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 ___________January 27, 1995____________
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.
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BOB EVANS FARMS, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
(Dollars in Thousands)
January 27, 1995 April 29, 1994
Unaudited Audited
<S> <C> <C>
Current Assets
Cash $ 3,493 $ 6,699
Investments 81 1,399
Accounts receivable 14,675 15,445
Inventory 16,032 15,799
Deferred income taxes 4,585 4,585
Prepaid expenses 3,399 3,514
Total Current Assets 42,265 47,441
Property, Plant, and Equipment, at Cost 572,571 509,831
Less accumulated depreciation 174,053 160,061
Net Property, Plant and 398,518 349,770
Equipment
Other Assets
Deposits and other 2,284 2,002
Long-term investments 2,303
Deferred income taxes 1,049 1,049
Cost in excess of net assets 11,151 11,555
acquired
Other intangible assets 1,822 2,058
Total Other Assets 18,609 16,664
$459,392 $413,875
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Line of credit $ 16,800 $ 9,500
Accounts payable 7,516 12,200
Dividends payable 3,059 2,839
Federal and state income taxes 2,196 6,160
Accrued wages and related 12,309 10,830
liabilities
Other accrued expenses 27,319 18,023
Total Current Liabilities 69,199 59,552
Long-Term Liabilities
Deferred income taxes 5,495 5,495
Notes payable (net of discount of 2,303
$697,000)
Total Long-Term Liabilities 7,798 5,495
Stockholders' Equity
Common stock, $.01 par value
Authorized: 100,000,000 shares;
issued 42,638,118 shares
at January 27, 1995, and April 426 426
29, 1994
Capital in excess of par value 144,528 144,782
Retained earnings 243,368 211,294
388,322 356,502
Less treasury stock: 444,604 shares
at January 27, 1995 and 575,890
shares
at April 29, 1994, at cost 5,927 7,674
Total Stockholders' Equity 382,395 348,828
$459,392 $413,875
The accompanying notes are an integral part of the financial statements.
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BOB EVANS FARMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<CAPTION>
(Dollars in Thousands Except Net Income
Per Share and Cash Dividend Amounts)
Three Months Ended Nine Months Ended
Jan. 27, 1995 Jan. 28, 1994 Jan. 27, 1995 Jan. 28, 1994
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Net sales $185,587 $166,625 $577,929 $522,094
Cost of sales 52,325 51,373 172,571 164,209
Operating expenses 79,741 69,782 244,393 218,038
Selling, general and
administrative expenses 24,349 20,378 75,169 65,131
Depreciation expense 6,575 5,834 18,880 16,828
Operating profit 22,597 19,258 66,916 57,888
Net interest 66 65 109 (15)
Income Before Income Taxes 22,663 19,323 67,025 57,873
Provisions for income taxes
Federal 7,255 5,832 21,121 17,449
State 1,504 1,287 4,654 3,996
8,759 7,119 25,775 21,445
Net Income $ 13,904 $ 12,204 $ 41,250 $ 36,428
Weighted average number
of common shares 42,159,394 41,991,072 42,159,394 41,991,072
outstanding
Net income per common share
based upon the weighted average
number of common shares $.33 $.29 $.98 $.87
Cash dividend per common share $.073 $.068 $.218 $.203
The accompanying notes are an integral part of the financial statements.
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BOB EVANS FARMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<CAPTION>
(Dollars in Thousands)
Nine Months Ended
January 27, 1995 January 28, 1994
<S> <C> <C>
Operating activities:
Net income $41,250 $36,428
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 19,520 17,469
Loss (gain) on sale of property and (47) 84
equipment
Compensation expense attributable to 789
stock plans
Cash provided by (used for) current
assets and current liabilities:
Accounts receivable 770 (312)
Inventories (233) (511)
Prepaid expenses 115 (2,077)
Accounts payable (4,684) (306)
Federal and state income taxes (3,964) (4,362)
Accrued wages and related 1,012 265
liabilities
Other accrued expenses 9,296 4,077
Net cash provided by 63,824 50,755
operating activities
Investing activities:
Purchase of property, plant and (67,839) (50,225)
equipment
Proceeds from sale of property, plant 258 314
and equipment
Purchase of investments (2,303) (18,038)
Proceeds from sale of investments 1,318 19,927
Other (282) 750
Net cash used in investing (68,848) (47,272)
activities
Financing activities:
Cash dividends paid (8,957) (8,292)
Draws on line of credit 7,300 3,500
Proceeds from issuance of note payable 2,303
Distribution of treasury stock
due to the exercise of stock
options and employee bonuses 1,172 1,642
Net cash provided by
(used in)
financing activities 1,818 (3,150)
Increase (decrease) in cash (3,206) 333
Cash at the beginning of the period 6,699 8,241
Cash at the end of the period $ 3,493 $ 8,574
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 third quarter ended January 27,
1995.
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
11.4% for the third quarter and 10.7% for the year-to-date period
ended January 27, 1995 as compared to the corresponding periods a
year ago.
Restaurant sales increased 14.1% for the three-month period and
12.1% for the nine-month period ended January 27, 1995 compared to the
corresponding periods a year ago. These increases resulted from more
restaurants in operation and traditional same-store sales increases of
6.1% and 4.0% for the three-month and nine-month periods,
respectively. The average menu price increase in both periods was
approximately 3.0% for our traditional restaurants (which includes all
restaurants except "small-town" Bob Evans Restaurants and Cantina del
Rio's). In the third quarter, the company opened nine additional
restaurants. Through three quarters, the company has opened a total
of 24 restaurants and closed five, bringing the total number of
restaurants operating at January 27, 1995 to 334, in comparison to 303
a year ago.
Food products sales increased 5.7% for the third quarter and 7.4%
year-to-date as compared to the prior year. These improvements were
the result of an increase in the volume of sausage products sold
(approximately 5.0% for the quarter and 4.0% year-to-date, based on
comparable sausage products) as well as increased sales of Hickory
Specialties' charcoal products.
Cost of Goods Sold
As a percentage of sales, the consolidated cost of sales
decreased to 28.2% in the third quarter of this year as compared to
30.8% last year. The year-to-date decrease was to 29.9% this year
from 31.5% last year.
Restaurant segment food cost improved in the third quarter of
fiscal 1995 to 26.7% of sales as compared to 27.5% in the third
quarter a year ago. The year-to-date food cost percentage was 27.3%
this fiscal year versus 27.4% in the corresponding period of fiscal
1994. These changes were mostly the result of various changes in
product mix.
As a percentage of sales, the food products segment recognized
significant decreases in cost of sales from 37.9% to 31.6% in the
third quarter and from 41.3% to 36.5% for the nine months ended
January 27, 1995. These decreases were the direct result of lower
live hog costs in both periods compared to a year ago.
Operating Expenses
Consolidated operating expenses, as a percentage of sales,
increased from 41.9% to 43.0% for the quarter and from 41.8% to 42.3%
year-to-date as compared to the corresponding periods last year.
These increases were due to slightly higher labor costs in the
restaurant segment as well as the fact that the restaurant segment
(which has operating costs of 51% to 54% of sales) has continued to
grow at a faster pace than the food products segment (which has
operating costs of 16% to 17% of sales), resulting in an overall
increase in the consolidated cost of operations as a percentage of
sales.
Selling and Administrative Expenses
Consolidated selling, general and administrative expenses
represented 13.1% of sales for the quarter and 13.0% of sales year-to-
date in comparison to 12.2% and 12.5%, respectively, in the
corresponding periods a year ago. The increases were the result of
higher labor costs associated with management training programs in the
restaurant segment to support the increased new restaurant openings,
as well as extensive advertising and promotional programs in the food
products segment.
Net Income
Consolidated net income increased $1.7 million, or 13.9%, in the
third quarter this year as compared to the corresponding quarter a
year ago, and $4.8 million, or 13.2%, for the year-to-date periods.
Profit increases in the food products segment were $1.0 million for
the quarter and $3.1 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 product sales. The
remaining increase ($0.7 million for the quarter and $1.7 million year-
to-date) occurred in the restaurant segment as the result of same-
store sales increases and more restaurants in operation.
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
requirements and capital expenditures. Bank lines of credit have also
been used for liquidity needs and capital expansion at various times.
The total bank lines of credit available is $53.0 million, of which
$16.8 million was outstanding at January 27, 1995.
The company believes that 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.
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
/s/ <Daniel E. Evans>
Daniel E. Evans
Chairman of the Board
(Chief Executive Officer)
/s/ <Donald J. Radkoski>
Donald J. Radkoski
Group Vice President and Treasurer
(Chief Financial Officer)
March 9, 1995
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 JANUARY 27, 1995.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-28-1995
<PERIOD-START> APR-30-1994
<PERIOD-END> JAN-27-1995
<EXCHANGE-RATE> 1
<CASH> 3,493
<SECURITIES> 81
<RECEIVABLES> 14,675
<ALLOWANCES> 0
<INVENTORY> 16,032
<CURRENT-ASSETS> 42,265
<PP&E> 572,571
<DEPRECIATION> 174,053
<TOTAL-ASSETS> 459,392
<CURRENT-LIABILITIES> 69,199
<BONDS> 0
<COMMON> 426
0
0
<OTHER-SE> 381,969
<TOTAL-LIABILITY-AND-EQUITY> 459,392
<SALES> 577,929
<TOTAL-REVENUES> 578,038
<CGS> 172,571
<TOTAL-COSTS> 511,013
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 67,025
<INCOME-TAX> 25,775
<INCOME-CONTINUING> 41,250
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,250
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
