<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, D C 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 JULY 18, 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 
 incorporation or organization)                           Identification Number)


                    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 AUGUST 26, 1998
     -------------------                          ------------------------------
COMMON STOCK, $.625  PAR VALUE                              99,790,481



<PAGE>   2




                            FLOWERS INDUSTRIES, INC.

                                      INDEX


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

     Item 1.  Financial Statements

              Consolidated Balance Sheet
                July 18, 1998 and January 3, 1998                                  3

              Consolidated Statement of Income
                Twenty Eight Weeks Ended July 18, 1998
                and July 19, 1997                                                  5

              Consolidated Statement of Income
                Twelve Weeks Ended July 18, 1998
                and July 19, 1997                                                  6

              Consolidated Statement of Cash Flows
                Twenty Eight Weeks Ended July 18, 1998
                and July 19, 1997                                                  7

              Notes to Consolidated Financial Statements                           8

     Item 2.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations                               12


PART II.      Other Information

     Item 5.  Other Information                                                   16

     Item 6.  Exhibits and Reports on Form 8-K                                    17
</TABLE>




                                       -2-


<PAGE>   3

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

<TABLE>
<CAPTION>
                                                         July 18,         January 3,
                                                           1998             1998
                                                      ==============================
                                                       (Unaudited)

<S>                                                   <C>                  <C>       
CURRENT ASSETS:
     Cash and cash equivalents                          $    78,902        $   3,866 
     Accounts and notes receivable, net                     241,766          118,147 
     Inventories:                                                                
         Raw materials                                       71,262           40,459 
         Finished goods                                     180,838           44,650 
         Supplies                                            24,457           20,322 
                                                        -----------        --------- 
                                                            276,557          105,431 
                                                        -----------        --------- 
     Deferred income taxes                                   62,668           16,024 
     Other assets                                            32,223            9,421 
                                                        -----------        --------- 
                                                            692,116          252,889 
                                                        -----------        --------- 
                                                                                     
PROPERTY, PLANT and EQUIPMENT:                                                       
     Land                                                    38,645           20,388 
     Buildings                                              343,913          208,179 
     Machinery and equipment                                790,480          443,739 
     Furniture, fixtures and transportation equipment        91,839           28,095 
     Construction in progress                               119,950           46,262 
                                                        -----------        --------- 
                                                          1,384,827          746,663 
     Less:  Accumulated depreciation                       (458,280)        (308,342)
                                                        -----------        --------- 
                                                            926,547          438,321 
                                                        -----------        --------- 
                                                                                     
OTHER ASSETS:                                                                        
     Investment in unconsolidated affiliate                                  100,663                  
     Other                                                  119,298           32,620 
                                                        -----------        --------- 
                                                            119,298          133,283 
                                                        -----------        --------- 
                                                                                     
COST IN EXCESS OF NET TANGIBLE                                                       
     ASSETS, NET                                            575,012           74,888 
                                                        -----------        --------- 
                                                        $ 2,312,973        $ 899,381 
                                                        ===========        ========= 
</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>
                                                         July 18,           January 3,
                                                           1998                1998
                                                       ===============================
                                                        (Unaudited)

<S>                                                     <C>                 <C>        
CURRENT LIABILITIES:
     Commercial paper                                   $    74,755         $  53,506  
     Current maturities of long-term debt                    33,431             4,232  
     Accounts payable                                       169,966            72,311  
     Income taxes                                            28,597                    
     Other accrued liabilities                              339,129           102,563  
                                                        -----------         ---------  
                                                            645,878           232,612  
                                                        -----------         ---------  

LONG TERM DEBT                                              738,003           276,211  
                                                        -----------         ---------  
                                                                                       
OTHER LIABILITIES:                                                                     
     Deferred income taxes                                  107,946            39,686  
     Postretirement/postemployment obligations               62,457                    
     Other long-term liabilities                             49,074             2,305  
                                                        -----------         ---------  
                                                            219,477            41,991
                                                        -----------         ---------  

MINORITY INTEREST                                           122,014                    
                                                        -----------         ---------  
                                                                                       
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 99,982,062 and                                     
         88,636,089 shares, respectively                     62,489            55,398  
     Capital in excess of par value                         272,269            45,200  
     Retained earnings                                      278,334           266,734  
     Less:  Common stock in treasury, 172,831                                          
                   and 207,670 shares, respectively          (2,261)           (2,452) 
            Stock compensation related                                              
                   adjustments                              (23,230)          (16,313) 
                                                        -----------         ---------  
                                                            587,601           348,567  
                                                        -----------         ---------  
                                                        $ 2,312,973         $ 899,381  
                                                        ===========         =========  
</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 28 Weeks Ended
                                                        ===============================
                                                         July 18,              July 19, 
                                                           1998                  1997
                                                        ===============================

<S>                                                     <C>                   <C>         
Sales                                                   $ 1,908,531           $ 734,235   
Other income                                                  4,927               5,232   
                                                        -----------           ---------   
                                                          1,913,458             739,467   
                                                        -----------           ---------   
                                                                                          
Materials, supplies, labor and other production costs       861,342             409,629   
Selling, marketing and administrative expenses              872,171             260,911   
Depreciation and amortization                                63,734              25,379   
                                                        -----------           ---------   
Income from operations                                      116,211              43,548   
Interest expense, net                                        32,493              10,458   
                                                        -----------           ---------   
Income before income taxes, income from investment in                                                 
     unconsolidated affiliate and minority interest          83,718              33,090   
Income taxes                                                 35,161              12,614   
Income from investment in unconsolidated affiliate                               10,691                       
                                                        -----------           ---------   
Income before minority interest                              48,557              31,167  
Minority interest                                           (15,062)                      
                                                        -----------           ---------   
Net income                                              $    33,495           $  31,167  
                                                        ===========           =========   

Net Income Per Common Share:                                                                
Basic -                                                                                   
     Net income per common share                        $       .36           $     .35   
                                                        ===========           =========   
     Weighted average shares outstanding                     93,835              88,151   
                                                        ===========           =========   
                                                                                          
Diluted -                                                                                 
     Net income per common share                        $       .36           $     .35   
                                                        ===========           =========   
     Weighted average shares outstanding                     94,296              88,569   
                                                        ===========           =========   
                                                                                          
Cash dividends paid per common share                    $    0.2325           $  0.2108   
                                                        ===========           =========   
</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
                                                        =============================
                                                         July 18,            July 19,
                                                           1998                1997
                                                        ==============================

<S>                                                     <C>                  <C>        
Sales                                                   $   833,059          $ 321,014  
Other income                                                  3,365              2,674  
                                                        -----------          ---------  
                                                            836,424            323,688  
                                                        -----------          ---------  
                                                                                        
Materials, supplies, labor and other production costs       375,052            194,328  
Selling, marketing and administrative expenses              371,600             99,461  
Depreciation and amortization                                29,538             10,943  
                                                        -----------          ---------  
Income from operations                                       60,234             18,956  
Interest expense, net                                        13,348              3,776  
                                                        -----------          ---------  
Income before income taxes, income from investment in                                               
     unconsolidated affiliate and minority interest          46,886             15,180  
Income taxes                                                 19,675              5,844  
Income from investment in unconsolidated affiliate                               5,351                     
                                                        -----------          ---------  
Income before minority interest                              27,211             14,687  
Minority interest                                            (8,744)                    
                                                        -----------          ---------  
Net income                                              $    18,467          $  14,687 
                                                        ===========          =========  
                                                                                        
Net Income Per Common Share:                                                              
Basic -                                                                                 
     Net income per common share                        $       .19          $    0.17  
                                                        ===========          =========  
     Weighted average shares outstanding                     97,548             88,186  
                                                        ===========          =========  
                                                                                        
Diluted -                                                                               
     Net income per common share                        $       .19          $    0.17  
                                                        ===========          =========  
     Weighted average shares outstanding                     98,002             88,613  
                                                        ===========          =========  
                                                                                        
Cash dividends paid per common share                    $    0.1175          $  0.1075  
                                                        ===========          =========  
</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 28 Weeks Ended
                                                                    ========================
                                                                      July 18,      July 19,
                                                                        1998          1997
                                                                    ========================
<S>                                                                 <C>            <C>
Cash flows provided by operating activities:
Net income                                                          $    33,495    $  31,167 
Adjustments to reconcile net income to net cash                                               
     provided by operating activities:                                                        
     Minority interest                                                   15,062               
     Income from investment in unconsolidated affiliate                              (10,691)         
     Depreciation and amortization                                       63,734       25,379        
     Deferred income taxes                                               (5,555)       1,037       
     Other                                                                   87        2,223               
Changes in assets and liabilities, net of acquisitions:                                       
     Accounts and notes receivable                                      (21,487)      12,849        
     Inventories                                                        (55,739)     (17,611)         
     Other assets                                                           533          (86)     
     Accounts payable                                                    10,674       21,299        
     Accrued taxes and other liabilities                                  5,801      (17,131)         
                                                                    -----------    ---------  
Net cash provided by operating activities                                46,605       48,435  
                                                                    -----------    ---------  
Cash flows from investing activities:                                                         
     Purchase of property, plant and equipment                          (50,277)     (41,022) 
     Acquisition of majority interest in Keebler                       (284,436)              
     Acquisition of other businesses                                    (30,206)              
     Other                                                                 (155)       8,676  
                                                                    -----------    ---------  
Net cash disbursed for investing activities:                           (365,074)     (32,346)
                                                                    -----------    ---------  
Cash flows from financing activities:                                                         
     Common stock offering proceeds, net of 
          underwriters discount and offering costs                      187,930
     Dividends paid                                                     (21,895)     (18,574)
     Treasury stock purchases                                            (3,987)         (86)     
     Stock compensation and warrants exercised                           20,305        3,428       
     Debentures proceeds                                                199,417               
     Debentures issuance costs                                           (1,750)              
     Increase (decrease) in commercial paper                             21,249       (3,840)        
     Net debt repayments                                                 (7,764)      (2,183)        
                                                                    -----------    ---------  
Net cash provided by (disbursed for) financing activities               393,505      (21,255)        
                                                                    -----------    ---------  
Net increase (decrease) in cash and cash equivalents                     75,036       (5,166)        
Cash and cash equivalents at beginning of period                          3,866        7,886       
                                                                    -----------    ---------  
Cash and cash equivalents at end of period                          $    78,902    $   2,720       
                                                                    ===========    =========  
                                                                                              
Schedule of noncash investing and financing activities:                                       
     Stock compensation transactions                                $     9,049    $   2,475        
                                                                    ===========    =========  
     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
   July 18, 1998 and January 3, 1998, the results of operations for the twelve
   and twenty eight weeks ended July 18, 1998 and July 19, 1997, respectively,
   and statement of cash flows for the twenty eight weeks ended July 18, 1998
   and July 19, 1997. The results of operations for the twelve and twenty eight
   week periods ended July 18, 1998 and July 19, 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 ending April 25, 1998 (sixteen
   weeks), second quarter ending July 18, 1998 (twelve weeks), third quarter
   ending 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
   reporting.

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 28 Weeks Ended
                                      ----------------------      ----------------------

                                      July 18,      July 19,      July 18,      July 19,        
                                        1998          1997          1998          1997          
                                      =======       ========      =======       ========        
<S>                                   <C>           <C>           <C>           <C>             
Numerator:                                                                                      
     Net income                       $18,467       $ 14,687      $33,495       $ 31,167         
                                      =======       ========      =======       ========        
                                                                                                
Denominator:                                                                                    
    Basic weighted average shares      97,548         88,186       93,835         88,151         
    Effect of dilutive securities:                                                              
           Stock compensation             454            427          461            418               
                                      -------       --------      -------       --------        
    Diluted weighted average shares    98,002         88,613       94,296         88,569         
                                      =======       ========      =======       ========        
                                                                                                
Net income per common share:                                                                    
    Basic                             $   .19       $    .17      $   .36        $   .35         
                                      =======       ========      =======       ========        
    Diluted                           $   .19       $    .17      $   .36        $   .35         
                                      =======       ========      =======       ========        
</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. These deferred amounts are 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 recognized
   immediately as other income or expense. At July 18, 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 July 18, 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 July 18, 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 acquisition occurred as of the beginning of each period (amounts
   in thousands, except per share data):


<TABLE>
<CAPTION>
                                                            For the 28 Weeks Ended
                                                       ----------------------------------
                                                       July 18, 1998        July 19, 1997
                                                       -------------        -------------

<S>                                                    <C>                  <C>          
Sales                                                   $ 1,908,531          $1,793,771   
Income before extraordinary loss                             33,495              24,555   
Net income                                                   33,495              23,074
Net Income Per Common Share:                                                              
  Income before extraordinary loss - basic                      .36                 .27   
  Income before extraordinary loss - diluted                    .36                 .27   
  Net income - basic                                            .36                 .25   
  Net income - diluted                                          .36                 .25   
</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 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.


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


<TABLE>
<CAPTION>
                                                       July 18, 1998       January 3, 1998
                                                       -------------       ---------------
<S>                                                    <C>                 <C>        
Employee compensation                                   $    79,889          $  18,123  
Self-insurance                                               69,026             13,429  
Purchase accounting reserves                                 40,872             34,953  
Marketing and consumer promotions                            87,649                 --    
Other                                                        61,693             36,058
                                                        -----------          ---------  
    Total                                               $   339,129          $ 102,563  
                                                        ===========          =========                     
</TABLE>







                                      -10-
<PAGE>   11



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

<TABLE>
<CAPTION>
                                                                                 July 18, 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                                          128,460               122,000
   Term A loans                                                                       145,000                    --
   Commercial paper                                                                    74,755                53,506
   Industrial revenue bonds                                                            12,950                13,170
   Other notes payable                                                                 35,624                20,273
                                                                                      -------              --------
                                                                                      846,189               333,949
   Due within one year                                                                108,186                57,738
                                                                                      -------              --------  
   Due after one year                                                                 738,003              $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, subsequent to quarter-end, the Company amended its Commercial
   Paper Agreement to increase the limit from $75,000,000 to $100,000,000.
   Borrowings under this agreement at July 18, 1998 were $74,755,000.

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 second 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.

9. Subsequent Event - On August 24, 1998, Keebler, of which the Company holds a
   majority ownership position, reached an agreement to acquire President Baking
   Company ("President") headquartered in Atlanta, Georgia. President is a
   supplier of Girl Scout Cookies, as well as, Famous Amos and Murray cookies.
   The transaction is subject to regulatory review and is expected to close in
   September 1998.









                                      -11-
<PAGE>   12


                     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 twenty eight weeks ended July
18, 1998 was $46,605,000. Positive net cash flow of $48,557,000 was provided
from net income for the twenty eight weeks. Net cash flows provided by
operations were negatively impacted by the build-up of frozen inventory by the
Company in anticipation of the upcoming high selling period. Timing of payments
of accrued taxes and other liabilities had a positive impact on cash flows.

Net cash disbursed for investing activities for the twenty eight weeks ended
July 18, 1998 of $365,074,000 was primarily used for the Keebler Acquisition and
capital expenditures. The capital expenditures were made principally to update
and enhance production and distribution facilities.

For the twenty eight weeks ended July 18, 1998, net cash provided by financing
activities of $393,505,000 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. 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 July 18, 1998, cash and cash equivalents were $78,902,000. As described in
Note 6 of the consolidated financial statements, long-term debt was $738,003,000
and current maturities of long-term debt were $108,186,000 at July 18, 1998. In
connection with the consolidation of Keebler, the Company has recorded Keebler's
indebtedness of $286,455,000 as of July 18, 1998, however, the Company has not
guaranteed such indebtedness and it is to be repaid solely from the cash flows
of Keebler. Subsequent to quarter-end, the Company amended its Commercial Paper
Agreement to increase the limit to $100,000,000. 

For the twelve and twenty eight weeks ended July 18, 1998, dividends paid per
share increased 9% and 10%, respectively, to $.1175 and $.2325, respectively,
from $.1075 and $.2108 paid for the comparable periods in the prior year.










                                      -12-

<PAGE>   13

Results of Operations:

Results of operations expressed as a percentage of net sales for the twelve and
twenty eight weeks ended July 18, 1998, and July 19, 1997 are set forth below:

<TABLE>
<CAPTION>
                                                                       For the 12 Weeks Ended             For the 28 Weeks Ended
                                                                     ---------------------------         ------------------------
                                                                     July 18,           July 19,         July 18,        July 19,
                                                                       1998              1997              1998            1997
                                                                       ----              ----              ----            ----
<S>                                                                  <C>                <C>              <C>             <C>    
Sales                                                                100.00%            100.00%           100.00%        100.00%
Gross Profit                                                          54.98              39.46             54.87          44.21
Selling, marketing and administrative expenses                        44.61              30.98             45.70          35.54
Depreciation and amortization                                          3.55               3.41              3.34           3.46
Interest                                                               1.60               1.18              1.70           1.42
Income before income taxes, income from investment in
  unconsolidated affiliate and minority interest                       5.63               4.73              4.39           4.51
Income taxes                                                           2.36               1.82              1.84           1.72
Net income                                                             2.22%              4.58%             1.76%          4.24%
</TABLE>

Sales. For the twelve weeks ended July 18, 1998, sales were $833,059,000 or
160% higher than sales for the comparable period in the prior year, which were
$321,014,000. For the twenty eight weeks ended July 18, 1998, sales were
$1,908,531,000, or 160% higher than sales for the comparable period in the prior
year which were $734,235,000. Most of the increase was due to the consolidation
of Keebler's sales, following the Keebler Acquisition, in the amount of
$490,042,000 for the quarter and $1,126,788,000 year to date. Sales increases
for both the twelve and twenty eight 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 and line extensions of existing products. The Company also
experienced increased sales as a result of the acquisition of three other
businesses.

Gross Profit. For the twelve weeks ended July 18, 1998, gross profit was
$458,007,000 or 262% higher than gross profit for the comparable period in the
prior year, which was $126,686,000. For the twenty eight weeks ended July 18,
1998, gross profit was $1,047,189,000 or 223% higher than gross profit for the
comparable period in the prior year, which was $324,606,000. The Company's gross
profit for the twelve and twenty eight weeks includes gross profit of
$281,357,000 and $654,016,000, respectively, attributable to Keebler, a factor
not present in the prior year. Lower ingredient costs, increased volume and
production efficiencies were also factors in the gross profit improvement.

Selling, Marketing and Administrative Expenses. Selling, marketing and
administrative expenses were $371,600,000 for the twelve weeks ended July 18,
1998, or 274% higher than its expenses of $99,461,000 for the comparable period
in the prior year. Selling, marketing and administrative expenses were
$872,171,000 for the twenty eight weeks ended July 18, 1998, or 234% higher than
its expenses of $260,911,000 for the comparable period in the prior year. The
increase is due primarily to the inclusion of $241,261,000 for the quarter and
$579,437,000 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.





                                     -13-


<PAGE>   14

Depreciation and Amortization. Depreciation and amortization expense was
$29,538,000 for the twelve weeks ended July 18, 1998, an increase of 170% over
the corresponding period in the prior year, which was $10,943,000. Depreciation
and amortization expense was $63,734,000 for the twenty eight weeks ended July
18, 1998, an increase of 151% over the corresponding period in the prior year,
which was $25,379,000. 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. For the twelve weeks ended July 18, 1998, interest expense was
$13,348,000 or 254% higher than interest expense for the corresponding period in
the prior year of $3,776,000. For the twenty eight weeks ended July 18, 1998,
interest expense was $32,493,000 or 211% higher than interest expense for the
corresponding period in the prior year of $10,458,000. Approximately $5,725,000
and $13,555,000 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
and Minority Interest. Income before income taxes, income from investment in
unconsolidated affiliate and minority interest for the twelve weeks ended July
18, 1998 was $46,886,000 an increase of 209% over the comparable period in the
prior year, which was $15,180,000. Income before income taxes, income from
investment in unconsolidated affiliate and minority interest for the twenty
eighty weeks ended July 18, 1998 was $83,718,000 an increase of 153% over the
comparable period in the prior year, which was $33,090,000. Approximately
$33,472,000 and $57,707,000 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 July 18, 1998 were
$19,675,000 an increase of 237% over the comparable period in the prior year,
which were $5,844,000. Income taxes for the twenty eight weeks ended July 18,
1998 were $35,161,000, an increase of 179% over the comparable period in the
prior year, which were $12,614,000. This increase is due primarily to the
inclusion of $14,041,000 and $24,236,000 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 July 18, 1998 was $18,467,000,
an increase of 26%, as compared to $14,687,000 reported in the prior year. Net
income for the twenty eight weeks ended July 18, 1998 was $33,495,000, an
increase of 7%, as compared to $31,167,000 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

Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than two years, computer systems and/or
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements. Significant uncertainty exists concerning the
potential effects associated with such compliance. The Company is currently
analyzing the Year 2000 computer systems issue and has completed the conversion
of certain of its computerized operations. There can be no assurance that the
Company's software contains or will contain all necessary date code changes. The
Company, its customers and its suppliers may be affected by Year 2000 issues.
The Company has plans to communicate with significant customers, vendors and
other third parties with whom it does significant business to determine their
Year 2000 compliance readiness. However, there can be no guarantee that the
systems of other entities will be timely converted, or that their failure to
convert, or a conversion that is incompatible with the Company's system, will
not have an adverse effect on the Company's business, financial condition and
results of operations.
                                      -14-


<PAGE>   15

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.








                                      -15-

<PAGE>   16


                           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.



                                      -16-
<PAGE>   17

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 - No reports on Form 8-K were filed by the
        Company for the second quarter ended July 18, 1998 or during the period
        from the close of the second quarter to the date of this report.






                                      -17-
<PAGE>   18

                                   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









August 26, 1998
---------------
     Date










                                      -18-