<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED OCTOBER 29, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________
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 No.)
1308 North Patt Street, Anaheim, California 92801
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(Address of principal executive offices) (Zip code)
(714) 526-5533
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
---------------------------------------
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant on January 19, 2000 was $33,530,000.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 11,369,812 shares of Common
Stock, par value of $1.00 per share, as of January 19, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Items 5, 6, 7 and 8 of Part II are incorporated by reference from the
registrant's Annual Report to Shareholders for the fiscal year ended October 29,
1999. Items 10, 11, 12 and 13 of Part III are incorporated by reference from the
registrant's Proxy Statement for the Annual Meeting of Shareholders to be held
March 15, 2000.
<PAGE> 2
SIGNATURES
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BRIDGFORD FOODS CORPORATION
By: /s/ Allan L. Bridgford
----------------------------
Allan L. Bridgford, Chairman
Date: April 4, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Allan L. Bridgford Chairman April 4, 2000
- ----------------------
Allan L. Bridgford
/s/ Robert E. Schulze President April 4, 2000
- ---------------------
Robert E. Schulze
/s/ Hugh Wm. Bridgford Vice President April 4, 2000
- ----------------------
Hugh Wm. Bridgford
/s/ Paul A. Gilbert Director April 4, 2000
- -------------------
Paul A. Gilbert
/s/ John W. McNevin Director April 4, 2000
- -------------------
John W. McNevin
/s/ Steven H. Price Director April 4, 2000
- -------------------
Steven H. Price
/s/ Norman V. Wagner II Director April 4, 2000
- -----------------------
Norman V. Wagner II
/s/ Paul R. Zippwald Director April 4, 2000
- --------------------
Paul R. Zippwald
</TABLE>
10
<PAGE> 3
Exhibit Index
Exhibit
No. Description
- ------- -----------
13.1 1999 Annual Report to Shareholders
<PAGE> 1
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common stock Capital Total
in excess Retained shareholders'
Shares Amount of par earnings equity
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1996 9,396,933 $ 9,453,816 $ 3,024,881 $27,776,994 $40,255,691
Net income 6,605,354 6,605,354
Cash dividends paid ($.20 per share) (2,255,263) (2,255,263)
10% stock dividends, November 10, 1997 939,482 939,482 10,921,478 (11,860,960)
Balance, October 31, 1997 10,336,415 10,393,298 13,946,359 20,266,125 44,605,782
Net income 8,720,430 8,720,430
Cash dividends paid ($.22 per share) (2,483,964) (2,483,964)
10% stock dividends, November 16, 1998 1,033,397 1,033,397 12,400,764 (13,434,161)
Balance, October 30, 1998 11,369,812 11,426,695 26,347,123 13,068,430 50,842,248
Net income 10,024,505 10,024,505
Cash dividends paid ($.24 per share) (2,731,888) (2,731,888)
Balance, October 29, 1999 11,369,812 $11,426,695 $26,347,123 $20,361,047 $58,134,865
</TABLE>
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Fiscal year ended
October 29 October 30 October 31
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $10,024,505 $ 8,720,430 $ 6,605,354
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,292,346 2,938,475 2,950,376
Provision for losses on accounts receivable 221,650 254,150 149,050
Gain on sale of assets (705,288) (81,941) (50,129)
Changes in operating assets and liabilities:
Accounts receivable (1,838,295) (952,705) (1,516,171)
Inventories (2,083,020) 1,489,852 47,162
Prepaid expenses (35,044) (96,101) 206,099
Deferred income tax benefits, net (1,061,135) (859,636) (210,152)
Other non-current assets (564,449) (726,540) (1,028,297)
Accounts payable and accrued expenses 891,605 446,768 1,758,848
Income taxes payable (722,615) 1,406,268 70,539
Non-current liabilities 2,214,928 2,039,547 1,206,466
Net cash provided by operating activities 9,635,188 14,578,567 10,189,145
Cash used in investing activities:
Proceeds from sale of assets 747,334 84,941 50,129
Additions to property, plant and equipment (4,901,936) (2,285,335) (1,949,100)
Net cash used in investing activities (4,154,602) (2,200,394) (1,898,971)
Cash used in financing activities:
Cash dividends paid (2,731,888) (2,483,964) (2,255,264)
Net increase in cash and cash equivalents 2,748,698 9,894,209 6,034,910
Cash and cash equivalents at beginning of year 22,272,141 12,377,932 6,343,022
Cash and cash equivalents at end of year $25,020,839 $22,272,141 $12,377,932
Cash paid for income taxes $ 7,837,000 $ 4,891,000 $ 4,022,000
</TABLE>
<PAGE> 2
Deferred taxes are provided for items whose financial and tax bases
differ.
Stock-based compensation
Statement of Financial Accounting Standards (SFAS No. 123), "Accounting
for Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans based on
the fair market value of options granted. The Company has chosen to account for
stock based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Accordingly, compensation for stock
options is measured as the excess, if any, of the fair market value of the
Company's stock price at the date of grant as determined by the Board of
Directors over the amount an employee must pay to acquire the stock.
Basic and diluted earnings per share
Basic earnings per share are calculated based on the weighted average
number of shares outstanding, 11,369,812 for all periods presented. Diluted
earnings per share is calculated based on the weighted average number of shares
outstanding plus shares issuable on conversion or exercise of all potentially
dilutive securities.
NOTE 2 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS:
<TABLE>
<CAPTION>
(in thousands)
1999 1998
<S> <C> <C>
Property, plant and equipment:
Land $ 1,087 $ 1,083
Buildings and improvements 12,511 11,310
Machinery and equipment 27,761 25,616
Transportation equipment 6,940 6,083
48,299 44,092
Accumulated depreciation (30,534) (27,895)
$ 17,765 $ 16,197
Inventories:
Meat, ingredients and supplies $ 3,288 $ 3,695
Work in progress 1,837 1,353
Finished goods 11,025 9,019
$ 16,150 $ 14,067
Accrued payroll and other expenses:
Payroll, vacation and payroll taxes $ 6,051 $ 5,533
Property taxes 263 263
Other 446 578
$ 6,760 $ 6,374
</TABLE>
NOTE 3 - RETIREMENT AND BENEFIT PLANS:
The Company has noncontributory-trusteed defined benefit retirement
plans for sales, administrative, supervisory and certain other employees. The
benefits under these plans are primarily based on years of service and
compensation levels. The Company's funding policy is to contribute annually the
maximum amount deductible for federal income tax purposes.
<PAGE> 3
Net pension cost consisted of the following (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cost of benefits earned during the year $ 646 $ 568 $ 485
Interest cost on projected benefit obligation 958 907 810
Actual return on plan assets (990) (748) (1,602)
Deferral of unrecognized (loss) gain on plan assets 138 (34) 931
Amortization of unrecognized gain (68) (83) (38)
Amortization of transition asset (15.02 years) (76) (76) (76)
Amortization of unrecognized prior service costs 36 34 34
Net pension cost $ 644 $ 568 $ 544
</TABLE>
The transition asset is being amortized using the straight-line method
over 15.02 years, the average remaining service period of active plan
participants. The discount rate and expected long-term rate of return used in
determining the projected benefit obligation for fiscal years 1999, 1998 and
1997 was 7.75%. The assumed rate of future compensation increases for fiscal
years 1999 and 1998 was 4% and for fiscal year 1997 was 6%.
Plan assets are primarily invested in marketable equity securities,
corporate and government debt securities and real estate and are administered by
an investment management company.
The funded status of the plan is as follows:
<TABLE>
<CAPTION>
(in thousands)
1999 1998 1997
<S> <C> <C> <C>
Plan assets at fair market value $ 11,455 $ 10,622 $ 10,081
Actuarial present value of benefit obligations:
Accumulated benefits based
on current salary levels,
including vested benefits of
$12,162, $9,974 and $8,927 12,970 10,502 9,415
Additional benefits based on
estimated future salary levels 946 817 1,152
Projected benefit obligation 13,916 11,319 10,567
Projected benefit obligation
in excess of plan assets (2,461) (697) (486)
Unrecognized prior service costs 233 247 281
Unrecognized gain on Plan assets (2,404) (3,463) (3,065)
Unrecognized net transition asset (369) (445) (520)
Accrued pension cost $ (5,001) $ (4,358) $ (3,790)
</TABLE>
In fiscal year 1991, the Company adopted a non-qualified supplemental
retirement plan for certain key employees. Benefits provided under the plan are
equal to 60% of the employee's final average earnings, less amounts provided by
the Company's defined benefit pension plan and amounts available through Social
Security. Total annual benefits are limited to $120,000 for each participant in
the plan. Effective January 1, 1991 the Company adopted a deferred compensation
savings plan for certain key employees. Under this arrangement, selected
employees contribute a portion of their annual compensation to the plan. The
Company contributes an amount to each participant's account by computing an
investment return equal to Moody's Average Seasoned Bond Rate plus 2%. Employees
receive vested amounts upon death, termination or retirement. Total benefit
expense recorded under these plans for fiscal years 1999, 1998 and 1997 was
$320,000, $303,000 and $348,000, respectively. Benefits payable related to
<PAGE> 4
these plans and included in other non-current liabilities in the accompanying
financial statements were $4,384,000 and $3,594,000 at October 29, 1999 and
October 30, 1998, respectively. In connection with this arrangement the Company
is the beneficiary of life insurance policies on the lives of certain key
employees. The aggregate cash surrender value of these policies, included in
non-current assets, was $5,862,000 and $5,298,000 at October 29, 1999 and
October 30, 1998, respectively.
The Company provides a deferred compensation plan for certain key
executives, which is based upon the Company's pretax income and return on
shareholders' equity. The payment of these bonuses is generally deferred over a
five-year period. The total amount payable related to this arrangement was
$5,823,000 and $4,598,000 at October 29, 1999 and October 30, 1998,
respectively. Future payments are approximately $1,700,000, $1,434,000,
$1,226,000, $942,000 and $521,000 for fiscal years 2000 through 2004,
respectively.
Postretirement health care benefits in the approximate amount of
$350,000 and $345,000 are included in non-current liabilities at October 29,
1999 and October 30, 1998, respectively.
The Company's 1999 Stock Incentive Plan ("the Plan") was approved by
the Board of Directors on January 11, 1999 and 275,000 options were granted on
April 29, 1999. Under the Plan, the maximum aggregate number of shares which may
be optioned and sold is 900,000 shares of common stock, subject to adjustment
upon changes in capitalization or merger. Generally, options granted under the
plan vest in annual installments over four years following the date of grant (as
determined by the Board of Directors) subject to the optionee's continuous
service. Options expire ten years from the date of grant with the exception of
an incentive stock option granted to an optionee who owns stock representing
more than 10% of the voting power of all classes of stock of the Company, in
which case the term of the option is five years. Options generally terminate
three months after termination of employment or one year after termination due
to permanent disability or death. Options are generally granted at a fair market
value determined by the Board of Directors subject to the following:
a.) With respect to options granted to an employee or service provider who, at
the time of grant owns stock representing more than 10% of the voting power of
all classes of stock of the Company, the per share exercise price shall be no
less than 110% of the fair market value on the date of grant.
b.) With respect to options granted to an employee or service provider other
than described in the preceding paragraph, the exercise price shall be no less
than 100% for incentive stock options and 85% for non-statutory stock options of
the fair market value on the date of grant. Stock option activity under the plan
was as follows:
<TABLE>
<CAPTION>
Options Exercise Price
Outstanding Per Share
<S> <C> <C>
Granted 900,000 $ 10.00
Cancelled - -
Exercised - -
Balance at October 29, 1999 900,000 $ 10.00
</TABLE>
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted
average Weighted Weighted
remaining average average
Exercise life exercise exercise
price Shares (years) price Shares price
<S> <C> <C> <C> <C> <C>
$10 900,000 9.2 $10 0 $10
</TABLE>
<PAGE> 5
The Company adopted the disclosure requirements of Statement of Financial
Accounting Standards No. 123 ("FAS 123"). As permitted by FAS 123, the Company
measures compensation cost in accordance with APB 25. Therefore, the adoption of
FAS 123 had no impact on the Company's financial condition or results of
operations. Had compensation cost for the Company's Stock Option Plan been
determined based on the fair value of the options consistent with FAS 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
October 29,1999
<S> <C> <C>
Net Income As reported $10,024,505
Pro forma $ 9,845,208
Basic Earnings Per Share As reported $.88
Pro forma $.87
</TABLE>
The fair value of compensatory stock options was estimated using the
Black-Scholes option pricing model using the following weighted average
assumptions:
<TABLE>
<CAPTION>
October 29, 1999
<S> <C>
Risk-free interest rate 5.34%
Expected years until exercise 6.0 years
Expected stock volatility 40.0%
Expected dividends 2.20%
</TABLE>
NOTE 4 - INCOME TAXES:
The provision for taxes on income includes the following:
<TABLE>
<CAPTION>
(in thousands)
1999 1998 1997
Current:
<S> <C> <C> <C>
Federal $ 6,034 $ 5,241 $ 3,602
State 1,172 964 658
7,206 6,205 4,260
Deferred:
Federal (867) (735) (99)
State (194) (125) (112)
(1,061) (860) (211)
$ 6,145 $ 5,345 $ 4,049
</TABLE>
The total tax provision differs from the amount computed by applying
the statutory federal income tax rate to income before income taxes as follows:
<TABLE>
<CAPTION>
(in thousands)
1999 1998 1997
<S> <C> <C> <C>
Provision for federal income
taxes at the applicable statutory rate $ 5,498 $ 4,782 $ 3,622
Increase in provision resulting from:
state income taxes,
net of federal income tax benefit 596 518 416
Other, net 51 45 11
$ 6,145 $ 5,345 $ 4,049
</TABLE>
<PAGE> 6
Deferred income taxes result from differences in the bases of assets
and liabilities for tax and accounting purposes.
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Receivables allowance $ 263 $ 235 $ 233
Inventory capitalization 367 329 290
Deferred compensation 478 382 385
Franchise tax 183 154 107
Employee benefits 853 842 631
Other (36) (29) 44
Current tax assets, net $ 2,108 $ 1,913 $ 1,690
Deferred compensation $ 1,673 $ 1,348 $ 1,001
Pension and health care
benefits 3,951 3,343 2,870
Depreciation (1,018) (952) (769)
Non-current tax assets, net $ 4,606 $ 3,739 $ 3,102
</TABLE>
No valuation allowance was provided against deferred tax assets in the
accompanying statements.
NOTE 5 - LINE OF CREDIT:
Under the terms of a revolving line of credit with Bank of America, the
Company may borrow up to $2,000,000 through April 30, 2001. At any time prior to
May, 2001, the Company may convert borrowings, if any, into a three-year term
loan with principal and interest payable monthly commencing May 31, 2001. The
interest rate is at the bank's reference rate unless the Company elects an
optional interest rate. The borrowing agreement contains various covenants, the
more significant of which require the Company to maintain certain levels of
shareholders' equity and working capital. The Company was in compliance with all
provisions of the agreement during the year. There were no borrowings under this
line of credit during the year.
NOTE 6 - CONTINGENCIES AND COMMITMENTS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported revenues and expenses during the respective
reporting periods. Actual results could differ from those estimates.
The Company leases certain transportation equipment under operating
leases expiring in 2005. The terms of the leases provide for annual renewal
options, and contingent rental payments based upon mileage and adjustments of
rental payments based on the Consumer Price Index. Minimum rental payments were
$320,000, $316,000, and $255,000 in fiscal years 1999, 1998, and 1997,
respectively. Contingent payments were $102,000, $105,000 and $98,000 in 1999,
1998 and 1997, respectively. Future minimum lease payments are approximately
$320,000 in the years 2000 through 2004 and $240,000 in 2005.
NOTE 7 - SUBSEQUENT EVENTS:
In November 1999 the City of San Diego redevelopment agency acquired,
under eminent domain proceedings, land owned by the Company and a pretax gain of
$675,000 was recognized.
