<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 APRIL 30, 1999
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 11, 1999 the registrant had 11,369,812 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
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 11, 1999 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>
APRIL 30 OCTOBER 30
1999 1998
(UNAUDITED) (AUDITED)
----------- ----------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $28,211,578 $22,272,141
Accounts receivable, less allowance
for doubtful accounts of $602,739
and $582,787 9,884,090 12,072,818
Inventories (Note 2) 12,811,329 14,066,898
Prepaid expenses and other 1,904,362 2,147,081
----------- -----------
Total current assets 52,811,359 50,558,938
Property, plant and equipment, less
accumulated depreciation of $29,513,327
and $27,894,827 16,732,415 16,197,108
Other non-current assets 9,571,355 9,036,895
----------- -----------
$79,115,129 $75,792,941
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 3,886,034 $ 5,343,725
Accrued payroll and other expenses 7,307,071 6,373,886
Income taxes payable 916,125 1,590,125
----------- -----------
Total current liabilities 12,109,230 13,307,736
----------- -----------
Non-current liabilities 12,293,456 11,642,957
----------- -----------
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 - shares 11,369,812 11,426,695 11,426,695
Capital in excess of par value 26,347,123 26,347,123
Retained earnings 16,938,625 13,068,430
----------- -----------
54,712,443 50,842,248
----------- -----------
$79,115,129 $75,792,941
=========== ===========
</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
-------------- --------------
APRIL 30 MAY 1 APRIL 30 MAY 1
1999 1998 1999 1998
---- ---- ----- ----
<S> <C> <C> <C> <C>
Net sales $33,138,899 $32,343,133 $69,698,531 $67,818,537
----------- ----------- ----------- -----------
Cost of products sold,
excluding depreciation 18,749,431 18,515,365 39,939,701 40,724,197
Selling, general and
administrative expenses 9,359,456 9,246,124 19,691,625 19,000,084
Depreciation 809,250 789,750 1,618,500 1,579,500
----------- ----------- ----------- -----------
28,918,137 28,551,239 61,249,826 61,303,781
----------- ----------- ----------- -----------
Income before taxes 4,220,762 3,791,895 8,448,705 6,514,757
Income tax provision 1,604,000 1,441,000 3,211,000 2,476,000
----------- ----------- ----------- -----------
Net income $ 2,616,762 $ 2,350,895 $ 5,237,705 $ 4,038,757
=========== =========== =========== ===========
Basic earnings
per share (Note 3) $ 0.23 $ 0.21 $ 0.46 $ 0.36
=========== =========== =========== ===========
Cash dividends paid
per share (Note 3) $ 0.06 $ 0.055 $ 0.12 $ 0.109
=========== =========== =========== ===========
</TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Capital
Common Stock in excess Retained
Shares Amount of par earnings
------ ------ --------- --------
<S> <C> <C> <C> <C>
October 31, 1997 10,336,415 $10,393,298 $13,946,359 $20,266,125
Net income 4,038,757
Cash dividends (Note 3)
($.109 per share) (1,243,593)
----------- ----------- ----------- -----------
May 1, 1998 10,336,415 $10,393,298 $13,946,359 $23,061,289
=========== =========== =========== ===========
October 30, 1998 11,369,812 $11,426,695 $26,347,123 $13,068,430
Net income 5,237,705
Cash dividends
($.12 per share) (1,367,511)
----------- ----------- ----------- -----------
April 30, 1999 11,369,812 $11,426,695 $26,347,123 $16,938,625
=========== =========== =========== ===========
</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
APRIL 30 MAY 1
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,237,705 $ 4,038,757
Income charges not affecting cash:
Depreciation 1,618,500 1,579,500
Provision for losses on accounts receivable 71,825 62,075
Gain on sale of land (615,432)
Effect on cash of changes in assets and liabilities:
Accounts receivable 2,116,903 2,835,100
Inventories 1,255,569 1,118,836
Prepaid expenses and other 242,720 58,568
Other non-current assets (534,460) (181,866)
Accounts payable and accrued expenses (524,506) (984,614)
Income taxes payable (674,000) 532,000
Non-current liabilities 650,499 77,278
------------ ------------
Net cash provided by operating activities 8,845,323 9,135,634
------------ ------------
Cash used in investing activities:
Proceeds from sale of land 615,432
Additions to property, plant and equipment (2,153,807) (508,420)
------------ ------------
Net cash used in investing activities (1,538,375) (508,420)
Cash used for financing activities:
Cash dividends paid (1,367,511) (1,243,593)
------------ ------------
Net increase in cash and cash equivalents 5,939,437 6,875,201
Cash and cash equivalents at beginning of period 22,272,141 12,377,932
------------ ------------
Cash and cash equivalents at end of period $ 28,211,578 $ 19,253,133
============ ============
Cash paid for income taxes $ 4,650,750 $ 2,321,000
============ ============
</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 April 30, 1999 have been prepared in conformity with the accounting
principles described in the 1998 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 1998 Annual Report to
Shareholders. In November 1998 the Company sold land and recognized a pre-tax
gain of $615,432. This gain is netted against selling, general and
administrative expenses in the accompanying consolidated statements of income.
Note 2 - Inventories
- --------------------
Inventories are comprised as follows at the respective periods:
APRIL 30 OCTOBER 30
1999 1998
---- ----
Meat, ingredients
and supplies $ 4,100,878 $ 3,694,898
Work in progress 1,713,422 1,353,000
Finished goods 6,997,029 9,019,000
----------- -----------
$12,811,329 $14,066,898
=========== ===========
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 11,369,812 for all periods
presented. Per share computations in fiscal year 1998 were recalculated to give
effect to a 10% stock dividend declared November 16, 1998.
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 early
part of the first quarter of fiscal 1999, however, such costs began to increase
in the second quarter.
The Company has and will continue to make certain investments in its software
systems and applications to ensure year 2000 compliance. The financial impact on
the Company has not been and is not anticipated to be material to its financial
position or results of operations in any given year. Detail disclosure regarding
the Company's year 2000 plan and a discussion of risk factors is contained under
Item 1., "Business" in Form 10-K for the fiscal year ended October 30, 1998.
Sales increased by $796,000 (2.5%) to $33,139,000 in the second thirteen weeks
of the 1999 fiscal year compared to the same period last year. Sales for the
second thirteen weeks decreased $3,421,000 (9.4%) compared to the previous
thirteen week period ended January 29,1999. The sales increase compared to the
second quarter of 1998 relates primarily to higher unit sales volume. 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 1999 increased
$1,880,000 (2.8%) to $69,699,000 compared to the same period last year. The
increase in sales primarily relates to higher unit sales volume and changes in
product mix.
Cost of products sold increased by $234,000 (1.3%) in the second thirteen weeks
of the 1999 fiscal year to $18,749,000 compared to the same period in 1998.
Compared to the prior thirteen-week period, cost of products sold decreased
$2,441,000 (11.5%). The increase in cost of products sold in the second
thirteen-week period primarily relates to increased unit sales volume. The
decrease in cost of products sold compared to the prior quarter relates
primarily to changes in product mix and seasonal characteristics. Cost of
products sold for the first twenty-six weeks of 1999 decreased $784,000 (1.9%)
to $39,940,000. The decrease in cost of products sold did not correspond to the
sales increase in the first twenty-six weeks of fiscal 1999 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 $113,000 (1.2%) to
$9,359,000 in the second thirteen weeks of 1999 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 $973,000 (9.4%). The Company netted a
$615,000 gain on the sale of land against selling, general and administrative
expenses in the first thirteen-week period of fiscal 1999. After giving effect
to this adjustment, selling, general and administrative expenses decreased
$1,588,000 (15.4%) in the second thirteen-week period. The increase in selling,
general and administrative expenses in the second thirteen-week period generally
corresponded to the sales increase. The significant decrease in selling, general
and administrative expenses compared to the prior thirteen-week period relates
to the 9.4% decrease in sales and seasonal characteristics. Selling, general and
administrative expenses increased $692,000 (3.6%) in the first twenty-six weeks
of fiscal 1999. After giving effect to the $615,000 gain noted above, selling,
general and administrative expenses increased $1,307,000 (6.9%). The increase in
selling, general and administrative expenses outpaced the sales increase in the
first twenty-six weeks primarily as a result of higher salaries.
Page 7 of 8 pages
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Depreciation expense increased by $20,000 (2.8%) in the second thirteen weeks of
the 1999 fiscal year compared to the same period in 1998. Depreciation expense
increased by $39,000 (2.5%) in the first twenty-six weeks of the 1999 fiscal
year compared to the same period in 1998.
The effective income tax rate was 38.0% in the first thirteen and twenty-six
weeks of fiscal 1999, consistent with the prior year.
Cash and cash equivalents increased $5,939,000 (26.7%) to $28,212,000 during the
first twenty-six weeks of the 1999 fiscal year. The principal items affecting
the $9,461,000 net cash provided by operating activities were net income of
$5,238,000 and accounts receivable and inventory reductions of $2,117,000 and
$1,256,000, respectively.
Cash used in investing activities for the first twenty-six weeks of fiscal 1999
consisted of $2,154,000 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
$1,368,000 and $1,244,000 in the first twenty-six weeks of fiscal years 1999 and
1998, respectively.
The Company remained free of interest bearing debt during the first twenty-six
weeks of 1999. The Company's revolving line of credit with Bank of America
expires April 30, 2001 and provides for borrowings up to $2,000,000. The Company
has not borrowed under the line for more than twelve 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 10, 1999
at the Four Points Sheraton, 1500 South Raymond Avenue, Fullerton, California at
10:00 a.m. Shareholders representing 10,755,752 or 94.6% of the 11,369,812
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 10,736,767 FOR and 18,985 ABSTAIN or WITHHELD.
Votes cast for approval of the 1999 Stock Incentive Plan were 9,776,782 FOR,
89,172 AGAINST and 49,479 ABSTAIN or WITHHELD. Votes cast for the reappointment
of Price Waterhouse LLP, as the independent public accountants for the Company
for 1999 were 10,722,825 FOR, 12,696 AGAINST and 20,232 ABSTAIN.
Item 6.
EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits:
27 - Financial Data Schedule for the 26 weeks ended April 30, 1999, 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
EXHIBIT
NUMBER DESCRIPTION
------- -----------
27 Financial Data Schedule
<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 APRIL
30, 1999, AS SET FORTH IN THSI FORM 10-Q FOR SUCH PERIOD, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-29-1999
<PERIOD-END> APR-30-1999
<CASH> 28,211,578
<SECURITIES> 0
<RECEIVABLES> 10,486,829
<ALLOWANCES> 602,739
<INVENTORY> 12,811,329
<CURRENT-ASSETS> 52,811,359
<PP&E> 46,245,742
<DEPRECIATION> 29,513,327
<TOTAL-ASSETS> 79,115,129
<CURRENT-LIABILITIES> 12,109,230
<BONDS> 0
0
0
<COMMON> 11,426,695
<OTHER-SE> 43,285,748
<TOTAL-LIABILITY-AND-EQUITY> 79,115,129
<SALES> 69,698,531
<TOTAL-REVENUES> 69,698,531
<CGS> 39,939,701
<TOTAL-COSTS> 39,939,701
<OTHER-EXPENSES> 21,310,124
<LOSS-PROVISION> 71,825
<INTEREST-EXPENSE> 208,867
<INCOME-PRETAX> 8,448,705
<INCOME-TAX> 3,211,000
<INCOME-CONTINUING> 5,237,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,237,705
<EPS-BASIC> .46
<EPS-DILUTED> .46
</TABLE>
