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BASIS OF PRESENTATION | 9 Months Ended
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Oct. 04, 2014
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION INTERIM FINANCIAL STATEMENTS — The accompanying unaudited condensed consolidated financial statements of Flowers Foods, Inc. (the “company”, “Flowers Foods”, “Flowers”, “us”, “we”, or “our”) have been prepared by the company’s management in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the company’s financial position, the results of its operations and its cash flows. The results of operations for the twelve and forty week periods ended October 4, 2014 and October 5, 2013 are not necessarily indicative of the results to be expected for a full fiscal year. The balance sheet at December 28, 2013 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013. ESTIMATES — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The company believes the following critical accounting estimates affect its more significant judgments and estimates used in the preparation of its consolidated financial statements: revenue recognition, derivative instruments, valuation of long-lived assets, goodwill and other intangibles, self-insurance reserves, income tax expense and accruals and pension obligations. These estimates are summarized in the company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013. REPORTING PERIODS — The company operates on a 52-53 week fiscal year ending the Saturday nearest December 31. Fiscal 2014 consists of 53 weeks, with the company’s quarterly reporting periods as follows: first quarter ended April 19, 2014 (sixteen weeks), second quarter ended July 12, 2014 (twelve weeks), third quarter ended October 4, 2014 (twelve weeks) and fourth quarter ending January 3, 2015 (thirteen weeks). SEGMENTS — Flowers Foods currently operates two business segments: a direct-store-delivery segment (“DSD segment”) and a warehouse delivery segment (“warehouse segment”). The DSD segment (84% of total year to date sales) operates 38 bakeries that market a wide variety of fresh bakery foods, including fresh breads, buns, rolls, tortillas, and snack cakes. These products are sold through a DSD route delivery system to retail and foodservice customers in the Southeast, Mid-Atlantic, New England, and Southwest as well as in select markets in California and Nevada. The warehouse segment (16% of total year to date sales) operates eight bakeries that produce snack cakes, breads and rolls for national retail, foodservice, vending, and co-pack customers and deliver through customers’ warehouse channels. The warehouse segment also operates one mix facility. Effective the first day of fiscal 2014, we reclassified our tortilla operation from a warehouse segment bakery to the DSD segment. This reclassification was made to better align their sales with the delivery method primarily used to serve their customers. All prior period information has been recasted to reflect this change. The tortilla operation was sold during our third quarter of fiscal 2014 for $8.4 million. The company relocated its flour tortilla equipment to an existing manufacturing facility and continues to sell these products through its DSD segment. See Note 16, Assets Held for Sale, for a detailed description of the sold tortilla operation. SIGNIFICANT CUSTOMER — Following is the effect our largest customer, Walmart/Sam’s Club, had on the company’s sales for the twelve and forty weeks ended October 4, 2014 and October 5, 2013. Walmart is the only customer to account for 10% or more of the company’s sales.
|  | For the Twelve Weeks Ended |  |  | For the Forty Weeks Ended |
|  | October 4, 2014 |  |  | October 5, 2013 |  |  | October 4, 2014 |  |  | October 5, 2013 |
|  | (Percent of Sales) |  |  | (Percent of Sales) |
DSD segment |  |  | 16.9 | % |  |  | 17.2 | % |  |  | 16.8 | % |  |  | 17.1 | %
Warehouse segment |  |  | 2.5 |  |  |  | 2.9 |  |  |  | 2.6 |  |  |  | 3.1 |
Total |  |  | 19.4 | % |  |  | 20.1 | % |  |  | 19.4 | % |  |  | 20.2 | %
SIGNIFICANT ACCOUNTING POLICIES — There were no significant changes to our critical accounting policies for the quarter ended October 4, 2014 from those disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013.

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