<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 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 September 10, 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
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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
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 10, 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>
JULY 30 OCTOBER 30
1999 1998
----------- -----------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $26,831,952 $22,272,141
Accounts receivable, less allowance
for doubtful accounts of $625,400
and $582,787 10,308,826 12,072,818
Inventories (Note 2) 14,452,674 14,066,898
Prepaid expenses and other 1,523,568 2,147,081
----------- -----------
Total current assets 53,117,020 50,558,938
Property, plant and equipment, less
accumulated depreciation of $30,322,577
and $27,894,827 17,346,059 16,197,108
Other tangible non-current assets 10,076,465 9,036,895
----------- -----------
$80,539,544 $75,792,941
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,617,633 $ 5,343,725
Accrued payroll and other expenses 7,073,400 6,373,886
Income taxes payable 481,125 1,590,125
----------- -----------
Total current liabilities 11,172,158 13,307,736
----------- -----------
Non-current liabilities 13,244,707 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 - 11,369,812 shares 11,426,695 11,426,695
Capital in excess of par value 26,347,123 26,347,123
Retained earnings 18,348,861 13,068,430
----------- -----------
56,122,679 50,842,248
----------- -----------
$80,539,544 $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 39 WEEKS ENDED
--------------------------- --------------------------
JULY 30 JULY 31 JULY 30 JULY 31
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 32,356,312 $31,782,572 $102,054,843 $99,601,109
------------ ----------- ------------ -----------
Cost of products sold,
excluding depreciation 18,911,321 18,844,676 58,851,023 59,568,873
Selling, general and
administrative expenses 9,261,316 8,841,001 28,952,941 27,841,085
Depreciation 809,250 789,750 2,427,750 2,369,250
------------ ----------- ------------ -----------
28,981,887 28,475,427 90,231,713 89,779,208
------------ ----------- ------------ -----------
Income before taxes 3,374,425 3,307,145 11,823,130 9,821,901
Income tax provision 1,282,000 1,256,000 4,493,000 3,732,000
------------ ----------- ------------ -----------
Net income $ 2,092,425 $ 2,051,145 $ 7,330,130 $ 6,089,901
============ =========== ============ ===========
Basic and diluted earnings
per share (Note 3) $ 0.18 $ 0.18 $ 0.64 $ 0.54
============ =========== ============ ===========
Cash dividends paid
per share (Note 3) $ 0.06 $ 0.055 $ 0.18 $ 0.164
============ =========== ============ ===========
</TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Common stock Capital
--------------------------- 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 $20,266,125
Net income 6,089,901
Cash dividends (Note 3)
($.164 per share) (1,863,778)
------------ ----------- ------------ -----------
July 31, 1998 10,336,415 $10,393,298 $ 13,946,359 $24,492,248
============ =========== ============ ===========
October 30, 1998 11,369,812 $11,426,695 $ 26,347,123 $13,068,430
Net income 7,330,130
Cash dividends
($.18 per share) (2,049,699)
------------ ----------- ------------ -----------
July 30,1999 11,369,812 $11,426,695 $ 26,347,123 $18,348,861
============ =========== ============ ===========
</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 30 JULY 31
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,330,130 $ 6,089,901
Income charges not affecting cash:
Depreciation 2,427,750 2,369,250
Provision for losses on accounts receivable 107,738 93,113
Effect on cash of changes in assets and liabilities:
Accounts receivable 1,656,254 2,369,237
Inventories (385,776) 1,570,871
Prepaid expenses and other 623,513 480,517
Other non-current assets (1,039,570) (389,976)
Accounts payable and accrued expenses (1,026,578) (1,116,799)
Income taxes payable (1,109,000) 328,983
Non-current liabilities 1,601,750 611,778
------------ ------------
Net cash provided by operating activities 10,186,211 12,406,875
------------ ------------
Cash used in investing activities:
Additions to property, plant and equipment (3,576,701) (968,022)
------------ ------------
Cash used for financing activities:
Cash dividends paid (2,049,699) (1,863,778)
------------ ------------
Net increase in cash and cash equivalents 4,559,811 9,575,075
Cash and cash equivalents at beginning of period 22,272,141 12,377,932
------------ ------------
Cash and cash equivalents at end of period $ 26,831,952 $ 21,953,007
============ ============
Cash paid for income taxes $ 6,397,000 $ 3,813,000
============ ============
</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 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:
<TABLE>
<CAPTION>
JULY 30 OCTOBER 30
1999 1998
----------- -----------
<S> <C> <C>
Meat, ingredients
and supplies $ 5,141,541 $ 3,694,898
Work in progress 1,697,883 1,353,000
Finished goods 7,613,250 9,019,000
----------- -----------
$14,452,674 $14,066,898
=========== ===========
</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 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
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 commodity products declined significantly in the early
part of the first quarter of fiscal 1999. Commodity costs, in general, increased
during the second and third quarters of the 1999 fiscal year and the Company
anticipates such costs will continue to increase in the fourth 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 in the third thirteen-week period ended July 30, 1999 increased by
$574,000 (1.8%) to $32,356,000 compared to the same period last year. Sales for
the third thirteen-week period decreased $783,000 (2.4%) compared to the
previous period ended April 30, 1999. The sales increase compared to the third
quarter of 1998 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 and seasonal factors. Sales for the first thirty-nine
weeks of 1999 increased $2,454,000 (2.5%) to $102,055,000 compared to the same
period last year. The increase in sales primarily relates to higher unit sales
volume.
Cost of products sold increased by $67,000 (.4%) in the third quarter of the
1999 fiscal year to $18,911,000 compared to the same period in 1998. Compared to
the prior quarter, cost of products sold increased $162,000 (.9%) despite lower
sales volume as a result of changes in product mix and increasing pork commodity
costs. Cost of products sold for the first thirty-nine weeks of 1999 decreased
$718,000 (1.2%) to $58,851,000. The decrease in cost of products sold did not
correspond to the sales increase in the first thirty-nine 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 $420,000 (4.8%) to
$9,261,000 in the third quarter of 1999 compared to the same period last year.
The increase corresponds to the increase in sales volume. The increase in
selling, general and administrative expenses outpaced the sales increase in the
comparative periods primarily as a result of higher salaries and added
personnel. Compared to the prior quarter, selling, general and administrative
expenses decreased $98,000 (1.1%). Selling, general and administrative expenses
increased $1,112,000 (4.0%) in the first thirty-nine weeks of fiscal 1999. 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
increased $1,727,000 (6.2%) in the thirty-nine week period. The increase in
selling, general and administrative expenses outpaced the sales increase in the
first thirty-nine weeks primarily as a result of higher salaries and added
personnel to support increased distribution of the Company's products.
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 (2.5%) in the third thirteen weeks of
the 1999 fiscal year compared to the same period in 1998. Depreciation expense
increased by $59,000 (2.5%) in the first thirty-nine weeks of the 1999 fiscal
year compared to the same period in 1998.
The effective income tax rate was 38.0% in the third quarter of fiscal 1999,
consistent with the prior fiscal year and the prior quarter.
Cash and cash equivalents increased $4,560,000 (20.5%) to $26,832,000 during the
first thirty-nine weeks of the 1999 fiscal year. The principal items favorably
affecting the $10,186,000 net cash provided by operating activities were net
income of $7,330,000, depreciation of $2,428,000 and accounts receivable
reductions of $1,656,000.
Cash used in investing activities for the first thirty-nine weeks of 1999 and
1998 consisted of $3,577,000 and $968,000, respectively, in additions to
property, plant and equipment. This amount reflects the Company's continued
modernization of manufacturing facilities and investment in transportation
equipment.
Cash used for financing activities consists of cash dividends in the amount of
$2,050,000 and $1,864,000 in the first thirty-nine weeks of fiscal years 1999
and 1998, respectively.
The Company remained free of interest bearing debt during the first thirty-nine
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.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have significant overall currency exposure at July 30,
1999 and October 30, 1998. The Company's financial instruments consist of cash
and cash equivalents and life insurance policies at July 30, 1999 and October
30, 1998 and the carrying value of the Company's financial instruments
approximated their fair market values based on current market prices and rates.
It is not the Company's policy to enter into derivative financial instruments.
The Company does not currently have any significant foreign currency exposure.
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits:
27 - Financial Data Schedule for the 39 weeks ended July 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
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
27 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
30, 1999, 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-29-1999
<PERIOD-END> JUL-30-1999
<CASH> 26,831,952
<SECURITIES> 0
<RECEIVABLES> 10,934,226
<ALLOWANCES> 625,400
<INVENTORY> 14,452,674
<CURRENT-ASSETS> 53,117,020
<PP&E> 47,668,636
<DEPRECIATION> 30,322,577
<TOTAL-ASSETS> 80,539,544
<CURRENT-LIABILITIES> 11,172,158
<BONDS> 0
0
0
<COMMON> 11,426,695
<OTHER-SE> 26,347,123
<TOTAL-LIABILITY-AND-EQUITY> 80,539,544
<SALES> 102,054,843
<TOTAL-REVENUES> 100,054,843
<CGS> 58,851,023
<TOTAL-COSTS> 58,851,023
<OTHER-EXPENSES> 31,380,691
<LOSS-PROVISION> 107,738
<INTEREST-EXPENSE> 288,231
<INCOME-PRETAX> 11,823,130
<INCOME-TAX> 4,493,000
<INCOME-CONTINUING> 7,330,130
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,330,130
<EPS-BASIC> .64
<EPS-DILUTED> .64
</TABLE>
