<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 1, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
COMMISSION FILE NUMBER 0-2396
BRIDGFORD FOODS CORPORATION
---------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-1778176
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
1308 N. PATT STREET, ANAHEIM, CA 92801
--------------------------------------
(Address of principal executive offices-Zip code)
714-526-5533
------------
(Registrant's telephone number, including area code)
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 [ ]
As of June 12, 1998 the registrant had 10,336,415 shares of common stock
outstanding.
Number of pages in this Form 10-Q 8
(end of cover page) Page 1 of 8 pages
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BRIDGFORD FOODS CORPORATION
---------------------------
FORM 10-Q QUARTERLY REPORT
--------------------------
INDEX
-----
Part I. Financial Information
Item 1. Financial Statements
a. Consolidated Balance Sheets
b. Consolidated Statements of Income
b. Consolidated Statements of Shareholders' Equity
c. Consolidated Statements of Cash Flows
d. Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Items 1-3 and item 5 have been omitted because they are not applicable with
respect to the current reporting period.
Item 6. Exhibits and Reports on Form 8-K
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 the
undersigned thereunto duly authorized.
BRIDGFORD FOODS CORPORATION
---------------------------
(Registrant)
By: /s/ Robert E. Schulze
June 12, 1998 ----------------------------------
R. E. Schulze, President,
Principal Financial Officer
Page 2 of 8 pages
<PAGE> 3
Item 1. a.
BRIDGFORD FOODS CORPORATION
---------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
MAY 1 OCTOBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $19,761,553 $12,377,932
Accounts receivable, less allowance
for doubtful accounts of $568,568
and $577,156 8,477,088 11,374,263
Inventories (Note 2) 14,437,914 15,556,750
Prepaid expenses and other 1,769,273 1,827,841
------------------- ------------------
Total current assets 44,445,828 41,136,786
Property, plant and equipment, less
accumulated depreciation of $27,011,973
and $25,432,473 15,782,168 16,853,248
Other non-current assets 7,855,724 7,673,858
------------------- ------------------
$68,083,720 $65,663,892
=================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $3,077,231 $5,343,687
Accrued payroll and other expenses 7,208,998 5,927,156
Income taxes payable 715,857 183,857
------------------- ------------------
Total current liabilities 11,002,086 11,454,700
------------------- ------------------
Non-current liabilities 9,680,688 9,603,410
------------------- ------------------
Shareholders'equity:
Preferred stock, without par value
Authorized - 1,000,000 shares
Issued and outstanding - none
Common stock, $1.00 par value
Authorized - 20,000,000 shares
Issued and outstanding - 10,336,415 shares 10,393,298 10,393,298
Capital in excess of par value 13,946,359 13,946,359
Retained earnings 23,061,289 20,266,125
------------------- ------------------
47,400,946 44,605,782
------------------- ------------------
$68,083,720 $65,663,892
=================== ==================
</TABLE>
Page 3 of 8 pages
<PAGE> 4
Item 1. b.
BRIDGFORD FOODS CORPORATION
---------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
13 WEEKS ENDED 26 WEEKS ENDED
-------------- --------------
MAY 1 MAY 2 MAY 1 MAY 2
1998 1997 1998 1997
----- ----- ----- ----
<S> <C> <C> <C> <C>
Net sales $ 32,343,133 $ 30,642,790 $67,818,537 $62,312,101
------------------ ------------------ ------------------- ------------------
Cost of products sold,
excluding depreciation 18,515,365 18,933,718 40,724,197 39,687,179
Selling, general and
administrative expenses 9,246,123 8,326,592 19,000,084 16,719,074
Depreciation 789,750 746,107 1,579,500 1,529,357
------------------ ------------------ ------------------- ------------------
28,551,239 28,006,417 61,303,781 57,935,610
------------------ ------------------ ------------------- ------------------
Income before taxes 3,791,895 2,636,373 6,514,757 4,376,491
Income tax provision 1,441,000 1,002,000 2,476,000 1,663,000
------------------ ------------------ ------------------- ------------------
Net income $ 2,350,895 $ 1,634,373 $4,038,757 $2,713,491
================== ================== =================== ==================
Basic earnings
per share (Note 3) $0.23 $0.16 $0.39 $0.26
================== ================== =================== ==================
Cash dividends paid
per share (Note 3) $0.06 $0.055 $0.12 $0.109
================== ================== =================== ==================
</TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
-----------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Capital
Common Stock in excess Retained
Shares Amount of par earnings
------ ------ ------ --------
<S> <C> <C> <C> <C>
November 1, 1996 9,396,933 $9,453,816 $3,024,881 $27,776,994
Net income 2,713,491
Cash dividends (Note 3)
($.109 per share) (1,127,632)
------------------ ------------------ ------------------- ------------------
May 2, 1997 9,396,933 $9,453,816 $3,024,881 $29,362,853
================== ================== =================== ==================
October 31, 1997 10,336,415 $10,393,298 $13,946,359 $20,266,125
Net income 4,038,757
Cash dividends
($.12 per share) (1,243,593)
------------------ ------------------ ------------------- ------------------
May 1, 1998 10,336,415 $10,393,298 $13,946,359 $23,061,289
================== ================== =================== ==================
</TABLE>
Page 4 of 8 pages
<PAGE> 5
Item 1.c.
BRIDGFORD FOODS CORPORATION
---------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
26 WEEKS ENDED
--------------
MAY 1 MAY 2
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $4,038,757 $2,713,491
Income charges not affecting cash:
Depreciation 1,579,500 1,529,357
Provision for losses on accounts receivable 62,075 62,075
Effect on cash of changes in assets and liabilities:
Accounts receivable 2,835,100 1,092,940
Inventories 1,118,836 1,027,810
Prepaid expenses and other 58,568 901,891
Other non-current assets (181,866) (768,007)
Accounts payable and accrued expenses (984,614) (34,127)
Income taxes payable 532,000 (76,531)
Non-current liabilities 77,278 509,407
------------------- ------------------
Net cash provided by operating activities 9,135,634 6,958,306
------------------- ------------------
Cash used in investing activities:
Additions to property, plant and equipment (508,420) (1,062,070)
------------------- ------------------
Cash used for financing activities:
Cash dividends paid (1,243,593) (1,127,632)
------------------- ------------------
Net increase in cash and cash equivalents 7,383,621 4,768,604
Cash and cash equivalents at beginning of period 12,377,932 6,343,022
------------------- ------------------
Cash and cash equivalents at end of period $19,761,553 $11,111,626
=================== ==================
Cash paid for income taxes $2,321,000 $1,870,000
=================== ==================
</TABLE>
Page 5 of 8 pages
<PAGE> 6
Item 1.d.
BRIDGFORD FOODS CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
Note 1 - General Comments
- -------------------------
The consolidated financial statements of the Company for the twenty-six
weeks ended May 1, 1998 have been prepared in conformity with the accounting
principles described in the 1997 Annual Report to Shareholders and include all
adjustments considered necessary by management for a fair statement of the
interim period. Such adjustments consist only of normal recurring items. This
report should be read in conjunction with the Company's 1997 Annual Report to
Shareholders. Certain reclassifications have been made in prior years to conform
to the current year presentation.
Note 2 - Inventories
- --------------------
Inventories are comprised as follows at the respective periods:
<TABLE>
<CAPTION>
MAY 1 OCTOBER 31
1998 1997
---- ----
<S> <C> <C>
Meat, ingredients
and supplies $4,731,758 $4,452,750
Work in progress 1,777,841 1,357,000
Finished goods 7,928,315 9,747,000
------------------ ------------------
$14,437,914 $15,556,750
================== ==================
</TABLE>
Note 3 - Common Stock and Per Share Data
- ----------------------------------------
The weighted average shares used for computing basic earnings per share
in the accompanying statements of income were 10,336,415 for all periods
presented. Per share computations in fiscal year 1997 were recalculated to give
effect to a 10% stock dividend declared November 10, 1997.
Page 6 of 8 pages
<PAGE> 7
Item 2.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q under Item 2., "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
Form 10-Q constitute "forward-looking statements" within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward
looking statements involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance, or achievements of
Bridgford Foods Corporation to be materially different from any future results,
performance or achievements expressed or implied by such forward looking
statements. Such factors include, among others, the following: general economic
and business conditions; the impact of competitive products and pricing; success
of operating initiatives; development and operating costs; advertising and
promotional efforts; adverse publicity; acceptance of new product offerings;
consumer trial and frequency; changes in business strategy or development plans;
availability, terms and deployment of capital; availability of qualified
personnel; commodity, labor, and employee benefit costs; changes in, or failure
to comply with, government regulations; weather conditions; construction
schedules; and other factors referenced in this Form 10-Q.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's operating results are heavily dependent upon the prices paid for
raw materials. The marketing of the company's value-added products does not lend
itself to instantaneous changes in selling prices. Changes in selling prices are
relatively infrequent and do not compare with the volatility of commodity
markets. Costs for pork commodity products declined significantly in the first
and second quarters of fiscal year 1998.
Sales increased by $1,700,000 (5.6%) to $32,343,000 in the second thirteen weeks
of the 1998 fiscal year compared to the same period last year. Sales for the
second thirteen weeks decreased $3,132,000 (8.8%) compared to the previous
thirteen week period ended January 30,1998. The sales increase compared to the
second quarter of 1997 relates to higher unit sales volume and changes in
product mix. The sales decrease from the prior fiscal quarter relates to changes
in product mix and seasonal characteristics. Sales for the first twenty-six
weeks of 1998 increased $5,506,000 (8.8%) to $67,819,000 compared to the same
period last year. The increase in sales primarily relates to higher unit sales
volume.
Cost of products sold decreased by $418,000 (2.2%) in the second thirteen weeks
of the 1998 fiscal year to $18,515,000 compared to the same period in 1997.
Compared to the prior thirteen-week period, cost of products sold decreased
$3,693,000 (16.6%). The decreases in cost of products sold did not correspond to
the sales increases and decrease in the respective fiscal 1998 quarters
primarily as a result of lower pork commodity costs compared to the same periods
in the prior year. Cost of products sold for the first twenty-six weeks of 1998
increased $1,037,000 (2.6%) to $40,724,000. The increase in cost of products
sold did not correspond to the sales increase in the first twenty-six weeks of
fiscal 1998 primarily as a result of lower pork commodity costs compared to the
same period in the prior year.
Selling, general and administrative expenses increased by $920,000 (11%) to
$9,246,000 in the second thirteen weeks of 1998 compared to the same period last
year. The increase primarily relates to higher sales volume compared to the
prior year. Compared to the prior thirteen-week period, selling, general and
administrative expenses decreased by $508,000 (5.2%). The increase and decrease
in selling, general and administrative expenses in the respective quarters
generally did not correspond to the sales increase and decrease primarily as a
result of higher advertising and payroll costs. Selling, general and
administrative expenses increased $2,281,000 in the first twenty-six weeks of
fiscal 1998 primarily as a result of higher advertising and payroll costs.
Depreciation expense increased by $44,000 (5.9%) in the second thirteen weeks of
the 1998 fiscal year compared to the same period in 1997. Depreciation expense
increased by $50,000 (3.3%) in the first twenty-six weeks of the 1998 fiscal
year compared to the same period in 1997.
The effective income tax rate was 38.0% in the first thirteen and twenty-six
weeks of fiscal 1998, consistent with the prior year.
Page 7 of 8 pages
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Cash and cash equivalents increased $7,384,000 (59.7%) to $19,762,000 during the
first twenty-six weeks of the 1998 fiscal year. The principal items affecting
the $9,136,000 net cash provided by operating activities were net income of
$4,039,000 and accounts receivable and inventory reductions of $2,835,000 and
$1,119,000, respectively.
Cash used in investing activities for the first twenty-six weeks of fiscal 1998
consisted of $508,000 in additions to property, plant and equipment. This amount
reflects the Company's continued investment in manufacturing and transportation
equipment.
Cash used for financing activities consists of cash dividends in the amount of
$1,244,000 and $1,128,000 in the first twenty-six weeks of fiscal years 1998 and
1997, respectively.
The Company remained free of interest bearing debt during the first twenty-six
weeks of 1998. The Company's revolving line of credit with Bank of America
expires April 30, 1999 and provides for borrowings up to $2,000,000. The Company
has not borrowed under the line for more than eleven consecutive years.
The impact of inflation on the Company's financial position and results of
operations has not been significant. Management is of the opinion that the
Company's strong financial position and its capital resources are sufficient to
provide for its operating needs and capital expenditures.
Part II. Other Information
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on Wednesday, March 11, 1998
at the Four Points Sheraton, 1500 South Raymond Avenue, Fullerton, California at
10:00 a.m. Shareholders representing 9,440,791 or 91% of the 10,336,415 shares
entitled to vote were present in person or by proxy. The following persons were
nominated and elected directors. Votes withheld from specific nominees were
insignificant.
Hugh Wm. Bridgford Allan L. Bridgford Robert E. Schulze
Paul A. Gilbert John W. McNevin Steven H. Price
Norman V. Wagner II Paul R. Zippwald
Votes cast for directors were 9,412,340 FOR and 28,451 ABSTAIN or WITHHELD.
Votes cast for the reappointment of Price Waterhouse LLP as the independent
public accountants for the Company for 1998 were 9,434,926 FOR, 553 AGAINST and
5,312 ABSTAIN.
Item 6.
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 - Financial Data Schedule for the 26 weeks ended May 1, 1998, submitted to
the Securities and Exchange Commission in electronic format (for SEC information
only)
(b) - Reports on Form 8-K
No Report on Form 8-K has been filed during the quarter for which this report is
filed.
Page 8 of 8 pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SUMMARY CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF BRIDGFORD FOODS CORPORATION FOR THE TWENTY-SIX WEEKS ENDED MAY 1,
1998, AS SET FORTH IN THIS FORM 10-Q FOR SUCH PERIOD, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-30-1998
<PERIOD-END> MAY-01-1998
<CASH> 19,761,553
<SECURITIES> 0
<RECEIVABLES> 9,045,656
<ALLOWANCES> 568,568
<INVENTORY> 14,437,914
<CURRENT-ASSETS> 44,445,828
<PP&E> 42,794,141
<DEPRECIATION> 27,011,973
<TOTAL-ASSETS> 68,083,720
<CURRENT-LIABILITIES> 11,002,086
<BONDS> 0
0
0
<COMMON> 10,393,298
<OTHER-SE> 37,007,648
<TOTAL-LIABILITY-AND-EQUITY> 68,083,720
<SALES> 67,818,537
<TOTAL-REVENUES> 67,818,537
<CGS> 40,724,197
<TOTAL-COSTS> 40,724,197
<OTHER-EXPENSES> 20,579,584
<LOSS-PROVISION> 62,075
<INTEREST-EXPENSE> 118,846
<INCOME-PRETAX> 6,514,757
<INCOME-TAX> 2,476,000
<INCOME-CONTINUING> 4,038,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,038,757
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
