<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 JULY 31, 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 September 11, 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
<PAGE> 2
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
Items 1-5 have been omitted because they are not applicable with respect to the
current reporting period.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27.1 Financial Data Schedule
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
---------------------------------
September 11, 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>
JULY 31 OCTOBER 31
1998 1997
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $21,953,007 $12,377,932
Accounts receivable, less allowance
for doubtful accounts of $558,711
and $577,156 8,911,913 11,374,263
Inventories (Note 2) 13,985,879 15,556,750
Prepaid expenses and other 1,347,324 1,827,841
----------- -----------
Total current assets 46,198,123 41,136,786
Property, plant and equipment, less
accumulated depreciation of $27,801,723
and $25,432,473 15,452,020 16,853,248
Other non-current assets 8,063,834 7,673,858
----------- -----------
$69,713,977 $65,663,892
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,755,109 $ 5,343,687
Accrued payroll and other expenses 7,398,935 5,927,156
Income taxes payable 512,840 183,857
----------- -----------
Total current liabilities 10,666,884 11,454,700
----------- -----------
Non-current liabilities 10,215,188 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 24,492,248 20,266,125
----------- -----------
48,831,905 44,605,782
----------- -----------
$69,713,977 $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 39 WEEKS ENDED
-------------- --------------
JULY 31 AUGUST 1 JULY 31 AUGUST 1
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $31,782,572 $31,153,002 $99,601,109 $93,465,103
----------- ----------- ----------- -----------
Cost of products sold,
excluding depreciation 18,844,676 19,111,815 59,568,873 58,798,993
Selling, general and
administrative expenses 8,841,001 8,580,686 27,841,085 25,299,760
Depreciation 789,750 730,693 2,369,250 2,260,050
----------- ----------- ----------- -----------
28,475,427 28,423,194 89,779,208 86,358,803
----------- ----------- ----------- -----------
Income before taxes 3,307,145 2,729,808 9,821,901 7,106,300
Income tax provision 1,256,000 1,037,000 3,732,000 2,700,000
----------- ----------- ----------- -----------
Net income $ 2,051,145 $ 1,692,808 $ 6,089,901 $ 4,406,300
=========== =========== =========== ===========
Basic and diluted earnings
per share (Note 3) $ 0.20 $ 0.16 $ 0.59 $ 0.43
=========== =========== =========== ===========
Cash dividends paid
per share (Note 3) $ 0.06 $ 0.055 $ 0.18 $ 0.164
=========== =========== =========== ===========
</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 $27,776,994
Net income 4,406,300
Cash dividends (Note 3)
($.164 per share) (1,691,448)
----------- ----------- ----------- -----------
August 1, 1997 9,396,933 $ 9,453,816 $ 3,024,881 $30,491,846
=========== =========== =========== ===========
October 31, 1997 10,336,415 $10,393,298 $13,946,359 $20,266,125
Net income 6,089,901
Cash dividends
($.18 per share) (1,863,778)
----------- ----------- ----------- -----------
July 31,1998 10,336,415 $10,393,298 $13,946,359 $24,492,248
=========== =========== =========== ===========
</TABLE>
Page 4 of 8 pages
<PAGE> 5
Item 1.c.
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
39 WEEKS ENDED
--------------
JULY 31 AUGUST 1
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,089,901 $ 4,406,300
Income charges not affecting cash:
Depreciation 2,369,250 2,260,050
Provision for losses on accounts receivable 93,113 93,113
Effect on cash of changes in assets and liabilities:
Accounts receivable 2,369,237 683,882
Inventories 1,570,871 367,555
Prepaid expenses and other 480,517 998,591
Other non-current assets (389,976) (808,660)
Accounts payable and accrued expenses (1,116,799) 454,723
Income taxes payable 328,983 33,469
Non-current liabilities 611,778 473,521
------------ ------------
Net cash provided by operating activities 12,406,875 8,962,544
------------ ------------
Cash used in investing activities:
Additions to property, plant and equipment (968,022) (1,412,401)
------------ ------------
Cash used for financing activities:
Cash dividends paid (1,863,778) (1,691,448)
------------ ------------
Net increase in cash and cash equivalents 9,575,075 5,858,695
Cash and cash equivalents at beginning of period 12,377,932 6,343,022
------------ ------------
Cash and cash equivalents at end of period $ 21,953,007 $ 12,201,717
============ ============
Cash paid for income taxes $ 3,813,000 $ 2,943,000
============ ============
</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 thirty-nine
weeks ended July 31, 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>
JULY 31 OCTOBER 31
1998 1997
---- ----
<S> <C> <C>
Meat, ingredients
and supplies $4,304,632 $4,452,750
Work in progress 1,560,384 1,357,000
Finished goods 8,120,863 9,747,000
----------- -----------
$13,985,879 $15,556,750
=========== ===========
</TABLE>
Note 3 - Common Stock and Per Share Data
The weighted average shares used for computing basic and diluted
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
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.
ITEM 2. 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 and flour commodity products declined significantly in
the first 39 weeks of fiscal year 1998 compared to the prior fiscal year.
Sales in the third thirteen-week period ended July 31,1998 increased by $630,000
(2.0%) to $31,783,000 compared to the same period last year. Sales for the third
thirteen week period decreased $561,000 (1.7%) compared to the previous period
ended May 1,1998. The sales increase compared to the third quarter of 1997
primarily relates to higher unit sales volume and changes in product mix. The
sales decrease from the prior fiscal quarter primarily relates to lower unit
sales volume. Sales for the first thirty-nine weeks of 1998 increased $6,136,000
(6.6%) to $99,601,000 compared to the same period last year. The increase in
sales primarily relates to higher unit sales volume.
Cost of products sold decreased by $267,000 (1.4%) in the third quarter of the
1998 fiscal year to $18,845,000 compared to the same period in 1997 due
primarily to lower commodity costs compared to the prior fiscal year. Compared
to the prior quarter, cost of products sold increased $329,000 (1.8%) despite
lower sales volume as a result of changes in product mix. Cost of products sold
for the first thirty-nine weeks of 1998 increased $770,000 (1.3%) to
$59,569,000. The increase in cost of products sold did not correspond to the
sales increase in the first thirty-nine weeks of fiscal 1998 primarily as a
result of lower flour and pork commodity costs compared to the same period in
the prior year.
Selling, general and administrative expenses increased by $260,000 (3.0%) to
$8,841,000 in the third quarter of 1998 compared to the same period last year.
The increase corresponds to the increase in sales volume. Compared to the prior
quarter, selling, general and administrative expenses decreased by $405,000
(4.4%). This decrease primarily relates to lower sales volume compared to the
prior fiscal quarter. Selling, general and administrative expenses increased
$2,541,000(10.0%) in the first thirty-nine weeks of fiscal 1998 primarily as a
result of higher sales, advertising and payroll costs. The Company has and will
continue to make certain investments in its software systems and applications to
ensure year 2000 compliance. The financial impact to the Company has not been
and is not anticipated to be material to its financial position or results of
operations in any given year.
Depreciation expense increased by $59,000 (8.1%) in the third thirteen weeks of
the 1998 fiscal year compared to the same period in 1997. Depreciation expense
increased by $109,000 (4.9%) in the first thirty-nine weeks of the 1998 fiscal
year compared to the same period in 1997.
The effective income tax rate was 38.0% in the third quarter of fiscal 1998,
consistent with the prior fiscal year and the prior quarter.
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 $9,575,000 (77.3%) to $21,953,000 during the
first thirty-nine weeks of the 1998 fiscal year. The principal items favorably
affecting the $12,407,000 net cash provided by operating activities were net
income of $6,090,000, depreciation of $2,369,000 and accounts receivable and
inventory reductions of $2,369,000 and $1,571,000, respectively.
Cash used in investing activities for the first thirty-nine weeks of 1998 and
1987 consisted of $968,000 and $1,412,000, respectively, in additions to
property, plant and equipment. This amount reflects the Company's continued
modernization of manufacturing facilities and investment in transportation
equipment. Capital expenditures are not anticipated to be significant in the
last 13 weeks of the fiscal year.
Cash used for financing activities consists of cash dividends in the amount of
$1,864,000 and $1,691,000 in the first thirty-nine weeks of fiscal years 1998
and 1997, respectively.
The Company remained free of interest bearing debt during the first thirty-nine
weeks of 1998. The Company's revolving line of credit with Bank of America
expires April 30, 2000 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.
Item 6.
Exhibits and Reports on Form 8-K (a) Exhibits:
27 - Financial Data Schedule for the 39 weeks ended July 31,1998 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
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SUMMARY CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF BRIDGFORD FOODS CORPORATION FOR THE THIRTY-NINE WEEKS ENDED JULY
31, 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> JUL-31-1998
<CASH> 21,953,007
<SECURITIES> 0
<RECEIVABLES> 9,470,624
<ALLOWANCES> 558,711
<INVENTORY> 13,985,879
<CURRENT-ASSETS> 46,198,123
<PP&E> 43,253,743
<DEPRECIATION> 27,801,723
<TOTAL-ASSETS> 69,713,977
<CURRENT-LIABILITIES> 10,666,884
<BONDS> 0
0
0
<COMMON> 10,393,298
<OTHER-SE> 38,438,607
<TOTAL-LIABILITY-AND-EQUITY> 69,713,977
<SALES> 99,601,109
<TOTAL-REVENUES> 99,601,109
<CGS> 59,568,873
<TOTAL-COSTS> 59,568,873
<OTHER-EXPENSES> 30,210,335
<LOSS-PROVISION> 93,113
<INTEREST-EXPENSE> 177,827
<INCOME-PRETAX> 9,821,901
<INCOME-TAX> 3,732,000
<INCOME-CONTINUING> 6,089,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,089,901
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
