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 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
(Dollars in Thousands)
October 27, 1995 April 28, 1995
Unaudited Audited
<S> <C> <C>
Current Assets
Cash and equivalents ............................... $ 7,862 $ 10,451
Accounts receivable ................................ 14,834 15,570
Inventory .......................................... 19,002 17,256
Deferred income taxes .............................. 6,162 6,162
Prepaid expenses ................................... 3,819 2,936
-------- --------
Total Current Assets ......................... 51,679 52,375
Property, Plant, and Equipment, at Cost .................. 640,589 594,390
Less accumulated depreciation ...................... 189,754 177,542
-------- --------
Net Property, Plant and Equipment ............ 450,835 416,848
Other Assets
Deposits and other ................................. 1,951 2,243
Long-term investments .............................. 3,842 2,303
Deferred income taxes .............................. 1,573 1,573
Cost in excess of net assets acquired .............. 10,746 11,016
Other intangible assets ............................ 1,586 1,743
-------- --------
Total Other Assets ........................... 19,698 18,878
-------- --------
$522,212 $488,101
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Line of credit ..................................... $ 38,925 $ 25,600
Accounts payable ................................... 11,695 7,325
Dividends payable .................................. 3,385 3,068
Federal and state income taxes ..................... 3,831 4,633
Accrued wages and related liabilities .............. 11,647 13,691
Other accrued expenses ............................. 29,853 31,253
-------- --------
Total Current Liabilities .................... 99,336 85,570
Long-Term Liabilities
Deferred income taxes .............................. 6,409 6,409
Notes payable (net of discount of
$522,000 at
October 27, 1995 and $600,000 at April ........... 2,328 2,250
28, 1995)
-------- --------
8,737 8,659
Stockholders' Equity
Common stock, $.01 par value
Authorized: 100,000,000 shares;
issued 42,638,118 shares
at October 27, 1995, and April 28, 1995 ......... 426 426
Capital in excess of par value ..................... 145,100 144,741
Retained earnings .................................. 273,594 252,961
-------- --------
419,120 398,128
Less treasury stock: 327,406 shares
at October 27, 1995 and 309,620 shares
at April 28, 1995, at cost ...................... 4,981 4,256
-------- --------
Total Stockholders' Equity ................... 414,139 393,872
-------- --------
$522,212 $488,101
======== ========
The accompanying notes are an integral part of the financial statements.
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<TABLE>
================================================================================
BOB EVANS FARMS, INC.
================================================================================
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in Thousands Except Net Income
Per Share and Cash Dividend Amounts)
Three Months Ended Six Months Ended
Oct. 27, 1995 Oct. 28, 1994 Oct. 27, 1995 Oct. 28, 1994
------------- ------------- ------------- -------------
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Net sales .................................. $ 207,700 $ 194,403 $ 413,562 $ 392,342
Cost of sales .............................. 63,348 57,367 124,501 120,246
Operating wage and fringe benefit expenses . 62,437 56,222 123,868 113,893
Other operating expenses ................... 28,314 25,539 56,658 50,759
Selling, general and administrative expenses 25,724 25,961 51,004 50,820
Depreciation expense ....................... 6,762 6,351 13,204 12,305
------------ ------------ ----------- -----------
OPERATING PROFIT ..................... 21,115 22,963 44,327 44,319
Net interest ............................... (42) (2) 4 43
------------ ------------ ----------- -----------
INCOME BEFORE INCOME TAXES ........... 21,073 22,961 44,331 44,362
Provisions for income taxes
Federal ................................ 6,627 7,174 13,889 13,866
State .................................. 1,436 1,624 3,035 3,150
----------- ----------- ----------- -----------
8,063 8,798 16,924 17,016
------------ ------------ ----------- -----------
NET INCOME ........................... $ 13,010 $ 14,163 $ 27,407 $ 27,346
============ ============ =========== ===========
Weighted average number of common
shares outstanding ................... 42,341,053 42,147,324 42,341,053 42,147,324
============ ============ =========== ===========
Net income per common share based upon
the weighted average number of
common shares ........................ $ .31 $ .34 $ .65 $ .65
============ ============ =========== ===========
Cash dividend per common share ............. $ .0800 $ .0725 $ .1600 $ .1450
============ ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
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BOB EVANS FARMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(Dollars in Thousands)
Six Months Ended
October 27, 1995 October 28, 1994
Operating activities:
Net income ......................................... $ 27,407 $ 27,346
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization ...................... 13,630 12,730
Loss (gain) on sale of property and
equipment ....................................... 94 (62)
Compensation expense attributable to
stock plans ..................................... 390 497
Cash provided by (used for) current assets
and current liabilities:
Accounts receivable .......................... 736 1,361
Inventories .................................. (1,746) 827
Prepaid expenses ............................. (883) 467
Accounts payable ............................. 4,370 (5,767)
Federal and state income taxes ............... (802) (1,709)
Accrued wages and related liabilities ........ (2,060) (805)
Other accrued expenses ....................... (1,400) 7,147
-------- --------
Net cash provided by operating activities.. 39,736 42,032
Investing activities:
Purchase of property, plant and equipment .......... (47,509) (40,543)
Purchase of investments ............................ (1,539) (2,100)
Proceeds from sale of property, plant and .......... 225 173
equipment
Other .............................................. 292 (121)
-------- --------
Net cash used in investing activities...... (48,531) (42,591)
Financing activities:
Cash dividends paid ................................ (6,457) (5,898)
Draws (payments) on line of credit ................. 13,325 (1,000)
Purchase of treasury stock ......................... (1,438)
Interest accrued on long-term notes ................ 78
Distribution of treasury stock
due to the exercise of stock
options and employee bonuses .................... 698 941
-------- --------
Net cash provided by (used in) ............ 6,206 (5,957)
financing activities -------- --------
Increase (decrease) in cash and equivalents ........ (2,589) (6,516)
Cash and equivalents at the beginning of the ....... 10,451 6,699
period -------- --------
Cash and equivalents at the end of the period ...... $ 7,862 $ 183
======== ========
The accompanying notes are an integral part of the financial statements.
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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 28, 1995
(refer to Form 10-K for a summary of significant accounting policies
followed in the preparation of the consolidated financial statements).
2. Reclassifications
Certain fiscal 1995 amounts have been reclassified to conform with the
fiscal 1996 classification.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SALES
Consolidated net sales for Bob Evans Farms, Inc. increased $13.3 million,
or 6.8% in the second quarter ended October 27, 1995 as compared to the
corresponding quarter a year ago. Of this increase, $13.2 million occurred in
the restaurant segment. Year-to-date sales increased $21.2 million, or 5.4%,
which was comprised of a $22.7 million increase in the restaurant segment and
a $1.5 million decrease in the food products segment.
In the restaurant segment, the sales increases ($13.2 million, or 9.3%
for the quarter; $22.7 million, or 7.9% year-to-date) are the result of more
restaurants in operation: 374 restaurants at October 27, 1995 compared to 325
a year ago. During the second quarter, the company opened a total of 13 new
restaurants - 12 "small-town" restaurants and one Cantina del Rio. The company
opened a total of 20 new restaurants through the first two quarters of this
year. The increase in sales brought about by this expansion was partially
offset by a decrease in same-store sales for core restaurants of 1.2% in the
second quarter and 1.4% year-to-date. (Core restaurants are restaurants that
have been open two full years.) The average menu price increase amounted to
2.9% for the quarter and 3.4% year-to-date.
In the food products segment, sales were flat for the quarter and down
$1.5 million (1.4%) year-to-date. In the second quarter, there was a 6.0%
increase in comparable pounds of sausage products sold which was partially
offset by lower prices ( the retail price of the benchmark one-pound roll
sausage was $2.69 versus $2.89 a year ago). Additionally, net sales of salad
and charcoal products were $0.7 million less, in total, in the second quarter
as compared to the corresponding quarter a year ago. Year-to-date, sausage
products sales were up $0.6 million, whereas sales of salad and charcoal
products were down $2.1 million.
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COST OF SALES
Consolidated cost of sales (cost of materials only) was 30.5% of sales in
the second quarter compared to 29.5% of sales in the second quarter a year
ago. Year-to-date, consolidated cost of sales represented 30.1% of sales
versus 30.6% last fiscal year.
In the restaurant segment, food cost (cost of sales) was 26.6% of sales
in both the second quarter and year-to-date, versus 27.0% and 27.5% in the
corresponding periods a year ago. The improvement was due mostly to changes in
product mix as well as the effect of menu price increases.
In the food products segment, cost of sales was 42.1% of sales for the
quarter and 40.5% year-to-date compared to 36.4% and 39.1% for the
corresponding periods a year ago. The increase in the second quarter of this
year compared to last year was due to changes in hog costs, which averaged
$39.60 per hundredweight versus $30.44 per hundredweight in the second
quarters of fiscal 1996 and 1995, respectively.
OPERATING WAGE AND FRINGE BENEFIT EXPENSES
Consolidated operating wage and fringe benefit expenses increased from
28.9% to 30.1% of sales in the second quarter and from 29.0% to 30.0% of sales
year-to-date in comparison to the corresponding periods last year.
In the restaurant segment, wages and fringes represented 35.8% of sales
for the quarter and 35.7% of sales year-to-date versus 35.0% and 35.2% for the
corresponding periods a year ago. The increases are due to higher hourly labor
costs over a year ago.
In the food products segment, wages and fringes represented 13.0% of
sales for the quarter and 12.9% of sales year-to-date versus 12.4% for both of
the corresponding periods a year ago.
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OTHER OPERATING EXPENSES
Approximately 90% of other operating expenses are in the restaurant
segment; the most significant components of which are advertising, utilities,
repair and maintenance, restaurant supplies, and taxes (other than income
taxes). Consolidated other operating expenses represented 13.6% of sales for
the quarter and 13.7% of sales year-to-date in comparison to 13.1% and 12.9%
for the corresponding periods last year. These increases are due to an
increase in restaurant advertising expenses of $1.6 million for the quarter
and $3.3 million year-to-date.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated selling, general and administrative expenses represented
12.4% of sales for the quarter and 12.3% of sales year-to-date in comparison
to 13.4% and 13.0%, respectively, in the corresponding periods a year ago. The
most significant components of selling, general and administrative expenses
are wages and fringe benefits and food products segment promotional expenses.
The decreases in these expenses occurred mostly in food products selling
expenses, which had reduced advertising and promotional programs, particularly
in the second quarter of fiscal 1996 compared to fiscal 1995. Other costs were
comparable to a year ago.
NET INCOME
Consolidated net income decreased $1.2 million, or 8.1%, in the second
quarter in comparison to the corresponding period a year ago. The entire
decrease occurred in the food products segment, which experienced decreased
margins as a result of higher hog costs and Hickory Specialties' lower sales
volume. The food products segment pre-tax profit margin for the quarter was
6.5% this year versus 10.3% last year.
In the restaurant segment, the pre-tax profit margin for the quarter fell
from 12.4% to 11.4%, and the net income remained virtually unchanged. The
decrease in pre-tax margin was attributable mainly to the decrease in
same-store sales as well as higher hourly labor costs and advertising expense.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from both the restaurant and food products segments has
been used as the main source of working capital and capital expenditures. Bank
lines of credit were also used for liquidity needs and capital expansion at
various times. The total of bank lines of credit available is $73.5 million,
of which $38.9 million was outstanding at October 27, 1995.
The company believes that funds needed for capital expenditures and
working capital during the remainder of fiscal 1996 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.
<PAGE>
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 14, 1995. At the close of business on
the record date 42,373,041 common shares were outstanding and
entitled to vote. At the Annual Meeting 32,146,978 or 75.9% of the
outstanding common shares entitled to vote were represented in
person or by proxy.
(b) Directors elected at the Annual Meeting:
Daniel E. Evans
J. Tim Evans
Robert S. Wood
Directors whose term of office continued after the Annual Meeting:
Larry C. Corbin Daniel A. Fronk
Stewart K. Owens Cheryl L. Krueger
Robert E.H. Rabold G. Robert Lucas II
(c) Matters voted upon at the Annual Meeting:
FOR AGAINST ABSTAIN
1) Election of Daniel E. Evans 31,753,196 393,782 0
2) Election of J. Tim Evans 31,748,869 398,109 0
3) Election of Robert S. Wood 31,751,627 395,351 0
(d) Not applicable
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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
Chairman of the Board
(Chief Executive Officer)
____________________
Donald J. Radkoski
Group Vice President and Treasurer
(Chief Financial Officer)
December 11, 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 OCTOBER 27, 1995.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-26-1996
<PERIOD-START> APR-29-1995
<PERIOD-END> OCT-27-1995
<EXCHANGE-RATE> 1
<CASH> 7,862
<SECURITIES> 0
<RECEIVABLES> 14,834
<ALLOWANCES> 0
<INVENTORY> 19,002
<CURRENT-ASSETS> 51,679
<PP&E> 640,589
<DEPRECIATION> 189,754
<TOTAL-ASSETS> 522,212
<CURRENT-LIABILITIES> 99,336
<BONDS> 0
<COMMON> 426
0
0
<OTHER-SE> 413,713
<TOTAL-LIABILITY-AND-EQUITY> 522,212
<SALES> 413,562
<TOTAL-REVENUES> 413,566
<CGS> 124,501
<TOTAL-COSTS> 369,235
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 44,331
<INCOME-TAX> 16,924
<INCOME-CONTINUING> 27,407
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,407
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>
