FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 1994
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: 0-1667
Bob Evans Farms, Inc.
(Exact name of registrant as specified in its charter)
Delaware 31-4421866
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
3776 South High Street Columbus, Ohio 43207
(Address of principal executive offices)
(Zip Code)
(614) 491-2225
(Registrant's telephone number, including area code)
(Former name, former address and formal fiscal year, if changed since
last report)
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 the close of the period covered by this report, the
registrant had issued 42,638,118 common shares.
BOB EVANS FARMS, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Dollars in Thousands)
October 28, 1994 April 29, 1994
Unaudited Audited
<S> <C> <C>
Current Assets
Cash $ 183 $ 6,699
Investments 3,499 1,399
Accounts receivable 14,084 15,445
Inventory 14,972 15,799
Deferred income taxes 4,585 4,585
Prepaid expenses 3,047 3,514
Total Current Assets 40,370 47,441
Property, Plant, and Equipment, at Cost 545,903 509,831
Less accumulated depreciation 168,005 160,061
Net Property, Plant and 377,898 349,770
Equipment
Other Assets
Deposits and other 2,123 2,002
Deferred income taxes 1,049 1,049
Cost in excess of net assets acquired 11,286 11,555
Other intangible assets 1,901 2,058
Total Other Assets 16,359 16,664
$434,627 $413,875
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Line of credit $ 8,500 $ 9,500
Accounts payable 6,433 12,200
Dividends payable 3,058 2,839
Federal and state income taxes 4,451 6,160
Accrued wages and related liabilities 10,200 10,830
Other accrued expenses 25,170 18,023
Total Current Liabilities 57,812 59,552
Long-Term Liabilities
Deferred income taxes 5,495 5,495
Stockholders' Equity
Common stock, $.01 par value
Authorized: 100,000,000 shares;
issued 42,638,118 shares
at October 28, 1994, and April 426 426
29, 1994
Capital in excess of par value 144,528 144,782
Retained earnings 232,524 211,294
377,478 356,502
Less treasury stock: 461,658 shares
at October 28, 1994 and 575,890
shares
at April 29, 1994, at cost 6,158 7,674
Total Stockholders' Equity 371,320 348,828
$434,627 $413,875
The accompanying notes are an integral part of the financial
statements.
</TABLE>
BOB EVANS FARMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
(Dollars in Thousands Except Net Income
Per Share and Cash Dividend Amounts)
Three Months Ended Six Months Ended
Oct. 28, 1994 Oct. 29, 1993 Oct. 28, 1994 Oct. 29, 1993
<S> <C> <C> <C> <C>
Net sales $194,403 $177,038 $392,342 $355,469
Cost of sales 57,367 55,651 120,246 112,836
Operating expenses 81,761 74,534 164,652 148,256
Selling, general and
administrative 25,961 21,527 50,820 44,753
expenses
Depreciation expense 6,351 5,622 12,305 10,994
Operating profit 22,963 19,704 44,319 38,630
Net interest (2) 26 43 (80)
Income Before Income
Taxes 22,961 19,730 44,362 38,550
Provisions for income taxes
Federal 7,174 5,933 13,866 11,617
State 1,624 1,388 3,150 2,709
8,798 7,321 17,016 14,326
Net Income $ 14,163 $ 12,409 $ 27,346 $24,224
Weighted average number
of common shares
outstanding 42,147,324 41,973,813 42,147,324 41,973,813
Net income per common share based upon
the weighted average number of
common shares $.34 $.30 $.65 $.58
Cash dividend per
common share $.072 $.067 $.145 $.135
The accompanying notes are an integral part of the financial
statements.
</TABLE>
BOB EVANS FARMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
(Dollars in Thousands)
Six Months Ended
October 28, 1994 October 29, 1993
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Operating activities:
Net income $27,346 $24,224
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 12,730 11,421
Loss (gain) on sale of property and (62) 195
equipment
Compensation expense attributable to 497
stock plans
Cash provided by (used for) current
assets and current liabilities:
Accounts receivable 1,361 (382)
Inventories 827 569
Prepaid expenses 467 (2,360)
Accounts payable (5,767) (1,631)
Federal and state income taxes (1,709) (1,977)
Accrued wages and related (805) (981)
liabilities
Other accrued expenses 7,147 8,212
Net cash provided by 42,032 37,290
operating activities
Investing activities:
Purchase of property, plant and (40,543) (27,987)
equipment
Purchase of investments (2,100) (5,488)
Proceeds from sale of property, plant 173 71
and equipment
Other (121) 648
Net cash used in investing (42,591) (32,756)
activities
Financing activities:
Cash dividends paid (5,898) (5,456)
Payments on line of credit (1,000)
Distribution of treasury stock
due to the exercise of stock
options and employee bonuses 941 1,343
Net cash used in financing (5,957) (4,113)
activities
Increase (decrease) in cash (6,516) 421
Cash at the beginning of the period 6,699 8,241
Cash at the end of the period $ 183 $8,662
The accompanying notes are an integral part of the financial
statements.
</TABLE>
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. Unaudited Financial Statements
The accompanying unaudited financial statements are presented in
accordance with the requirements of Form 10-Q and, consequently,
do not include all of the disclosures normally required by
generally accepted accounting principles, or those normally made
in the Company's Form 10-K filing. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
No significant changes have occurred in the disclosures made in
Form 10-K for the fiscal year ended April 29, 1994 except for a
change in the computation of depreciation as discussed below
(refer to Form 10-K for a summary of significant accounting
policies followed in the preparation of the consolidated
financial statements).
2. Reclassifications
Certain 1994 amounts have been reclassified to conform with the
1995 classification.
3. Depreciation Method
The Company adopted the straight-line depreciation method for all
property placed in service on or after April 30, 1994.
Depreciation on property placed in service prior to April 30,
1994 continues to be calculated principally on accelerated
methods. The Company believes the new method will more
accurately reflect its financial results by better matching costs
of new property over the useful lives of the assets. In
addition, the new method more closely conforms with that
prevalent in the industry. The effect of the change was not
material to the results of the second quarter or the year to date
period ended October 28, 1994.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sales
Net sales for Bob Evans Farms, Inc. and Subsidiaries increased
9.8% for the second quarter and 10.4% for the year-to-date period
ended October 28, 1994 as compared to the corresponding periods a year
ago.
Restaurant sales increased 10.3% for the three-month period and
11.2% for the six-month period ended October 28, 1994 compared to the
corresponding periods a year ago. These increases resulted from more
restaurants in operation and 3.1% and 2.5% weighted-average menu price
increases for the three-month and six-month periods, respectively. In
the second quarter, the company opened 7 new restaurants and closed
one, bringing the total restaurants in operation to 325, compared to
296 a year ago.
Food products sales increased 8.5% for the second quarter and
8.3% year-to-date through October 28, 1994 as compared to the prior
year. These improvements were the result of increased volume of
sausage products sold, higher wholesale prices on sausage products,
and increased sales of Hickory Specialties' charcoal products.
Cost of Sales
As a percentage of sales, the consolidated cost of sales
decreased to 29.5% in the second quarter of this year as compared to
31.4% last year. The year-to-date decrease was to 30.6% this year
from 31.7% last year.
Restaurant segment food cost improved in the second quarter of
fiscal 1995 to 27.0% of sales as compared to 27.3% in the second
quarter a year ago. The year-to-date food cost percentage was 27.5%
this fiscal year versus 27.4% in the corresponding period of fiscal
1994. These changes were the result of various changes in product
mix.
As a percentage of sales, the food products segment realized
significant decreases in cost of sales from 42.5% to 36.4% in the
second quarter and from 43.2% to 39.1% for the six months ended
October 28, 1994. These decreases were the direct result of lower
live hog costs in both periods compared to a year ago.
Operating Expenses
Consolidated operating expenses were unchanged at 42.1% of sales
for the second quarter of this year as compared to last year. On a
year-to-date basis, consolidated operating expenses increased from
41.7% of sales last year to 42.0% this year. This increase occurred
in the restaurant segment, where operating expenses were 51.1% of
sales for the six-month period ended October 28, 1994 as compared to
50.8% in the corresponding period a year ago primarily as a result of
higher labor costs of hourly personnel.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses
represented 13.4% of sales for the quarter and 13.0% of sales year-to-
date in comparison to 12.2% and 12.6%, respectively, in the
corresponding periods a year ago. The increases were the result of
extensive advertising and promotional programs in the food products
segment and labor costs associated with management training programs
in the restaurant segment.
Net Income
Consolidated net income increased $1.8 million, or 14.1%, in the
second quarter this year as compared to the corresponding quarter a
year ago, and $3.1 million, or 12.9% for the year-to-date periods.
Profit increases in the food products segment were $1.1 million for
the quarter and $2.1 million year-to-date. The improvement was
attributable to higher margins on sausage products due to lower live
hog costs as well as overall increases in sausage sales. The
remaining profit increase occurred in the restaurant segment as a
result of more restaurants in operation.
The increases in net income were somewhat reduced by increases in
the effective tax rate to 38.3% for the quarter and 38.4% year-to-date
from 37.1% and 37.2%, respectively, in the corresponding periods a
year ago. The increased tax provisions were the result of the income
tax rate increase included as part of the 1993 Tax Act as well as an
expectation that the company's targeted jobs tax credit will be
reduced from that in the prior year.
Liquidity and Capital Resources
Cash generated from both the restaurant and food products
segments has been used as the main source of funds for working capital
and capital expenditure requirements. Bank lines of credit have also
been used for liquidity needs and capital expansion at various times.
At October 28, 1994, $8.5 million was outstanding under such
arrangements. The bank lines of credit available total $53.0 million.
The company believes that the funds needed for capital
expenditures and working capital during the remainder of fiscal 1995
will be generated both internally and from available bank lines of
credit. Longer-term financing alternatives will be evaluated by the
company, especially in the event of acquisitions.
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of the Company
(the "Annual Meeting") was held on August 8, 1994.
At the close of business on the record date
42,156,004 common shares were outstanding and
entitled to vote. At the Annual Meeting 34,519,400
or 81.9% of the outstanding common shares entitled
to vote were represented in person or by proxy.
(b) Directors elected at the Annual Meeting:
Larry C. Corbin
Stewart K. Owens
Robert E.H. Rabold
Directors whose term of office continued after the
Annual Meeting:
Daniel E. Evans Daniel A. Fronk
J. Tim Evans Cheryl L. Krueger
Robert S. Wood G. Robert Lucas II
(c) Matters voted upon at the Annual Meeting:
FOR AGAINST ABSTAIN
1) Election of Larry C. Corbin 33,536,591 982,779 30
2) Election of Stewart K. Owens 33,216,850 1,302,016 534
3) Election of Robert E.H. Rabold 33,269,558 1,249,812 30
4) Proposal to approve the
Bob Evans Farms, Inc.
1994 Long Term Incentive Plan 31,847,701 1,996,039 675,660
Evans Farms, Inc. 1994 Long
Term Incentive Plan
(d) Not applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None
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 undersigned thereunto duly authorized.
Bob Evans Farms, Inc.
Registrant
Daniel E. Evans
Daniel E. Evans
Chairman of the Board
(Chief Executive Officer)
Donald J. Radkoski
Donald J. Radkoski
Group Vice President and Treasurer
(Chief Financial Officer)
December 1, 1994
Date
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF INCOME OF
BOB EVANS FARMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM 10-Q FOR THE PERIOD ENDED OCTOBER 28, 1994.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
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<PERIOD-TYPE> QTR-2 6-MOS
<FISCAL-YEAR-END> APR-28-1995 APR-28-1995
<PERIOD-START> JUL-30-1994 APR-30-1994
<PERIOD-END> OCT-28-1994 OCT-28-1994
<EXCHANGE-RATE> 1 1
<CASH> 183 183
<SECURITIES> 3,499 3,499
<RECEIVABLES> 14,084 14,084
<ALLOWANCES> 0 0
<INVENTORY> 14,972 14,972
<CURRENT-ASSETS> 40,370 40,370
<PP&E> 545,903 545,903
<DEPRECIATION> 168,005 168,005
<TOTAL-ASSETS> 434,627 434,627
<CURRENT-LIABILITIES> 57,812 57,812
<BONDS> 0 0
<COMMON> 426 426
0 0
0 0
<OTHER-SE> 370,894 370,894
<TOTAL-LIABILITY-AND-EQUITY> 434,627 434,627
<SALES> 194,403 392,342
<TOTAL-REVENUES> 194,403 392,385
<CGS> 57,367 57,367
<TOTAL-COSTS> 171,440 348,023
<OTHER-EXPENSES> 2 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 22,961 44,362
<INCOME-TAX> 8,798 17,016
<INCOME-CONTINUING> 14,163 27,346
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,163 27,346
<EPS-PRIMARY> .34 .65
<EPS-DILUTED> .34 .65
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