<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

(Mark One)
       (  X  )    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                  SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended OCTOBER 10, 1998
                               ----------------

       (     )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                  SECURITIES EXCHANGE ACT OF 1934

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

Commission file number      1-9787
                       ---------------

                            FLOWERS INDUSTRIES, INC.
                            ------------------------
             (Exact name of registrant as specified in its charter)

              GEORGIA                                  58-0244940
              -------                                  ----------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)         


                    1919 FLOWERS CIRCLE, THOMASVILLE, GEORGIA
                    -----------------------------------------
                    (Address of principal executive offices)

                                      31757
                                      -----
                                   (Zip Code)

                                  912/226-9110
                                  ------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
(Former name, former address and former fiscal year, if changed since last
                                    report)

     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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days..

Yes       X                  No 
      -----------               ----------

    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes                          No 
    ---------                   ----------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.



         TITLE OF EACH CLASS               OUTSTANDING AT NOVEMBER 16, 1998
         -------------------               --------------------------------
   COMMON STOCK, $.625  PAR Value                      99,817,500



<PAGE>   2




                            FLOWERS INDUSTRIES, INC.

                                      INDEX



<TABLE>
<CAPTION>
                                                                              Page Number
                                                                              -----------
<S>                                                                           <C>
PART I.       Financial Information

     Item 1.    Financial Statements

              Consolidated Balance Sheet
                October 10, 1998 and January 3, 1998                              3

              Consolidated Statement of Income
                Forty Weeks Ended October 10, 1998
                and October 11, 1997                                              5

              Consolidated Statement of Income
                Twelve Weeks Ended October 10, 1998
                and October 11, 1997                                              6

              Consolidated Statement of Cash Flows
                Forty Weeks Ended October 10, 1998
                and October 11, 1997                                              7

                Notes to Consolidated Financial Statements                        8

     Item 2.    Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                           13


PART II.      Other Information

     Item 5.    Other Information                                                19
     Item 6.    Exhibits and Reports on Form 8-K                                 20
</TABLE>













                                       -2-

<PAGE>   3


                            FLOWERS INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEET
                                     ASSETS
          (Amounts in Thousands, Except Share Data and Per Share Data)

<TABLE>
<CAPTION>
                                                               October 10,         January 3, 
                                                                   1998               1998
                                                               ===============================
                                                               (Unaudited)
<S>                                                            <C>                 <C>
CURRENT ASSETS:
     Cash and cash equivalents                                 $    34,509           $   3,866
     Accounts and notes receivable, net                            314,967             118,147
     Inventories, net:
         Raw materials                                              51,878              27,310
         Packaged materials                                         29,969              12,648
         Finished goods                                            222,676              44,650
         Other                                                      25,488              20,322
                                                               -----------           ---------
                                                                   330,011             104,930
                                                               -----------           ---------
     Deferred income taxes                                          64,865              16,024
     Other                                                          64,337              22,295
                                                               -----------           ---------
                                                                   808,689             265,262
                                                               -----------           ---------
PROPERTY, PLANT and EQUIPMENT:
     Land                                                           42,153              20,388
     Buildings                                                     373,672             208,179
     Machinery and equipment                                       840,598             443,739
     Furniture, fixtures and transportation equipment              105,486              28,095
     Construction in progress                                      147,405              46,262
                                                               -----------           ---------
                                                                 1,509,314             746,663
     Less:  Accumulated depreciation                              (477,216)           (308,342)
                                                               -----------           ---------
                                                                 1,032,098             438,321
                                                               -----------           ---------
OTHER ASSETS:
     Investment in unconsolidated affiliate                              0             100,663
     Other                                                         104,473              17,917
                                                               -----------           ---------
                                                                   104,473             118,580
                                                               -----------           ---------
COST IN EXCESS OF NET TANGIBLE
     ASSETS, NET                                                   955,806              76,717
                                                               -----------           ---------
                                                               $ 2,901,066           $ 898,880
                                                               ===========           =========
</TABLE>











          (See Accompanying Notes to Consolidated Financial Statements)
                                       -3-

<PAGE>   4



                            FLOWERS INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEET
                      LIABILITIES AND STOCKHOLDERS' EQUITY
          (Amounts in Thousands, Except Share Data and Per Share Data)

<TABLE>
<CAPTION>
                                                                October 10,          January 3, 
                                                                    1998                1998
                                                               =================================
                                                               (Unaudited)
<S>                                                            <C>                   <C>
CURRENT LIABILITIES:
     Commercial paper                                          $    96,314           $  53,506
     Current maturities of long-term debt                          106,706               4,232
     Accounts payable                                              208,669              72,311
     Income taxes                                                   22,932
     Facility closing costs and severance                           17,882               4,812
     Other accrued liabilities                                     332,387              67,109
                                                               -----------           ---------
                                                                   784,890             201,970
                                                               -----------           ---------

LONG-TERM DEBT                                                   1,061,074             276,211
                                                               -----------           ---------

OTHER LIABILITIES:
     Deferred income taxes                                         159,035              39,686
     Postretirement/postemployment obligations                      63,832
     Facility closing costs and severance                           62,890              30,141
     Other                                                          38,914               2,305
                                                               -----------           ---------
                                                                   324,671              72,132
                                                               -----------           ---------

MINORITY INTEREST                                                  133,838
                                                               -----------           ---------

COMMITMENTS AND CONTINGENCIES 
                                                               -----------           ---------

STOCKHOLDERS' EQUITY:
     Preferred Stock - $100 par value, authorized
         10,467 shares and none issued
     Preferred Stock - $100 par value, authorized
         249,533 shares and none issued
     Common stock - $.625 par value, authorized
         350,000,000 shares, issued 100,202,414 and
         88,636,089 shares, respectively                            62,627              55,398
     Capital in excess of par value                                270,984              45,200
     Retained earnings                                             290,971             266,734
     Common stock in treasury, 379,160
         and 207,670 shares, respectively                           (6,273)             (2,452)
     Stock compensation related
         adjustments                                               (21,716)            (16,313)
                                                               -----------           ---------
                                                                   596,593             348,567
                                                               -----------           ---------
                                                               $ 2,901,066           $ 898,880
                                                               ===========           =========
</TABLE>

          (See Accompanying Notes to Consolidated Financial Statements)
                                       -4-




<PAGE>   5


                            FLOWERS INDUSTRIES, INC.
                        CONSOLIDATED STATEMENT OF INCOME
                  (Amounts in Thousands, Except Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                For the 40 Weeks Ended
                                                                            ================================
                                                                            October 10,           October 11,
                                                                                1998                 1997
                                                                            ================================
<S>                                                                         <C>                   <C>
Sales                                                                       $ 2,776,242           $1,061,225
                                                                            -----------           ----------

Materials, supplies, labor and other production costs                         1,243,548              597,651
Selling, marketing and administrative expenses                                1,242,831              358,601
Depreciation and amortization                                                    92,986               36,372
                                                                            -----------           ----------
Income from operations                                                          196,877               68,601
Interest expense, net                                                            46,624               14,566
                                                                            -----------           ----------
Income before income taxes, investment in
     unconsolidated affilate, minority interest
     and extraordinary loss                                                     150,253               54,035
Income taxes                                                                     63,106               20,678
Income from investment in unconsolidated affiliate                                                    15,034
                                                                            -----------           ----------
Income before minority interest and extraordinary loss                           87,147               48,391
Minority interest                                                               (28,097)
                                                                            -----------           ----------
Income before extraordinary loss                                                 59,050               48,391
Extraordinary loss due to early extinguishment of
     debt, net of tax benefit and minority interest                                (938)
                                                                            -----------           ----------
Net income                                                                  $    58,112           $   48,391
                                                                            ===========           ==========

Net Income Per Common Share:
Basic -
     Income before extraordinary loss                                       $      0.62           $     0.55
     Extraordinary loss due to early extinguishment of
       debt, net of tax benefit and minority interest                             (0.01)                0.00
                                                                            -----------           ----------
     Net income per common share                                            $      0.61           $     0.55
                                                                            ===========           ==========
     Weighted average shares outstanding                                         95,460               88,218
                                                                            ===========           ==========

Diluted -
     Income before extraordinary loss                                       $      0.62           $     0.55
     Extraordinary loss due to early extinguishment of
       debt, net of tax benefit and minority interest                             (0.01)                0.00
                                                                            -----------           ----------
     Net income per common share                                            $      0.61           $     0.55
                                                                            ===========           ==========
     Weighted average shares outstanding                                         95,907               88,646
                                                                            ===========           ==========

Cash dividends paid per common share                                        $    0.3525           $   0.3208
                                                                            ===========           ==========
</TABLE>




          (See Accompanying Notes to Consolidated Financial Statements)
                                       -5-


<PAGE>   6


                            FLOWERS INDUSTRIES, INC.
                        CONSOLIDATED STATEMENT OF INCOME
                  (Amounts in Thousands, Except Per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 For the 12 Weeks Ended
                                                                            =================================
                                                                             October 10,          October 11, 
                                                                                1998                 1997
                                                                            =================================
<S>                                                                         <C>                   <C>
Sales                                                                       $   862,784           $  321,758
                                                                            -----------           ----------

Materials, supplies, labor and other production costs                           382,206              188,022
Selling, marketing and administrative expenses                                  370,660               97,690
Depreciation and amortization                                                    29,252               10,993
                                                                            -----------           ----------
Income from operations                                                           80,666               25,053
Interest expense, net                                                            14,131                4,108
                                                                            -----------           ----------
Income before income taxes, investment in
     unconsolidated affiliate, minority interest
     and extraordinary loss                                                      66,535               20,945
Income taxes                                                                     27,945                8,064
Income from investment in unconsolidated affiliate                                                     7,536
                                                                            -----------           ----------
Income before minority interest and extraordinary loss                           38,590               20,417
Minority interest                                                               (13,035)
                                                                            -----------           ----------
Income before extraordinary loss                                                 25,555               20,417
Extraordinary loss due to early extinguishment of
     debt, net of tax benefit and minority interest                                (938)
                                                                            -----------           ----------
Net income                                                                  $    24,617           $   20,417
                                                                            ===========           ==========

Net Income Per Common Share:
Basic -
     Income before extraordinary loss                                       $      0.26           $     0.23
     Extraordinary loss due to early extinguishment of
       debt, net of tax benefit and minority interest                             (0.01)                0.00
                                                                            -----------           ----------
     Net income per common share                                            $      0.25           $     0.23
                                                                            ===========           ==========
     Weighted average shares outstanding                                         99,794               88,398
                                                                            ===========           ==========

Diluted -
     Income before extraordinary loss                                       $      0.26           $     0.23
     Extraordinary loss due to early extinguishment of
       debt, net of tax benefit and minority interest                             (0.01)                0.00
                                                                            -----------           ----------
     Net income per common share                                            $      0.25           $     0.23
                                                                            ===========           ==========
     Weighted average shares outstanding                                        100,203               88,845
                                                                            ===========           ==========

Cash dividends paid per common share                                        $    0.1200           $   0.1100
                                                                            ===========           ==========
</TABLE>





          (See Accompanying Notes to Consolidated Financial Statements)
                                       -6-

<PAGE>   7


                            FLOWERS INDUSTRIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  For the 40 Weeks Ended
                                                                            ================================
                                                                              October 10,       October 11,
                                                                                 1998              1997
                                                                            ================================
<S>                                                                         <C>                   <C>
Cash flows provided by operating activities:
Net income                                                                  $    58,112           $   48,391
Adjustments to reconcile net income to net cash
     provided by operating activities:
     Minority interest                                                           28,097
     Income from investment in unconsolidated affiliate                                              (15,034)
     Depreciation and amortization                                               92,986               36,372
     Deferred income taxes                                                        1,690                1,792
     Loss due to early extinguishment of debt                                       938
     Other                                                                       (1,483)               2,223
Changes in assets and liabilities, net of acquisitions:
     Accounts and notes receivable, net                                         (58,544)              (3,176)
     Inventories, net                                                           (69,274)             (44,267)
     Other assets                                                               (14,196)              (1,470)
     Accounts payable                                                            36,220               56,826
     Facility closing costs and severance                                        (6,696)              (3,035)
     Accrued taxes and other liabilities                                          8,937               (7,321)
                                                                            -----------           ----------
Net cash provided by operating activities                                        76,787               71,301
                                                                            -----------           ----------
Cash flows from investing activities:
     Purchase of property, plant and equipment                                  (81,367)             (55,230)
     Acquisition of majority interest in Keebler                               (284,436)
     Acquisition of President International, Inc. by Keebler                   (444,818)
     Acquisition of other businesses                                            (30,206)              (7,932)
     Other                                                                          182                9,471
                                                                            -----------           ----------
Net cash disbursed for investing activities:                                   (840,645)             (53,691)
                                                                            -----------           ----------
Cash flows from financing activities:
     Common stock offering proceeds, net of
          underwriters discount and offering costs                              187,930
     Dividends paid                                                             (33,875)             (28,246)
     Treasury stock purchases                                                    (5,597)                (352)
     Stock compensation and warrants exercised                                   20,353                3,700
     Debentures proceeds                                                        199,417
     Debentures issuance costs                                                   (1,750)
     Increase in commercial paper                                                42,808                  610
     Increase in long-term debt                                                 385,215                  792
                                                                            -----------           ----------
Net cash provided by (disbursed for) financing activities                       794,501              (23,496)
                                                                            -----------           ----------
Net increase (decrease) in cash and cash equivalents                             30,643               (5,886)
Cash and cash equivalents at beginning of period                                  3,866                7,886
                                                                            -----------           ----------
Cash and cash equivalents at end of period                                  $    34,509           $    2,000
                                                                            ===========           ==========

Schedule of noncash investing and financing activities:
     Stock compensation transactions                                        $     9,345           $    5,509
                                                                            ===========           ==========
     Stock issued for acquisition                                           $    40,000           $
                                                                            ===========           ==========
</TABLE>

          (See Accompanying Notes to Consolidated Financial Statements)
                                       -7-



<PAGE>   8



                            FLOWERS INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  The accompanying consolidated financial statements of Flowers Industries,
    Inc. (the "Company") contain all adjustments (consisting of only normal
    recurring accruals) necessary to present fairly the financial position as of
    October 10, 1998 and January 3, 1998, the results of operations for the
    twelve and forty weeks ended October 10, 1998 and October 11, 1997,
    respectively, and statement of cash flows for the forty weeks ended October
    10, 1998 and October 11, 1997. The results of operations for the twelve and
    forty week periods ended October 10, 1998 and October 11, 1997,
    respectively, are not necessarily indicative of the results to be expected
    for a full year.

    In prior years, the Company's fiscal year ended on the Saturday nearest June
    30. Concurrent with the Company's purchase of the majority interest in
    Keebler Foods Company ("Keebler"), as further discussed in Note 4, the
    Company changed its fiscal year end to coincide with Keebler's, which
    consists of thirteen four week periods (52 or 53 weeks) and ends on the
    Saturday nearest December 31. The Company's quarterly reporting periods for
    fiscal year 1998 are as follows: first quarter ended April 25, 1998
    (sixteen weeks), second quarter ended July 18, 1998 (twelve weeks), third
    quarter ended October 10, 1998 (twelve weeks) and fourth quarter ending
    January 2, 1999 (twelve weeks). Unaudited condensed combined pro forma
    results of operations, which assume the acquisition of the majority interest
    in Keebler occurred as of the beginning of each period presented, are
    included in Note 4.

    The Company changed its method of presenting the statement of cash flows
    from the direct method to the indirect method, beginning with the second
    quarter ending July 18, 1998. This and certain other reclassifications of
    prior period information have been made to conform with the current period
    presentation.

2.  Net Income Per Common Share - Basic net income per share is computed by
    dividing net income by weighted average common shares outstanding for the
    period. Diluted net income per share is computed by dividing net income by
    weighted average common and dilutive common equivalent shares outstanding
    for the period. Common stock equivalents consist of the incremental shares
    associated with the Company's stock compensation plans, as determined under
    the treasury stock method. The following table sets forth the computation of
    basic and diluted net income per share (amounts in thousands, except per
    share data):


<TABLE>
<CAPTION>
                                                        For the 12 Weeks Ended                For the 40 Weeks Ended
                                                     ------------------------------       -----------------------------
                                                     October 10,        October 11,       October 10,        October 11,
                                                        1998               1997              1998                1997
                                                     -----------        -----------       -----------        ----------
<S>                                                  <C>                <C>               <C>                <C>
Numerator:
     Income before extraordinary loss                 $  25,555           $20,417          $ 59,050           $48,391
     Extraordinary loss due to early
          extinguishment of debt, net of tax
          benefit and minority interest                    (938)               --              (938)               --
                                                      ---------           -------          --------           -------
     Net income                                       $  24,617           $20,417          $ 58,112           $48,391
                                                      =========           =======          ========           =======

Denominator:
    Basic weighted average shares                        99,794            88,398            95,460            88,218
    Effect of dilutive securities:
           Stock compensation                               409               447               447               428
                                                      ---------           -------          --------           -------
    Diluted weighted average shares                     100,203            88,845            95,907            88,646
                                                      =========           =======          ========           =======
</TABLE>


                                       -8-


<PAGE>   9


3.  The Company's primary raw materials are flour, sugar, shortening, fruits and
    dairy products. The Company has limited involvement with derivative
    financial instruments and does not use them for trading purposes. The
    Company enters into forward purchase agreements and derivative financial
    instruments to reduce the impact of volatility in raw material prices.
    Amounts payable or receivable under the agreements which qualify as hedges
    are recognized as deferred gains or losses and charged or credited to cost
    of sales as the related raw materials are used in production. Gains and
    losses on agreements which do not qualify as hedges are marked to market and
    recognized immediately as other income or expense. At October 10, 1998, the
    Company had no material commitments outstanding relating to derivative
    financial instruments.

    During June 1997, the Company entered into an arrangement that allows the
    Company to engage in commodity price agreements based on fixed and floating
    prices of an agreed type of commodity. At October 10, 1998, the Company had
    no material amounts outstanding under this arrangement.

4.  Acquisitions - On February 3, 1998, the Company acquired an additional 11.5%
    of the common stock of Keebler, concurrent with Keebler's initial public
    offering, giving the Company a majority ownership position in Keebler of
    approximately 55% (the "Keebler Acquisition"). The aggregate purchase price
    of the additional interest in Keebler was approximately $311,624,000,
    including transaction expenses. The acquisition was initially financed
    through borrowings under the Company's $500,000,000 syndicated loan
    facility. Keebler is a major producer and marketer of cookies and crackers
    in the United States. The acquisition of the additional interest in Keebler
    was accounted for using the purchase method of accounting, and, accordingly,
    Keebler's assets and liabilities are included in the consolidated balance
    sheet as of October 10, 1998. The acquisition of the majority interest
    resulted in the Company consolidating Keebler's operating results effective
    January 4, 1998. Keebler's operating results for the period January 4, 1998
    through February 3, 1998, the date the Company acquired the majority
    interest, were not materially different had they been accounted for under
    the equity method, the method by which the Company previously accounted for
    its investment in Keebler. The excess of the purchase price over the fair
    value of the net assets underlying the additional interest acquired,
    approximately $263,391,000, has been recorded as goodwill and is being
    amortized over 40 years.

    The purchase price has been preliminarily allocated to the assets acquired
    and liabilities assumed based on the respective fair values at the date of
    purchase, as summarized below (amounts in thousands):

<TABLE>
         <S>                                                     <C>    
         Cash                                                    $ 46,989
         Accounts receivable                                       98,963
         Inventory                                                112,462
         Other current assets                                      63,033
         Property, plant and equipment                            478,121
         Cost in excess of net tangible assets                    201,205
         Other assets                                              61,879
         Current liabilities                                      368,185
         Long-term debt                                           272,390
         Deferred income taxes                                     69,417
         Postretirement/postemployment obligations                 60,605
         Other noncurrent liabilities                              50,203
         Minority interest                                        108,833
</TABLE>







                                       -9-

<PAGE>   10

    The following unaudited condensed combined pro forma results of operations
    assume the Keebler Acquisition occurred as of the beginning of each period
    (amounts in thousands, except per share data):


<TABLE>
<CAPTION>
                                                                                 For the 40 Weeks Ended 
                                                                         --------------------------------------
                                                                         October 10, 1998      October 11, 1997
                                                                         ----------------      ----------------
<S>                                                                      <C>                   <C>
Sales                                                                       $ 2,776,242           $2,600,824
Income before extraordinary loss                                                 59,050               44,339
Net income                                                                       58,112               42,858
Net Income Per Common Share:
  Income before extraordinary loss - basic                                          .62                  .47
  Income before extraordinary loss - diluted                                        .62                  .47
  Net income - basic                                                                .61                  .45
  Net income - diluted                                                              .61                  .45
</TABLE>


    The pro forma financial information is not necessarily indicative of the
    operating results that would have occurred had the acquisition been
    consummated as of the beginning of the period, nor are they necessarily
    indicative of future operating results.

    On September 28, 1998, Keebler, of which the Company owns a 55% majority
    interest, acquired President International, Inc. ("PII") from President
    International Trade and Investment Corporation, a company limited by shares
    under the International Business Companies Ordinance of the British Virgin
    Islands, for an aggregate purchase price of $446,100,000, excluding related
    fees and expenses paid at closing of approximately $3,400,000. The PII
    acquisition was funded in cash, with approximately $75,000,000 from existing
    resources and the remainder from borrowings under the Keebler $700,000,000
    Senior Credit Facility Agreement ("Credit Facility") and a $125,000,000
    Bridge Facility, both dated as of September 28, 1998.

    The acquisition of PII by Keebler has been accounted for as a purchase. The
    total purchase price and the fair value of liabilities assumed have been
    allocated to the tangible and intangible assets of PII based on a
    preliminary assessment of their respective fair values. The acquisition has
    resulted in a preliminary unallocated excess purchase price over fair value
    of net assets acquired of approximately $325,000,000, which is being
    amortized straight-line over a forty year period.

    Results of operations for PII from September 28, 1998 to October 10, 1998
    will be included in the consolidated statement of income for the fourth
    quarter of the Company's fiscal year. The Company intends to file unaudited
    pro forma financial information with the Securities and Exchange Commission
    under a Form 8-K/A filing no later than December 14, 1998.

    On January 30, 1998, the Company acquired the outstanding common stock of
    Franklin Baking Company ("Franklin") in Goldsboro, North Carolina. Franklin
    is a producer and marketer of fresh bakery products primarily to
    supermarkets. Additionally, on May 1, 1998, the Company acquired the
    Pet-Ritz and Oronoque Orchard frozen dessert brands from Van de Kamp's, Inc.
    Both business combinations have been accounted for as purchases, and,
    accordingly, the results of operations are included in the consolidated
    statement of income from the date of acquisition. The Company does not
    consider the effects of either of the acquisitions significant for pro forma
    disclosure purposes.

                                      -10-


<PAGE>   11


5. Other accrued liabilities consist of (amounts in thousands):


<TABLE>
<CAPTION>
                                                                         October 10, 1998      January 3, 1998
                                                                         ----------------      ---------------
<S>                                                                      <C>                   <C>

Employee compensation                                                       $    99,822           $   18,123
Self-insurance                                                                   66,200               13,429
Marketing and consumer promotions                                                92,497                    -
Other                                                                            73,868               35,557
                                                                            -----------           ----------
    Total                                                                   $   332,387           $   67,109
                                                                            ===========           ==========
</TABLE>


6.  The following table summarizes the Company's debt (amounts in thousands):

<TABLE>
<CAPTION>
                                                                          October 10, 1998       January 3, 1998
                                                                          ----------------       ---------------
<S>                                                                       <C>                    <C>
7.15% Debentures due 2028                                                   $   200,000          $         -
Private placement Senior Notes                                                  125,000              125,000
Senior Subordinated Notes                                                       124,400                    -
Borrowings under syndicated loan facility                                       157,500              122,000
Term A loans                                                                    350,000                    -
Commercial paper                                                                 96,314               53,506
Industrial revenue bonds                                                         12,950               13,170
Bridge Facility                                                                  75,000                    -
Revolving Facility                                                               85,000                    -
Other notes payable                                                              37,930               20,273
                                                                            -----------           ----------
                                                                              1,264,094              333,949
Due within one year                                                             203,020               57,738
                                                                            -----------           ----------
Due after one year                                                          $ 1,061,074           $  276,211
                                                                            ===========           ==========
</TABLE>


    On April 27, 1998, the Company sold $200,000,000 of 7.15% debentures due
    April 15, 2028. Net proceeds from the offering were used to reduce
    borrowings under the $500,000,000 syndicated loan facility which were
    primarily incurred to purchase the majority interest in Keebler.

    In July 1998, the Company amended its Commercial Paper Agreement to increase
    the limit from $75,000,000 to $100,000,000. Borrowings under this agreement
    at October 10, 1998 were $96,314,000.

    On September 28, 1998, Keebler entered into a new debt facility in order to
    finance the acquisition of PII. The new debt structure specifically provides
    for available borrowings of $825,000,000 consisting of a $350,000,000
    Revolving Facility and $350,000,000 Term facility, and an additional
    $125,000,000 Bridge Facility. Any unused borrowings under the Revolving
    Facility are subject to a commitment fee. The current commitment fee will
    vary from 0.1250% - 0.30% based on the relationship of debt to adjusted
    earnings with a minimum commitment fee of 0.20% required through March 28,
    1999.

    In conjunction with the acquisition of PII, Term Note A was extinguished by
    using $145,000,000 of borrowings under the new Credit Facility. Keebler
    recorded a before-tax extraordinary charge of $2,800,000 related primarily
    to expensing certain bank fees which were being amortized and which were
    incurred at the time Term Note A was issued. The related after-tax charge
    was $1,706,000.


                                      -11-


<PAGE>   12


7.  New Accounting Pronouncements - As of January 4, 1998, the Company adopted
    Statement of Financial Accounting Standards No. 130, "Reporting
    Comprehensive Income" ("SFAS 130"). SFAS 130 establishes new rules for the
    reporting and display of comprehensive income and its components. The
    adoption of this Statement had no impact on the Company's net earnings or
    stockholders' equity. During the third quarter of fiscal 1998 and the
    comparable period in the prior year, total comprehensive income
    substantially equaled net income.

    In June 1998, the Financial Accounting Standards Board issued Statement of
    Financial Accounting Standards No. 133, "Accounting for Derivative
    Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes new
    rules for accounting for derivative instruments and hedging activities. This
    standard is effective for the Company's fiscal year 2000. The Company is
    currently assessing the effects SFAS 133 will have on its financial position
    and results of operations.

8.  Equity Offering - On April 27, 1998, the Company sold 9,000,000 shares of
    its common stock in a public offering at $22 per share. Net proceeds from
    the offering were used to reduce borrowings under the $500,000,000
    syndicated loan facility which were primarily incurred to purchase the
    majority interest in Keebler.








                                      -12-


<PAGE>   13



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Matters Affecting Analysis:

From January 26, 1996, the date of the Company's initial investment in Keebler,
through January 3, 1998, the Company accounted for its investment in Keebler
using the equity method of accounting. For reporting periods beginning after
January 3, 1998, the Company has consolidated Keebler for financial reporting
purposes, due to the Keebler Acquisition.


Liquidity and Capital Resources:

Net cash provided by operating activities for the forty weeks ended October 10,
1998 was $76,787,000. Positive net cash flow of $85,441,000 was provided from
net income for the forty weeks. Net cash flows provided by operations were
negatively impacted by the build-up of inventory in anticipation of the upcoming
high selling holiday period and an increase in trade accounts receivable. Timing
of payments of accrued taxes and other liabilities had a positive impact on cash
flows.

Net cash disbursed for investing activities for the forty weeks ended October
10, 1998 of $840,645,000 was primarily used for the Keebler Acquisition, the
acquisition of PII by Keebler and capital expenditures. The capital expenditures
were made principally to update and enhance production and distribution
facilities.

For the forty weeks ended October 10, 1998, net cash provided by financing
activities of $794,501,000 resulted from the issuance of $200,000,000 of 7.15%
debentures due April 15, 2028 and the issuance of 9,000,000 shares of common
stock in a public offering at $22 per share. These transactions were consummated
on April 27, 1998. Debt incurred by Keebler to finance the acquisition of PII
and the exercise of Keebler warrants by Bermore Ltd., concurrent with Keebler's
initial public offering on February 3, 1998, also contributed to net cash
provided by financing activities.

At October 10, 1998, cash and cash equivalents were $34,509,000. As described in
Note 6 of the consolidated financial statements, long-term debt was
$1,061,074,000 and current maturities of long-term debt were $203,020,000 at
October 10, 1998. During the third quarter, the Company amended its Commercial
Paper Agreement to increase the limit to $100,000,000. In connection with the
consolidation of Keebler, the Company has recorded Keebler's indebtedness of
$654,657,000 as of October 10, 1998, however, the Company has not guaranteed
such indebtedness and it is to be repaid solely from the cash flows of Keebler. 
The Company believes that, in light of its current cash position, its cash flow 
from operating activities and its credit arrangements, it can adequately meet 
presently foreseeable financing requirements.

For the twelve and forty weeks ended October 10, 1998, dividends paid per share
increased 9% and 10%, respectively, to $.12 and $.3525, respectively, from $.11
and $.3208 paid for the comparable periods in the prior year.












                                      -13-


<PAGE>   14



Results of Operations:
----------------------

Results of operations expressed as a percentage of net sales for the twelve and
forty weeks ended October 10, 1998, and October 11, 1997 are set forth below:



<TABLE>
<CAPTION>
                                                           For the 12 Weeks Ended             For the 40 Weeks Ended
                                                        ----------------------------       -----------------------------
                                                        October 10,      October 11,       October 10,       October 11,
                                                          1998              1997              1998              1997
                                                          ----              ----              ----              ----
<S>                                                     <C>              <C>               <C>               <C>
Sales                                                    100.00%           100.00%           100.00%           100.00%
Gross margin                                              55.70             41.56             55.21             43.68
Selling, marketing and administrative expenses            42.96             30.36             44.77             33.79
Depreciation and amortization                              3.39              3.42              3.35              3.43
Interest expense, net                                      1.64              1.28              1.68              1.37
Income before income taxes, income from investment in
      unconsolidated affiliate, minority interest and
      extraordinary loss                                   7.71              6.51              5.41              5.09
Income taxes                                               3.24              2.51              2.27              1.95
Net income                                                 2.85%             6.35%             2.09%             4.56%
</TABLE>

Sales. For the twelve weeks ended October 10, 1998, sales were $862,784,000, or
168% higher than sales for the comparable period in the prior year, which were
$321,758,000. For the forty weeks ended October 10, 1998, sales were
$2,776,242,000, or 162% higher than sales for the comparable period in the prior
year which were $1,061,225,000. Most of the increase was due to the
consolidation of Keebler's sales, following the Keebler Acquisition, in the
amount of $499,897,000 for the quarter and $1,626,685,000 year to date. Sales
increases for both the twelve and forty weeks were driven primarily by selected
price increases initiated in the first quarter of 1998 an increase in sales
volume, and a more favorable sales mix. Volume gains were a result of sales of
new products, line extensions of existing products and wider distribution in
non-supermarket channels. The Company also experienced increased sales as a
result of the acquisition of three other businesses.

Gross Margin. For the twelve weeks ended October 10, 1998, gross margin was
$480,578,000, or 259% higher than gross margin for the comparable period in the
prior year, which was $133,736,000. For the forty weeks ended October 10, 1998,
gross margin was $1,532,694,000, or 231% higher than gross margin for the
comparable period in the prior year, which was $463,574,000. The Company's gross
margin for the twelve and forty weeks includes gross margin of $301,884,000 and
$970,926,000, respectively, attributable to Keebler, a factor not present in the
prior year. Lower ingredient costs, price increases, increased volume and
production efficiencies obtained through capital investment in bakery automation
projects were also factors in the gross margin improvement.

Selling, Marketing and Administrative Expenses. Selling, marketing and
administrative expenses were $370,660,000 for the twelve weeks ended October 10,
1998, or 279% higher than its expenses of $97,690,000 for the comparable period
in the prior year. Selling, marketing and administrative expenses were
$1,242,831,000 for the forty weeks ended October 10, 1998, or 247% higher than
its expenses of $358,601,000 for the comparable period in the prior year. The
increase is due primarily to the inclusion of $232,152,000 for the quarter and
$799,789,000, year to date of such expenses for Keebler. The increase in these
expenses relative to sales was primarily due to increased marketing expenses,
somewhat offset by reduced delivery expenses.




                                      -14-


<PAGE>   15


Depreciation and Amortization. Depreciation and amortization expense was
$29,252,000 for the twelve weeks ended October 10, 1998, an increase of 166%
over the corresponding period in the prior year, which was $10,993,000.
Depreciation and amortization expense was $92,986,000 for the forty weeks ended
October 10, 1998, an increase of 156% over the corresponding period in the prior
year, which was $36,372,000. The increase was primarily a result of the
consolidation of Keebler, increased goodwill amortization relating to the
Keebler Acquisition and increased depreciation attributable to capital
improvements.

Interest Expense. For the twelve weeks ended October 10, 1998, interest expense
was $14,131,000, or 244% higher than interest expense for the corresponding
period in the prior year of $4,108,000. For the forty weeks ended October 10,
1998, interest expense was $46,624,000, or 220% higher than interest expense for
the corresponding period in the prior year of $14,566,000. Approximately
$4,856,000 and $17,005,000 in interest expense was attributable to Keebler for
the quarter and year to date, respectively, and the remaining increase in
interest expense was due to borrowings used to fund the Keebler Acquisition.

Income Before Income Taxes, Income from Investment in Unconsolidated Affiliate,
Minority Interest and Extraordinary Loss. Income before income taxes, income
from investment in unconsolidated affiliate, minority interest and extraordinary
loss for the twelve weeks ended October 10, 1998 was $66,535,000, an increase of
218% over the comparable period in the prior year, which was $20,945,000. The
amount for the forty weeks ended October 10, 1998 was $150,253,000, an increase
of 178% over the comparable period in the prior year, which was $54,035,000.
Approximately $49,942,000 and $107,649,000 of the increase for the quarter and
year to date, respectively, were results of the consolidation of Keebler, which
was partially offset by increased goodwill amortization and interest expense, as
discussed above.

Income Taxes. Income taxes for the twelve weeks ended October 10, 1998 were
$27,945,000 an increase of 247% over the comparable period in the prior year,
which were $8,064,000. Income taxes for the forty weeks ended October 10, 1998
were $63,106,000, an increase of 205% over the comparable period in the prior
year, which were $20,678,000. This increase is due primarily to the inclusion of
$20,976,000 and $45,212,000 of income taxes attributable to Keebler for the
quarter and year to date, respectively, as well as an increase in the effective
tax rate to 42% from 38.5%. The tax rate increase is due primarily to
nondeductible goodwill amortization associated with the Keebler Acquisition.

Net Income. Net income for the twelve weeks ended October 10, 1998 was
$24,617,000, an increase of 21%, as compared to $20,417,000 reported in the
prior year. Net income for the forty weeks ended October 10, 1998 was
$58,112,000, an increase of 20%, as compared to $48,391,000 reported in the
prior year. This increase is primarily a result of the Keebler Acquisition,
offset by the increased goodwill amortization and interest expense, as discussed
above.


Year 2000 Conversion

The Company utilizes a number of computer software programs and operating
systems throughout its organization, including applications used in order
processing, shipping and receiving, accounts payable and receivable processing,
financial reporting and in various other administrative functions. The Company
recognizes the need to make every effort to ensure that its operations will not
be adversely impacted by applications and processing issues related to the
upcoming calendar year 2000 (the "Year 2000 Issue"). The Year 2000 Issue is the
result of computer programs that have been written to recognize two digit,
rather than four digit, date codes to define the applicable year. To the extent
that the Company's software applications contain source codes that are unable to
appropriately interpret a code using "00" as the upcoming year 2000 rather than
1900, the Company could experience system failures or miscalculations that could
disrupt operations and cause a temporary inability to process transactions, send
and process invoices or engage in similar normal business activities.


                                      -15-


<PAGE>   16



Based on its ongoing assessment of its systems, the Company has determined that
it will be required to modify or replace significant portions of its software so
that its computer systems will function properly with respect to dates in the
year 2000 and thereafter. The Company presently believes that with modifications
to its existing software and certain conversions to new software, the Year 2000
Issue will not present significant operational problems for its computer
systems. In addition, the Company's systems and operations are dependent, in
part, on interaction with systems operated or provided by vendors, customers or
other third-parties, and the Company is currently surveying those parties about
their progress in identifying and addressing problems that their computer
systems may face in connection with the Year 2000 Issue. The Company believes
that it has no exposure for contingencies related to the Year 2000 Issue for the
products it has sold.

The Company's plan to resolve the Year 2000 Issue (the "Plan") identifies
exposure with respect to the Company's three operating divisions, Flowers
Bakeries, Mrs. Smith's Bakeries, and Keebler, in three different areas:
information technology, operating equipment with embedded chips or software and
third party vendors. In addition, the Plan involves the following four phases
for each of the potential exposure items: assessment, remediation, testing and
implementation. The discussion set forth below will present a current assessment
of these areas for each of the Company's operating divisions.

FLOWERS BAKERIES
With respect to information technology, Flowers Bakeries has fully completed its
assessment of this risk area. This assessment indicated that most of Flowers
Bakeries' significant information technology systems could be affected,
particularly the general ledger, billing, payables, inventory and ordering
systems. To date, Flowers Bakeries is 90% complete on the remediated phase and
expects to complete software reprogramming and replacement no later than
February 1999. Once software is reprogrammed or replaced, Flowers Bakeries will
begin testing and implementation. These phases run concurrently for different
systems. To date, Flowers Bakeries has completed 50% of its testing. Completion
of the testing phase for all significant systems is expected by June 1999, with
all remediation and implementation of systems expected to be fully tested and
operational by August 1999.

The assessment and remediation of the operating equipment with embedded chips or
software is 15% complete. The expected completion date of remediation is June
1999. Testing of this equipment is more difficult than the testing of
information technology systems; as a result, Flowers Bakeries has completed
approximately 2% of the testing of remediation of its operating equipment. Once
testing is complete, the operating equipment should be compliant. Testing and
implementation of affected equipment is expected to be complete by August 1999.

The assessment of third party vendors or customers and their exposure to the
Year 2000 Issue is 50% complete for systems that directly interface with Flowers
Bakeries. Flowers Bakeries expects to complete surveying all third parties by
August 1999. Flowers Bakeries expects to complete the testing phase for systems
interface work by August 1999. Flowers Bakeries has queried its significant
suppliers that do not share information systems with Flowers Bakeries (external
agents). To date, Flowers Bakeries is not aware of any external agent with a
Year 2000 Issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, Flowers Bakeries has no
means of ensuring that external agents will be Year 2000 compliant. The
inability of external agents to complete their Year 2000 resolution processing
in a timely fashion could materially impact Flowers Bakeries. The effect of
noncompliance by external agents is not determinable by Flowers Bakeries.

Flowers Bakeries has engaged an independent outside consultant (the
"Consultant") to review the adequacy, completeness and feasibility of its
programs to address the Year 2000 Issue. The Consultant has made recommendations
that Flowers Bakeries is currently considering regarding improvements to its
program. After Flowers Bakeries completes the review and responds to these
recommendations, the Consultant will review Flowers Bakeries' responses to these
recommendations and will monitor Flowers Bakeries' execution of remediation
efforts.

                                      -16-


<PAGE>   17
MRS. SMITH'S BAKERIES 
With respect to information technology, Mrs. Smith's Bakeries has fully
completed its assessment of this risk area. This assessment indicated that most
of Mrs. Smith's Bakeries' significant information technology systems would not
be affected. Mrs. Smith's Bakeries, Inc. has recently completed a four year
project of installing a new information technology system. This system is Year
2000 compliant and is responsible for running over 90% of the companies business
processes.

The assessment and remediation of the operating equipment with embedded chips or
software is 90% complete. The expected completion date of remediation is April
1999. Mrs. Smith's Bakeries has completed approximately 75% of the testing of
remediation of its operating equipment. Once testing is complete, the operating
equipment should be compliant. Testing and implementation of affected equipment
is expected to be complete by April, 1999.

The assessment of third party vendors or customers and their exposure to the
Year 2000 Issue is 50% complete for systems that directly interface with Mrs.
Smith's Bakeries and 80% complete for all other material exposure. Mrs. Smith's
Bakeries expects to complete surveying all third parties by January 1999. Mrs.
Smith's Bakeries expects to complete remediation's efforts on the systems by
March 1999 and is 50% complete with the testing and implementation phases. Mrs.
Smith's Bakeries expects to complete the testing phase for systems interface
work by March 1999. Mrs. Smith's Bakeries has queried its significant suppliers
that do not share information systems with Mrs. Smith's Bakeries (external
agents). To date, Mrs. Smith's Bakeries is not aware of any external agent with
a Year 2000 Issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, Mrs. Smith's Bakeries has
no means of ensuring that external agents will be Year 2000 compliant. The
inability of external agents to complete their Year 2000 resolution processing
in a timely fashion could materially impact Mrs. Smith's Bakeries. The effect of
noncompliance by external agents is not determinable by Mrs. Smith's Bakeries.

KEEBLER
Keebler utilizes software and related technologies that will be affected by the
Year 2000 Issue. Keebler has completed a comprehensive review of the computer
systems and non-information technology systems (i.e. elevators) to identify
potential problems arising from the Year 2000 Issue. As Keebler has implemented
the SAP R/3 management information system and Manugistics software, both of
which were developed/purchased as Year 2000 compliant, the impact of the Year
2000 Issue on the business is not anticipated to be material to Keebler.
Additionally, secondary information systems, which are not material to Keebler's
ability to forecast, manufacture, or deliver product, have been reviewed and
Year 2000 issues identified. Keebler is currently in the process of correcting
or upgrading these systems. Keebler intends to be Year 2000 compliant on all
critical systems by the end of April 1999.

Keebler is also undertaking efforts to verify, by no later than December 1998,
that all vendors and suppliers will be Year 2000 compliant. A comprehensive
questionnaire was sent to all of Keebler's significant suppliers and vendors
regarding their Year 2000 compliance in an attempt to identify any problem areas
with respect to these groups. As no specific issues related to third parties
have been identified to warrant a contingency plan, Keebler has not yet
developed a plan to deal with a Year 2000 failure caused by a third party, but
rather would intend to do so if a specific problem is identified through the
questionnaire. While there can be no absolute assurance that third parties will
convert their systems in a timely manner and in a way compatible with Keebler's
systems, Keebler believes that its actions with third parties detailed above
will minimize these risks.

Keebler is currently conducting a comprehensive review of the computer systems
and non-information technology systems (i.e. elevators) to identify potential
Year 2000 issues for its newly-acquired subsidiary, PII. Many of the Year 2000
risks at President International, Inc. will be mitigated through the
implementation of the SAP R/3 management information system, Manugistics
software, and Keebler's warehouse management system. This implementation is
expected to be completed during 1999.




                                      -17-
<PAGE>   18



SUMMARY
The Company is utilizing both internal and external resources to reprogram, or
replace, and test its software for Year 2000 modifications. The total cost of
the Plan is estimated at $6-7 million and is being funded through operating cash
flow and expensed as incurred. To date, the Company has incurred approximately
one million in expenses related to the assessment of, and preliminary efforts
on, its Year 2000 modification projects, the development of the plan for the
purchase of new systems and system modifications.

         The costs of the Plan and the time frame in which the Company believes
it will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third-party
modification plans and other factors. Specific factors that might result in
additional costs or time delays include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties. Based upon
the Company's current estimates, the Company does not anticipate that the cost
of compliance with the Year 2000 Issue will be material to its business,
financial condition or results of operations; however, there can be no assurance
that the Company's systems, or those of its vendors, customers or other third
parties, will be made Year 2000 compliant in a timely manner or that the impact
of the failure to achieve such compliance will not have a material adverse
effect on the Company's business, financial condition or results of operations.

Based on the progress the Company has made in addressing its Year 2000 issues
and the Company's compliance with the Year 2000 Issue on its primary business
information systems, the Company does not foresee significant risks associated
with its Year 2000 compliance at this time. As the Company plan is to address
any significant Year 2000 issues prior to being affected by them, a
comprehensive contingency plan has not been developed. However, if a significant
risk related to Year 2000 compliance or a delay in the anticipated schedule for
compliance occurs, the Company will develop contingency plans as deemed
necessary at that time.

         The discussion of the Company's efforts and management's expectations
relating to Year 2000 compliance are forward-looking statements. Readers are
cautioned that forward-looking statements contained herein should be read in
conjunction with the Company's disclosures under the heading "Forward-Looking
Statements" set forth elsewhere herein.

Forward-Looking Statements

Certain statements made herein are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and are subject
to the safe harbor provisions of that Act. Such forward-looking statements
include, without limitation, the future availability and prices of raw
materials, the availability of capital on acceptable terms, the competitive
conditions in the baked foods industry, potential regulatory obligations, the
Company's strategies and other statements contained herein that are not
historical facts. Because such forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by such forward-looking
statements, including, but not limited to, changes in general economic and
business conditions (including the baked foods markets), the Company's ability
to recover its raw material costs in the pricing of its products, the
availability of capital on acceptable terms, actions of competitors, the extent
to which the Company is able to develop new products and markets for its
products, the time required for such development, the level of demand for such
products, changes in the Company's business strategies and other factors
discussed herein.





                                      -18-
<PAGE>   19



                           PART II. OTHER INFORMATION


Item 5.    Other Information

The following unaudited condensed combined pro forma results of operations give
effect to the purchase of the majority ownership position in Keebler on February
3, 1998, as if the transaction had occurred as of the beginning of the year
ended January 3, 1998, and the sale of 9,000,000 shares of the Company's common
stock in a public offering at $22 per share and $200,000,000 of 7.15% debentures
on April 27, 1998, as if these transactions had occurred as of the beginning of
the second quarter of the year ended January 3, 1998. The periods presented are
the comparable periods in the prior year based on the Company changing its
fiscal year end from the Saturday nearest June 30 to the Saturday nearest
December 31 (amounts in thousands, except per share data):

<TABLE>
<CAPTION>
                                                      For the 16                                                       For the 52
                                                      Weeks Ended               For the 12 Weeks Ended                 Weeks Ended
                                                    --------------              ----------------------               --------------

                                                        April 26,        July 19,     October 11,      January 3,        January 3, 
                                                           1997            1997           1997            1998              1998
                                                    --------------    -----------     ------------    -----------     -------------

<S>                                                 <C>               <C>             <C>             <C>             <C>          
Sales                                               $   1,010,255     $   783,516     $   807,053     $   906,842     $   3,507,666
Income before extraordinary loss and cumulative
 effect of changes in accounting principles                11,135          13,420          19,784          17,437            61,776
Net income                                                  9,654          13,420          19,784           5,397            48,255
Net Income Per Common  Share:
Basic -
Income before extraordinary loss and cumulative
 effect of changes in accounting principles                  0.13            0.14            0.20            0.18              0.65


Net income                                                   0.11            0.14            0.20            0.06              0.51
Diluted -
Income before extraordinary loss and cumulative
 effect of changes in accounting principles                  0.13            0.14            0.20            0.18              0.65

Net income                                          $        0.11     $      0.14     $      0.20     $      0.06     $        0.51
</TABLE>


The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the transactions been consummated
as of the beginning of the period, nor are they necessarily indicative of future
operating results.





                                      -19-
<PAGE>   20


           Shareholder Proposals

Proposals by shareholders intended to be presented at the 1999 Annual Meeting of
Shareholders must be forwarded in writing and received at the principal
executive office of the Company no later than December 31, 1998, directed to the
attention of the Secretary, for consideration for inclusion in the Company's
proxy statement for the Annual Meeting of Shareholders to be held on May 28,
1999. Moreover, with regard to any proposal by a shareholder not seeking to have
such proposal included in the proxy statement but seeking to have such proposal
considered at the 1999 Annual Meeting, if such shareholder fails to notify the
Company in the manner set forth above of such proposal no later than March 15,
1999, then the persons appointed as proxies may exercise their discretionary
voting authority if the proposal is considered at the 1999 Annual Meeting
notwithstanding that shareholders have not been advised of the proposal in the
proxy statement for the 1999 Annual Meeting. Any proposals submitted by
shareholders must comply in all respects with the rules and regulations of the
Securities and Exchange Commission and the provisions of the Company's Articles
of Incorporation and Bylaws and of Georgia law.



Item 6.    Exhibits and Reports on Form 8-K


     (a)   Exhibit 27 - Financial Data Schedule (for SEC use only).

     (b)   Reports on Form 8-K - The Company filed a report on Form 8-K on
           October 13, 1998 to report the acquisition of President
           International, Inc. by Keebler Foods Company.
































                                      -20-
<PAGE>   21




                                   SIGNATURES



       Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                     FLOWERS INDUSTRIES, INC.





                                     /s/ Amos R. McMullian
                                     ------------------------------------
                                     By:  Amos R. McMullian
                                          Chairman of the Board




                                     /s/ Jimmy M. Woodward   
                                     ------------------------------------
                                     By:  Jimmy M. Woodward
                                          Treasurer and Chief Accounting 
                                          Officer









November 18, 1998
-----------------
      Date









                                      -21-