<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 JANUARY 29, 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 March 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
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
------------------------------
March 12, 1999 R. E. Schulze, President,
Date Principal Financial Officer
Page 2 of 8 pages
<PAGE> 3
Item 1. a.
BRIDGFORD FOODS CORPORATION
---------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
JANUARY 29 OCTOBER 30
1999 1998
(UNAUDITED) (AUDITED)
----------- ---------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $27,308,749 $22,272,141
Accounts receivable, less allowance
for doubtful accounts of $579,705
and $582,787 9,508,160 12,072,818
Inventories (Note 2) 11,937,584 14,066,898
Prepaid expenses and other 2,175,394 2,147,081
----------- -----------
Total current assets 50,929,887 50,558,938
Property, plant and equipment, less
accumulated depreciation of $28,704,077
and $27,894,827 16,213,978 16,197,108
Other non-current assets 8,884,610 9,036,895
----------- -----------
$76,028,475 $75,792,941
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 3,665,012 $ 5,343,725
Accrued payroll and other expenses 7,148,262 6,373,886
Income taxes payable 1,095,125 1,590,125
----------- -----------
Total current liabilities 11,908,399 13,307,736
----------- -----------
Non-current liabilities 11,342,206 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 15,004,052 13,068,430
----------- -----------
52,777,870 50,842,248
----------- -----------
$76,028,475 $75,792,941
=========== ===========
</TABLE>
Page 3 of 8 pages
<PAGE> 4
Item 1. b.
BRIDGFORD FOODS CORPORATION
---------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
13 WEEKS ENDED
--------------
JANUARY 29 JANUARY 30
1999 1998
---- ----
Net sales $36,559,632 $35,475,404
----------- -----------
Cost of products sold,
excluding depreciation 21,190,270 22,208,832
Selling, general and
administrative expenses 10,332,169 9,753,961
Depreciation 809,250 789,750
----------- -----------
32,331,689 32,752,542
----------- -----------
Income before taxes 4,227,943 2,722,862
Income tax provision 1,607,000 1,035,000
----------- -----------
Net income $ 2,620,943 $ 1,687,862
=========== ===========
Basic earnings
per share (Note 3) $ 0.23 $ 0.15
=========== ===========
Cash dividends paid
per share (Note 3) $ 0.06 $ 0.055
=========== ===========
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>
October 31, 1997 10,336,415 $10,393,298 $13,946,359 $20,266,125
Net income 1,687,862
Cash dividends (Note 3)
($.055 per share) (623,409)
----------- ----------- ----------- -----------
January 30, 1998 10,336,415 $10,393,298 $13,946,359 $21,330,579
=========== =========== =========== ===========
October 30, 1998 11,369,812 $11,426,695 $26,347,123 $13,068,430
Net income 2,620,943
Cash dividends
($.06 per share) (685,322)
----------- ----------- ----------- -----------
January 29, 1999 11,369,812 $11,426,695 $26,347,123 $15,004,052
=========== =========== =========== ===========
</TABLE>
Page 4 of 8 pages
<PAGE> 5
Item 1.c.
BRIDGFORD FOODS CORPORATION
---------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
13 WEEKS ENDED
--------------
JANUARY 29 JANUARY 30
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,620,943 $ 1,687,862
Income charges not affecting cash:
Depreciation 809,250 789,750
Provision for losses on accounts receivable 35,913 31,038
Gain on sale of land (615,432)
Effect on cash of changes in assets and liabilities:
Accounts receivable 2,528,745 2,218,538
Inventories 2,129,314 2,971,534
Prepaid expenses and other (28,313) (231,293)
Other non-current assets 152,285 21,244
Accounts payable and accrued expenses (904,337) (488,236)
Income taxes payable (495,000) 332,000
Non-current liabilities (300,751) (457,222)
----------- -----------
Net cash provided by operating activities 5,932,617 6,875,215
----------- -----------
Cash used in investing activities:
Proceeds from sale of land 615,432
Additions to property, plant and equipment (826,120) (205,952)
----------- -----------
Net cash provided by investing activities (210,688) (205,952)
Cash used for financing activities:
Cash dividends paid (685,322) (623,409)
----------- -----------
Net increase in cash and cash equivalents 5,036,608 6,045,855
Cash and cash equivalents at beginning of period 22,272,141 12,377,932
----------- -----------
Cash and cash equivalents at end of period $27,308,749 $18,423,787
=========== ===========
Cash paid for income taxes $ 2,811,000 $ 1,077,000
=========== ============
</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 thirteen
weeks ended January 29, 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>
JANUARY 29 OCTOBER 30
1999 1998
---- ----
<S> <C> <C>
Meat, ingredients
and supplies $ 3,623,759 $ 3,694,898
Work in progress 1,598,918 1,353,000
Finished goods 6,714,907 9,019,000
----------- -----------
$11,937,584 $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 10, 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 and in Bridgford Foods
Corporation's Annual Report on Form 10-K for the fiscal year ended October 30,
1998.
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 continued to decline in early part of
the first quarter of fiscal 1999, however, such costs began to firm later in the
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 $1,084,000 (3.1%) to $36,560,000 in the first thirteen weeks
of the 1999 fiscal year compared to the same period last year. Compared to the
prior thirteen-week period, sales increased $1,345,000 (3.8%). The sales
increase compared to the first thirteen weeks of 1998 relates primarily to
higher unit sales volume. The sales increase compared to the prior thirteen-week
period relates to changes in product mix and increases in sales volume.
Cost of products sold decreased by $1,019,000 (4.6%) in the first thirteen weeks
of the 1999 fiscal year to $21,190,000 compared to the same period in 1998.
Compared to the prior thirteen-week period, cost of products sold decreased
$117,000 (.6%) due to lower pork prices and changes in product mix. The
decreases in cost of sales did not correspond to the sales increases primarily
as a result of lower pork commodity costs in the first quarter of fiscal year
1999.
Selling, general and administrative expenses increased by $578,000 (5.9%) to
$10,332,000 in the first 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 increased by $1,237,000 (13.6%) as a result of increased
sales, higher advertising, payroll costs and seasonal characteristics.
Page 7 of 8 pages
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Depreciation expense increased by $19,500 (0.8%) in the first thirteen weeks of
the 1999 fiscal year compared to the same period in 1998. Depreciation expense
was $240,000 (42.2%) higher than in the prior thirteen-week period. This
increase reflects favorable fourth quarter adjustments as a result of
conservative depreciation estimates as well a lower than anticipated capital
expenditures during the 1998 fiscal year.
The effective income tax rate was 38.0% in the first thirteen weeks of fiscal
1998, consistent with the prior fiscal year and the prior thirteen-week period.
Cash and cash equivalents increased $5,037,000 (22.6%) to $22,272,000 during the
first thirteen weeks of the 1999 fiscal year. The principal items affecting the
$5,933,000 net cash provided by operating activities were net income of
$2,621,000 and accounts receivable and inventory reductions of $2,529,000 and
$2,129,000, respectively.
Cash used in investing activities for the first thirteen weeks of fiscal 1999
consisted of $210,688 (net of proceeds from the sale of land in the amount of
$615,432) 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
$685,000 and $623,000, respectively, in the first thirteen weeks of fiscal years
1999 and 1998. The increase results from the 10% stock dividend declared in
November 1998.
The Company remained free of interest bearing debt during the first thirteen
weeks of 1999. 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 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 6.
Exhibits and Reports on Form 8-K
(a) Exhibits:
27 - Financial Data Schedule for the 13 weeks ended January 29, 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SUMMARY CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF BRIDGFORD FOODS CORPORATION FOR THE THIRTEEN WEEKS ENDED JANUARY
29, 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-30-1998
<PERIOD-END> JAN-29-1999
<CASH> 27,308,749
<SECURITIES> 0
<RECEIVABLES> 10,087,865
<ALLOWANCES> 579,705
<INVENTORY> 11,937,584
<CURRENT-ASSETS> 50,929,887
<PP&E> 44,918,055
<DEPRECIATION> 28,704,077
<TOTAL-ASSETS> 76,028,475
<CURRENT-LIABILITIES> 11,908,399
<BONDS> 0
0
0
<COMMON> 11,426,696
<OTHER-SE> 41,351,175
<TOTAL-LIABILITY-AND-EQUITY> 76,028,476
<SALES> 36,559,632
<TOTAL-REVENUES> 36,559,632
<CGS> 21,190,270
<TOTAL-COSTS> 21,190,270
<OTHER-EXPENSES> 11,141,419
<LOSS-PROVISION> 35,913
<INTEREST-EXPENSE> 125,499
<INCOME-PRETAX> 4,227,943
<INCOME-TAX> 1,607,000
<INCOME-CONTINUING> 2,620,943
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,620,943
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
