FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 26, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________________ to __________________
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 (I.R.S. Employer
incorporation or organization) Identification No.)
3776 South High Street, Columbus, Ohio 43207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 614-491-2225
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock with $.01 par value
(Title of class)
This Report contains 74 pages of which this is page 1. The Exhibit Index
begins at page 58.
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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 )
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value has been computed by reference to
the last quoted sale price of such stock, as of July 12, 1996.
Total shares outstanding 42,235,163
Number of shares owned beneficially and/or
of record by directors and executive
officers* 1,829,565
Number of shares held by persons other than
directors and executive officers 40,405,598
Last quoted sale price $16.125
Market value of shares held by persons other
than directors and executive officers $651,540,267.75
*For purposes of this computation, all executive officers and directors are
included, although not all are necessarily "affiliates."
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
42,235,163 shares of Common Stock with $.01 par value were outstanding at July
12, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
1. Annual Report to Stockholders for the Fiscal Year
Ended April 26, 1996 (in pertinent part, as indicated) ....PART II
2. Proxy Statement dated Aug. 2, 1996, for the Annual
Meeting of Stockholders to be held on Sept. 9, 1996
(in pertinent part, as indicated) ........................PART III
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PART I
Item 1. BUSINESS.
Bob Evans Farms, Inc. (the "Registrant") is a Delaware corporation
incorporated on Nov. 4, 1985. It is the successor by merger to Bob Evans
Farms, Inc., an Ohio corporation incorporated in 1957. BEF Holding Co., Inc.
is a subsidiary of the Registrant. The subsidiaries owned by BEF Holding
Co., Inc. include Bob Evans Farms, Inc., an Ohio corporation ("BEF Ohio");
Owens Country Sausage, Inc. ("Owens"); Mrs. Giles Country Kitchens, Inc.
("Mrs. Giles"); and Hickory Specialties, Inc. ("Hickory Specialties"). On
Oct. 16, 1995, BEF RE Holding Co., Inc. was formed as a wholly owned
subsidiary of BEF Ohio and BEF REIT, Inc. was formed as a majority-owned
subsidiary of BEF RE Holding Co., Inc. The Registrant; BEF Holding Co. Inc.;
BEF RE Holding Co., Inc.; BEF REIT, Inc.; BEF Ohio; Owens; Mrs. Giles; and
Hickory Specialties are collectively referred to herein as the "Company."
The business of the Company is divided into two principal industry segments:
the food products segment and the restaurant segment.
Food Products Segment Operations
Principal Products and Procurement Methods
The Company's traditional business in its food products segment has been the
production and distribution of approximately 30 varieties of fresh, smoked and
fully-cooked pork sausage and ham products under the brand names of Bob Evans
Farms and Owens Country Sausage. In recent years, the Company has begun to
expend more time and effort on both new product development and sales of its
pork sausage and ham products to institutional and foodservice purchasers. The
Company also established a frozen foods division to create new distribution
and marketing strategies for new frozen product lines. In addition, the
Company has been exploring the expansion of the products offered in its food
products segment through the acquisition of companies producing food and food
related products which complement the Company's traditional sausage products.
During the fiscal year ended April 29, 1994 (the "1994 fiscal year"), sales of
sausage products contributed 77% of total revenues; sales of products by Mrs.
Giles contributed 11%; and sales of Hickory Specialties contributed 12%.
During the fiscal year ended April 28, 1995 (the "1995 fiscal year"), sales of
sausage products contributed 76% of total revenues; sales of products by Mrs.
Giles contributed 11%; and sales of Hickory Specialties contributed 13%.
During the fiscal year ended April 26, 1996 (the "1996 fiscal year"), sales of
sausage products contributed 77% of total revenues; sales of products by Mrs.
Giles contributed 10%; and sales of Hickory Specialties contributed 13%.
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During the last several years, the Company has expanded its product line in
the Bob Evans and Owens markets to include convenience items for meals and
snacks that are microwaveable. During the 1996 fiscal year, the Company
introduced Snackwiches, a convenience sandwich product; and beer bratwursts in
all Bob Evans markets. Also during the fiscal year, Skillets, a convenience
entree product; Special Seasonings flavored roll sausage; and sausage balls, a
fully cooked convenience product, were introduced in most Owens markets. In
the fall of 1995, the frozen foods division introduced frozen white dinner
rolls and buttermilk biscuits into the Cincinnati, Columbus and Toledo markets
with further testing expected.
Since 1991, the Company has offered fresh, prepared salads in its food
products segment. The refrigerated, deli salads are intended as convenience
items for meals, and include deluxe macaroni salad, Italian pasta salad,
homestyle potato salad, chunky chicken salad, classic cole slaw, pimento
cheese spread and smokehouse baked beans. During the 1996 fiscal year, New
Orleans-style gumbo, Louisiana-style rice creole and ruffled pasta and cheese
were introduced in all Mrs. Giles markets. The deli items manufactured by Mrs.
Giles are distributed principally in the southern and southeastern markets of
the United States under the brand names of Mrs. Giles and Mrs. Kinser's. Bob
Evans Harvest Salads, a line of fresh, premium quality, prepared salads first
offered in 1992, are currently being marketed in more than half of the Bob
Evans Farms marketing areas.
With the acquisition of Hickory Specialties in March 1992, the Company
expanded into food-related products which complement its existing food
products business. Hickory Specialties produces premium quality charcoal, wood
smoking chips, natural smoke flavorings, gas grill ceramic briquettes and
grilling systems. Brand names of such products include Nature-Glo, Old
Hickory, Jack Daniels, Zesti Smoke, Wildfire and Woodstone. This past year,
Hickory Specialties introduced two new products, Wildfire Gourmet Hickory
Charcoal and Woodstone Gas Grill Briquettes. A new charcoal manufacturing
facility was completed in December 1995 and fully operational by April 1996 in
Summer Shade, Ky. Hickory Specialties' products are marketed nationwide, and
the Company is exploring various opportunities abroad, especially with respect
to its liquid smoke flavorings products.
During the 1996 fiscal year, the food products segment of the Company
continued to produce specialty items for its institutional and foodservice
customers. These products are made to customer specifications, and include
fresh sausage links and patties, sausage gravy, and biscuit sandwiches.
Although this segment of the business does not command the higher pre-tax
margins that branded items do, it gives the Company additional incremental
volume in the production plants. Foodservice volume accounts for less than 10
percent of the Company's total volume sold and is expected to remain in that
range in the 1997 fiscal year. The Company is also marketing its prepared
salad products to institutional and foodservice customers.
All of the Company's pork sausage and ham products are produced in the
Company's seven processing plants located in Xenia, Bidwell and Springfield,
Ohio; Hillsdale, Mich.; Galva, Ill.; and Richardson and Fort Worth, Texas. The
Springfield, Ohio, and Hillsdale, Mich., plant are producing the products for
sale to foodservice distributors.
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Live hogs are procured from terminals; local and country markets; and
corporate farms in Ohio, Indiana, Illinois, Iowa, North Carolina, Kansas,
Michigan, Nebraska, South Dakota, Pennsylvania, Wisconsin, Minnesota, West
Virginia, Missouri, Oklahoma and Texas at daily prevailing market prices. The
Company does not contract in advance for the purchase of live hogs. Live hogs
procured in these markets are purchased by an employee of the Company. Live
hogs are then transported overnight directly from the various markets in which
they were purchased to five of the Company's processing plants where they are
slaughtered and processed into various pork sausage products. These products,
in turn, are shipped daily from the plant facilities for distribution to the
Company's customers. To date, the Company has experienced no difficulty in
procurring live hogs for its pork sausage products.
All of the Company's prepared salad products are produced at the Company's
plant in Lynchburg, Virginia. Food items used in the manufacture of the
Company's salad products include potatoes, cheese, eggs, macaroni and other
pastas, fresh vegetables, chicken, tuna and salad dressings. These items are
purchased by the Company directly from various suppliers. The Company believes
that there are a number of suppliers of the items used in its salad products
and that its sources of supply of these items are adequate for its needs.
The Hickory Specialties charcoal products are produced at the Company's plants
in Crossville, Tenn., and Summer Shade, Ky.; and the Hickory Specialties
liquid smoke flavoring products are produced at the Company's plants in
Crossville, Tenn.; Greenville, Mo.; and Summer Shade, Ky. The principal raw
materials used by the Company in the manufacture of the Hickory Specialties
products are sawdust and other related wood by-products. All are available
from a wide range of suppliers. The Company has experienced no difficulty in
obtaining raw materials for its Hickory Specialties products and anticipates
no future difficulty in that regard.
Distribution Methods
The Company uses two delivery methods for Bob Evans Farms Sausage:
(1) Primarily, the direct store delivery system (i.e., the Company's products
are not warehoused, but are delivered to grocery stores as described below) is
used for the retail distribution of the sausage, biscuit and other products
bearing the Bob Evans Farms brand name, including Bob Evans Harvest Salads.
One hundred eight driver-salesmen, employed by the Company and driving
Company-owned refrigerated trucks, deliver the Company's products directly to
more than 8,500 supermarkets and independent retail groceries.
(2) During the 1996 fiscal year, the Company continued to test alternate
distribution methods for its sausage products, and as a result, Bob Evans
Farms brand products are available through a warehouse in the Greater New York
City area and a distributor in Madison and Milwaukee, Wis., on a limited
basis. A warehouse is also used for the new frozen foods division established
during fiscal year 1996.
The marketing territory for Bob Evans Farms brand products as well as the Bob
Evans Harvest Salads includes Ohio, Michigan, Indiana, Illinois, Delaware and
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the District of Columbia, as well as portions of Alabama, Iowa, Kentucky, West
Virginia, Pennsylvania, New Jersey, Maryland, Virginia, New York, Tennessee,
Missouri, Wisconsin and Georgia.
Products distributed under the Owens Country Sausage brand name are
distributed to retail customers in two ways:
(1) Company-owned transport trucks deliver directly to most major
supermarket chain warehouse distribution centers in the Owens marketing
area. Thereafter, the products are shipped to individual retail outlets.
(2) Thirty-one driver-salesmen, driving Company-owned refrigerated trucks,
deliver products directly to supermarkets and independent retail
groceries.
Owens' marketing territory includes Texas, Arkansas, Oklahoma, New Mexico,
Louisiana, Arizona, Colorado, Nevada and portions of Mississippi and Kansas.
Owens Country Sausage products are available in more than 5,000 supermarkets
and independent retail groceries.
Distribution to the Company's foodservice customers is accomplished through
frozen food brokers and distributors.
Mrs. Giles salad products are distributed to more than 4,500 supermarkets and
independent groceries in three ways:
(1) through direct store delivery by Company employees to customers within the
Bob Evans Farms marketing territory;
(2) through food brokers and distributors;
(3) through direct shipment to customers.
The marketing territory for Mrs. Giles salad products includes Alabama,
Florida, Georgia, Kentucky, Louisiana, Maryland, North Carolina, Pennsylvania,
South Carolina, Tennessee, Texas and Virginia.
Hickory Specialties charcoal products are distributed nationwide to retail
customers, and its liquid smoke flavoring products are distributed nationally
and internationally to food products manufacturers and pet food manufacturers,
through brokers and distributors and through direct shipment to customers.
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Inventory Levels
All of the Company's sausage products and salad products are highly perishable
in nature and require proper refrigeration. Shelf life of the sausage products
ranges from 18 to 45 days; of the Bob Evans Harvest Salads from 21 to 28 days;
and of the Mrs. Giles salad products from 15 to 45 days. Due to the highly
perishable nature and short shelf life of the Company's sausage products, the
Company's processing plants normally process only enough product to fill
existing orders. Due to the highly perishable nature and short shelf life of
the Company's salad products, the Company's Lynchburg plant normally processes
only enough product to fill existing orders. Therefore, the Company maintains
minimal inventory levels of sausage products and of salad products, because
such products are generally manufactured only to meet existing demand and are
delivered to retail outlets within a three-day period after manufacture.
Hickory Specialties products are not perishable in nature. Although such
products are manufactured throughout the year, the greatest amount of
production of charcoal briquettes occurs in the winter months in anticipation
of the peak selling season for charcoal from April through September.
Trademarks and Service Marks
The Company maintains various trademarks and service marks that identify
various Bob Evans Farms, Owens Country Sausage, Mrs. Giles and Hickory
Specialties products. The principal trademarks used to identify the Mrs. Giles
salad products are Mrs. Giles and Mrs. Kinser's. The principal trademarks used
to identify the Hickory Specialties charcoal products are Old Hickory,
Nature-Glo, Jack Daniels, Wildfire and Woodstone, and the principal trademark
used to identify the Hickory Specialties liquid smoke flavoring products is
ZestiSmoke. These trademarks and service marks are renewed periodically and
the Company believes that such trademarks and service marks adequately protect
the brand names of the Company. The operations of the food products segment of
the Company are not dependent upon any patents, licenses, franchises or
concessions.
Competition and Seasonality
The sausage business is highly competitive. It is also seasonal to the extent
that more pounds of fresh sausage are typically sold during the colder winter
months from October through April. The Company continues to promote products
for summer outdoor grilling in an attempt to create more volume during the
summer months. The Company competes primarily on the basis of the price and
quality of its sausage products. The Company is in direct competition with a
large number and variety of producers and wholesalers of similar products,
including companies active both locally and nationally, companies engaged in a
general meat packing business and companies in the same specialized field.
Many of such competitors have substantially greater financial resources and
higher volumes of total sales than the Company. While the Company does not
possess statistics which would enable it to make an accurate statement of its
percentage of the total sales of sausage in each of its market areas, the
Company believes that sales of its products constitute a significant portion
of sales of sausage of comparable price and quality in the majority of its
market areas.
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The salad products business is highly competitive. It is also seasonal to the
extent that more salad products are typically sold during the warmer spring
and summer months from April through September. The Company competes primarily
on the basis of the price and quality of its salad products. The Company is in
direct competition with a large number and variety of producers and
wholesalers of similar products, including companies active both locally and
nationally, companies engaged in a general deli business and companies in the
same specialized field. Many of such competitors have substantially greater
financial resources and higher volumes of total sales than the Company. While
the Company does not possess statistics which would enable it to make an
accurate statement of its percentage of the total sales of salad products in
each of its market areas, the Company believes that sales of its products
constitute a small portion of sales of salad products of comparable price and
quality in the majority of its market areas.
The charcoal business is highly competitive. The charcoal business is also
seasonal to the extent that more charcoal products are typically sold during
the warmer spring and summer months from April through September. The Company
competes primarily on the basis of the price and quality of its charcoal
products. The Company is in direct competition with a large number and variety
of producers and wholesalers of similar products, including companies active
both locally and nationally. Many of such competitors have substantially
greater financial resources and higher volumes of total sales than the
Company. While the Company does not possess statistics which would enable it
to make an accurate statement of its percentage of total sales of charcoal
products in each of its market areas, the Company believes that the sales of
its products constitute a small portion of sales of charcoal products of
comparable price and quality in the majority of its market areas.
The Company is aware of only one major competitor, Red Arrow Products Co.,
Inc., in its liquid smoke flavoring business. The Company believes that it
produces approximately 70% of the liquid smoke flavorings produced and sold in
the United States and that this competitor accounts for approximately 30% of
the liquid smoke flavorings produced and sold in the United States.
Advertising
During the 1996 fiscal year, the Company spent approximately $9,816,000 for
advertising of its sausage and salad products, and approximately $1,102,000
for advertising of its charcoal and liquid smoke flavoring products.
Approximately 81% of this amount was spent on television, radio and newspaper
media. The remaining 19% was spent for various promotional programs throughout
the year in an attempt to maintain and gain market share for its products.
Dependence on a Single Customer
The Company's food products are sold through more than 18,000 retail grocery
stores and are available through such stores to approximately 50% of the
population of the continental United States. The Company's charcoal products
are sold nationwide and its liquid smoke flavoring products are sold
nationally and internationally. The Company is not dependent upon a single
customer or group of affiliated customers.
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Sales on Credit; Aged Product
The Company typically allows seven to 30 day terms on the sales of its salad
and sausage products, and up to sixty days on its charcoal products. The
Company has not experienced any material bad debt problems, nor has the return
of aged product had a material effect on the Company.
Sources and Availability of Raw Materials
The Company is dependent upon the availability of live hogs to produce its
pork sausage and ham products. However, the Company has never experienced
shortages in the number of hogs available at prevailing market prices. The
live hog market is highly cyclical (both in terms of the number of hogs
available and the price therefor) and is dependent upon corn production, since
corn is the major food supply for hogs.
Food items used in the manufacture of the Company's salad products include
potatoes, cheese, eggs, macaroni and other pastas, fresh vegetables, chicken,
tuna fish and salad dressings. These items are purchased by the Company
directly from various suppliers. The Company believes that there are a number
of suppliers of the items used in its salad products and that its sources of
supply of these items are adequate for its needs.
The principal raw materials used by the Company in the manufacture of the
Hickory Specialties products are sawdust and other related wood by-products.
All are available from a wide range of suppliers. The Company has experienced
no difficulty in obtaining raw materials for the Hickory Specialties products
and anticipates no future difficulty.
Expansion of Distribution Area
New markets opened for the Company's sausage products during the 1996 fiscal
year included Madison and Milwaukee, Wis., for Bob Evans Farms products.
During fiscal year 1997, the Company plans to test a line of frozen dinner
entrees in Ohio.
The Company has no current plans for further geographic expansion of its
distribution area for Owens Country Sausage, the Mrs. Giles salad products or
the charcoal and liquid smoke flavoring products produced by Hickory
Specialties in the 1997 fiscal year.
Profit Margins Related to Sausage Production
The Company's profit margins for the portion of the Company's business
relating to sausage production are normally more favorable during periods of
lower live hog costs. During the 1996 fiscal year, the Company experienced
more normalized live hog costs than the 1995 record-low hog costs. The Company
expects live hog costs to increase over the next 12 months.
Restaurant Segment Operations
General
The Company operates full-service, family restaurants under the Bob Evans
Restaurants, Bob Evans "small-town" Restaurants, Bob Evans Restaurant &
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General Stores and Owens Family Restaurants names. The "small-town"
restaurants were designed to efficiently serve communities with smaller
population bases. The "small-town" restaurants serve the regular Bob Evans
menu and have seating for approximately 98 versus 167 in the newer Bob Evans
Restaurants. The Restaurant & General Stores feature a combined restaurant and
gift shop.
All of the Company's family restaurants feature a wide variety of menu
offerings designed to appeal to its customers. Breakfast entree items are
featured and served all day. The restaurants are typically open from 6 a.m.
until 10 p.m. Sunday through Thursday, with extended closing hours on Friday
and Saturday for most locations. Approximately 61% of total revenues from
restaurant operations are generated from 6 a.m. to 4 p.m., with the balance
generated from 4 p.m. to closing. Sales on Saturday and Sunday account for
approximately 39% of a typical week's revenues.
In addition, the Company operates full-service Mexican restaurants under the
Cantina del Rio name. These restaurants feature authentic southwestern foods
served in a Mexican atmosphere and are open from 11 a.m. until 10 p.m. Sunday
through Thursday, and from 11 a.m. until 12:30 a.m. on Friday and Saturday.
Restaurants in Operation at April 26, 1996
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Traditional "small-town" General Owens Cantina Total
Stores del Rio Restaurants
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Delaware 2 1 3
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Florida 27 1 1 29
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Illinois 13 2 1 16
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Indiana 28 18 2 48
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Iowa 1 1
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Kentucky 12 1 13
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Maryland 8 8
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Michigan 31 3 1 35
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Minnesota 1 1
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Missouri 9 1 10
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New Jersey 1 1
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New York 9 2 1 12
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Ohio 106 31 1 7 145
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Pennsylvania 21 1 22
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South Carolina 1 1
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Tennessee 3 1 1 5
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Texas 1 12 13
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Virginia 9 1 1 11
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West Virginia 15 1 16
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TOTAL 295 60 8 12 15 390
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During the Company's 1996 fiscal year, 37 additional restaurants were opened.
Of the 37 new restaurants opened, 10 were traditional Bob Evans Restaurants,
26 were "small-town" restaurants (one operating under Owens Family
Restaurants) and one was a Cantina del Rio. The majority of restaurants opened
during fiscal year 1996 were in the Company's existing market area.
From time to time, restaurants are evaluated and closed due to a changing
market, lack of profit, low performance, a change in access or building
safety. On Jan. 15, 1996, an Owens Family Restaurant was closed in Richardson,
Texas, due to a change in access which hindered performance.
The Company has typically opened restaurants in areas where a strong consumer
awareness and acceptance for its sausage products has been established over
the years. It has deviated from this practice only in Florida and South
Carolina, where the Company has 29 restaurants and one restaurant,
respectively, but does not have sausage distribution.
Restaurants are supplied with food and inventory items (other than sausage
products, related meat items and certain salad products) by four independent
food distributors twice a week. Sausage products, other related meat items and
certain salad products are supplied by the Company to each restaurant by the
Company's driver-salesmen, with the exception of the restaurants located in
Florida and South Carolina, which are supplied by independent food
distributors.
Seasonality
Revenues from restaurant operations as a percentage of total revenues have
been virtually the same, quarter by quarter, during the last two fiscal years.
However, certain locations, which are near major interstate highways,
experience increased revenues during the summer tourist season. In addition,
severe winter weather conditions during fiscal year 1996 had a negative impact
on sales.
Competition
The restaurant segment is engaged in an intensely competitive business. The
Company's restaurants compete directly with both local and national family
restaurant and fast-food chains, as well as with individual restaurant
operators, for favorable sites for expansion, as well as for customer
acceptance. Bob Evans restaurant segment sales are not a significant factor in
the overall restaurant business in the Company's market areas.
Sources and Availability of Raw Materials
Menu mix in the restaurant segment is varied enough that raw materials have
been readily available; however, some food products may be in short supply
during certain seasons and raw material prices often fluctuate according to
availability. The restaurant segment experienced a slight decrease in food
costs during the Company's 1996 fiscal year, and the Company does not expect
food costs to fluctuate to any significant degree during its 1997 fiscal year.
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Advertising
The Company spent approximately $26,425,000 in the restaurant segment for
advertising during its 1996 fiscal year. Seventy percent of these advertising
dollars was spent on television media, with the remainder being spent for
radio and newspaper advertising. In addition to the Breakfast Breaks program
that features a variety of morning meals priced at $2.99 or less, LunchSavors,
lunch-sized portions at lower prices, were introduced. These items are
designed to increase weekday business. The Company has typically not used
coupons, except in certain markets where it is attempting to gain market
share.
Carryout Business
During fiscal year 1996, carryout business in the Company's restaurants
accounted for 2.9% of the total revenues generated in the restaurant segment.
The Company's restaurants do not have a drive-through or pick-up window for
carryout business.
Research and Development
The Company is continuously testing new food items in its search for new and
improved menu offerings to appeal to its customer base and to satisfy changing
eating trends. During fiscal year 1996, the Company continued to revise the
Breakfast Breaks menu which offers specially priced items on weekday mornings.
Because of this program's success, the Company introduced "LunchSavors" in the
spring of 1996 to drive weekday lunch business. This program features
lunch-sized portions of favorites such as chicken vegetable pasta and beef
tips and noodles for lower prices. Since March 1996, stir-fry has been
available on the menu in both chicken and vegetable varieties. Research and
development expenses, to date, have not been material.
Restaurant Expansion
The Company plans to build and open approximately 25 to 30 new restaurants
during the 1997 fiscal year, divided somewhat evenly between Bob Evans and
"small-town" Bob Evans Restaurants. Future restaurant expansion will depend on
the availability of sites, as well as restaurant industry trends. The Company
believes, however, that it can continue with its planned expansion and is
actively seeking quality restaurant sites, not only in its present market
area, but in new market areas as well.
Trademarks, Service Marks and Licenses
The Company maintains various trademarks and service marks in connection with
its family restaurant operations. These trademarks and service marks are
renewed periodically and the Company believes that such trademarks and service
marks adequately protect the various products and services to which they
relate. The Cantina del Rio Mexican style restaurants require liquor licenses,
since this casual theme dining concept includes a full service bar. The
operations of the restaurant segment of the Company are not dependent upon any
patents, franchises or concessions.
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Employees
The Company had in its employment approximately 1,900 persons in the food
products segment and 26,800 persons in the restaurant segment as of April 26,
1996.
Compliance with Environmental Protection Requirements
The Company does not anticipate that compliance with federal, state and local
provisions which have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, will have a material effect upon the capital expenditures,
earnings or the competitive position of the Company.
Sales, Operating Profit and Identifiable Assets
The following table sets forth, for each of the Company's last three fiscal
years, the amounts of revenue from intersegment sales of its food products and
the amounts of revenue from sales to unaffiliated customers, operating profit
and identifiable assets attributable to each of the Company's industry
segments:
FISCAL YEAR ENDED
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April 26, April 28, April 29,
1996 1995 1994
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Sales:
Intersegment Sales of
Food Products: $ 36,638,000 $ 31,277,000 $ 30,902,000
Food Products
(excluding
intersegment sales): 216,564,000 216,759,000 203,909,000
Restaurant Operations: 590,063,000 550,209,000 495,129,000
Operating Profit:
Food Products: 17,169,000 26,726,000 19,580,000
Restaurant Operations: 29,384,000 60,135,000 56,910,000
Identifiable Assets:
Food Products: 119,316,000 94,494,000 90,502,000
Restaurant Operations: 395,804,000 383,569,000 317,739,000
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Item 2. PROPERTIES.
The materially important properties of the Company, in addition to those
described below, consist of its executive offices located at 3776 South High
Street, Columbus, Ohio, a 937-acre farm located in Rio Grande, Ohio, and a
30-acre farm located in Richardson, Texas. The two farm locations serve as
visitor centers, are tourist attractions and are open to the general public.
Food Products Segment
The food products segment has seven sausage manufacturing plants: three in
Ohio; two in Texas; and one each in Michigan and Illinois; one prepared salads
manufacturing plant in Virginia; one charcoal/liquid smoke manufacturing plant
in each of Tennessee, Kentucky and Missouri. All of these properties are owned
in fee by the Company. The Company owns regional sales offices in Westland,
Mich., and in Houston, San Antonio, Lubbock and Tyler, Texas. In addition,
various other locations are rented by the Company throughout its marketing
territory which serve as regional and divisional sales offices.
Restaurant Segment
Of the 390 restaurants operated by the Company, 335 are owned in fee and 55
are leased from unaffiliated persons. All lease agreements contain either
multiple renewal options or options to purchase. Six of these leased
properties have terms that will expire through May 1, 2000. With respect to
these six leases, the Company has the following options: four leases contain
four five-year renewal options; one lease contains six five-year renewal
options; and one lease has three five-year renewal options.
Item 3. LEGAL PROCEEDINGS.
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
-14-
<PAGE>
Executive Officers of the Registrant
The following table sets forth the executive officers of the Registrant and
certain information with respect to each executive officer. Unless otherwise
indicated, each person has held his or her principal occupation for more than
five years. The executive officers are appointed by and serve at the pleasure
of the Board of Directors.
Name, Age and Period of Service as
an Officer of the Registrant; Principal Occupations for Past
Positions and Offices with the Five Years and Other Information
Registrant
- ------------------------------------- ------------------------------------
Daniel E. Evans, age 59; Chairman Chairman of the Board, Chief
of the Board, Chief Executive Executive Officer and Secretary of
Officer, Secretary and a Director the Registrant. Mr. Evans is the
of the Registrant; 40 years as an first cousin of J. Tim Evans, a
officer of the Registrant. director of the Registrant.
Donald J. Radkoski, age 41, Group Group Vice President - Finance
Vice President - Finance Group, Group since January 1994,
Treasurer and Chief Financial Treasurer and Chief Financial
Officer of the Registrant; eight Officer since May 1993, Senior
years as an officer of the Vice President from May 1993 to
Registrant. December 1993, Vice President of
Finance and Assistant Treasurer
from 1989 to May 1993, and
Assistant Treasurer from 1988 to
1989, of the Registrant.
Stewart K. Owens, age 41; President and Chief Operating
President, Chief Operating Officer Officer since 1995, Executive
and a Director of the Registrant; Vice President and Chief Operating
six years as an officer of the Officer from 1994 to 1995, and
Registrant. Group Vice President - Food
Products Group from 1990 to
December 1993, of the Registrant.
President and Chief Operating
Officer of Owens since 1984.
-15-
<PAGE>
Larry C. Corbin, age 54; Executive Executive Vice President -
Vice President - Restaurant Restaurant Operations since 1995,
Operations Group and a Director of Senior Group Vice President -
the Registrant; 28 years as an Restaurant Operations Group from
officer of the Registrant. 1994 to 1995, Group Vice President
- Business Development from 1990 to
December 1993, Executive Vice
President, Operations and
Development, Restaurant Division,
from 1988 to 1990, Senior Vice
President, Operations and
Development, Restaurant Division,
from 1987 to 1988, and Senior Vice
President, Operations, Restaurant
Division, from 1974 to 1987, of the
Registrant.
Roger D. Williams, age 45; Executive Vice President - Food
Executive Vice President - Food Products/Marketing/Purchasing/Technical
Products/Marketing/ Technical Services since 1995, Senior Group
Services Group of the Registrant; Vice President - Food
17 years as an officer of the Products/Marketing/
Registrant. Purchasing/Technical Services from
1994 to 1995, Group Vice President
- Marketing & Purchasing/ Technical
Services from 1990 to December
1993, Senior Vice President,
Director of Marketing, Restaurant
Division, from 1988 to 1990, and
Vice President, Director of
Marketing, Restaurant Division,
from 1980 to 1988, of the
Registrant.
Howard J. Berrey, age 54; Group Group Vice President - Real
Vice President - Real Estate/ Construction & Engineering
Estate/Construction & Engineering Group since 1990, Senior Vice
Group of the Registrant; President, Director of Real
17 years as an officer of the Estate, Restaurant Division, from
Registrant. 1988 to 1990, and Vice President,
Director of Real Estate, Restaurant
Division, from 1978 to 1988, of the
Registrant.
James B. Radebaugh, age 48; Group Group Vice President -
Vice President - Administration & Administration & Human Resources
Human Resources Group of the Group since January 1994, Group
Registrant; six years as an Vice President - Corporate
officer of the Registrant. Development from August 1990 to
December 1993, and Vice President
from April 1990 to August 1990, of
the Registrant.
-16-
<PAGE>
Joseph B. Crace, age 41; Group Group Vice President-Specialty
Vice President - Specialty Products & Business Development
Products & Business Development Group since January 1994, and Vice
Group of the Registrant; four President from April 1992 to
years as an officer of the December 1993, of the Registrant.
Registrant. President since 1989, and Vice
President from 1978 to 1986, of
Hickory Specialties.
Mary L. Cusick, age 40; Vice Vice President - Corporate
President -Corporate Communications since 1990,
Communications since 1990; six Director of Corporate
years as an officer of the Communications from 1981 to 1990,
Registrant. of the Registrant.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
In accordance with General Instruction G(2), the information contained under
the subcaption "Stock Price Ranges and Dividends," at page 2 of Registrant's
Annual Report to Stockholders for the fiscal year ended April 26, 1996, is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA.
In accordance with General Instruction G(2), the information for the years
1987 through 1996 contained under the subcaption "Comparative Highlights for
Ten Years," at page 2 of the Registrant's Annual Report to Stockholders for
the fiscal year ended April 26, 1996, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
In accordance with General Instruction G(2), the information contained under
the caption "Management's Discussion and Analysis of Selected Financial
Information," at pages 14 and 15 of the Registrant's Annual Report to
Stockholders for the fiscal year ended April 26, 1996, is incorporated herein
by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements included on pages 5 through 13 and the Auditor's
report thereon included on page 17 of the Registrant's Annual Report to
Stockholders for the fiscal year ended April 26, 1996, are incorporated herein
by reference.
The "Quarterly Financial Data" included in Note I of the Notes to Consolidated
Financial Statements on page 13 of the Registrant's Annual Report to
Stockholders for the fiscal year ended April 26, 1996, is also incorporated
herein by reference.
-17-
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In accordance with General Instruction G(3), the information contained under
the caption "ELECTION OF DIRECTORS" in the Registrant's definitive Proxy
Statement dated Aug. 2, 1996, to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A promulgated under the Securities
Exchange Act of 1934, is incorporated herein by reference. The information
regarding executive officers required by Item 401 of Regulation S-K is
included in Part I hereof under the caption "Executive Officers of the
Registrant." The Registrant is not required to make any disclosure pursuant to
Item 405 of Regulation S-K.
Item 11. EXECUTIVE COMPENSATION.
In accordance with General Instruction G(3), the information contained under
the captions "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS" and
"COMPENSATION/STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" in
the Registrant's Proxy Statement dated Aug. 2, 1996, to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A promulgated
under the Securities Exchange Act of 1934, is incorporated herein by
reference. Neither the report of the Compensation/Stock Option Committee of
the Registrant's Board of Directors on executive compensation nor the
performance graph included in the Registrant's Proxy Statement dated Aug. 2,
1996, shall be deemed to be incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
In accordance with General Instruction G(3), the information contained under
the caption "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF" in the
Registrant's definitive Proxy Statement dated Aug. 2, 1996, to be filed with
the Securities and Exchange Commission pursuant to Regulation 14A promulgated
under the Securities Exchange Act of 1934, is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In accordance with General Instruction G(3), the information contained under
the caption "ELECTION OF DIRECTORS" in the Registrant's definitive Proxy
Statement dated Aug. 2, 1996, to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A promulgated under the Securities
Exchange Act of 1934, is incorporated herein by reference.
-18-
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents Filed as Part of this Report
1 & 2 Financial Statements and Financial Statement Schedules:
The response to this portion of Item 14 is submitted as a separate
section of this report.
3 Exhibits:
Exhibits filed with this Annual Report on Form 10-K are attached hereto.
For a list of such exhibits, see "Index to Exhibits" at page 24. The following
table provides certain information concerning executive compensation plans and
arrangements required to be filed as exhibits to this Annual Report on Form
10-K.
Executive Compensation Plans and Arrangements
Exhibit No. Description Location
10(a) Restated Bob Evans Farms, Inc. and Incorporated herein
Affiliates 401K by reference to
Retirement Plan Exhibit 10(a) to the
(effective Jan. 1, 1994, Registrant's Annual
except as otherwise provided) Report on Form 10-K
for the fiscal year
ended April 28, 1995
(File No. 0-1667)
10 (b) Amendment No. 1 to the Page 62
Bob Evans Farms, Inc.
and Affiliates 401K
Retirement Plan
10(c) Bob Evans Farms, Inc. and Incorporated herein
Affiliates 401K by reference to
Retirement Plan Trust Exhibit 4(f) to the
(effective May 1, 1990) Registrant's Pre-
Effective Amendment
No. 1 to Form S-8
Registration State-
ment, filed
April 27, 1990
(Registration No.
33-34149)
-19-
<PAGE>
10(d) Bob Evans Farms, Inc. Incorporated herein
1987 Incentive Stock by reference to
Option Plan Exhibit 4(a) to the
Registrant's Regis-
tration Statement on
Form S-8, filed
Oct. 19, 1987
(Registration No.
33-17978)
10(e) Agreement, dated Incorporated herein by
Feb. 24, 1989, reference to Exhibit
between Daniel E. Evans 10(g) to the Registrant's
and Bob Evans Farms, Annual Report on Form
Inc.; and Schedule A to 10-K for its fiscal year
Exhibit 10(e) identifying ended April 28, 1989
other substantially identical (File No. 0-1667);
Agreements between Bob Evans Page 68
Farms, Inc. and certain of the
executive officers of Bob Evans
Farms, Inc.
10(f) Bob Evans Farms, Inc. Incorporated herein
1989 Stock Option Plan by reference to
for Nonemployee Exhibit 4(d) to the
Directors Registrant's Regis-
tration Statement on
Form S-8, filed
Aug. 23, 1989
(Registration No.
33-30665)
10(g) Bob Evans Farms, Inc. Incorporated herein
1991 Incentive Stock by reference to
Option Plan Exhibit 4(d) to the
Registrant's Regis-
tration Statement on
Form S-8, filed
Sept. 13, 1991
(Registration No.
33-42778)
10(h) Bob Evans Farms, Inc. Incorporated herein
Supplemental Executive by reference to
Retirement Plan Exhibit 10(i) to the
Registrant's Annual
Report on Form 10-K
for the fiscal year
ended April 24, 1992
(File No. 0-1667)
-20-
<PAGE>
10(i) Bob Evans Farms, Inc. Incorporated herein
Nonqualified Stock Option by reference to
Plan Exhibit 10(j) to the
Registrant's Annual
Report on Form 10-K
for the fiscal year
ended April 24, 1992
(File No. 0-1667)
10(j) Bob Evans Farms, Inc. Incorporated herein
Long Term Incentive Plan by reference to
for Managers Exhibit 10(k) to the
Registrant's Annual
Report on Form 10-K
for the fiscal year
ended April 30, 1993
(File No. 0-1667)
10(k) Bob Evans Farms, Inc. Incorporated herein
1994 Long Term Incentive by reference to
Plan Exhibit 10(n) to the
Registrant's Annual
Report on Form 10-K
for
the fiscal year
ended April 29, 1994
(File No. 0-1667)
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the fiscal quarter
ended April 26, 1996.
(c) Exhibits
See Item 14(a) (3) above.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this Report.
-21-
<PAGE>
SIGNATURES
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.
Bob Evans Farms, Inc.
July 23, 1996 By: /s/ Donald J. Radkoski
__________________________________
Donald J. Radkoski
Group Vice President-Finance Group
and Treasurer (Chief
Financial Officer & Chief
Accounting Officer)
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.
Signature Title Date
_________________ _____________ __________
/s/ Daniel E. Evans Chairman of the Board, July 23, 1996
Daniel E. Evans Chief Executive
Officer and Secretary
/s/ Larry C. Corbin Director July 23, 1996
Larry C. Corbin
/s/ J. Tim Evans Director July 23, 1996
J. Tim Evans
/s/ Daniel A. Fronk Director July 23, 1996
Daniel A. Fronk
-22-
<PAGE>
/s/ Cheryl L. Krueger Director July 23, 1996
Cheryl L. Krueger
/s/ _____________________ Director July 23, 1996
G. Robert Lucas II
/s/ Stewart K. Owens Director July 23, 1996
Stewart K. Owens
/s/ Robert E.H. Rabold Director July 23, 1996
Robert E. H. Rabold
/s/ _____________________ Director July 23, 1996
Robert S. Wood
/s/ Donald J. Radkoski Group Vice President- July 23, 1996
Donald J. Radkoski Finance Group and Treasurer
(Chief Financial Officer
& Chief Accounting Officer)
-23-
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS
FISCAL YEAR ENDED APRIL 26, 1996
BOB EVANS FARMS, INC.
COLUMBUS, OHIO
-24-
<PAGE>
FORM 10-K -- ITEM 14 (a) (1) AND (2)
BOB EVANS FARMS, INC.
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Bob Evans Farms, Inc. and
subsidiaries, included in the Annual Report of the Registrant to its
stockholders for the fiscal year ended April 26, 1996, are incorporated by
reference in Item 8:
Consolidated Balance Sheets -- April 26, 1996 and April 28, 1995
Consolidated Statements Of Income -- Years ended April 26, 1996,
April 28, 1995 and April 29, 1994
Consolidated Statements Of Stockholders' Equity -- Years ended
April 26, 1996, April 28, 1995, and April 29, 1994
Consolidated Statements Of Cash Flows -- Years ended April 26,
1996, April 28, 1995, and April 29, 1994
Notes To Consolidated Financial Statements -- April 26, 1996
All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been
omitted.
-25-
<TABLE>
Consolidated Financial Review
Bob Evans Farms, Inc. and Subsidiaries
Comparative Highlights for Ten Years
Income
Income Per Share Cash
Before Before Dividends
Long-Term Income Before Income Extraordinary Extraordinary Per
Year Total Assets Debt Net Sales Income Taxes Taxes Gain Gain Share
================================================================================================================================
<C> <C> <C> <C> <C> <C> <C> <C> <C>
1996* $535,813,000 $1,927,000 $806,627,000 $46,745,000 $17,529,000 $29,216,000 $ .69 $.32
1995 488,101,000 2,250,000 766,968,000 86,869,000 33,359,000 53,510,000 1.27 .29
1994 413,875,000 - 699,038,000 76,514,000 28,332,000 48,182,000 1.15 .27
1993 363,075,000 - 653,176,000 68,540,000 25,478,000 43,062,000 1.03 .25
1992 325,538,000 1,200,000 556,304,000 62,409,000 23,080,000 39,329,000 .94 .21
1991 287,254,000 1,600,000 501,305,000 53,882,000 20,247,000 33,635,000 .81 .20
1990 260,643,000 2,000,000 454,339,000 44,046,000 16,301,000 27,745,000 .65 .19
1989 244,198,000 2,400,000 419,529,000 48,754,000 18,091,000 30,663,000 .71 .17
1988 219,448,000 2,800,000 395,061,000 48,343,000 19,014,000 29,329,000 .68 .17
1987 193,098,000 3,200,000 327,160,000 41,226,000 19,756,000 21,470,000 .52 .15
* Includes pre-tax loss of $22,000,000 on the write-down of assets, which
reduced the income tax provision by $8,209,000 and decreased net income
by $13,791,000, or $0.33 per share. (See Note G)
</TABLE>
Stock Price Ranges and Dividends
The common stock of the company is traded on the NASDAQ National Market
System and is identified by the symbol BOBE. The approximate number of record
holders of the company's common stock at May 24, 1996, was 37,239. The high
and low closing bid quotations for the company's common stock, as reported on
NASDAQ, and cash dividends declared thereon for each fiscal quarter (13 weeks)
of the company's past two fiscal years have been as follows:
Cash
Dividends
Fiscal Year High Low Per Share
========================================================================
1996
1st Quarter ............ $21 1/8 ........... $19 1/4 ......... $.0800
2nd Quarter ............ 19 1/2 ........... 16 7/8 ......... .0800
3rd Quarter ............ 19 1/4 ........... 15 15/16 ....... .0800
4th Quarter ............ 17 1/8 ........... 15 1/4 ......... .0800
1995
1st Quarter ............ $22 ............... $20 3/8 ......... $.0725
2nd Quarter ............ 21 5/8 ........... 19 5/8 ......... .0725
3rd Quarter ............ 22 3/16 .......... 19 1/2 ......... .0725
4th Quarter ............ 21 1/2 .......... 19 7/8 ......... .0725
-26-
<PAGE>
Comparative Highlights by Segment
Bob Evans Farms, Inc. and Subsidiaries
Restaurant Segment
Income
Income Per Share
Before Before
Income Before Income Extraordinary Extraordinary
Year Net Sales Income Taxes Taxes Gain Gain
================================================================================
1996* $590,063,000 $29,504,000 $10,739,000 $18,765,000 $.44
1995 550,209,000 60,234,000 22,789,000 37,445,000 .89
1994 495,129,000 56,973,000 20,975,000 35,998,000 .86
1993 457,396,000 51,254,000 19,057,000 32,197,000 .77
1992 397,583,000 44,258,000 16,426,000 27,832,000 .67
1991 358,248,000 40,277,000 15,205,000 25,072,000 .60
1990 322,266,000 34,288,000 12,579,000 21,709,000 .51
1989 293,531,000 31,599,000 11,451,000 20,148,000 .47
1988 259,226,000 30,750,000 11,957,000 18,793,000 .43
1987 221,315,000 28,105,000 13,476,000 14,629,000 .35
* Includes pre-tax loss of $21,370,000 on the write-down of assets, which
reduced the income tax provision by $7,969,000 and decreased net income
by $13,401,000, or $0.32 per share. (See Note G)
Food Products Segment
Income
Income Per Share
Before Before
Income Before Income Extraordinary Extraordinary
Year Net Sales Income Taxes Taxes Gain Gain
================================================================================
1996* $216,564,000 $17,241,000 $ 6,790,000 $10,451,000 $.25
1995 216,759,000 26,635,000 10,570,000 16,065,000 .38
1994 203,909,000 19,541,000 7,357,000 12,184,000 .29
1993 195,780,000 17,286,000 6,421,000 10,865,000 .26
1992 158,721,000 18,151,000 6,654,000 11,497,000 .27
1991 143,057,000 13,605,000 5,042,000 8,563,000 .21
1990 132,073,000 9,758,000 3,722,000 6,036,000 .14
1989 125,998,000 17,155,000 6,640,000 10,515,000 .24
1988 135,835,000 17,593,000 7,057,000 10,536,000 .25
1987 105,845,000 13,121,000 6,280,000 6,841,000 .17
* Includes pre-tax loss of $630,000 on the write-down of assets, which
reduced the income tax provision by $240,000 and decreased net income by
$390,000, or $0.01 per share. (See Note G)
================================================================================
See Notes to Consolidated Financial Statements
================================================================================
-27-
<PAGE>
<TABLE>
Consolidated Balance Sheets
Bob Evans Farms, Inc. and Subsidiaries
Assets April 26, 1996 April 28, 1995
===========================================================================================
<S> <C> <C>
Current Assets
Cash and equivalents..................................... $ 14,369,000 $ 10,451,000
Trade accounts receivable ............................... 14,509,000 15,570,000
Inventories ............................................. 20,876,000 17,256,000
Deferred income taxes ................................... 5,882,000 6,162,000
Prepaid expenses ........................................ 3,263,000 2,936,000
------------ ------------
Total Current Assets ................................ 58,899,000 52,375,000
Property, Plant and Equipment, at cost
Buildings ............................................... 312,084,000 288,260,000
Machinery and equipment ................................. 166,824,000 146,255,000
Other ................................................... 20,919,000 19,572,000
------------ ------------
499,827,000 454,087,000
Less accumulated depreciation ........................... 199,606,000 177,542,000
------------ ------------
300,221,000 276,545,000
Land .................................................... 141,399,000 133,135,000
Construction in progress ................................ 5,623,000 7,168,000
------------ ------------
Net Property, Plant and Equipment ................... 447,243,000 416,848,000
Other Assets
Deposits and other ...................................... 2,955,000 2,243,000
Long-term investments ................................... 4,893,000 2,303,000
Deferred income taxes ................................... 9,918,000 1,573,000
Cost in excess of net assets acquired ................... 10,477,000 11,016,000
Other intangible assets ................................. 1,428,000 1,743,000
------------ ------------
Total Other Assets .................................. 29,671,000 18,878,000
------------ ------------
$535,813,000 $488,101,000
============ ============
Liabilities and Stockholders' Equity
=========================================================================================
Current Liabilities
Line of credit........................................... $59,655,000 $ 25,600,000
Accounts payable ........................................ 5,940,000 7,325,000
Dividends payable ....................................... 3,382,000 3,068,000
Federal and state income taxes .......................... 535,000 4,633,000
Accrued wages and related liabilities ................... 14,245,000 13,691,000
Other accrued expenses .................................. 32,674,000 31,253,000
------------ ------------
Total Current Liabilities ........................... 116,431,000 85,570,000
Long-Term Liabilities
Deferred income taxes ................................... 8,300,000 6,409,000
Notes payable (net of discount of $443,000
at April 26, 1996 and $600,000 at
April 28, 1995) ...................................... 1,927,000 2,250,000
------------ ------------
Total Long-Term Liabilities ......................... 10,227,000 8,659,000
Stockholders' Equity
Common stock, $.01 par value; authorized
100,000,000 shares; issued 42,638,118
shares in 1996 and 1995 .............................. 426,000 426,000
Preferred stock; authorized 1,200 shares;
issued 120 shares in 1996 ............................ 60,000 --
Capital in excess of par value .......................... 145,584,000 144,741,000
Retained earnings ....................................... 268,677,000 252,961,000
------------ ------------
414,747,000 398,128,000
Less treasury stock: 362,875 shares in
1996 and 309,620 shares in 1995, at cost ............. 5,592,000 4,256,000
------------ ------------
Total Stockholders' Equity .......................... 409,155,000 393,872,000
------------ ------------
$535,813,000 $488,101,000
============ ============
</TABLE>
================================================================================
See Notes to Consolidated Financial Statements
================================================================================
-28-
<PAGE>
<TABLE>
Consolidated Statements of Income
Bob Evans Farms, Inc. and Subsidiaries
Years Ended April 26, 1996,
April 28, 1995, and April 29, 1994 1996 1995 1994
====================================================================================
<S> <C> <C> <C>
Net sales.................................$806,627,000 $766,968,000 $699,038,000
Cost of sales............................. 246,020,000 229,256,000 221,558,000
Operating wage and fringe
benefit expenses 248,000,000 225,280,000 201,606,000
Other operating expenses.................. 113,828,000 101,703,000 91,287,000
Selling, general and administrative
expenses 102,621,000 98,048,000 85,015,000
Depreciation expense...................... 27,605,000 25,820,000 23,082,000
Loss on impaired assets................... 22,000,000 - -
------------ ------------ ------------
Operating Profit................... 46,553,000 86,861,000 76,490,000
Net interest.............................. 192,000 8,000 24,000
------------ ------------ ------------
Income Before Income Taxes......... 46,745,000 86,869,000 76,514,000
Provisions for income taxes
Federal................................. 14,304,000 27,316,000 23,060,000
State................................... 3,225,000 6,043,000 5,272,000
------------ ------------ ------------
17,529,000 33,359,000 28,332,000
------------ ------------ ------------
Net Income.........................$ 29,216,000 $ 53,510,000 $ 48,182,000
============ ============ ============
Net income per share...................... $0.69 $1.27 $1.15
===== ===== =====
</TABLE>
================================================================================
See Notes to Consolidated Financial Statements
================================================================================
-29-
<PAGE>
<TABLE>
Consolidated Statements
of Stockholders' Equity
Bob Evans Farms, Inc. and Subsidiaries
Years Ended April 26, 1996, April 28, 1995,
and April 29, 1994
Capital Total
Common Preferred in Excess Retained Treasury Stockholders'
Stock Stock of Par Value Earnings Stock Equity
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balances at 4/30/93 $426,000 $ - $144,339,000 $174,169,000 $(9,634,000) $309,300,000
Net income 48,182,000 48,182,000
Dividends declared of
$.27 per share (11,351,000) (11,351,000)
Purchase of treasury
stock (116,000) (116,000)
Tax benefit from disqualified
disposition of stock
options exercised 294,000 294,000
Compensation expense
attributable to stock
options granted 500,000 500,000
Distribution of treasury
stock.......... (57,000) 2,076,000 2,019,000
-------- ------- ------------ ------------ ----------- ------------
Balances at 4/29/94 426,000 - 144,782,000 211,294,000 (7,674,000) 348,828,000
Net income 53,510,000 53,510,000
Dividends declared of
$.29 per share (12,245,000) (12,245,000)
Tax benefit from disqualified
disposition of stock
options exercised 402,000 402,000
Compensation expense
attributable to stock
options granted 706,000 706,000
Compensation expense
attributable to stock
awards (203,000) 525,000 322,000
Distribution of treasury
stock (544,000) 2,893,000 2,349,000
-------- ------- ------------ ------------ ----------- ------------
Balances at 4/28/95 426,000 - 144,741,000 252,961,000 (4,256,000) 393,872,000
Net income 29,216,000 29,216,000
Dividends declared of
$.32 per share (13,542,000) (13,542,000)
Issuance of preferred stock 60,000 60,000
Purchase of treasury
stock (2,091,000) (2,091,000)
Tax benefit from disqualified
disposition of stock
options exercised 42,000 42,000
Compensation expense
attributable to stock
options granted 474,000 474,000
Compensation expense
attributable to stock
awards 153,000 184,000 337,000
Distribution of treasury
stock 216,000 571,000 787,000
-------- ------- ------------ ------------ ----------- ------------
Balances at 4/26/96 $426,000 $60,000 $145,584,000 $268,677,000 $(5,592,000) $409,155,000
======== ======= ============ ============ =========== ============
====================================================================================
See Notes to Consolidated Financial Statements
====================================================================================
</TABLE>
-30-
<PAGE>
<TABLE>
Consolidated Statements
of Cash Flows
Bob Evans Farms, Inc. and Subsidiaries
Years Ended April 26, 1996,
April 28, 1995, and April 29, 1994 1996 1995 1994
======================================================================================================
<S> <C> <C> <C>
Operating Activities:
Net income ........................................ $ 29,216,000 $ 53,510,000 $ 48,182,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................... 28,459,000 26,674,000 23,937,000
Deferred federal income taxes .................... (6,174,000) (1,187,000) (2,061,000)
Loss (gain) on sale of property and equipment .... 445,000 (115,000) (85,000)
Loss on impaired assets .......................... 22,000,000 -- --
Compensation expense attributable to stock plans . 437,000 1,080,000 822,000
Cash provided by (used for) current assets
and current liabilities:
Accounts receivable ......................... 1,061,000 (125,000) (2,900,000)
Inventories ................................. (3,620,000) (1,457,000) (985,000)
Prepaid expenses ............................ (327,000) 578,000 (143,000)
Accounts payable ............................ (1,385,000) 5,793,000 2,670,000
Federal and state income taxes .............. (4,056,000) (1,196,000) (1,143,000)
Accrued wages and related liabilities ....... 928,000 3,093,000 345,000
Other accrued expenses ...................... 1,421,000 2,349,000 838,000
Net cash provided by operating activities .. 68,405,000 88,997,000 69,477,000
Investing Activities:
Purchase of property, plant and equipment ......... (80,967,000) (94,766,000) (72,910,000)
Net proceeds from sale of short-term investments .. -- -- 1,947,000
Purchase of long-term investments ................. (2,590,000) (2,303,000) --
Proceeds from sale of property, plant
and equipment .................................. 522,000 1,983,000 909,000
Other ............................................. (712,000) (241,000) 161,000
Net cash used in investing activities ...... (83,747,000) (95,327,000) (69,893,000)
Financing Activities:
Cash dividends paid ............................... (13,228,000) (12,016,000) (11,130,000)
Purchase of treasury stock ........................ (2,091,000) -- (116,000)
Draws on line of credit ........................... 34,055,000 16,100,000 9,500,000
Proceeds from issuance of note payable ............ -- 2,250,000 --
Payments on principal of note payable ............. (323,000) -- --
Proceeds from issuance of preferred stock ......... 60,000 -- --
Distribution of treasury stock
due to the exercise of stock
options and employee bonuses ................... 787,000 2,349,000 2,019,000
Net cash provided by financing activities 19,260,000 8,683,000 273,000
Increase (decrease) in cash and equivalents ......... 3,918,000 2,353,000 (143,000)
Cash and equivalents at the beginning of the year ... 10,451,000 8,098,000 8,241,000
Cash and equivalents at the end of the year ......... $ 14,369,000 $ 10,451,000 $ 8,098,000
</TABLE>
================================================================================
See Notes to Consolidated Financial Statements
================================================================================
-31-
<PAGE>
Notes to Consolidated
Financial Statements
Bob Evans Farms, Inc. and Subsidiaries -- April 26, 1996
Note A -- Summary of Significant Accounting Policies
Description of Business: Bob Evans Farms, Inc. owns and operates 390
restaurants in 19 states, including Bob Evans Restaurants, Owens Family
Restaurants, Bob Evans "small-town" Restaurants and Cantina Del Rio Mexican
restaurants. The company also produces fresh and fully-cooked sausage products
and fresh, deli-style salads which are distributed primarily to grocery stores
in the Midwest, Southwest and Southeast. The company's charcoal products and
liquid-smoke flavorings are distributed nationally and internationally.
Principles of Consolidation: The consolidated financial statements
include the accounts of the company and its wholly owned subsidiaries.
Intercompany accounts and transactions have been eliminated.
Fiscal Year: The company's fiscal year ends on the last Friday in April.
References herein to 1996, 1995 and 1994 refer to fiscal years ended April 26,
1996; April 28, 1995; and April 29, 1994, respectively.
Inventories: The company values inventories at the lower of first-in,
first-out cost or market. Inventory is composed of raw materials and supplies
($12,138,000 in 1996, and $11,880,000 in 1995) and finished goods ($8,738,000
in 1996, and $5,376,000 in 1995).
Property, Plant and Equipment: The company calculates depreciation on the
straight-line and declining-balance methods at rates adequate to amortize
costs over the estimated useful lives of buildings (15 to 25 years), machinery
and equipment (3 to 10 years), and other (5 to 25 years). The straight-line
depreciation method was adopted 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.
Long-Term Investments: The company records its long-term investments
(investments in limited partnerships) at market.
Cost in Excess of Net Assets Acquired: The cost in excess of net assets
acquired (goodwill) is being amortized over 25 years using the straight-line
method. The company uses the cash flow method to assess the recoverability of
goodwill. Accumulated amortization at April 26, 1996, and April 28, 1995, was
$2,998,000 and $2,459,000, respectively.
Pre-opening Expenses: Expenditures related to the opening of new
restaurants, other than those for capital assets, are charged to expense when
incurred.
Advertising Costs: The company expenses advertising costs as incurred.
Advertising expense was $37,342,000, $32,585,000 and $29,927,000 in 1996, 1995
and 1994, respectively.
Stock Options: The company accounts for stock options under APB 25,
Accounting for Stock Issued to Employees.
Cost of Sales: Cost of sales represents food cost in the restaurant
segment and cost of materials in the food products segment.
Net Income Per Share: The company calculates net income per share based
upon the weighted average number of common shares outstanding during the year.
Weighted average number of common shares outstanding for 1996, 1995 and 1994,
was 42,311,000; 42,179,000; and 42,006,000 respectively. Outstanding stock
options do not have a material dilutive effect.
-32-
<PAGE>
Notes to Consolidated
Financial Statements
Bob Evans Farms, Inc. and Subsidiaries -- April 26, 1996
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingent assets and
liabilities. Actual results could differ from the estimates and assumptions
used.
Note B -- Credit Arrangements
The company has arrangements with certain banks from which it may borrow
up to $124,400,000 on a short-term basis. The arrangements are reviewed
annually for renewal. At April 26, 1996, $59,655,000 was outstanding under
these arrangements. During 1996 and 1995, respectively, the maximum amounts
outstanding under these arrangements were $63,905,000 and $25,600,000 and the
average amounts outstanding were $43,104,000 and $10,857,000 with weighted
average interest rates of 6.34% and 5.95%.
Total interest expense of $2,394,000; $569,000; and $78,000 incurred in
1996, 1995 and 1994, respectively, was capitalized in connection with the
company's construction activities.
Note C -- Income Taxes
Deferred federal income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the company's deferred tax liabilities and assets as
of April 26, 1996, and April 28, 1995, are as follows:
April 26, 1996 April 28, 1995
Deferred tax liabilities:
Accelerated depreciation... $ 7,991,000 $6,409,000
Other taxes................ 309,000 -
----------- ----------
Total deferred tax liabilities 8,300,000 6,409,000
Deferred tax assets:
Loss on impaired assets.... 8,244,000 -
Self-insurance............. 4,470,000 4,303,000
Other taxes................ - 605,000
Vacation pay............... 1,020,000 913,000
Stock compensation plans... 1,281,000 1,281,000
Accrued bonus.............. 310,000 244,000
Inventory and other........ 475,000 389,000
----------- ----------
Total deferred tax assets.. 15,800,000 7,735,000
----------- ----------
Net deferred tax assets $ 7,500,000 $1,326,000
=========== ==========
-33-
<PAGE>
Notes to Consolidated
Financial Statements
Bob Evans Farms, Inc. and Subsidiaries -- April 26, 1996
Significant components of the provisions for income taxes are as follows:
1996 1995 1994
Current:
Federal ................ $ 20,113,000 $ 29,563,000 $ 25,438,000
State .................. 4,209,000 6,484,000 5,462,000
------------ ------------ ------------
Total Current .......... 24,322,000 36,047,000 30,900,000
Deferred:
Federal ................ (5,809,000) (2,247,000) (2,378,000)
State .................. (984,000) (441,000) (190,000)
------------ ------------ ------------
Total Deferred ....... (6,793,000) (2,688,000) (2,568,000)
------------ ------------ ------------
$ 17,529,000 $ 33,359,000 $ 28,332,000
============ ============ ============
The company's provisions for income taxes differ from the amounts
computed by applying the federal statutory rate due to the following:
1996 1995 1994
Tax at statutory rate ....... $ 16,400,000 $ 30,404,000 $ 26,780,000
State income tax (net) ...... 2,100,000 3,928,000 3,427,000
Other ....................... (971,000) (973,000) (1,875,000)
------------ ------------ ------------
Provisions for income taxes.. $17,529,000 $33,359,000 $28,332,000
============ ============ ============
Taxes paid during 1996, 1995 and 1994 were $28,429,000; $36,647,000; and
$31,643,000, respectively.
Note D -- Stockholders' Equity
The company has employee stock option plans adopted in 1985, 1987, 1991
and 1994; a non-employee directors stock option plan adopted in 1989; and a
nonqualified stock option plan adopted in 1992, in conjunction with a
supplemental executive retirement plan. The 1992 plan provides that the option
price shall be not less than 50% of the fair market value of the stock at the
date of grant; all other plans provide that the option price shall be the fair
market value of the stock at the grant date. Options may be granted for a
period of up to 10 years under the 1985, 1987, 1991 and 1994 plans, and until
all available shares reserved have been issued or until the board determines
that the plan shall terminate under the 1989 and 1992 plans. Except for the
1992 plan, options granted under the plans become exercisable at the rate of
20% per year beginning at the date of grant. The 1994 plan also provides for
the granting of performance share awards in the form of common shares if
certain performance objectives are met. As of April 26, 1996, options for
1,538,511 shares were outstanding, and options for 792,904 shares were
exercisable at prices ranging from $8.69 to $20.50 per share.
During 1996, 1995 and 1994, options of 44,914; 226,749; and 151,726
shares, respectively, were exercised at prices ranging from $8.63 to $20.19
per share. At April 26, 1996, 3,087,147 shares were reserved for issuance
under the plans.
The company's supplemental executive retirement plan (SERP) provides
retirement benefits to certain key management employees of the company and its
-34-
<PAGE>
Notes to Consolidated
Financial Statements
Bob Evans Farms, Inc. and Subsidiaries -- April 26, 1996
subsidiaries. The purpose of the 1992 nonqualified stock option plan discussed
earlier is to fund and settle benefit obligations of the company that arise
under the SERP. To the extent that benefits under the SERP are satisfied by
grants of stock options under the nonqualified plan, the plan will operate as
an incentive plan that produces both risk and reward to participants based on
future growth in the market value of the company's common stock. Since the
company intends to fund and settle its obligations under the SERP on a current
basis by granting stock options under the nonqualified plan, the company
anticipates that no long-term unfunded pension obligations will arise under
the SERP. Compensation expense attributable to stock options granted in 1996,
1995 and 1994 pursuant to the 1992 plan was $474,000; $706,000; and $500,000,
respectively.
The company's long-term incentive plan (LTIP) for managers, an unfunded
plan, provides for the award of up to an aggregate of 500,000 shares of the
company's common stock to mid-level managers as incentive compensation to
attain growth in the net income of the company as well as to help attract and
retain management personnel. Shares awarded are restricted until certain
vesting requirements are met, at which time all restricted shares are
converted to unrestricted shares. LTIP participants are entitled to cash
dividends and to vote their respective shares. Restrictions generally limit
the sale, pledge or transfer of the shares during a restricted period, not to
exceed 12 years. In 1996 and 1995, 20,089 and 40,286 shares, respectively,
were awarded as part of the LTIP. Compensation expense attributable to the
LTIP was de minimis in 1996, $374,000 in 1995, and $322,000 in 1994.
Note E -- Profit Sharing Plan
The company has a profit sharing plan which covers substantially all
employees with at least one year of service. The annual contribution to the
plan is at the discretion of the company's board of directors. The company's
expenses related to contributions to the plan in 1996, 1995 and 1994 were
$2,994,000, $3,412,000, and $3,104,000, respectively.
Note F -- Commitments and Contingencies
At April 26, 1996, the company had contractual commitments approximating
$9,953,000 for restaurant construction, plant equipment additions and the
purchase of land and inventory.
The company is from time to time involved in a number of claims and
litigation considered normal in the course of business. Various lawsuits and
assessments, among them employment discrimination, product liability, workers'
compensation claims and tax assessments, are in litigation or pending
litigation. While it is not feasible to predict the outcome of these actions,
in the opinion of the company, these actions should not ultimately have a
material adverse effect on the financial position or results of operations of
the company.
Note G -- Impairment of Long-Lived Assets
In April 1996, the company adopted FASB Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, the company evaluated the ongoing value of its property,
plant and equipment. Based on this evaluation, the company determined that
assets with a carrying value of $58,598,000 were impaired, and wrote them down
by $22,000,000 to their fair value. Fair value was based on external real
estate appraisals and estimates which took into consideration prices of
comparable assets. The $22,000,000 loss was comprised of a $21,370,000
write-down in the restaurant segment, and a $630,000 write-down in the food
products segment.
-35-
<PAGE>
Notes to Consolidated
Financial Statements
Bob Evans Farms, Inc. and Subsidiaries -- April 26, 1996
Note H -- Industry Segments
The company's operations include restaurant operations and the processing
and sale of food and related products. The revenue from these segments
includes both sales to unaffiliated customers and intersegment sales, which
are accounted for on a basis consistent with sales to unaffiliated customers.
Intersegment sales and other intersegment transactions have been eliminated in
the financial statements.
Operating profit represents earnings before interest and income taxes.
Identifiable assets by segment are those assets that are used in the company's
operations in each segment. General corporate assets consist of investments
and deferred income taxes.
Information on the company's industry segments is summarized as follows:
<TABLE>
Fiscal Year 1996 1995 1994
=========================================================================================
<S> <C> <C> <C>
Sales
Restaurant operations ............... $ 590,063,000 $ 550,209,000 $ 495,129,000
Food products ....................... 253,202,000 248,036,000 234,811,000
843,265,000 798,245,000 729,940,000
Intersegment sales of food products . (36,638,000) (31,277,000) (30,902,000)
Total ........................... $ 806,627,000 $ 766,968,000 $ 699,038,000
Operating Profit
Restaurant operations ............... $ 29,384,000 $ 60,135,000 $ 56,910,000
Food products ....................... 17,169,000 26,726,000 19,580,000
Total ........................... $ 46,553,000 $ 86,861,000 $ 76,490,000
Depreciation and Amortization Expense
Restaurant operations ............... $ 20,911,000 $ 18,732,000 $ 16,216,000
Food products ....................... 7,548,000 7,942,000 7,721,000
Total ........................... $ 28,459,000 $ 26,674,000 $ 23,937,000
Capital Expenditures
Restaurant operations ............... $ 56,429,000 $ 81,772,000 $ 62,576,000
Food products ....................... 24,538,000 12,994,000 10,334,000
Total ........................... $ 80,967,000 $ 94,766,000 $ 72,910,000
Identifiable Assets
Restaurant operations.....................$395,804,000 $383,569,000 $317,739,000
Food products............................ 119,316,000 94,494,000 90,502,000
515,120,000 478,063,000 408,241,000
General corporate assets................. 20,693,000 10,038,000 5,634,000
Total.................................$535,813,000 $488,101,000 $413,875,000
</TABLE>
-36-
<PAGE>
Notes to Consolidated
Financial Statements
Bob Evans Farms, Inc. and Subsidiaries -- April 26, 1996
Note I -- Quarterly Financial Data (Unaudited)
Net
Gross Net Income
Sales Profit Income Per Share
================================================================================
Fiscal Year 1996
First Quarter $205,862,000 $144,709,000 $14,397,000 $.34
Second Quarter 207,700,000 144,352,000 13,010,000 .31
Third Quarter 194,740,000 134,578,000 7,577,000 .18
Fourth Quarter * 198,325,000 136,968,000 (5,768,000) (.14)
Fiscal Year 1995
First Quarter $197,939,000 $135,060,000 $13,183,000 $.31
Second Quarter 194,403,000 137,036,000 14,163,000 .34
Third Quarter 185,587,000 133,262,000 13,904,000 .33
Fourth Quarter 189,039,000 132,354,000 12,260,000 .29
Fiscal Year 1994
First Quarter $178,431,000 $121,246,000 $11,815,000 $.28
Second Quarter 177,038,000 121,386,000 12,409,000 .30
Third Quarter 166,625,000 115,253,000 12,204,000 .29
Fourth Quarter 176,944,000 119,595,000 11,754,000 .28
Note: gross profit represents net sales less cost of sales (materials)
* Includes pre-tax loss of $22,000,000 on the write-down of assets, which
decreased net income by $13,791,000, or $0.33 per share. (See Note G)
-37-
<PAGE>
Auditor's Report
Bob Evans Farms, Inc. and Subsidiaries
Report of Ernst & Young LLP, Independent Auditors
Board of Directors
Bob Evans Farms, Inc.
Columbus, Ohio
We have audited the accompanying consolidated balance sheets of Bob Evans
Farms, Inc. and subsidiaries as of April 26, 1996, and April 28, 1995, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended April 26, 1996. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Bob Evans Farms,
Inc. and subsidiaries at April 26, 1996, and April 28, 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended April 26, 1996, in conformity with generally
accepted accounting principles.
Columbus, Ohio
May 31, 1996
-38-
<PAGE>
Management's Discussion and Analysis
of Selected Financial Information
Bob Evans Farms, Inc. and Subsidiaries
Sales
Consolidated net sales for Bob Evans Farms, Inc. and subsidiaries
increased $39.7 million, or 5.2%, in 1996 compared to 1995. The increase in
net sales resulted from a $39.9 million increase in restaurant segment sales
and a $0.2 million decrease in food products segment sales. Net sales in 1995
represented a 9.7% increase over 1994 sales.
Restaurant segment sales accounted for 73.2%, 71.7% and 70.8% of total
sales for 1996, 1995 and 1994, respectively. The $39.9 million sales increase
in the restaurant segment in 1996 was due entirely to more restaurants in
operation: 390 at the end of 1996 versus 354 at the end of 1995. In 1996, the
company opened 37 new restaurants and closed one underperforming restaurant.
The new restaurants included 10 traditional Bob Evans Restaurants, 26 Bob
Evans "small-town" Restaurants and one Cantina del Rio Mexican restaurant.
This compares with 44 restaurants opened during 1995, comprised of 12
traditional Bob Evans Restaurants, 25 Bob Evans "small-town" Restaurants and
seven Cantina del Rios.
The increase in sales brought about by this expansion was partially
offset by a decrease in same-store sales for core restaurants of 1.8% in 1996.
(Core restaurants are restaurants that have been open two full years.) Severe
winter weather during the third and fourth quarters of this year was a
contributing factor to the decrease in same-store sales. In 1995, same-store
sales for core restaurants increased 3.4%.
Restaurant menus were changed at various times throughout the year to
keep the company's menus fresh, provide seasonal choices and give customers an
opportunity to try something new. Menu changes in 1996 included the addition
of items which represented nontraditional Bob Evans fare as well as various
homestyle offerings. A variety of promotional programs were implemented
throughout 1996, including a "LunchSavors" program, which offered
value-priced, lunch-sized salads and entrees before 4 p.m. during the week. No
one single menu item or program had a material impact on sales although the
company believes without the combination of these additional menu items and
promotional programs, same-store sales comparisons would have been less
favorable. For 1996, the traditional Bob Evans Restaurant menu price increase
amounted to 2.8% compared with 3.1% in 1995.
Food products segment sales accounted for 26.8%, 28.3% and 29.2% of
total sales for 1996, 1995 and 1994, respectively. The $0.2 million sales
decrease in the food products segment in 1996 was the result of a $3.0 million
increase in sausage sales and a combined $3.2 million decrease in sales at
Mrs. Giles Country Kitchens and Hickory Specialties.
The sausage sales increase was due to a 3.0% increase in comparable
pounds of sausage sold (5.0% in 1995). Additional volume increases were due to
the introduction of Snackwiches to all Bob Evans markets, expansion into the
Milwaukee and Madison, Wis., markets, and other new product introductions such
as frozen rolls and biscuits, sliced country bacon and ham steaks. New product
introductions during 1995 included Bob Evans Homestyle Chicken & Noodles and a
maple-flavored sausage product. New product introductions added additional
volume but were not significant compared with the total pounds sold in 1996 or
1995. The benchmark retail price for a one-pound roll of sausage averaged
$2.74 in 1996, $2.79 in 1995 and $2.84 in 1994.
Mrs. Giles Country Kitchens and Hickory Specialties had combined sales
of $49.1 million in 1996, $52.3 million in 1995 and $46.7 million in 1994.
These amounts represented 22.7%, 24.1% and 22.9% of total food products
segment sales in 1996, 1995 and 1994, respectively. The decreased sales in
1996 occurred in all the major product lines: salads, charcoal and
liquid-smoke flavorings. The increase in sales in 1995 was attributable to
increased sales of charcoal products at Hickory Specialties.
Cost of Sales
As a percentage of sales, the consolidated cost of sales (cost of
materials) was 30.5%, 29.9% and 31.7% in 1996, 1995 and 1994, respectively.
The restaurant segment cost of sales percentage was 26.8% in 1996, 27.0% in
1995 and 27.5% in 1994. These decreases were due mostly to various changes in
-39-
<PAGE>
product mix. The food products segment cost of sales percentage was 40.6%,
37.1% and 41.9% in 1996, 1995 and 1994, respectively. These changes were the
direct result of changes in live hog costs which averaged $36.43, $31.00 and
$39.25 per hundredweight in 1996, 1995 and 1994, respectively.
Operating Wage and Fringe Benefit Expenses
Consolidated operating wage and fringe benefit expenses were 30.7%,
29.4% and 28.8% of sales in 1996, 1995 and 1994, respectively. In the
restaurant segment, labor and fringe benefit expenses were 37.4% of sales in
1996 compared to 36.2% of sales in 1995. The increase was due primarily to
higher hourly labor costs in addition to higher health insurance costs. In the
food products segment, labor and fringe benefit expenses amounted to 12.8% of
sales in 1996 compared to 12.1% of sales in 1995. The increase was due to
higher health insurance costs as well as a decrease in the sales base at Mrs.
Giles Country Kitchens and Hickory Specialties.
Other Operating Expenses
Approximately 90% of other operating expenses were in the restaurant
segment; the most significant components of which were advertising, utilities,
repair and maintenance, restaurant supplies and taxes (other than income
taxes). Consolidated other operating expenses were 14.1%, 13.3% and 13.1% of
sales in 1996, 1995 and 1994, respectively. The increases were due mostly to
an increase in restaurant advertising expenses. Operating expenses were also
negatively impacted by increases in utilities expense and repair and
maintenance expense in the restaurant segment.
Selling, General and Administrative Expenses
As a percentage of sales, consolidated selling, general and
administrative expenses were 12.7%, 12.8% and 12.2% in 1996, 1995 and 1994,
respectively. The most significant components of selling, general and
administrative expenses were wages and fringe benefits and food products
segment promotional expenses. The increase in 1995 compared to 1994 was mainly
the result of increased management training expenses needed to support
increased restaurant openings.
Taxes
The effective federal and state income tax rates were 37.5%, 38.4% and
37.0% in 1996, 1995 and 1994, respectively. The decrease in 1996 was
attributable to the significant decrease in pre-tax income of $40.1 million,
or 46%, and decreases in state taxes. The increase in 1995 was due mostly to
an increase in state taxes. In fiscal 1997, the effective tax rate is expected
to approximate 37.5%.
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. Cash and cash equivalents totaled $14.4 million at
April 26, 1996, and $10.5 million at April 28, 1995. Dividends paid
represented 45.3% of net income in 1996 and 22.5% of net income in 1995.
Bank lines of credit were used for liquidity needs and capital expansion
during fiscal year 1996. At April 26, 1996, $59.7 million was outstanding
under such arrangements. The bank lines of credit available were increased to
$124.4 million during 1996 (compared to $63.0 million at the end of fiscal
1995) to meet liquidity and capital resource requirements anticipated because
of increased restaurant expansion. The company believes that the funds needed
for capital expenditures and working capital during 1997 will be generated
internally and from available bank lines of credit. Longer-term financing
alternatives will be evaluated by the company, especially in the event of
acquisitions.
-40-
<PAGE>
At April 26, 1996, the company had contractual commitments for
restaurant construction, plant equipment additions and land purchases of
approximately $10.0 million. Capital expenditures for 1997 are expected to
approximate $63.0 million and depreciation and amortization expenses are
expected to approximate $30.0 million. The company plans to build
approximately 25 to 30 restaurants in fiscal year 1997, as well as upgrade
various properties, plants and equipment in both segments.
-41-
<PAGE>
================================================================================
================================================================================
Management's Outlook
Bob Evans Farms, Inc. and Subsidiaries
Management is unaware of any material events or uncertainties that would
cause the reported financial information not to be indicative of future
operating results. However, various degrees of business risks are present in
both operating segments.
The restaurant segment is continually impacted by an intensely
competitive environment. Competition from quick-service restaurants and casual
dining restaurants as well as the family style category in which traditional
Bob Evans Restaurants and "small-town" Bob Evans Restaurants operate has been
greater than ever. Increased numbers of restaurants, in all categories, have
provided more options for the consumer and have tended to suppress the
industry's same-store sales. Same-store sales for Bob Evans Restaurants
decreased 1.8% in fiscal 1996. This impact on sales and corresponding profit
margins is significant. Continued sales declines in the future would put
continued pressure on restaurant profit margins. To combat same-store sales
declines, the company has begun initiatives with menu development, improved
service steps and a fresh advertising approach.
Management is continually evaluating all restaurants and restaurant
concepts for under-performing restaurants or restaurant concepts. In fiscal
1996, the company closed one restaurant. Depending on profitability, as well
as changes in market conditions, the company may close other restaurants in
fiscal 1997. In May 1996, four restaurants were closed due to
less-than-desired performance.
Competition for qualified labor was intense in 1996, and is expected to
continue in fiscal 1997, as unemployment remains historically low in most of
the company's marketing area. Increases in the federally mandated minimum wage
base will tend to increase restaurant labor costs and correspondingly decrease
operating margins.
Plans are to add approximately 25 to 30 new restaurants in 1997. This
projected growth will be slower than the 37 restaurants and 44 restaurants
opened in fiscal 1996 and fiscal 1995, respectively. Availability of sites and
weather conditions add uncertainty to restaurant expansion.
In the food products segment, uncertainties in fiscal 1997 include the
cyclical nature of the live hog market and its effect on profitability as well
as consumer acceptance of new items. Planned product introductions and
expansions in fiscal 1997 include a continued roll-out of frozen dinner rolls
and biscuits, various sausage products and a line of frozen dinner entrees,
scheduled for test marketing in the fall of 1996.
Various risks and uncertainties are present in both operating segments.
Food safety is an issue of top priority: risk of food contamination is an
exposure at the company's restaurants and with its food products. Continued
emphasis with quality control programs, such as the HACCP (Hazard Analysis of
Critical Control Points) program, limits the company's exposure. Increased
governmental initiatives at the local, state and federal level tend to
increase costs and present challenges to management in both segments of the
business. Other uncertainties, such as the general economy, weather and
consumers' changing life-styles and eating habits impose various degrees of
risk on our business.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995
The statements contained in this report which are not historical in fact
are "forward-looking statements" that involve various important assumptions,
risks, uncertainties and other factors which could cause the company's actual
results for 1997 and beyond to differ materially from those expressed in such
forward-looking statements. These important factors include, without
limitation, the assumptions, risks and uncertainties set forth above in
"Management's Outlook," as well as other assumptions, risks, uncertainties and
factors previously disclosed in this report and the company's securities
filings.
-42-
BOB EVANS FARMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED APRIL 26, 1996
INDEX TO EXHIBITS
Exhibit
Number Description Location
3(a) Certificate of Incorporation Incorporated herein
of the Registrant by reference to
Exhibit 3 (a) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 24, 1987
(File No. 0-1667)
3(b) Certificate of Amendment of Incorporated herein
Certificate of Incorporation by reference to
of the Registrant dated Aug. 26, 1987 Exhibit 3(b) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 28, 1989
(File No. 0-1667)
3(c) Certificate of Adoption Incorporated herein
of Amendment to by reference to
Certificate of Incorporation Exhibit 3(c) to the
of the Registrant Registrant's Annual
dated Aug. 9, 1993 Report on Form 10-K
for its fiscal year
ended April 29, 1994
(File No. 0-1667)
3(d) Restated Certificate of Incorporated herein
Incorporation of Registrant by reference to
Exhibit 3(d) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 29, 1994
(File No. 0-1667)
3(e) By-Laws of the Registrant Incorporated herein
by reference to
Exhibit 3(c) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 24, 1987
(File No. 0-1667)
-58-
<PAGE>
10(a) Restated Bob Evans Farms, Inc. Incorporated herein
and Affiliates 401K by reference to
Retirement Plan Exhibit 10(a) to the
(effective Jan. 1, 1994, Registrant's Annual
except as otherwise provided) Report on Form 10-K
for the fiscal year
ended April 28, 1995
(File No. 0-1667)
10(b) Amendment No. 1 Page 62
to the Bob Evans Farms, Inc.
and Affiliates 401K
Retirement Plan
10(c) Bob Evans Farms, Inc. and Incorporated herein
Affiliates 401K by reference to
Retirement Plan Trust Exhibit 4(f) to the
(effective May 1, 1990) Registrant's Pre-
Effective
Amendment
No. 1 to Form S-8
Registration
Statement, filed
April 27, 1990
(Registration No.
33-34149)
10(d) Bob Evans Farms, Inc. Incorporated herein
1987 Incentive Stock by reference to
Option Plan Exhibit 4(a) to the
Registrant's
Registration
Statement on
Form S-8, filed
Oct. 19, 1987
(Registration No.
33-17978)
10(e) Agreement, dated Incorporated herein by
Feb. 24, 1989, reference to Exhibit
between Daniel E. Evans 10(g) to the Registrant's
and Bob Evans Farms, Annual Report on Form
Inc.; and, Schedule A to 10-K for its fiscal year
Exhibit 10(e) identifying ended April 28, 1989
other substantially (File No. 0-1667);
identical Agreements Page 68
between Bob Evans Farms,
Inc. and certain of the
executive officers of Bob
Evans Farms, Inc.
-59-
<PAGE>
10(f) Bob Evans Farms, Inc. Incorporated herein
1989 Stock Option Plan by reference to
for Nonemployee Exhibit 4(d) to the
Directors Registrant's Regis-
tration Statement on
Form S-8, filed
Aug. 23, 1989
(Registration No.
33-30665)
10(g) Bob Evans Farms, Inc. Incorporated herein
1991 Incentive Stock by reference to
Option Plan Exhibit 4(d) to the
Registrant's Regis-
tration Statement on
Form S-8, filed
Sept. 13, 1991
(Registration No.
33-42778)
10(h) Bob Evans Farms, Inc. Incorporated herein
Supplemental Executive by reference to
Retirement Plan Exhibit 10(i) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 24, 1992
(File No. 0-1667)
10(i) Bob Evans Farms, Inc. Incorporated herein
Nonqualified Stock Option by reference to
Plan Exhibit 10(j) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 24, 1992
(File No. 0-1667)
10(j) Bob Evans Farms, Inc. Incorporated herein
Long Term Incentive Plan by reference to
for Managers Exhibit 10(k) to the
Registrant's Annual
Report on Form 10-K
for its fiscal year
ended April 30, 1993
(File No. 0-1667)
10(k) Bob Evans Farms, Inc. Incorporated herein
1994 Long Term Incentive Plan by reference to
Exhibit 10(n) to the
Registrant's Annual
Report on Form 10-K
for the fiscal year
ended April 29, 1994
(File No. 0-1667)
-60-
<PAGE>
11 Computation of Earnings Per Page 71
Share
13 Registrant's Annual Report to Page 26
Stockholders for the fiscal
year ended April 26, 1996 (Not
deemed filed except for
portions thereof which are
specifically incorporated by
reference into this Annual
Report on Form 10-K)
21 Subsidiaries of the Registrant Page 72
23 Consent of Ernst & Young, LLP Page 73
27 Financial Data Schedule Page 74
-61-
EXHIBIT 10(b)
AMENDMENT NO. 1
TO THE
BOB EVANS FARMS, INC.
AND AFFILIATES
401K RETIREMENT PLAN
-62-
<PAGE>
WHEREAS, Bob Evans Farms, Inc. ("Employer") has adopted the Bob
Evans Farms, Inc. and Affiliates 401K Retirement Plan ("Plan"); and
WHEREAS, the Plan provides that the Employer may amend the Plan
from time to time; and
WHEREAS, the Employer desires to amend the Plan in certain
respects;
NOW, THEREFORE, the Plan is amended as follows:
1. The definition of "Entry Date" contained in Article I shall be
deleted in its entirety and the following shall be substituted therefor:
"Entry Date
'Entry Date' means the first business day following the
15th day of each month during the Plan Year."
2. The definition of "Valuation Date" contained in Article I shall
be deleted in its entirety and the following shall be substituted therefor:
"Valuation Date
'Valuation Date' means the last day of each month during the Plan
Year, or more frequently if determined to be necessary by the
Committee."
3. Section 2.01 shall be amended by deleting the second
paragraph in its entirety and by substituting the following therefor:
"To be eligible to make Participant deferrals, a Participant must enroll
with the Plan's record keeper and agree to make contributions to the
Plan, authorize the Employer to withhold such contributions from his
Compensation and pay the same to the Trustee and designate a
Beneficiary. An Employee who declines to make Participant deferrals at
the time when he is initially eligible shall be a Participant for all
-63-
<PAGE>
other purposes of the Plan and may elect to make Participant deferrals
effective as of the first day of the payroll period beginning on or
after the 15th day of any succeeding calendar month, provided the
Employee enrolls with the Plan record keeper within the time period
required by the Committee."
4. Section 3.01 shall be deleted in its entirety and the
following shall be substituted therefor:
"3.01. Contribution of Participant Deferrals
(a) Each Participant may elect for each Plan Year to defer a
portion of his Compensation, not to exceed the lesser of 15% of such
Compensation or the maximum amount permitted under Section 402(g) of the
Code, taking into account elective deferrals made under other qualified
cash or deferred arrangements in which the Participant participates, and
have such deferred amount contributed by the Employer to his Employee
Deferral Account.
(b) A Participant's election to make Participant deferrals shall
be effective as of the date on which the Participant enrolls with the
Plan's record keeper.
(c) A Participant's Participant deferral percentage will remain in
effect, notwithstanding any change in his Compensation, until he elects
to change such percentage. As of the first day of the payroll period
beginning on or after the 1st day of any calendar month, a Participant
may elect to change his deferral percentage, provided such election is
made with the Plan's record keeper within the time prescribed by the
Committee. A Participant who has elected a deferral percentage for a
prior calendar month who fails to change such percentage for a
subsequent calendar month shall be deemed to have kept his prior
deferral percentage in effect for such subsequent calendar month.
A Participant may suspend his Participant deferrals at any time
during a Plan Year, provided he notifies the Plan's record keeper in the
manner and within the time prescribed by the Committee. A Participant
who suspends his Participant deferrals shall be referred to as an
Inactive Participant and shall be ineligible to rejoin the Plan until
such time as he again elects to resume his Participant deferrals.
(d) Participant deferrals under this section shall be made by
payroll deductions authorized by the Participant and shall be
contributed to the Plan by the Employer. Participant deferrals
constitute Employer contributions under the Plan and are intended to
qualify as elective contributions under Code Section 401(k). Amounts
-64-
<PAGE>
allocated to a Participant's Employee Deferral Account shall be fully
vested in such Participant and nonforfeitable at all times. The
salary-deferral arrangement of this Plan and any other plans of the
Employer [which include a cash or deferred arrangement under Section
401(k) of the Code and which are considered one plan for purposes of
Section 401(a)(4) or Section 410(b) of the Code] shall be treated as one
salary-deferral arrangement for purposes of applying the provisions of
this Article III.
(e) In the event a Participant notifies the Committee in writing
by any March 1 that, with respect to the previous calendar year, such
Participant has made elective Participant deferrals in excess of the
maximum amount permitted under Section 402(g)(5) of the Code for such
calendar year (taking into account for this purpose the aggregate salary
deferrals made by the Participant to all qualified cash or deferred
arrangements in which he participates), then the Committee shall return
to such Participant by the next following April 15 the amount specified
in such written notification of his Participant deferral contributions
to the Plan during the previous calendar year, together with allocable
earnings thereon. In the event that Participant's elective deferrals
exceed the maximum amount permitted under Section 402(g)(5) as a result
of deferrals which arise solely from deferrals made to this Plan and
other plans sponsored by the Employer and its Affiliates, the Committee
shall return any excess deferrals to such Participant by the April 15
following the end of the Plan Year in which such excess deferrals
occurred. No notice is required pursuant to this paragraph (e) with
respect to excess Participant deferrals which arise solely from
deferrals made to this Plan and other plans sponsored by the Employer
and its Affiliates.
(f) Notwithstanding any provision contained herein, to the extent
that, during any payroll period, the total payroll deductions elected by
a Participant [including any payroll deductions under Section 401(k) and
125 of the Code] exceed the amount payable to such Participant which is
subject to income tax withholding, then no payroll deductions shall be
made for such payroll period. Therefore, in such a case, no Participant
deferrals shall be made to the Plan on behalf of such Participant for
such payroll period."
5. Effective January 1, 1996, paragraph (c) of Section 3.02 shall
be deleted in its entirety and the following shall be substituted therefor:
"(c) Matching Contributions. Each Plan Year, the Employer may make
a matching contribution to the Plan on behalf of each Participant who
makes Participant deferrals pursuant to Section 3.01. The amount of this
matching contribution, if any, shall be determined in the discretion of
the Board of Directors of the Employer. Contributions made pursuant to
-65-
<PAGE>
this paragraph shall be allocated to the Employer Matching Contributions
Account of Participants who both (i) made Participant deferrals during
the Plan Year for which such matching contribution is made by the
Employer; and (ii) are employed by the Employer or an Affiliate on the
last day of such Plan Year. Any amounts contributed by the Employer
pursuant to this paragraph shall be paid on an annual basis to the
Trustee."
6. Section 4.03 shall be deleted in its entirety and the
following shall be substituted therefor:
"4.03. Allocation of Net Gains or Losses; Crediting of Accounts
As of each Valuation Date, the fair market value of the Trust Fund
shall be determined in accordance with Section 5.04. The net increase
or decrease in such values resulting from the investment of the assets
therein and from administrative expenses charged to the Trust Fund, if
any, pursuant to Section 8.07 shall be apportioned to each
Participant's Account in proportion to the value thereof as of the last
preceding Valuation Date."
7. Sections 5.02 and 5.03 shall be deleted in their entirety
and the following shall be substituted therefor:
"5.02. Investment Fund Options
The Committee shall establish and maintain one or more Investment
Funds for the investment of Participant contributions under the Plan.
Each sum credited to a Participant's Employee Deferral Account and
Rollover Account shall be invested in such Investment Funds by the
Trustee pursuant to directions received by the Committee through the
Plan's record keeper from the Participant. Rules and regulations
relating to Participant investment directions, including, but not
limited to, the manner in which such directions shall be given, the
frequency with which such directions may be given and the minimum
percentage of a Participant's Account that may be invested in a
particular Investment Fund, shall be determined, from time to time, by
the Committee.
-66-
<PAGE>
5.03. Investment of Employer Contributions
Amounts credited to the Employer Profit Sharing Contributions
Accounts of all Participants shall be invested by the Trustee in
accordance with the provisions of the Trust Agreement. Amounts credited
to the Base Contributions Accounts and the Employer Matching
Contributions Accounts of all Participants shall be invested by the
Trustee in the Investment Funds designated by the Committee."
8. Section 6.01 shall be amended by changing the reference to
"Section 3.01(f)" in the first line of such section to "Section 3.01(e)".
9. Section 6.02 shall be amended by adding "(through the Plan's
record keeper)" after the word Committee in the first line thereof.
10. Article VI shall be further amended by re-designating Section
6.03 as Section 6.04 and by adding a new Section 6.03 to read as follows:
"6.03. Distribution of Rollover Contributions
A Participant may withdraw from the Trust Fund, as of any
Valuation Date, all of his Rollover Account or any portion thereof which
would not reduce the amount in such Account to less than $500. Upon
receipt of a request for withdrawal of a portion of such Rollover
Account which would reduce it to less than $500, the Trustee will
distribute the entire amount of the Participant's Rollover Account."
IN WITNESS WHEREOF, the undersigned has executed this amendment
effective as of July 1, 1996, unless otherwise specifically stated herein.
BOB EVANS FARMS, INC.
By: /s/ R. Lindsay Borden
____________________________________
Title: Vice President, Administration
Benefits & Risk Management
Date: July 23, 1996
-67-
<PAGE>
Schedule A
to
Exhibit 10(e)
Agreements between Bob Evans Farms, Inc. and certain
of the executive officers of Bob Evans Farms, Inc.
substantially identical to Agreement, dated February 24,
1989, between Daniel E. Evans and Bob Evans Farms, Inc.
-68-
<PAGE>
On the dates indicated below, Bob Evans Farms, Inc. (the "Registrant")
entered into Agreements with the executive officers of the Registrant
identified below, which Agreements are substantially identical to the
Agreement, dated February 24, 1989, between the Registrant and Daniel E.
Evans, Chairman of the Board, Chief Executive Officer and Secretary of the
Registrant, a copy of which was included as Exhibit 10(g) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended April 28, 1989 and has
been incorporated into Exhibit 10(e) to the Registrant's Annual Report on Form
10-K for the fiscal year ended April 26, 1996 (the "1996 Form 10-K") by
reference. Each of the Agreements had an initial term of approximately one
year (which was, and will continue to be, automatically extended for one-year
periods unless either party gives notice of his, her or its decision not to
renew).
In accordance with Rule 12b-31 promulgated under the Securities Exchange
Act of 1934 and Item 601(b)(10)(iii) of Regulation S-K, the following table
identifies those executive officers of the Registrant with whom the Registrant
has entered into Agreements similar to that included as Exhibit 10(e) to the
1996 Form 10-K:
Date of Original Current Offices Held
Name Agreement with the Registrant
_______________________ ________________________ __________________________
Donald J. Radkoski February 24, 1989 Group Vice President
- Finance Group,
Treasurer and Chief
Financial Officer
-69-
<PAGE>
Stewart K. Owens February 24, 1989 President and Chief
Operating Officer
Larry C. Corbin February 24, 1989 Executive Vice
President - Restaurant
Operations Group
Roger D. Williams February 24, 1989 Executive Vice
President - Food
Products/Marketing/
Purchasing/Technical
Services Group
Howard J. Berrey February 24, 1989 Group Vice President -
Real Estate/
Construction &
Engineering Group
James B. Radebaugh June 12, 1990 Group Vice President -
Administration & Human
Resources Group
Joseph B. Crace July 21, 1992 Group Vice President -
Specialty Products &
Business Development
Group
Mary L. Cusick September 5, 1990 Vice President -
Corporate Communications
-70-
Exhibit 11
Computation of Earnings per Share
Bob Evans Farms, Inc.
Year ended
------------------------------------
April 26, April 28, April 29,
1996 1995 1994
========================================
Weighted average number of shares
outstanding during the year used in
computation of net income per share 42,311,442 42,179,130 42,006,453
Net effect of dilutive stock options
based on treasury stock method
using average market price 126,582 284,582 267,676
----------------------------------------
Number of shares for computation of
primary net income per share 42,438,024 43,463,712 42,274,129
Net additional shares added to above
based on treasury stock method
using the year-end market price,
if higher than average market price -- -- 47,612
----------------------------------------
Number of shares for computations of
fully diluted net income per share 42,438,024 42,463,712 42,321,741
----------------------------------------
Net income $29,216,000 $53,510,000 $48,182,000
----------------------------------------
Net income per share $0.69 $1.27 $1.15
Primary net income per share (1) $0.69 $1.26 $1.14
Fully diluted net income per share (1) $0.69 $1.26 $1.14
Notes:
(1) The effect on net income per share assuming full dilution was less than
3% for all years and therefore has not been reflected in the Consolidated
Statements of Income.
-71-
Exhibit 21
SUBSIDIARIES OF BOB EVANS FARMS, INC.
State or Other Jurisdiction of
Name Incorporation or Organization
__________________________________ ______________________________
BEF Holding Co., Inc. ............................... Delaware
Bob Evans Farms, Inc. ............................... Ohio
Owens Country Sausage, Inc. ......................... Texas
Mrs. Giles Country Kitchens, Inc. ................... Ohio
Hickory Specialties, Inc. ........................... Tennessee
BEF Aviation Co., Inc. .............................. Ohio
BEF RE Holding Co., Inc. ............................ Delaware
BEF REIT, Inc. ...................................... Ohio
-72-
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Bob Evans Farms, Inc. of our report dated May 31, 1996, included in the
1996 Annual Report to Stockholders of Bob Evans Farms, Inc..
We also consent to the incorporation by reference of our report dated May 31,
1996, with respect to the consolidated financial statements incorporated
herein by reference in the following Registration Statements:
o Form S-8 No. 33-17978 -- 1987 Incentive Stock Option Plan
o Form S-8 No. 33-30665 -- 1989 Stock Option Plan for Nonemployee
Directors
o Form S-8 No. 33-34149 -- 401K Retirement Plan
o Form S-8 No. 33-42778 -- 1991 Incentive Stock Option Plan
o Form S-8 No. 33-53166 -- Nonqualified Stock Option Plan
o Form S-8 No. 33-69022 -- Long Term Incentive Plan for Managers
o Form S-8 No. 33-55269 -- 1994 Long Term Incentive Plan
o Form S-3 No. 33-58443 -- Dividend Reinvestment and Stock Purchase
Plan
Ernst & Young LLP
Columbus, Ohio
July 19, 1996
-73-
<TABLE> <S> <C>
<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-K
FOR THE PERIOD ENDED APRIL 26, 1996.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-26-1996
<PERIOD-START> APR-29-1995
<PERIOD-END> APR-26-1996
<EXCHANGE-RATE> 1
<CASH> 14,369
<SECURITIES> 0
<RECEIVABLES> 14,509
<ALLOWANCES> 0
<INVENTORY> 20,876
<CURRENT-ASSETS> 58,899
<PP&E> 646,849
<DEPRECIATION> 199,606
<TOTAL-ASSETS> 535,813
<CURRENT-LIABILITIES> 116,431
<BONDS> 0
0
60
<COMMON> 426
<OTHER-SE> 408,669
<TOTAL-LIABILITY-AND-EQUITY> 535,813
<SALES> 806,627
<TOTAL-REVENUES> 806,819
<CGS> 246,020
<TOTAL-COSTS> 635,453
<OTHER-EXPENSES> 22,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 46,745
<INCOME-TAX> 17,529
<INCOME-CONTINUING> 29,216
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,216
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
</TABLE>
