --------
                                                     $59,754        $106,864
                                                     =======        ========
</TABLE>

        The Company elected to prepay $35,000,000 of the Senior Notes in 1996.
The Company incurred $971,000 (net of $570,000 income tax benefits), or $.04 per
share, of related prepayment penalties which are reflected as an extraordinary
item in the Consolidated Statement of Operations.



                                      24
<PAGE>   25


        The remaining Senior Notes are payable in amounts of $8,750,000 in
fiscal 1999, $14,792,000 in fiscal 2000, and $1,458,000 in fiscal 2001. The
market value of this $25,000,000 fixed rate long-term debt at September 29, 1996
is approximately $26,301,000 based on interest rates at that date.

        At September 29, 1996, the Company had $9,815,000 in notes payable
related to the Employee Stock Ownership Plan (ESOP) and $22,500,000 of
industrial revenue bonds. These notes and bonds carry tax-advantaged variable
rates of interest equal to approximately 4.99% in 1996. The ESOP loans are
payable as follows: $6,215,000 in fiscal 1998 and $3,600,000 payable in fiscal
1999 through fiscal 2001. The $22,500,000 industrial revenue bonds are payable
as follows: $4,500,000 in 2000; $4,500,000 in 2001; $6,000,000 in $1,000,000
annual installments in 2002 through 2007; $3,500,000 in 2004; $2,500,000 in
$500,000 installments from 2001 through 2005; and $1,500,000 due in 2017. These
bonds are secured by financing statements on project-related equipment, the
cost of which approximates the bond amounts.

        On April 1, 1996, the Company entered into a $120,000,000 revolving
credit facility which expires on January 1, 2000, and automatically extends by
one year on each anniversary date of the agreement. In general, this facility 
enables the Company to borrow funds at LIBOR plus 1/2% to 3/4%, depending  upon
achievement of specified financial targets. The Company pays an annualized
facility fee of 1/10% and an annualized fee of 1/10% of the unused portion of
the facility. At September 29, 1996, $7,500,000 was outstanding as short-term
debt. The Company has a Standby Letter of Credit (SLC) in favor of the Senior
Note lenders drawn under the revolving credit agreement. The SLC is maintained
at 105% of the Senior Notes outstanding and was $26,250,000 at September 29,
1996. In connection with the execution of this agreement, the Senior Note
agreement was amended to remove all of the financial ratio covenants. As of
September 29, 1996 the Company was in compliance with all of its debt covenants.

        Short-term borrowings, including borrowings under the Company's
revolving credit facilities which were for temporary working capital needs, are
summarized as follows:

<TABLE>
<CAPTION>
                                                             Fiscal Year Ended
                                                 -------------------------------------------
                                                 September 29,   October 1,       October 2,
                                                     1996           1995             1994
                                                 -------------   ----------       ----------
                                                               (In thousands)
         <S>                                        <C>           <C>              <C>   
         Daily average outstanding borrowings       $39,004       $31,373          $27,953
         Daily weighted average interest rate          5.66%         6.29%            3.82%
         Maximum borrowings                         $71,980       $68,500          $62,300
         Amount outstanding at year-end             $ 7,500       $22,300          $     -
</TABLE>

        The Company uses interest rate exchange agreements, more commonly called
interest rate swaps, to manage its interest rate exposure. Swaps were entered
into to fix the interest rate on variable debt at rates which the Company
considered attractive at the time the agreements were consummated. When the
Company entered into these agreements, it compared its anticipated interest
costs to other long-term borrowing sources such as private placements and other
fixed rate borrowing options. The notional amounts of swaps outstanding at
September 29, 1996 and October 1, 1995 were $30,000,000 and $50,000,000,
respectively. The fixed rates of interest for swaps outstanding during fiscal
1996 and 1995 were 8.66% and 8.52%, respectively. These swaps expire from
December 1997 to February 1998.  The effective fixed rate of swapped debt
instruments during fiscal 1996 and 1995 was 7.76% and 8.00%, respectively.
Accordingly, the Company has realized its desired objectives in the use of
these financing instruments. If the Company had canceled these agreements as of
September 29, 1996, it would have been required to pay the counter-parties to
the agreements an aggregate amount of $1,342,000.



                                      25

<PAGE>   26

        The Company has also entered into forward swap agreements for periods
ranging from 1998 to 2004 which fix the rate on debt as follows: $20,000,000 in
1998-1999, $30,000,000 in 2000, $50,000,000 in 2001, $90,000,000 in 2002 and
$80,000,000 in 2003-2004. The Company entered into these agreements to fix the
rate on variable rated debt intended to be borrowed during this time period.
The swaps require the Company to pay fixed rates ranging from 6.5% to 7.0%
against 90 day LIBOR. These transactions were entered into to protect the
Company against interest rate increases and to fix future interest rates at
rates the Company considers attractive. If the Company had canceled these
agreements as of September 29, 1996, it would have received from the
counter-parties to the agreements an aggregate amount of $734,000.

        Interest expense was $12,355,000 in fiscal 1996, $14,847,000 in fiscal
1995, and $13,380,000 in fiscal 1994. Cash payments of interest were $12,945,000
in fiscal 1996, $13,620,000 in fiscal 1995, and $12,321,000 in fiscal 1994.



                                      26
<PAGE>   27

        Annual maturities of long-term debt each year for the next five fiscal
years are $2,170,000 in 1997, $7,894,000 in 1998, $9,440,000 in 1999,
$19,982,000 in 2000, $9,248,000 in 2001, and $13,190,000 in subsequent years
through 2017.

        Lease expense related to operating leases aggregated $2,081,000,
$1,552,000, and $1,887,000 in fiscal 1996, 1995 and 1994, respectively. Lease
commitments on operating leases exceeding one year for fiscal 1997, 1998, 1999,
2000 and 2001 are $1,265,000, $1,245,000, $837,000, $802,000 and $564,000,
respectively.

Note 6 - Income Taxes:

        Pre-tax income for all years presented was taxed exclusively in the
United States. The provision for (benefit from) income taxes is comprised of the
following:

<TABLE>
<CAPTION>

                                                             Fiscal Year Ended
                                                 -------------------------------------------
                                                 September 29,     October 1,     October 2,
                                                     1996            1995           1994
                                                 ------------      ----------     ----------
                                                               (In thousands)
         <S>                                       <C>             <C>              <C>    
         Current federal                           $6,092          $(1,515)         $8,071
         Current state                              1,249             (863)             75
         Deferred federal                          (4,357)            (271)         (4,794)
         Deferred state                              (816)              64            (489)
                                                   ------          -------          ------
         Provision for (benefit from)
            income taxes                           $2,168          $(2,585)         $2,863
                                                   ======          =======          ======

         Tax effect of change in:
            Minimum pension liability adjustment   $  507          $(4,716)         $  720
            Cumulative translation adjustment         (45)            (261)              -
                                                   ------          -------          ------
                                                   $  462          $(4,977)         $  720
                                                   ======          =======          ======
</TABLE>

        Cash payments for income taxes amounted to $537,000, $6,637,000 and
$7,504,000 for fiscal 1996, 1995 and 1994, respectively.




                                      27


<PAGE>   28

     Deferred income tax assets (liabilities) are comprised of the
following:

<TABLE>
<CAPTION>
                                                   September 29,   October 1,
                                                       1996          1995
                                                   -------------   ----------
                                                         (In thousands)
     <S>                                             <C>           <C>   
     Loss on impairment of long-lived assets         $ 3,906       $      -
     Depreciation                                    (21,658)       (22,854)
     Other postretirement benefits                    12,565         12,316
     Accrued pension liability                         8,796         12,769
     Deferred compensation                             7,743          6,227
     Tax benefit purchases                            (1,143)        (2,616)
     Other non-current                                 4,009            659
                                                     -------       --------
     Total net non-current asset                      14,218          6,501
                                                     -------       --------
                                                    
     Other accrued expenses                            2,288            847
     Inventory                                          (243)          (411)
     Other current                                       980          1,226
                                                     -------       --------
     Total net current asset                           3,025          1,662
                                                     -------       --------
     Net deferred asset                              $17,243       $  8,163
                                                     =======       ========
</TABLE>

     A reconciliation between the provision for (benefit from) income taxes and 
the amount computed by applying the U. S. federal income tax rate to income 
before income taxes and extraordinary item is as follows:

<TABLE>
<CAPTION>

                                                                  Fiscal Year Ended
                                                     ------------------------------------------
                                                     September 29,     October 1,    October 2,
                                                       1996             1995           1994
                                                     -------------     ----------    ----------
                                                                    (In thousands)
     <S>                                               <C>             <C>            <C>  
     Computed "expected" tax expense (benefit)         $3,292          $(2,127)       $3,012
     Increases (reductions) in taxes
        resulting from:
        State income taxes, net of federal
          income tax benefit                              224              280          (269)
        Tax-free income earned                           (221)            (120)         (104)
        ESOP dividends                                    (17)            (254)         (506)
        Tax rate benefit of NOL carryback                (600)               -             -
        Other                                              60             (364)          730
                                                       ------          -------        ------
                                                        2,738           (2,585)        2,863
     Extraordinary item                                  (570)               -             -
                                                       ------          -------        ------
     Provision for (benefit from) income taxes         $2,168          $(2,585)       $2,863
                                                       ======          =======        ======
</TABLE>

Note 7 - Stockholders' Equity:

     The Certificate of Incorporation of the Company, as amended, authorizes a 
class of preferred stock to consist of up to 1,000,000 shares of $.50 par value
stock. The Board of Directors can determine the characteristics of the
preferred stock without further stockholder approval.


                                      28

<PAGE>   29


     During fiscal 1996, the Company established a Benefit Trust (the "Trust")
with 2,500,000 shares of treasury stock. The Trust will enhance the Company's
financial flexibility to provide funds to satisfy its obligations under various
employee benefit plans and agreements. The shares may be sold at the Company's
discretion, until March 31, 2011. However, the shares do not have to be sold.
Proceeds from the sales, if any, will be used to fund eligible employee
benefits. The employee benefits payable from the Trust are primarily included in
the $78,834,000 "Deferred employee benefits" liability. Shares held by the Trust
are not considered outstanding for earnings per share calculations until they
are sold, but are considered outstanding for shareholder voting purposes. The
shares are voted based upon the voting results of the shares held in the
Company's Employee Stock Ownership Plan.

     To record this transaction, the Company reduced "Treasury stock" by the 
average cost of these shares to the Company, or $15,426,000, and the fair market
value of the stock was recorded as "Stock held by benefit trust". "Capital in
excess of stated value" was increased for the difference of $11,449,000 between
the cost of the shares and their fair value. Each quarter, "Stock held by
benefit trust" is adjusted to the fair market value of the shares held in the
Trust, and an adjustment for the same amount is made to "Capital in excess of
stated value". At September 29, 1996, the market value of the stock was $14.00
per share. Total stockholders' equity will increase as the shares are sold from
the Trust.

     Effective April 23, 1996, the Company entered into a one-year employment 
agreement  with the Chairman of the Board of Directors of the Company. The
employment agreement grants an option to purchase from the Company 100,000
shares of the Company's common stock at the price of $11.00 per share. The
option price coincided with the market price of the Company's common stock on
the date the options were granted. The options are exercisable until April 24,
2001. None of the options have yet been exercised.

Note 8 - Pension Plans:

     Substantially all employees and retirees of the Company are covered by 
noncontributory defined benefit pension plans. The Company also provides
supplemental pension benefits to certain retired employees. The supplemental
pension benefits are determined annually by the Board of Directors.

     The Company's largest defined benefit plan provides employees a retirement
benefit based on a percentage of their final three year average pay. Effective
July 1, 1996, this percentage of final pay was


                                      29
<PAGE>   30


modified, and provisions to reduce pension benefits for early retirement were
incorporated into this plan. These modifications, along with some other minor
changes, reduced the "projected benefit obligation" at September 29, 1996 by
$3,009,000.

     Benefits under the noncontributory defined benefit pension plans for 
bargaining employees are primarily based on years of service.

     The Company's contribution policy for all pension plans is to contribute 
at  least the minimum amount required by the Employee Retirement Income Security
Act. At September 29, 1996, the assets of these plans are invested primarily in
cash equivalents and commingled institutional stock and bond funds.

     The following table sets forth the status of the Company's qualified 
defined benefit pension plans and the pertinent assumptions used in computing
this information as of the end of each respective year:

<TABLE>
<CAPTION>
                                             September 29,         October 1,
                                                  1996                1995
                                             -------------         ----------
                                                       (In thousands)
<S>                                           <C>                  <C>
Actuarial present value of benefit            
   obligation based on current                
   compensation:                              
     Vested                                    $(80,235)           $(78,364)
     Nonvested                                   (6,216)             (6,927)
                                               --------            --------
Accumulated benefit obligation                  (86,451)            (85,291)
Increase in present value of benefit          
   obligation to reflect projected            
   compensation increases                        (4,846)             (7,524)
                                               --------            --------
Projected benefit obligation                    (91,297)            (92,815)
Plan assets at fair value                        72,533              62,852
                                               --------            --------
Projected benefit obligation                  
   in excess of plan assets                     (18,764)            (29,963)
Unrecognized prior service cost                    (193)              3,386
Unrecognized net loss                            29,810              31,876
Unrecognized net asset at transition             (1,276)             (2,352)
Adjustment required to recognize              
   minimum liability                            (23,495)            (25,386)
                                               --------            --------
Pension liability included in                 
   "Deferred employee benefits"                $(13,918)           $(22,439)
                                               ========            ========
                                              
Actuarial assumptions:                        
   Discount rate                                    7.5%               7.5%
   Projected salary increases                       4.5%               4.5%
</TABLE>


                                      30
<PAGE>   31


     Pension expense and the assumed rate of return on plan assets used to 
calculate it are summarized as follows:

<TABLE>
<CAPTION>

                                          Fiscal Year Ended
                                    ------------------------------------
                                    September 29, October 1, October 2,
                                        1996        1995      1994
                                    ------------- ---------- -----------
                                           (In thousands)
<S>                                     <C>        <C>         <C>    
Costs related to services provided                                    
  by employees during the year          $2,070     $2,250      $2,401 
Interest cost on projected benefit                                    
  obligation                             6,874      6,601       6,274 
Actual gain on plan assets              (5,939)    (6,390)     (1,172)
Net amortization and deferrals             659        437      (4,564)
                                        ------     ------      ------ 
Pension expense related to defined                                    
  benefit plans                          3,664      2,898       2,939 
Supplemental pension benefits              205        190         126 
                                        ------     ------      ------
  Total pension expense                 $3,869     $3,088      $3,065 
                                        ======     ======      ====== 
                                                                      
                                                                      
Actuarial assumption:                                                 
  Expected long-term rate of                                          
     return on plan assets                 9.5%       9.5%       9.5% 

</TABLE>
                                                                     

     The Company has an unqualified Supplemental Executive Retirement Plan 
(SERP) which it amended in 1996 by freezing the years of credited service for 
participants as of June 30, 1996. This modification reduced the "projected 
benefit obligation" at September 29, 1996 by $3,689,000. The actuarially 
determined expense related to the SERP is summarized as follows:

<TABLE>
<CAPTION>
                                                Fiscal Year Ended
                                       -----------------------------------
                                       September 29, October 1, October 2,
                                           1996       1995        1994
                                       ------------  ---------- ----------
                                                 (In thousands)
<S>                                     <C>           <C>        <C>  
Costs related to services provided                
   by employees during the year         $  316        $  283     $  285
Interests cost on projected benefit               
   obligation                              928           912        781
Net amortization and deferrals             203           169        189
Net curtailment gain                      (189)            -          -
                                        ------        ------     ------
Total pension expense related to                  
  SERP plan                             $1,258        $1,364     $1,255
                                        ======        ======     ======
</TABLE>


                                      31

<PAGE>   32


     The table below summarizes the status of the SERP plan and the pertinent 
assumptions used in computing this information at the end of each respective 
year:
<TABLE>
<CAPTION>
                                             September 29,   October 1,
                                                  1996          1995
                                             -------------   ----------
                                                    (In thousands)
     <S>                                       <C>            <C>
     Actuarial present value of benefit         
       obligation based on current              
       compensation:                            
          Vested                               $ (7,770)      $(11,097)
          Nonvested                                (648)          (917)
                                               --------       --------
     Accumulated benefit obligation              (8,418)       (12,014)
     Increase in present value of benefit       
       obligation to reflect projected          
       compensation increases                    (2,613)          (850)
                                               --------       --------
     Projected benefit obligation               (11,031)       (12,864)
     Unrecognized prior service cost                  -            197
     Unrecognized net loss                          700          2,893
     Unrecognized net obligation at           
       transition                                     -             70
     Adjustment required to recognize         
       minimum liability                           (273)        (2,310)
                                               --------       --------
     Pension liability included in            
       "Deferred employee benefits"            $(10,604)      $(12,014)
                                               ========       ========
                                              
                                              
     Actuarial assumptions:                   
       Discount rate                                7.5%           7.5%
       Projected salary increases                   4.5%           4.5%
</TABLE>

     In accordance with the provisions of Statement of Financial Accounting 
Standards No. 87 - Employers' Accounting for Pensions, the Company has recorded
an additional minimum liability at September 29, 1996 and at October 1, 1995
representing the excess of the accumulated benefit obligation over the fair
value of plan assets and accrued (prepaid) pension expense for its pension and
SERP plans. The additional liability has been offset by an intangible asset
which is included in "Other assets" to the extent of previously unrecognized
prior service cost. Amounts in excess of previously unrecognized prior service
cost are recorded net of the related deferred tax benefit as a reduction of
stockholders' equity of $14,038,000 at September 29, 1996 and $14,842,000 at
October 1, 1995.

Note 9 - Other Retirement and Benefit Plans:

     The Company has a deferred compensation program, which it modified in 
1996. This program allowed directors and certain management employees to defer
their compensation and earn a guaranteed interest rate on the deferred amounts.
In effect, such amounts deferred are unsecured loans to the Company. The
deferred salaries 
                                      32

<PAGE>   33
and interest at the market rate are accrued as incurred. Interest above the
market rate is accrued over the vesting period.  The expense related to the
Company's deferral plan was $2,523,000 in 1996, $2,320,000 in 1995, and
$1,915,000 in 1994.

        The 1996 amendment terminated all additional employee deferrals
effective June 30, 1996. The nonemployee directors' deferral plan was also
modified to reduce the guaranteed rate of interest on amounts deferred to 8%,
and then to the prime rate in effect each January 1. The effect of this
amendment is estimated to have reduced the present value of the payments which
ultimately will be paid to the directors under the plan by $2,600,000. 

     As consideration for the reduction in the interest rate on the directors'
deferred compensation, a Supplemental Share Unit Plan (the "Plan") was
established for nonemployee directors. The Plan granted a number of Share Units
(a Share Unit is the equivalent of one share of Company common stock) to each
nonemployee director equal to one-half of the director's deferred compensation
account balance as of June 30, 1996 divided by a price of $11.00 per Share Unit.
These Share Units fully vested on June 30, 1996 and the value of each unit is
adjusted upward or downward based on the highest daily closing price of the
Company's common stock during the preceding twelve month period. At retirement
from the Board of Directors, each nonemployee director will receive, in cash,
the value of the Share Units in their deferral account. During 1996, the Company
expensed $1,563,000 related to this plan. Future expenses related to this plan
will only be incurred as the Company's stock price increases.

     The Company has included in "Deferred employee benefits" $20,524,000 at 
September 29, 1996 and $17,694,000 at October 1, 1995 to reflect its liability
under its deferred compensation programs. Payments required to be made to
participants in these programs for the next five fiscal years are approximately
$1,460,000 in 1997, $1,460,000 in 1998, $1,555,000 in 1999, $1,878,000 in 2000
and $2,706,000 in 2001.

     The Company sponsors 401(k) plans in which substantially all non-
bargaining employees and certain bargaining unit employees are eligible to
participate. These plans allow eligible employees to save a portion of their
salary on a pre-tax basis. The Company makes monthly contributions to these
plans which aggregated $449,000, $437,000 and $408,000 in fiscal 1996, 1995 and
1994, respectively.




                                      33
<PAGE>   34


     The Company also sponsors benefit plans that provide postretirement health
care and life insurance benefits to certain employees who meet the applicable
eligibility requirements. The cost of postretirement health care and life
insurance benefits is summarized as follows:


<TABLE>
<CAPTION>
                                                   Fiscal Year Ended
                                           -----------------------------------
                                           September 29, October 1, October 2,
                                               1996         1995       1994
                                           ------------- ---------- ----------
                                                     (In thousands)
     <S>                                     <C>          <C>       <C>   
     Costs related to services provided by
       employees during the year             $  520       $  476    $  669
     Interest cost on accumulated benefit
       obligation                             2,408        2,447     2,369
                                             ------       ------    ------
     Total postretirement benefit expense    $2,928       $2,923    $3,038
                                             ======       ======    ======
</TABLE>

     The actuarial and recorded liabilities for these postretirement benefits,
none of which have been funded, and the pertinent assumptions used to compute 
this information are as follows:

<TABLE>
<CAPTION>
                                           September 29,    October 1,
                                               1996            1995
                                           -------------    ----------
                                                (In thousands)
     <S>                                     <C>            <C>   
     Accumulated postretirement benefit
       obligation:
          Retirees                           $(20,594)      $(20,473)
          Active participants                 (11,865)       (11,634)
                                             --------       --------
     Accumulated benefit obligation           (32,459)       (32,107)
     Unrecognized net gain                     (1,329)        (1,000)
                                             --------       --------
     Accrued postretirement benefit
       obligation included in
       "Deferred employee benefits"          $(33,788)      $(33,107)
                                             ========       ========
     
     Actuarial assumptions:
       Discount rate                              7.5%           7.5%
       Health care cost trend rate -
          Fiscal 1996                               -            7.5%
          Fiscal 1997 - 1999                      7.5%           7.5%
          Fiscal 2000 - 2004                      6.0%           6.0%
          Thereafter                              5.0%           5.0%
</TABLE>

Increasing the health care cost trend rate assumption by one percentage point
would have increased the accumulated postretirement benefit obligation as of
September 29, 1996 by approximately $1,983,000 and would have increased
postretirement benefit expense by approximately $221,000 in fiscal 1996.



                                      34


<PAGE>   35


     The Company also sponsors an Employee Stock Ownership Plan (ESOP). 
Substantially all non-bargaining employees participate and receive shares in
their account at the discretion of the Board of Directors. Expenses related to
this plan have been immaterial in 1996, 1995, and 1994.

Note 10 - Commitments and Contingencies:

     The Company has contracted for the purchase of a substantial portion of 
its future raw sugar requirements. Prices to be paid for raw sugar under these
contracts are based in some cases on market prices during the anticipated
delivery month. In other cases prices are fixed and, in these instances, the
Company generally obtains commitments from its customers to buy the sugar prior
to fixing the price, or enters into futures transactions to hedge the
commitment.

     The Company is exposed to loss in the event of non-performance by the 
other party to the interest rate swap agreements discussed in Note 5. However,
the Company does not anticipate non-performance by the counter-parties to the
transactions.

     As of the end of fiscal 1996, approximately $2,500,000 of a claim by the 
United States Customs Service (Customs) remains unresolved. Customs has alleged
that drawback claims prepared by the Company for certain export shipments of
sugar during the years 1984 to 1988 are technically and/or substantively
deficient and that the Company, therefore, is not entitled to amounts previously
received under these drawback claims. The Company disputes Customs' findings and
has been vigorously protesting this matter with Customs. The ultimate resolution
of this matter is not expected to have a materially adverse effect on the
Company's financial position or results of operations.



                                      35


<PAGE>   36

Note 11 - Quarterly Financial Information (Unaudited):

     Unaudited quarterly financial information for fiscal 1996 and 1995 is as 
follows:

<TABLE>
<CAPTION>
                                First          Second    Third        Fourth
                               Quarter         Quarter   Quarter      Quarter
                               -------         -------   -------      -------
                                 (In thousands except for per share amounts)
Fiscal 1996
<S>                           <C>            <C>        <C>           <C>  
Net sales                     $304,409       $250,804   $287,462      $303,657
Gross profit                    27,937         24,951     31,151        34,075
Impairment loss                      -              -          -       (10,280)
Other costs                      1,525         (3,800)         -        (1,099)
Income from operations           8,550            162     10,906         2,181

Income (loss) before
 extraordinary item              3,543         (2,043)     4,726           717
  Per share                        .14           (.08)       .18           .03

Net income (loss)                3,543         (2,043)     4,028           444
  Per share                        .14           (.08)       .15           .02

Fiscal 1995

Net sales                     $282,477       $253,377   $275,554      $287,136
Gross profit                    28,848         20,907     20,472        25,638
Other costs                          -              -          -        (4,284)
Income (loss) from operations    8,428            299        199        (1,525)

Net income (loss)                3,618         (1,927)    (2,428)       (2,756)
  Per share                        .14           (.07)      (.10)         (.10)

  
</TABLE>

"Other costs" included above and in the Consolidated Statements of Operations
includes the following:

<TABLE>
<CAPTION>
                                  First        Second    Third         Fourth
                                  Quarter      Quarter   Quarter       Quarter
Fiscal 1996                       -------      -------   -------       -------
<S>                                <C>         <C>       <C>           <C>
Net gain (loss) on asset disposals $1,525      $(3,800)  $     -       $  (376)
Cost of workforce reduction             -            -         -          (723)
                                   ------      -------   -------       -------
Other costs                        $1,525      $(3,800)  $     -       $(1,099)
                                   ======      =======   =======       =======
Fiscal 1995

Net loss on asset disposals                                            $(1,197)
Litigation settlement                                                   (1,615)
Cost of workforce reduction                                             (1,472)
                                                                       -------
Other costs                                                            $(4,284)
                                                                       =======
</TABLE>


     A $1,514,000 net gain on the disposal of assets in the first quarter of
fiscal 1996 has been reclassified to income from operations from other income
(expense), where it was shown in the first quarter 10-Q.


                                      36
<PAGE>   37


Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

(a) Previous independent accountants

     On October 17, 1996, the Registrant notified Price Waterhouse LLP that it
would be dismissed as the Registrant's independent accountants upon completion
of its audit of the consolidated financial statements as of and for the fiscal
year ended September 29, 1996. This audit was completed on November 18, 1996.

     The reports of Price Waterhouse LLP on the consolidated financial 
statements of the Registrant as of and for the fiscal years ended September 29,
1996 and October 1, 1995 contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principle.

     The Registrant's Audit Committee and Board of Directors made and approved
the decision to change independent accountants.

     In connection with its audits for the fiscal years ended September 29, 
1996 and October 1, 1995 and through November 18, 1996, there have been no
disagreements with Price Waterhouse LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Price Waterhouse LLP
would have caused them to make reference thereto in their report on the
consolidated financial statements for such years.

     During the fiscal years ended September 29, 1996 and October 1, 1995 and 
through November 18, 1996, there have been no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)).

     The Registrant has requested that Price Waterhouse LLP furnish it with a 
letter addressed to the SEC stating whether or not it agrees with the above
statements. Copies of such letters, one dated October 22, 1996 and one dated
November 18, 1996 were filed as Exhibits 16-1 to two Form 8-K's filed with the 
SEC.  The Form 8-K's were dated October 17, 1996 and November 18, 1996, 
respectively.



                                      37

<PAGE>   38


(b)  New independent accountants

     The Registrant engaged Arthur Andersen LLP as its new independent
accountants as of December 16, 1996. During the fiscal years ended September 29,
1996 and October 1, 1995 and through December 16, 1996, the Registrant has not
consulted with Arthur Andersen LLP on items which (1) were or should have been
subject to SAS 50 (Reports on the Application of Accounting Principles) or (2)
concerned the subject matter of a disagreement or reportable event with the
former independent accountants, (as described in Regulation S-K Item 304(a)(2)).




                                      38


<PAGE>   39

                                    PART III

Item 10.  Directors and Executive Officers of Registrant.

     The information relating to the Directors of the Company is incorporated 
by reference from the "ELECTION OF DIRECTORS" section, pages 4 through 7, of the
Company's Proxy Statement for its Annual Meeting of Stockholders to be held on
February 20, 1997, to be filed pursuant to Section 14 of the Securities Exchange
Act of 1934 ("1997 Proxy Statement"). The information relating to the Executive
Officers of the Company is incorporated by reference from the "MANAGEMENT OF
SAVANNAH FOODS & INDUSTRIES, INC." section, page 8, of the 1997 Proxy Statement.
The information relating to disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is incorporated by reference from the "SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" section, page 19, of the 1997
Proxy Statement.

Item ll.  Executive Compensation.

     The information relating to executive compensation is incorporated by
reference from the "EXECUTIVE COMPENSATION" section, pages 9 and 10, the "BOARD
OF DIRECTORS AND COMMITTEES OF THE BOARD" section, pages 14 through 16, the
"COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" section, pages 11 and
12, the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section,
page 12, and the performance graph, page 13, of the 1997 Proxy Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     The information relating to the security ownership of certain beneficial 
owners and management is incorporated by reference from the "STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" section, pages 2 and 3, of the 1997
Proxy Statement.

Item 13.  Certain Relationships and Related Transactions.

     The information relating to certain relationships and related transactions
is incorporated by reference from the "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" section, page 14, and the "COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION" section, page 12, of the 1997 Proxy Statement.



                                      39


<PAGE>   40


                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1) and (2):     See index of Financial Statements, Item 8(a) and 8(b), 
                    page 15.

(a)(3) Exhibits:
<TABLE>
<CAPTION>
Page        Exhibit
No.         Number         Description
----        -------        -----------
<S>         <C>            <C>
            3-1            Articles  of Incorporation, as amended, is hereby 
                           incorporated by reference to Commission File No. 
                           1-11420 on Form 10-K for the year ended January 3, 
                           1993 as Exhibit 3-1.

            3-2            By-Laws, as amended, are hereby incorporated by 
                           reference to Commission File No. 1-11420 on Form 
                           10-K for the year ended October 1, 1995 as Exhibit 
                           3-3.

            4-1            Credit Agreement, dated as of April 1, 1996, among
                           Savannah Foods & Industries, Inc., as the borrower,
                           the banks listed therein, and Wachovia Bank of
                           Georgia, N.A., as agent is hereby incorporated by
                           reference to Commission File No. 1-11420 on Form
                           10-Q for the quarter ended March 31, 1996 as Exhibit
                           4-1.

            4-2            Note Agreements, dated as of September 1, 1992,
                           between Savannah Foods & Industries, Inc., as
                           borrower, and the lenders named therein, consisting
                           of $50,000,000 8.35% Series A Senior Notes due
                           November 1, 2002 and $20,000,000 7.15% Series B
                           Senior Notes due November 1, 2002 is hereby
                           incorporated by reference to Commission File No.
                           1-11420 on Form 10-K for the year ended October 2,
                           1994 as Exhibit 4-2.

            4-3            Third Amendment to Note Agreements, dated as of
                           March 29, 1996, by and among Savannah Foods &
                           Industries, Inc., as borrower, and the lenders named
                           therein, consisting of $50,000,000 8.35% Series A
                           Senior Notes due November 1, 2002 and $20,000,000
                           7.15% Series B Senior Notes due November 1, 2002 is
                           hereby incorporated by 
</TABLE>

                                      40
<PAGE>   41
<TABLE>
            <S>            <C>
                           reference to Commission File No. 1-11420 on Form 10-Q 
                           for the quarter ended March 31, 1996 as Exhibit 4-2.

            4-4            In reliance upon Item 601(b) (4) (iii) of Regulation 
                           S-K, various instruments defining the rights of
                           holders of long-term debt of Registrant are not
                           being filed herewith because the total of securities
                           authorized under each such instrument does not exceed 
                           10% of the total assets of Registrant. Registrant 
                           hereby agrees to furnish a copy of any such 
                           instrument to the Commission upon request.

            10-1*          Profit Sharing and Management Incentive Compensation 
                           Plan is hereby incorporated by reference to 
                           Commission File No. 1-11420 on Form 10-K for the year
                           ended January 3, 1993 as Exhibit 10-1.

            10-2*          Supplemental Executive Retirement Plan, as amended
                           and restated, is hereby incorporated by reference to
                           Commission File No. 1-11420 on Form 10-K for the
                           year ended January 3, 1993 as Exhibit 10-2.

            10-3*          Amendment No. 1 to the Supplemental Executive 
                           Retirement Plan is hereby incorporated by reference 
                           to Commission File No. 1-11420 on Form 10-K for the
                           year ended January 3, 1993 as Exhibit 10-3.

            10-4*          Amendment No. 2 to the Supplemental Executive 
                           Retirement Plan.

            10-5*          Deferred Compensation Plan for Key Employees, as 
                           amended and restated, is hereby incorporated by 
                           reference to Commission File No. 1-11420 on Form 10-K
                           for the year ended January 3, 1993 as Exhibit 10-4.

            10-6*          Amendment No. 1 to the Deferred Compensation Plan for 
                           Key Employees is hereby incorporated by reference to 
                           Commission File No. 1-11420 on Form 10-K for
                           the year ended January 3, 1993 as Exhibit 10-5.

            10-7*          Amendment No. 2 to the Deferred Compensation Plan for 
                           Key Employees is hereby incorporated by 


</TABLE>



                                      41
<PAGE>   42

<TABLE>
            <S>            <C>
                           reference to Commission File No. 1-11420 on Form 10-K 
                           for the year ended October 2, 1994 as Exhibit 10-6.

            10-8*          Deferred  Compensation Plan for Directors of Savannah 
                           Foods & Industries, Inc. as amended and restated.

            10-9*          Savannah Foods & Industries, Inc. Non-Employee 
                           Directors' Compensation Plan.

            10-10*         Savannah Foods & Industries, Inc. Non-Employee 
                           Directors' Supplemental Share Unit Plan.

            10-11*         Employment Agreements with all other Executive
                           Officers of the Company are incorporated by
                           reference to Commission File No. 1-11420 filed on
                           Form 10-K for the year ended January 1, 1989 as
                           Exhibit 10-7.

            10-12*         Employment Agreement - W. W. Sprague, III is 
                           incorporated by reference to Commission File No. 
                           1-11420 filed on Form 10-K for the year ended 
                           December 29, 1991 as Exhibit 10-8.

            10-13*         Employment Agreement - David H. Roche is incorporated 
                           by reference to Commission File No. 1-11420 filed on 
                           Form 10-K for the year ended October 1, 1995 as 
                           Exhibit 10-9.

            10-14*         Employment Agreement - R. Eugene Cartledge

            16-1           Letters re: change in certifying accountant are
                           incorporated by reference to Commission File No.
                           1-11420 filed on Form 8-K dated October 17, 1996
                           as Exhibit 16-1 and by reference to Commission
                           File No. 1-11420 filed on Form 8-K dated 
                           November 18, 1996 as Exhibit 16-1.

            21-1           Subsidiaries of Registrant

            23-1           Consent of Independent Accountants

            27-1           Financial Data Schedules (for SEC use only).
</TABLE>

*  Indicates exhibits which are management contracts or compensatory agreements.

                                      42

<PAGE>   43


(b)  Reports on Form 8-K:

     No reports were filed on Form 8-K during the last quarter covered by this
     Form 10-K. However, since September 29, 1996 the Registrant has filed
     three Form 8-K's related to the dismissal of Price Waterhouse LLP as
     independent accountants and the engagement of Arthur Andersen LLP as
     independent accountants. The Form 8-K's were dated October 17, 1996,
     November 18, 1996 and December 16, 1996.

(c)  See (a) (3) Exhibits above.

(d)  Not applicable.




                                      43



<PAGE>   44

                                  UNDERTAKINGS


     For the purposes of complying with the amendments to the rules governing 
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned Registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into Registrant's Registration Statement on Form S-8
Number 2-94678, Employee Retirement Savings Account Plan (filed December 22,
1984 as amended on October 18, 1994).

     Insofar as indemnification for liabilities arising under the Securities 
Act of 1933 (the "Act") may be permitted to Directors, Officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, Officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, Officer or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.


                                      44
<PAGE>   45


                                   SIGNATURE


     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                   SAVANNAH FOODS & INDUSTRIES, INC.



Dated: December 16, 1996           By: /s/William W. Sprague, III
       -----------------               ---------------------------
                                       William W. Sprague, III
                                       President and          
                                       Chief Executive Officer



                                      45




<PAGE>   46


     Pursuant to the requirements of the Securities Act of 1934, this report 
has been signed by the following persons on behalf of Registrant in the 
capacities and on the dates indicated:



<TABLE>
<CAPTION>
<S>                           <C>                          <C>
/S/William W. Sprague, III    President and                December 16, 1996
--------------------------    Chief Executive Officer
William W. Sprague, III       and Director           
                                                     


/S/Gregory H. Smith           Senior Vice President        December 16, 1996
-------------------           Chief Financial Officer 
Gregory H. Smith              and Treasurer (PRINCIPAL
                              FINANCIAL AND PRINCIPAL 
                              ACCOUNTING OFFICER)     
                                                      


/S/F. Sprague Exley           Senior Vice President -      December 16, 1996
--------------------          Human Resources and    
F. Sprague Exley              Administration         
                              and Assistant Secretary
                              and Director           
                                                     


/S/R. Eugene Cartledge        Chairman of the Board        December 16, 1996
----------------------        of Directors
R. Eugene Cartledge           


/S/W. Waldo Bradley           Director                     December 16, 1996
-------------------
W. Waldo Bradley


/S/John D. Carswell           Director                     December 16, 1996
-------------------
John D. Carswell


/S/Hugh M. Tarbutton          Director                     December 16, 1996
--------------------
Hugh M. Tarbutton


/S/Arthur Gignilliat, Jr.     Director                     December 16, 1996
-------------------------
Arthur Gignilliat, Jr.


/S/Robert L. Harrison         Director                     December 16, 1996
---------------------
Robert L. Harrison

</TABLE>

 
                                     46