<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended April 25, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ____________________
Commission File Number 0-1667
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 79 pages of which this is page 1. The Exhibit Index begins
at page 69.
<PAGE> 2
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 and non-voting common equity held
by non-affiliates of the registrant. The aggregate market value has been
computed by reference to the last quoted sale price of the registrant's common
stock (the only common equity), as of July 11, 1997.
<TABLE>
<S> <C>
Total shares outstanding 41,579,041
Number of shares owned beneficially and/or of record by directors 1,217,697
and executive officers*
Number of shares held by persons other than directors and executive 40,361,344
officers
Last quoted sale price $17.50
Market value of shares held by persons other than directors and $706,323,520
executive officers
<FN>
*For purposes of this computation, all executive officers and directors are
included, although not all are necessarily "affiliates."
</TABLE>
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
41,579,041 shares of common stock with $.01 par value were outstanding at July
11, 1997.
<TABLE>
<CAPTION>
DOCUMENTS INCORPORATED BY REFERENCE
<S> <C> <C>
1. Annual report to stockholders for the fiscal year ended
April 25, 1997 (in pertinent part, as indicated) . . . . . . . . . PART II.
2. Proxy statement dated Aug. 1, 1997, for the annual
meeting of stockholders to be held on Sept. 8, 1997
(in pertinent part, as indicated) . . . . . . . . . . . . . . . . PART III.
</TABLE>
2
<PAGE> 3
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. ("RE Holding") 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.
On April 26, 1997, Bob Evans Restaurants, Inc. ("Restaurants"), which was
incorporated on April 23, 1997, became a wholly owned subsidiary of BEF Ohio and
RE Holding became a wholly owned subsidiary of Restaurants. The registrant; BEF
Holding Co., Inc.; RE Holding; BEF REIT, Inc.; BEF Ohio; Restaurants; 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
restaurant segment and the food products segment.
RESTAURANT SEGMENT OPERATIONS
- -----------------------------
General
- -------
The company operates full-service, family restaurants under the Bob Evans
Restaurants, Bob Evans Restaurant & General Stores and Owens Family Restaurants
names. The Restaurant & General Stores feature a combined restaurant and gift
shop.
All of the company's family restaurants feature a wide variety of homestyle 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 62% 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 40% of
a typical week's revenues.
The company's 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.
3
<PAGE> 4
RESTAURANTS IN OPERATION AT APRIL 25, 1997
<TABLE>
<CAPTION>
--------------------- --------------- ------------ ---------- ---------------
Traditional General Owens Total
Stores Restaurants
--------------------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C>
Delaware 4 4
--------------------- --------------- ------------ ---------- ---------------
Florida 24 1 25
--------------------- --------------- ------------ ---------- ---------------
Illinois 17 17
--------------------- --------------- ------------ ---------- ---------------
Indiana 48 48
--------------------- --------------- ------------ ---------- ---------------
Iowa 1 1
--------------------- --------------- ------------ ---------- ---------------
Kentucky 14 14
--------------------- --------------- ------------ ---------- ---------------
Maryland 11 11
--------------------- --------------- ------------ ---------- ---------------
Michigan 36 36
--------------------- --------------- ------------ ---------- ---------------
Missouri 10 1 11
--------------------- --------------- ------------ ---------- ---------------
New Jersey 1 1
--------------------- --------------- ------------ ---------- ---------------
New York 13 13
--------------------- --------------- ------------ ---------- ---------------
Ohio 142 1 143
--------------------- --------------- ------------ ---------- ---------------
Pennsylvania 24 1 25
--------------------- --------------- ------------ ---------- ---------------
South Carolina 1 1
--------------------- --------------- ------------ ---------- ---------------
Tennessee 4 1 5
--------------------- --------------- ------------ ---------- ---------------
Texas 13 13
--------------------- --------------- ------------ ---------- ---------------
Virginia 10 10
--------------------- --------------- ------------ ---------- ---------------
West Virginia 15 1 16
--------------------- --------------- ------------ ---------- ---------------
TOTAL 374 7 13 394
--------------------- --------------- ------------ ---------- ---------------
</TABLE>
During the company's 1997 fiscal year, 23 restaurants were opened, the majority
of which 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 or a change in access or building
safety. During the 1997 fiscal year, the company closed its 15 Cantina del Rio
Mexican restaurants because of the concept's lower-than-expected performance. In
addition, three Bob Evans Restaurants were closed in Seminole, Searstown and
Tampa, Fla., and one Bob Evans Restaurant & General Store was closed in
Williamsburg, Va., due to their inability to perform to company expectations.
The company has typically opened restaurants in areas where a strong consumer
awareness and acceptance of 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 25 restaurants and one restaurant, respectively, but does
not have sausage distribution. Additionally, during fiscal 1998, the company
will build its first Bob Evans Restaurant in North Carolina, where sausage is
currently not distributed.
4
<PAGE> 5
Seasonality
- -----------
Certain restaurant locations, which are near major interstate highways,
experience increased revenues during the summer travel season.
Competition
- -----------
The company's 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. The company's 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
historically 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 1997 fiscal year, and the company does not expect
food costs to fluctuate significantly during its 1998 fiscal year.
Advertising
- -----------
The company spent approximately $25,749,000 in the restaurant segment for
advertising during its 1997 fiscal year. Seventy-seven percent of the
advertising dollars were spent on television, radio, print and outdoor
advertising. The remaining dollars were spent primarily on the in-store
promotion of programs such as Breakfast Breaks and LunchSavors. These programs
were developed to increase sales during the weekday via variety, speed and value
pricing. The company has typically not used coupons, except in certain outlying
markets where it is attempting to gain new customer trial.
Carryout Business
- -----------------
During fiscal 1997, carryout business in the company's restaurants accounted for
3% 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 1997, the company reduced the number of items on
its menu to focus on premium, homestyle offerings. Product development has been
concentrated on new and unique homestyle options, as well as quality
enhancements to some of the company's best-selling items. The company's
Breakfast Breaks and LunchSavors programs, designed to drive weekday sales,
continue to be refreshed to maintain the program's success. Research and
development expenses, to date, have not been material.
5
<PAGE> 6
Restaurant Expansion
- --------------------
The company plans to build and open approximately 20 new restaurants during the
1998 fiscal year, divided somewhat equally between urban areas and small towns.
New restaurants will have either 167 seats, the company's traditional
restaurant; or 129 seats, the new prototype for locations with smaller
populations. The company will not build additional "small-town" restaurants of
97 seats, as the 129-seat design is expected to be more efficient. In fact,
20 of the "small-town" restaurants have been expanded to better meet customer
and company expectations. Future restaurant growth 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 areas,
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
operations of the restaurant segment of the company are not dependent upon any
patents, franchises or concessions.
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 35 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 devoted 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
has a frozen foods division which creates new points of distribution and
marketing strategies for its new frozen food products.
6
<PAGE> 7
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 1997 fiscal year, the company introduced a
new Snackwich product, mini-hotcakes with a maple sausage patty. In the frozen
foods division, distribution of frozen white dinner rolls and buttermilk
biscuits was expanded to most Bob Evans markets. Additionally, in the fall of
1996 eight frozen Homestyle Recipe Entrees were introduced in Cleveland. Because
of favorable customer acceptance, the products were then expanded to Cincinnati
and Columbus, Ohio, and Buffalo and Rochester, N.Y., during the spring of 1997.
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, tuna salad, classic cole slaw, pimento cheese
spread and smokehouse baked beans. The deli items manufactured by Mrs. Giles are
distributed principally in the southern and southeastern markets of the United
States under the grocer's name or Mrs. Giles and Mrs. Kinser's brand names.
Co-branded Mrs. Kinser's/Bob Evans salads are currently being marketed in more
than half of the Bob Evans marketing areas.
Through Hickory Specialties, the company is also involved in food-related
products which complement its existing food products business. Hickory
Specialties produces premium-quality charcoal and liquid smoke flavorings. Brand
names produced by the company include Nature-Glo, Old Hickory, Jack Daniels,
Zesti Smoke, Wildfire Gourmet Hickory Charcoal and Woodstone Gas Grill
Briquettes. 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 1997 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 margins that branded items do, it
gives the company 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 1998 fiscal year. The company is also
marketing its prepared salad products to institutional and foodservice
customers.
7
<PAGE> 8
<TABLE>
<CAPTION>
% of Food Products Segment Revenues
FISCAL YEAR ENDED
------------------------------------------------------------------------
APRIL 25, 1997 APRIL 26, 1996 APRIL 28, 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Sales of Bob Evans 57% 56% 54%
Products
Sales of Owens 20% 21% 22%
Country Sausage
Products
Sales of Mrs. Giles 9% 10% 11%
Salad Products
Sales of Hickory 14% 13% 13%
Specialties Products
</TABLE>
The company's pork sausage and ham products are produced in the company's six
processing plants located in Xenia, Bidwell and Springfield, Ohio; Hillsdale,
Mich.; Galva, Ill.; and Richardson, Texas. The Springfield, Ohio, and Hillsdale,
Mich., plants are producing the products for sale to foodservice distributors.
Live hogs are procured from terminals; local auctions and country markets; and
corporate and family 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 and farms
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, Va. 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.
8
<PAGE> 9
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. Liquid smoke and charcoal briquets
complement each other by utilizing common raw material sources which are wood
waste materials generated by a variety of wood processing industries. 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 products:
(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 brand name. One
hundred three 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 1997 fiscal year, the company continued to test alternate
distribution methods for its sausage products, and as a result, Bob
Evans brand products are available through a warehouse in the Greater
New York City area and upstate New York, and a distributor in Madison
and Milwaukee, Wis., on a limited basis. A warehouse is also used for
the frozen foods division which was established during fiscal 1996.
The marketing territory for Bob Evans brand products as well as the Bob
Evans/Mrs. Kinser's Salads includes Ohio, Michigan, Indiana, Illinois, Maryland,
Delaware and the District of Columbia, as well as portions of New Jersey, New
York, Iowa, Mississippi, Pennsylvania, Missouri, Tennessee, Georgia, Alabama,
Virginia, Kentucky, West Virginia and Wisconsin.
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.
9
<PAGE> 10
Distribution to the company's foodservice customers is accomplished through food
brokers and distributors.
Mrs. Giles and Mrs. Kinser's 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 and Mrs. Kinser's salad products includes
Alabama, Florida, Georgia, Kentucky, Louisiana, Maryland, North Carolina,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Mississippi, New York,
District of Columbia and New Jersey.
Hickory Specialties charcoal products are distributed nationwide to grocery
stores, mass merchandisers and foodservice distributors, 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.
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 Mrs. Kinser's/Bob Evans 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 food products, the
company's processing plants normally process only enough product to fill
existing orders. Therefore, the company maintains minimal inventory levels of
sausage and 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 processing.
Hickory Specialties products are not perishable in nature. Although such
products are manufactured throughout the year, the highest level of production
of charcoal briquettes occurs in the winter months in anticipation of the peak
selling season for charcoal from April through September.
10
<PAGE> 11
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 such
competitors have substantially greater financial resources and higher volumes of
total sales than the company. 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.
The salad products business is also highly competitive. Further, it is 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. 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. 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.
11
<PAGE> 12
The company is aware of only one major competitor, Red Arrow Products Co., Inc.,
in its liquid smoke flavoring business. The company believes that Hickory
Specialties' liquid smoke products account for a majority of the liquid smoke
flavorings produced and sold in the United States.
Advertising
- -----------
During the 1997 fiscal year, the company spent approximately $10,389,000 for
advertising of its sausage and salad products, and approximately $703,000 for
advertising of its charcoal and liquid smoke flavoring products. Approximately
85% of these amounts was spent on television, radio and newspaper media. The
remaining 15% 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.
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 60 days on its charcoal products. The company has
not experienced any significant bad debt problems, nor has the return of aged
product had a significant 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 wood waste materials generated in a variety of
wood processing industries. 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.
12
<PAGE> 13
Expansion of Distribution Area
- ------------------------------
During fiscal year 1997, the company introduced a line of Bob Evans frozen
dinner entrees in parts of Ohio and New York. Distribution of frozen dinner
rolls and buttermilk biscuits was expanded to parts of Indiana, Michigan and
Pennsylvania.
The company has no current plans for further geographic expansion of its
distribution area for Bob Evans Sausage, Owens Country Sausage, Mrs. Giles salad
products or the charcoal and liquid smoke flavoring products manufactured by
Hickory Specialties in the 1998 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 1997 fiscal year, the company experienced
higher-than-normal live hog costs. The company expects live hog costs to remain
moderate-to-high during the next 12 months.
EMPLOYEES
- ---------
The company had in its employment 27,457 persons in the restaurant segment and
1,918 persons in the food products segment as of April 25, 1997.
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.
13
<PAGE> 14
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:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
April 25, April 26, April 28,
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Sales:
- ------
Intersegment Sales of
Food Products: $ 36,769,000 $ 36,638,000 $ 31,277,000
Food Products (excluding
intersegment sales): 227,241,000 216,564,000 216,759,000
Restaurant Operations: 594,914,000 590,063,000 550,209,000
Operating Profit:
- -----------------
Food Products: 6,908,000 17,169,000 26,726,000
Restaurant Operations: 50,892,000 29,384,000 60,135,000
Identifiable Assets:
- --------------------
Food Products: 113,875,000 112,091,000 89,980,000
Restaurant Operations: 431,332,000 403,029,000 388,083,000
</TABLE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
- --------------------------------------------------------------------------------
The statements contained in this Form 10-K which are not historical fact are
"forward-looking statements" that involve various important assumptions, risks,
uncertainties and other factors which could cause the company's actual results
for 1998 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 under the caption
"Management's Discussion of Risk Factors," at page 35 of the registrant's annual
report to stockholders for the fiscal year ended April 25, 1997, as well as
other assumptions, risks, uncertainties and factors previously disclosed in this
Form 10-K, the company's securities filings and press releases.
14
<PAGE> 15
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 support the
company's heritage and image through educational and recreational tourist
activities.
RESTAURANT SEGMENT
- ------------------
Of the 394 restaurants operated by the company, 343 are owned in fee and 51 are
leased from unaffiliated persons. All lease agreements contain either multiple
renewal options or options to purchase.
FOOD PRODUCTS SEGMENT
- ---------------------
The food products segment has six sausage manufacturing plants -- three in Ohio;
and one each in Texas, Michigan and Illinois; one prepared salads manufacturing
plant in Virginia; one charcoal/liquid smoke manufacturing plant in each of
Tennessee and Kentucky; and one liquid smoke manufacturing plant in 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.
ITEM 3. LEGAL PROCEEDINGS.
------------------
There are no pending legal proceedings to which the company or any of its
subsidiaries is a party or to which any of their respective properties are
subject, except routine legal proceedings to which they are parties incident to
their respective businesses. None of such proceedings are considered by the
company to be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
Not applicable.
15
<PAGE> 16
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.
<TABLE>
<CAPTION>
Name, Age and Position with the
Registrant; Period of Service as an Officer Principal Occupations for Past Five Years and
of the Registrant Other Information
- ------------------------------------------- ---------------------------------------------
<S> <C>
Daniel E. Evans, age 60; Chairman of the Board, Chairman of the Board, Chief Executive Officer and
Chief Executive Officer, Secretary and a Director Secretary since 1971 of the registrant.
of the registrant; 41 years as an officer of the
registrant.
Donald J. Radkoski, age 42, Group Vice President - Group Vice President - Finance Group since 1994,
Finance Group, Treasurer and Chief Financial Treasurer and Chief Financial Officer since 1993,
Officer of the registrant; nine years as an officer Senior Vice President in 1993, Vice President of
of the registrant. Finance and Assistant Treasurer from 1989 to 1993,
and Assistant Treasurer from 1988 to 1989, of the
registrant.
Stewart K. Owens, age 42; President, Chief President and Chief Operating Officer since 1995,
Operating Officer and a Director of the registrant; Executive Vice President and Chief Operating
seven years as an officer of the registrant. Officer from 1994 to 1995, and Group Vice President -
Food Products Group from 1990 to 1993, in each case of
the registrant. President and Chief Operating Officer
of Owens Country Sausage, Inc., a subsidiary of the
registrant, from 1984 to 1996.
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
Larry C. Corbin, age 55; Executive Vice President - Executive Vice President - Restaurant Division
Restaurant Division and a Director of the since 1995, Senior Group Vice President -
registrant; 29 years as an officer of the Restaurant Operations Group from 1994 to 1995,
registrant. Group Vice President - Business Development from
1990 to 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 46; Executive Vice President Executive Vice President - Food Products Division
- - Food Products Division of the registrant; 17 since 1997, Executive Vice President - Food
years as an officer of the registrant. Products/Marketing/ Purchasing/Technical Services
from 1995 to 1997, Senior Group Vice President Food
Products/Marketing/ Purchasing/ Technical Services
from 1994 to 1995, Group Vice President Marketing &
Purchasing/Technical Services from 1990 to 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 55; Group Vice President - Group Vice President - Real Estate/ Construction &
Real Estate/Construction & Engineering Group of the Engineering Group since 1990, Senior Vice
registrant; 19 years as an officer of the resistrant. President, Director of Real Estate, Restaurant
Division, from 1988 to 1990, and Vice President,
Director of Real Estate, Restaurant Division, from
1978 to 1988, of the registrant.
James B. Radebaugh, age 49; Group Vice President - Group Vice President - Administration & Human
Administration & Human Resources Group of the Resources Group since 1994, Group Vice President -
registrant; seven years as an officer of the Corporate Development from 1990 to 1993, and Vice
registrant. President in 1990, of the registrant.
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
Mary L. Cusick, age 41; Vice President -Corporate Vice President - Corporate Communications since
Communications since 1990; seven years as an 1990, Director of Corporate Communications from
officer of the registrant. 1981 to 1990, of the registrant.
</TABLE>
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 20 of registrant's annual
report to stockholders for the fiscal year ended April 25, 1997, is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
------------------------
In accordance with General Instruction G(2), the information for the years 1988
through 1997 contained under the subcaption "Comparative Highlights for Ten
Years," at page 20 of the registrant's annual report to stockholders for the
fiscal year ended April 25, 1997, 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 32, 33 and 34 of the registrant's annual report to
stockholders for the fiscal year ended April 25, 1997, is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
-----------------------------------------------------------
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
The financial statements included on pages 22 through 30 and the auditor's
report thereon included on page 31 of the registrant's annual report to
stockholders for the fiscal year ended April 25, 1997, are incorporated herein
by reference.
The "Quarterly Financial Data" included in Note I of the notes to consolidated
financial statements on page 30 of the registrant's annual report to
stockholders for the fiscal year ended April 25, 1997, is also incorporated
herein by reference.
18
<PAGE> 19
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. 1, 1997, 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. 1, 1997, 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. 1, 1997, 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. 1, 1997, 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. 1, 1997, 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.
19
<PAGE> 20
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. See the "List of Financial
Statements" at page 26.
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 69. 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
---------------------------------------------
<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
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 Incorporated herein
Bob Evans Farms, Inc. by reference to
and Affiliates 401K Exhibit 10(b) to the
Retirement Plan Registrant's Annual
Report on Form 10-K
for the fiscal year
ended April 26, 1996
(File No. 0-1667)
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C> <C>
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)
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
Feb. 24, 1989, by reference to
between Daniel E. Evans Exhibit 10(g) to the
and Bob Evans Farms, Registrant's Annual Report on
Inc.; and Schedule A to 10-K for its fiscal year
Exhibit 10(e) ended April 28, 1989
identifying other (File No. 0-1667);
substantially identical Page 73
Agreements between
Bob Evans 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)
</TABLE>
21
<PAGE> 22
<TABLE>
<S> <C> <C>
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)
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)
</TABLE>
(b) Reports on Form 8-K
-------------------
There were no current reports on Form 8-K filed during the fiscal quarter
ended April 25, 1997.
(c) Exhibits
--------
See Item 14(a) (3) above.
(d) Financial Statement Schedules
-----------------------------
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have
been omitted.
22
<PAGE> 23
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 22, 1997 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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Daniel E. Evans Chairman of the Board, July 22, 1997
- ----------------------------------- Chief Executive
Daniel E. Evans Officer and Secretary
/s/ Larry C. Corbin Director July 22, 1997
- -----------------------------------
Larry C. Corbin
/s/ Daniel A. Fronk Director July 22, 1997
- ------------------------------------
Daniel A. Fronk
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C> <C>
/s/ Michael J. Gasser Director July 22, 1997
- ------------------------------------
Michael J. Gasser
/s/ Cheryl L. Krueger Director July 22, 1997
- ------------------------------------
Cheryl L. Krueger
/s/ G. Robert Lucas II Director July 22, 1997
- ------------------------------------
G. Robert Lucas II
/s/ Stewart K. Owens Director July 22, 1997
- ------------------------------------
Stewart K. Owens
/s/ Robert E.H. Rabold Director July 22, 1997
- ------------------------------------
Robert E.H. Rabold
/s/ Robert S. Wood Director July 22, 1997
- ------------------------------------
Robert S. Wood
/s/ Donald J. Radkoski Group Vice President- July 22, 1997
- ------------------------------------ Finance Group and Treasurer
Donald J. Radkoski (Chief Financial Officer
& Chief Accounting Officer)
</TABLE>
24
<PAGE> 25
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS
FISCAL YEAR ENDED APRIL 25, 1997
BOB EVANS FARMS, INC.
COLUMBUS, OHIO
25
<PAGE> 26
FORM 10-K -- ITEM 14(a) (1) and (2)
BOB EVANS FARMS, INC.
LIST OF FINANCIAL STATEMENTS
The following consolidated financial statements of Bob Evans Farms, Inc. and its
subsidiaries, included in the Annual Report of the Registrant to its
stockholders for the fiscal year ended April 25, 1997, are incorporated by
reference in Item 8:
Consolidated Balance Sheets -- April 25, 1997 and April 26, 1996
Consolidated Statements of Income -- Years ended April 25, 1997, April
26, 1996 and April 28, 1995
Consolidated Statements of Stockholders' Equity -- Years ended April
25, 1997, April 26, 1996 and April 28, 1995
Consolidated Statements of Cash Flows -- Years ended April 25, 1997,
April 26, 1996 and April 28, 1995
Notes to Consolidated Financial Statements -- April 25, 1997
Report of Ernst & Young LLP, Independent Auditors
26
<PAGE> 27
PAGE 20
Consolidated Financial Review
Bob Evans Farms, Inc. and Subsidiaries
Comparative Highlights for Ten Years
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $564,079,000 $1,587,000 $822,155,000 $56,992,000 $20,916,000 $36,076,000 $ .86 $.32
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
</TABLE>
* 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)
Stock Price Ranges and Dividends
The common stock of the company is traded on the NASDAQ National Market
and is identified by the symbol BOBE. The approximate number of holders of the
company's common stock at May 23, 1997, was 43,570. 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:
<TABLE>
<CAPTION>
Cash
Dividends
Fiscal Year High Low Per Share
1997
<S> <C> <C> <C> <C>
1st Quarter $17 $13 1/2 $.08
2nd Quarter 14 7/8 12 3/4 .08
3rd Quarter 13 7/8 12 1/8 .08
4th Quarter 14 1/4 13 .08
1996
1st Quarter $21 1/8 $19 1/4 $.08
2nd Quarter 19 1/2 16 7/8 .08
3rd Quarter 19 1/4 15 15/16 .08
4th Quarter 17 1/8 15 1/4 .08
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 28
Page 21
Comparative Highlights by Segment
Bob Evans Farms, Inc. and Subsidiaries
Restaurant Segment
<TABLE>
<CAPTION>
Income
Income Per Share
Before Before
Income Before Income Extraordinary Extraordinary
Year Net Sales Income Taxes Taxes Gain Gain
<S> <C> <C> <C> <C> <C>
1997 $594,914,000 $51,121,000 $18,621,000 $32,500,000 $.77
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
</TABLE>
* 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
<TABLE>
<CAPTION>
Income
Income Per Share
Before Before
Income Before Income Extraordinary Extraordinary
Year Net Sales Income Taxes Taxes Gain Gain
<S> <C> <C> <C> <C> <C>
1997 $227,241,000 $ 5,871,000 $ 2,295,000 $ 3,576,000 $.09
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
</TABLE>
* 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
<PAGE> 29
<TABLE>
<CAPTION>
Page 22
Consolidated Balance Sheets
Bob Evans Farms, Inc. and Subsidiaries
April 25, 1997 April 26, 1996
Assets
<S> <C> <C>
Current Assets
Cash and equivalents $ 12,283,000 $ 14,369,000
Trade accounts receivable 16,394,000 14,509,000
Inventories 23,600,000 20,876,000
Federal and state income taxes 635,000 --
Deferred income taxes 6,182,000 5,882,000
Prepaid expenses 2,329,000 3,263,000
------------ ------------
Total Current Assets 61,423,000 58,899,000
Property, Plant and Equipment
Buildings 335,712,000 312,084,000
Machinery and equipment 179,134,000 166,824,000
Other 21,952,000 20,919,000
------------ ------------
536,798,000 499,827,000
Less accumulated depreciation 214,684,000 199,606,000
------------ ------------
322,114,000 300,221,000
Land 145,031,000 141,399,000
Construction in progress 5,876,000 5,623,000
------------ ------------
Net Property, Plant and Equipment 473,021,000 447,243,000
Other Assets
Deposits and other 3,403,000 2,955,000
Long-term investments 5,101,000 4,893,000
Deferred income taxes 10,080,000 9,918,000
Cost in excess of net assets acquired 9,938,000 10,477,000
Other intangible assets 1,113,000 1,428,000
------------ ------------
Total Other Assets 29,635,000 29,671,000
------------ ------------
$564,079,000 $535,813,000
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Line of credit $ 68,880,000 $ 59,655,000
Accounts payable 7,119,000 5,940,000
Dividends payable 3,327,000 3,382,000
Federal and state income taxes -- 535,000
Accrued wages and related liabilities 13,438,000 14,245,000
Other accrued expenses 36,085,000 32,674,000
------------ ------------
Total Current Liabilities 128,849,000 116,431,000
Long-Term Liabilities
Deferred income taxes 10,836,000 8,300,000
Notes payable (net of discount of $303,000 at
April 25, 1997, and $443,000 at April 26, 1996) 1,587,000 1,927,000
------------ ------------
Total Long-Term Liabilities 12,423,000 10,227,000
Stockholders' Equity
Common stock, $.01 par value; authorized
100,000,000 shares;issued 42,638,118 shares in
1997 and 1996 426,000 426,000
Preferred stock, $500 par value; authorized
1,200 shares; issued 120 shares in 1997 and 1996 60,000 60,000
Capital in excess of par value 145,889,000 145,584,000
Retained earnings 291,364,000 268,677,000
------------ ------------
437,739,000 414,747,000
Less treasury stock: 1,054,949 shares in 1997 and
362,875 shares in 1996, at cost 14,932,000 5,592,000
------------ ------------
Total Stockholders' Equity 422,807,000 409,155,000
------------ ------------
$564,079,000 $535,813,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 30
Page 23
<TABLE>
<CAPTION>
Consolidated Statements of Income
Bob Evans Farms, Inc. and Subsidiaries
Years Ended April 25, 1997,
April 26, 1996, and April 28, 1995 1997 1996 1995
<S> <C> <C> <C>
Net Sales $ 822,155,000 $ 806,627,000 $ 766,968,000
Cost of sales 265,470,000 246,020,000 229,256,000
Operating wage and fringe benefit expenses 256,569,000 248,000,000 225,280,000
Other operating expenses 113,238,000 113,828,000 101,703,000
Selling, general and administrative expenses 100,628,000 102,621,000 98,048,000
Depreciation expense 28,450,000 27,605,000 25,820,000
Loss on impaired assets -- 22,000,000 --
------------- ------------- -------------
Operating Profit 57,800,000 46,553,000 86,861,000
Net interest income (expense) (808,000) 192,000 8,000
------------- ------------- -------------
Income Before Income Taxes 56,992,000 46,745,000 86,869,000
Provisions For Income Taxes
Federal 17,165,000 14,304,000 27,316,000
State 3,751,000 3,225,000 6,043,000
------------- ------------- -------------
20,916,000 17,529,000 33,359,000
------------- ------------- -------------
Net Income $ 36,076,000 $ 29,216,000 $ 53,510,000
============= ============= =============
Net Income Per Share $ 0.86 $ 0.69 $ 1.27
============= ============= =============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 31
Page 24
Consolidated Statements of Stockholders' Equity
Bob Evans Farms, Inc. and Subsidiaries
Years Ended April 25, 1997,
April 26, 1996, and April 28, 1995
<TABLE>
<CAPTION>
Capital Total
Common Preferred in Excess Retained Treasury Stockholders'
Stock Stock of Par Value Earnings Stock Equity
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 (12,245,000) (12,245,000)
Tax benefit from disqual-
ifying 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 (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 disqual-
ifying 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
Net income 36,076,000 36,076,000
Dividends declared (13,399,000) (13,399,000)
Purchase of treasury
stock (9,762,000) (9,762,000)
Tax benefit from disqual-
ifying disposition of
stock options exercised 10,000 10,000
Compensation expense
attributable to stock
options granted 85,000 85,000
Compensation expense
attributable to stock
awards 184,000 (110,000) 74,000
Distribution of treasury
stock 36,000 532,000 568,000
-------- ------- ------------ ------------ ------------ ------------
Balances at 4/25/97 $426,000 $60,000 $145,889,000 $291,364,000 $(14,932,000) $422,807,000
======== ======= ============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 32
<TABLE>
<CAPTION>
Page 25
Consolidated Statements of Cash Flows
Bob Evans Farms, Inc. and Subsidiaries
Years Ended April 25, 1997,
April 26, 1996, and April 28, 1995 1997 1996 1995
<S> <C> <C> <C>
Operating Activities:
Net income $ 36,076,000 $ 29,216,000 $ 53,510,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 29,544,000 28,459,000 26,674,000
Deferred income taxes 2,074,000 (6,174,000) (1,187,000)
Loss (gain) on sale of property and equipment (146,000) 445,000 (115,000)
Loss on impaired assets -- 22,000,000 --
Compensation expense attributable to stock plans 159,000 437,000 1,080,000
Cash provided by (used for) current assets and
current liabilities:
Accounts receivable (1,885,000) 1,061,000 (125,000)
Inventories (2,724,000) (3,620,000) (1,457,000)
Prepaid expenses 934,000 (327,000) 578,000
Accounts payable 1,179,000 (1,385,000) 5,793,000
Federal and state income taxes (1,160,000) (4,056,000) (1,196,000)
Accrued wages and related liabilities (807,000) 928,000 3,093,000
Other accrued expenses 3,533,000 1,421,000 2,349,000
------------ ------------ ------------
Net cash provided by operating activities 66,777,000 68,405,000 88,997,000
Investing Activities:
Purchase of property, plant and equipment (60,048,000) (80,967,000) (94,766,000)
Purchase of long-term investments (448,000) (2,590,000) (2,303,000)
Proceeds from sale of property, plant
and equipment 5,844,000 522,000 1,983,000
Other (448,000) (712,000) (241,000)
------------ ------------ ------------
Net cash used in investing activities (55,100,000) (83,747,000) (95,327,000)
Financing Activities:
Cash dividends paid (13,454,000) (13,228,000) (12,016,000)
Purchase of treasury stock (9,762,000) (2,091,000) --
Draws on line of credit 9,225,000 34,055,000 16,100,000
Proceeds from issuance of note payable -- -- 2,250,000
Payments on principal of note payable (340,000) (323,000) --
Proceeds from issuance of preferred stock -- 60,000 --
Distribution of treasury stock due to the exercise
of stock options and employee bonuses 568,000 787,000 2,349,000
------------ ------------ ------------
Net cash provided by (used in)
financing activities (13,763,000) 19,260,000 8,683,000
------------ ------------ ------------
Increase (decrease) in cash and equivalents (2,086,000) 3,918,000 2,353,000
Cash and equivalents at the beginning of the year 14,369,000 10,451,000 8,098,000
------------ ------------ ------------
Cash and equivalents at the end of the year $ 12,283,000 $ 14,369,000 $ 10,451,000
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 33
Page 26
Notes to Consolidated Financial Statements
Bob Evans Farms, Inc. and Subsidiaries - April 25, 1997
Note A -- Summary of Significant Accounting Policies
Description of Business: Bob Evans Farms, Inc. owns and operates 394
restaurants in 18 states as Bob Evans Restaurants and Owens Family Restaurants.
On Aug. 5, 1996, the company closed its 14 remaining 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. Frozen rolls, biscuits and entrees are
distributed primarily to grocery stores in Ohio and various surrounding areas.
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 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 1997, 1996 and 1995 refer to fiscal years ended
April 25, 1997; April 26, 1996; and April 28, 1995, respectively.
Cash Equivalents: The company considers all highly liquid instruments,
with a maturity of three months or less when purchased, to be cash equivalents.
Inventories: The company values inventories at the lower of first-in,
first-out cost or market. Inventory is comprised of raw materials and supplies
($11,103,000 in 1997, and $12,138,000 in 1996) and finished goods ($12,497,000
in 1997, and $8,738,000 in 1996).
Property, Plant and Equipment: The company calculates depreciation on
the straight-line and accelerated 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.
Long-Term Investments: The company records its long-term investments
(investments in income tax credit limited partnerships) at amortized cost. The
company amortizes the investments to the expected residual value of the
partnerships once the income tax credits are fully utilized. The amortization
period of the investments matches the respective income tax credit period.
<PAGE> 34
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 25, 1997, and April 26, 1996, was
$3,537,000 and $2,998,000, 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 $36,841,000; $37,626,000; and $32,585,000 in 1997, 1996
and 1995, respectively.
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 1997, 1996 and 1995,
was 41,987,000; 42,311,000; and 42,179,000, respectively. Outstanding stock
options do not have a material dilutive effect.
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.
Reclassifications: Certain 1996 and 1995 amounts have been reclassified
to conform with the 1997 classification.
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 25, 1997, $68,880,000 was outstanding under these
arrangements. During 1997 and 1996, respectively, the maximum amounts
outstanding under these arrangements were $74,225,000 and $63,905,000 and the
average amounts outstanding were $66,612,000 and $43,104,000 with weighted
average interest rates of 6.08% and 6.34%.
Interest costs of $2,934,000; $2,394,000; and $569,000 incurred in
1997, 1996, and 1995, respectively, were capitalized in connection with the
company's construction activities.
<PAGE> 35
Page 27
Note C -- Income Taxes
Deferred 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 25,
1997 and April 26, 1996, were as follows:
<TABLE>
<CAPTION>
April 25, 1997 April 26, 1996
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation $ 9,717,000 $ 7,991,000
Other taxes 1,119,000 309,000
----------- -----------
Total deferred tax liabilities 10,836,000 8,300,000
Deferred tax assets:
Loss on impaired assets 8,263,000 8,244,000
Self-insurance 4,653,000 4,470,000
Vacation pay 1,018,000 1,020,000
Stock compensation plans 1,333,000 1,281,000
Accrued bonus 425,000 310,000
Inventory and other 570,000 475,000
----------- -----------
Total deferred tax assets 16,262,000 15,800,000
----------- -----------
Net Deferred Tax Assets $ 5,426,000 $ 7,500,000
=========== ===========
</TABLE>
Significant components of the provisions for income taxes are as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Current:
Federal $ 15,896,000 $ 20,113,000 $ 29,563,000
State 2,983,000 4,209,000 6,484,000
------------ ------------ ------------
Total Current 18,879,000 24,322,000 36,047,000
Deferred:
Federal 1,269,000 (5,809,000) (2,247,000)
State 768,000 (984,000) (441,000)
------------ ------------ ------------
Total Deferred 2,037,000 (6,793,000) (2,688,000)
------------ ------------ ------------
$ 20,916,000 $ 17,529,000 $ 33,359,000
============ ============ ============
</TABLE>
The company's provisions for income taxes differ from the amounts
computed by applying the federal statutory rate due to the following:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Tax at statutory rate $19,947,000 $16,400,000 $30,404,000
State income tax (net) 2,438,000 2,100,000 3,928,000
Other (1,469,000) (971,000) (973,000)
----------- ----------- -----------
Provisions for income taxes $20,916,000 $17,529,000 $33,359,000
=========== =========== ===========
</TABLE>
Taxes paid during 1997, 1996 and 1995 were $22,147,000; $28,429,000; and
$36,647,000, respectively.
Note D -- Stockholders' Equity and Stock Option Plans
The company has employee stock option plans adopted in 1985, 1987, 1991
and 1994; a nonemployee 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
<PAGE> 36
Page 28
years under the 1985, 1987, 1991 and 1994 plans, and five years under the 1989
plan. 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 awards in the form of shares,
cash or a combination thereof if certain pre-established performance objectives
are met. As of April 25, 1997, options for 1,520,550 shares were outstanding,
and options for 934,886 shares were exercisable at prices ranging from $8.00 to
$21.25 per share.
During 1997, 1996 and 1995, options covering 19,662; 44,914; and
226,749 shares, respectively, were exercised at prices ranging from $8.63 to
$20.19 per share. At April 25, 1997, 3,064,491 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
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 stock option 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 stock option
plan, the company anticipates that no long-term unfunded pension obligations
will arise under the SERP. Compensation expense attributable to the plan in
1997, 1996 and 1995 was $85,000; $474,000; and $706,000, 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
1997 and 1996, 0 and 20,089 shares, respectively, were awarded as part of the
LTIP. Compensation expense attributable to the plan was $74,000 in 1997, de
minimis in 1996, and $374,000 in 1995.
In 1997, the company adopted FASB Statement No. 123, Accounting for
Stock-Based Compensation. In accordance with the provisions of the statement,
the company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its employee stock
options, and accordingly does not recognize compensation expense when the
exercise price of its employee stock options is equal to or greater than the
fair market value of the stock at the grant date. If the company had elected to
recognize compensation expense based on the fair market value of the options
granted at grant date as prescribed by FASB Statement No. 123, net income and
earnings per share would not have been materially affected for the years
reported. The financial effects of applying FASB Statement No. 123 for providing
proforma disclosures may not be representative of the effects on reported net
income and earnings per share in future years.
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 1997, 1996 and 1995 were $2,343,000;
$2,994,000; and $3,412,000, respectively.
Note F -- Commitments and Contingencies
At April 25, 1997, the company had contractual commitments
approximating $10,208,000 for restaurant construction, plant equipment additions
and the purchases 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 administrative
hearings. 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.
<PAGE> 37
Page 29
Note G -- Impairment of Long-Lived Assets
In April 1996, the company determined that certain of its assets had
become impaired and accordingly evaluated the ongoing value of its plant and
equipment in accordance with the measurement guidelines of FASB Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. 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.
Note H -- Industry Segments
The company's operations include restaurant operations and the
processing and sale of food and related products. The revenues from these
segments include 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 consolidated 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
income taxes.
Information on the company's industry segments is summarized as follows:
<TABLE>
<CAPTION>
Fiscal Year 1997 1996 1995
<S> <C> <C> <C>
Sales
Restaurant operations $ 594,914,000 $ 590,063,000 $ 550,209,000
Food products 264,010,000 253,202,000 248,036,000
------------- ------------- -------------
858,924,000 843,265,000 798,245,000
Intersegment sales of
food products (36,769,000) (36,638,000) (31,277,000)
------------- ------------- -------------
Total $ 822,155,000 $ 806,627,000 $ 766,968,000
============= ============= =============
Operating Profit
Restaurant operations $ 50,892,000 $ 29,384,000* $ 60,135,000
Food products 6,908,000 17,169,000* 26,726,000
------------- ------------- -------------
Total $ 57,800,000 $ 46,553,000* $ 86,861,000
============= ============= =============
Depreciation and Amortization Expense
Restaurant operations $ 20,137,000 $ 20,911,000 $ 18,732,000
Food products 9,407,000 7,548,000 7,942,000
------------- ------------- -------------
Total $ 29,544,000 $ 28,459,000 $ 26,674,000
============= ============= =============
Capital Expenditures
Restaurant operations $ 51,808,000 $ 56,429,000 $ 81,772,000
Food products 8,240,000 24,538,000 12,994,000
------------- ------------- -------------
Total $ 60,048,000 $ 80,967,000 $ 94,766,000
============= ============= =============
Identifiable Assets
Restaurant operations $ 431,332,000 $ 403,029,000 $ 388,083,000
Food products 113,875,000 112,091,000 89,980,000
------------- ------------- -------------
545,207,000 515,120,000 478,063,000
General corporate assets 18,872,000 20,693,000 10,038,000
------------- ------------- -------------
Total $ 564,079,000 $ 535,813,000 $ 488,101,000
============= ============= =============
</TABLE>
<PAGE> 38
Page 30
Note I -- Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Net
Gross Net Income
Net Sales Profit Income Per Share
<S> <C> <C> <C> <C>
Fiscal Year 1997
First Quarter $213,060,000 $145,087,000 $ 8,901,000 $.21
Second Quarter 206,244,000 139,812,000 9,682,000 .23
Third Quarter 199,189,000 133,020,000 7,806,000 .19
Fourth Quarter 203,662,000 138,766,000 9,687,000 .23
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
</TABLE>
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)
<PAGE> 39
Page 31
Auditor's Report
Bob Evans Farms, Inc. and Subsidiaries - April 25, 1997
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 25, 1997, and April 26, 1996, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended April 25, 1997. 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 25, 1997, and April 26, 1996, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended April 25, 1997, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Columbus, Ohio
May 29, 1997
<PAGE> 40
Page 32
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 $15.5 million, or 1.9%, in 1997 compared to 1996. The increase was
comprised of a $4.8 million increase in restaurant segment sales and a $10.7
million increase in food products segment sales. Net sales in 1996 represented
a 5.2% increase over 1995 sales.
Restaurant segment sales accounted for 72.4%, 73.2% and 71.7% of
total sales for 1997, 1996 and 1995, respectively. The $4.8 million additional
restaurant sales in 1997 represented an 0.8% increase over 1996 results.
Excluding the Cantina del Rio Mexican concept which the company closed in
August 1996, fiscal 1997 sales increased $22.7 million, or 4.0%. Additional
sales provided by new restaurant openings were partially offset by a 1.0%
decrease in same-store sales. At the end of 1997, the company had 394
restaurants in operation compared to 390 at the end of 1996 (375 excluding the
Cantina del Rios). The chart below summarizes the openings and closings during
the last two years:
SUMMARY OF RESTAURANTS OPENED AND CLOSED
<TABLE>
<CAPTION>
Beginning Opened Closed Ending
--------- ------ ------ ------
<S> <C> <C> <C> <C>
Fiscal 1997
First Quarter 390 5 5 390
Second Quarter 390 7 14 383
Third Quarter 383 4 0 387
Fourth Quarter 387 7 0 394
Fiscal 1996
First Quarter 354 7 0 361
Second Quarter 361 13 0 374
Third Quarter 374 10 1 383
Fourth Quarter 383 7 0 390
</TABLE>
The 1.0% same-store sales decrease in 1997 was characterized by a
3.2% same-store sales decline in the first half of the year, but a 1.4%
same-store sales increase in the last half of the year. Although the same-store
sales improvement in the third and fourth quarters of fiscal 1997 was partly
attributable to severe winter weather in fiscal 1996, the company's same-store
sales trends have improved since August 1996. In fiscal 1996, same-store sales
fell 1.8%, due in part to the severe winter weather.
In fiscal 1997, the company's menus were updated at various times in
conjunction with the strategy to reinforce the appeal of the company's
homestyle meals and to concentrate efforts on the core business. In April 1997,
the company introduced a new streamlined menu designed to focus attention on
the most popular items, simplify preparation and benefit quality as well as
reduce the number of ingredients in-store. Various promotional programs were
employed throughout 1997, including gift certificate promotions which provided
additional certificates free with large orders and a complimentary phone card
with any certificate purchase of $20 or more. No single menu item nor
promotional program had a material impact on sales although the company
believes that without the menu changes or promotional programs, same-store
sales comparisons would have been less favorable. For 1997, the menu price
increase amounted to 1.9% compared with 2.8% in 1996.
Food products segment sales accounted for 27.6%, 26.8% and 28.3% of
total sales for 1997, 1996 and 1995, respectively. The $10.7 million sales
increase in the food products segment in 1997 was comprised of a $7.6 million
increase in sausage sales and a combined $3.1 million increase in sales at Mrs.
Giles Country Kitchens and Hickory Specialties.
The sausage sales increase reflected wholesale price increases
intended to help offset the impact of high hog costs throughout 1997. The
benchmark retail price for a one-pound roll of sausage averaged $3.07 in 1997,
$2.74 in 1996 and $2.79 in 1995. Comparable pounds of sausage products sold
declined 4.0% in 1997 versus a 3.0% increase in 1996. The company believes the
decline in comparable pounds sold was impacted by the retail price increases of
its products. Additional volume was provided by several new products including:
a line of frozen Bob Evans Homestyle Entrees which was introduced throughout
Ohio, as well as the Buffalo and Rochester, N.Y., markets in the fourth quarter;
an extension of the Snackwich product line - mini-hotcakes with a maple sausage
patty - which was introduced in all Bob Evans markets; expansion of beer brats,
sliced country bacon and ham steaks to all Bob Evans markets; and expansion into
the Ohio, Michigan, Indianapolis and Pittsburgh
<PAGE> 41
Page 33
Management's Discussion and Analysis
of Selected Financial Information
Bob Evans Farms, Inc. and Subsidiaries
markets with frozen rolls and biscuits. Volume increases in 1996 were partly
attributable to the introduction of Snackwiches to all Bob Evans markets as well
as the expansion into the Milwaukee and Madison, Wis., markets. New product
introductions added additional volume but were not significant compared with the
total pounds sold in 1997 or 1996.
Mrs. Giles Country Kitchens and Hickory Specialties had combined
sales of $52.2 million in 1997, $49.1 million in 1996 and $52.3 million in
1995. These amounts represented 23.0%, 22.7% and 24.1% of total food products
segment sales in 1997, 1996 and 1995, respectively. The increased sales in 1997
were a result of aggressive promotions of charcoal products; sales of salad
products and liquid-smoke flavorings were not appreciably different. The
decreased sales in 1996 occurred in all the major product lines: salads,
charcoal and liquid-smoke flavorings.
Cost of Sales
As a percentage of sales, the consolidated cost of sales (cost of
materials) was 32.3%, 30.5% and 29.9% in 1997, 1996 and 1995, respectively. The
restaurant segment cost of sales percentage (food cost) was 26.6% in 1997,
26.8% in 1996 and 27.0% in 1995. These decreases were due mostly to various
changes in product mix as well as the effect of menu price increases. The food
products segment cost of sales percentage was 47.2%, 40.6% and 37.1% in 1997,
1996 and 1995, respectively. These increases were due to significant increases
in hog costs, which averaged $51.05 per hundredweight in 1997 versus $36.43 in
1996, a 40.1% increase. The increased hog costs were not fully absorbed by
price increases of the company's sausage products. Although the company raised
its prices three times since March 1996 to help mitigate the tremendous rise in
hog costs, the price increases were limited in order to preserve market share.
The 1996 increase in cost of sales was also the result of higher hog costs
which were 17.5% higher than the average 1995 cost of $31.00 per hundredweight.
Operating Wage and Fringe Benefit Expenses
Consolidated operating wage and fringe benefit expenses were 31.2%,
30.7% and 29.4% of sales in 1997, 1996 and 1995, respectively. In the
restaurant segment, labor and fringe benefit expenses were 38.5% of sales in
1997 compared to 37.4% in 1996. The increase was the result of higher hourly
labor costs (partially due to the increased minimum wage rate), higher
managerial costs and increased health insurance expense. In the food products
segment, labor and fringe benefit expenses amounted to 12.0% of sales in 1997
compared to 12.8% of sales in 1996. The improvement in this ratio was due to
the fact that the increased food products sales were primarily the result of
price increases rather than increased production; the volume of sausage
produced was lower than in 1996.
Other Operating Expenses
Approximately 90% of other operating expenses occurred in the
restaurant segment; the most significant components of which were advertising,
utilities, restaurant supplies, repair and maintenance, general liability
insurance and taxes (other than income taxes). Consolidated other operating
expenses were 13.8%, 14.1% and 13.3% of sales in 1997, 1996 and 1995,
respectively. The improvement in 1997 was mostly the result of lower general
liability insurance expense in the restaurant segment and decreased restaurant
advertising expense. The 1996 increase was generally the result of increased
restaurant advertising expense.
Selling, General and Administrative Expenses
As a percentage of sales, consolidated selling, general and
administrative expenses were 12.2%, 12.7% and 12.8% in 1997, 1996 and 1995,
respectively. The most significant components of selling, general and
administrative expenses were wages, fringe benefits and food products segment
promotional expenses. Decreases in corporate administrative expenses were
mitigated somewhat by increased promotional expenses at Hickory Specialties.
Taxes
The effective federal and state income tax rates were 36.7%, 37.5%
and 38.4% in 1997, 1996 and 1995, respectively. The decreased tax rates in 1997
and 1996 were attributable mostly to decreases in state income taxes and the
increase in investment tax credit activity. In fiscal 1998, the effective tax
rate is expected to approximate 37.0% to 37.5%.
<PAGE> 42
Page 34
Management's Discussion and Analysis
of Selected Financial Information
Bob Evans Farms, Inc. and Subsidiaries
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 $12.3 million at
April 25, 1997, and $14.4 million at April 26, 1996. Dividends paid represented
37.3% of net income in 1997 and 45.3% of net income in 1996.
Bank lines of credit were used for liquidity needs and capital
expansion during fiscal 1997. At April 25, 1997, $68.9 million was outstanding
under such arrangements. The bank lines of credit available were $124.4 million
during 1997 and at the end of fiscal 1996. The company believes that the funds
needed for capital expenditures and working capital during 1998 will be
generated internally and from available bank lines of credit.
At April 25, 1997, the company had contractual commitments for
restaurant construction, plant equipment additions and the purchases of land
and inventory of approximately $10.2 million. Capital expenditures for 1998 are
expected to approximate $55.0 million and depreciation and amortization
expenses are expected to approximate $31.0 million. The company plans to open
approximately 20 restaurants in fiscal 1998, as well as upgrade various
property, plant and equipment in both segments.
Cantina del Rio Mexican Restaurants
On Aug. 5, 1996, the company closed its remaining 14 Cantina del Rio
Mexican restaurants (one was previously closed on June 17, 1996). There was no
charge to earnings as a result of the closings. The company entered into lease
arrangements with entities affiliated with other restaurant operators for seven
of the closed locations. The initial terms of the leases range from 10 to 20
years, and each has provisions for renewal options. The company intends to sell
or lease the remaining locations.
<PAGE> 43
Page 35
Management's Discussion of Risk Factors
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.
Restaurant segment business risks include:
1) Competition
2) Same-store sales
3) Labor and fringe benefit expenses
4) Restaurant closings
5) Governmental initiatives
6) General (economy, weather, consumer acceptance, etc.)
An intensely competitive environment is continually impacting the
restaurant segment. Competition from quick-service restaurants and casual
dining restaurants, as well as the family style category in which Bob Evans
Restaurants operate, has been greater than ever. Increased numbers of
restaurants, in all categories, have provided more options for consumers and
have tended to suppress the industry's same-store sales. Same-store sales for
Bob Evans Restaurants decreased 1.0% in fiscal 1997. This impact on sales and
corresponding profit margins is significant. Continued sales declines in the
future would put continued pressure on restaurant profit margins.
Management is continually evaluating all restaurants in order to
identify underperforming units. In fiscal 1997, the company closed 19
restaurants, including all 15 Cantina del Rio Mexican restaurants. Depending on
profitability, as well as changes in site and access, the company may close
other restaurants in fiscal 1998. In May 1997, one restaurant was closed due to
less-than-desired performance.
Competition for qualified labor was intense in 1997, and is expected
to continue in fiscal 1998, as unemployment remains historically low in most of
the company's marketing area. Increases in the federally mandated minimum wage
rate increased restaurant labor costs in 1997, and will do so again in 1998,
which is expected to have a direct impact on operating profit.
Plans are to add approximately 20 new restaurants in 1998 in
comparison to 23 in 1997. This growth plan is 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.
Food products segment business risks include:
1) Hog costs
2) Governmental initiatives
3) General (economy, weather, consumer acceptance, etc.)
In the food products segment, uncertainties in fiscal 1998 include the
prices to be paid in the live hog market and the ability of the company to pass
on any increased costs as well as consumer acceptance of new items. Planned
product introductions and expansions in fiscal 1998 include additional frozen
dinner entrees and various new sausage products.
Various risks and uncertainties are present in both operating
segments. Food safety is an issue of top priority: risk of food contamination
is an issue focused on by the company at its restaurants as well as in the
manufacture of its food products. Continued emphasis upon quality control
programs, such as the HACCP (Hazard Analysis of Critical Control Points)
program, are designed to limit 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 changes in general economic conditions, weather, as well
as consumers' changing life-styles and eating habits impose various degrees of
risk to the company's business.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
The statements contained in this report which are not historical fact are
"forward-looking statements" that involve various important assumptions, risks,
uncertainties and other factors which could cause the company's actual results
for 1998 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 Discussion of Risk Factors," as well as other assumptions, risks,
uncertainties and factors previously disclosed in this report, the company's
securities filings and press releases.
<PAGE> 44
BOB EVANS FARMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED APRIL 25, 1997
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<S> <C> <C>
3(a) Certificate of Incorporation Incorporated herein
of the Registrant (filed with by reference to
the Delaware secretary of Exhibit 3 (a) to the
state on Nov. 4, 1985) 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
(filed with the Delaware secretary Registrant's Annual
of state on Sept. 4, 1987) 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 Registrant's
of the Registrant Annual Report on Form 10-K
dated Aug. 9, 1993 (filed with for its fiscal year
the Delaware secretary of state ended April 29, 1994
on Aug. 10, 1993) (File No. 0-1667)
3(d) Restated Certificate of Incorporated herein
Incorporation of Registrant by reference to
reflecting amendments through Exhibit 3(d) to the Registrant's
Aug. 10, 1993. Note: filed for Annual Report on Form 10-K
purposes of SEC reporting for its fiscal year
compliance only -- this document ended April 29, 1994
has not been filed with the (File No. 0-1667)
Delaware secretary of state
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)
</TABLE>
69
<PAGE> 45
<TABLE>
<S> <C> <C>
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 Incorporated herein
to the Bob Evans Farms, Inc. by reference to
and Affiliates 401K Exhibit 10(b) to the Registrant's
Retirement Plan Annual
Report on Form 10-K
for the fiscal year
ended April 26, 1996
(File No. 0-1667)
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
Feb. 24, 1989, by reference to
between Daniel E. Evans Exhibit 10(g) to the
and Bob Evans Farms, Registrant's Annual Report on
Inc.; and, Schedule A to 10-K
Exhibit 10(e) identifying for its fiscal year
other substantially ended April 28, 1989
identical Agreements (File No. 0-1667);
between Bob Evans Farms, Page 73
Inc. and certain of the
executive officers of Bob
Evans Farms, Inc.
</TABLE>
70
<PAGE> 46
<TABLE>
<S> <C> <C>
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)
</TABLE>
71
<PAGE> 47
<TABLE>
<S> <C> <C>
11 Computation of Earnings Per Page 76
Share
13 Registrant's Annual Report to Page 25
Stockholders for the fiscal
year ended April 25, 1997 (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 77
23 Consent of Ernst & Young, LLP Page 78
27 Financial Data Schedule Page 79
</TABLE>
72
<PAGE> 1
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.
73
<PAGE> 2
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 25, 1997 (the "1997 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 1997 Form 10-K:
<TABLE>
<CAPTION>
Date of Original Current Offices Held
Name Agreement with the Registrant
---- ---------------- ---------------------
<S> <C> <C>
Donald J. Radkoski February 24, 1989 Group Vice President
- Finance Group, Treasurer and Chief
Financial Officer
</TABLE>
74
<PAGE> 3
<TABLE>
<CAPTION>
Date of Original Current Offices Held
Name Agreement with the Registrant
---- ---------------- ---------------------
<S> <C> <C>
Stewart K. Owens February 24, 1989 President and Chief
Operating Officer
Larry C. Corbin February 24, 1989 Executive Vice President -
Restaurant Division
Roger D. Williams February 24, 1989 Executive Vice President - Food
Products Division
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
Mary L. Cusick September 5, 1990 Vice President - Corporate
Communications
</TABLE>
75
<PAGE> 1
Exhibit 11
Computation of Earnings per Share
Bob Evans Farms, Inc.
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------
APRIL 25, 1997 APRIL 26, 1996 APRIL 28, 1995
----------------------------------------------------
<S> <C> <C> <C>
Weighted average number of shares
outstanding during the year used in
computation of net income per share 41,986,605 42,311,442 42,179,130
Net effect of dilutive stock options based on
treasury stock method using average market
price 74,767 126,582 284,582
----------------------------------------------------
Number of shares for computation of primary
net income per share 42,061,372 42,438,024 43,463,712
Net additional shares added to above based on
treasury stock method using the year-end
market price, if higher than average market
price -- -- --
----------------------------------------------------
Number of shares for computations of fully
diluted net income per share 42,061,372 42,438,024 42,463,712
----------------------------------------------------
Net income $36,076,000 $29,216,000 $53,510,000
----------------------------------------------------
Net income per share $0.86 $0.69 $1.27
Primary net income per share (1) $0.86 $0.69 $1.26
Fully diluted net income per share (1) $0.86 $0.69 $1.26
Notes:
- ------
<FN>
(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.
</TABLE>
76
<PAGE> 1
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
Bob Evans Restaurants, Inc. Ohio
77
<PAGE> 1
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 29, 1997, included in the 1997
Annual Report to Stockholders of Bob Evans Farms, Inc..
We also consent to the incorporation by reference of our report dated May 29,
1997, with respect to the consolidated financial statements incorporated herein
by reference in the following Registration Statements:
- Form S-8 No. 33-17978 -- 1987 Incentive Stock Option Plan
- Form S-8 No. 33-30665 -- 1989 Stock Option Plan for Nonemployee
Directors
- Form S-8 No. 33-34149 -- 401K Retirement Plan
- Form S-8 No. 33-42778 -- 1991 Incentive Stock Option Plan
- Form S-8 No. 33-53166 -- Nonqualified Stock Option Plan
- Form S-8 No. 33-69022 -- Long Term Incentive Plan for Managers
- Form S-8 No. 33-55269 -- 1994 Long Term Incentive Plan
- Form S-3 No. 33-58443 -- Dividend Reinvestment and Stock
Purchase Plan
- Form S-3 No.333-17815 -- Dividend Reinvestment and Stock
Purchase Plan (additional shares)
Ernst & Young LLP
Columbus, Ohio
July 21, 1997
78
<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 25, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-25-1997
<PERIOD-START> APR-27-1996
<PERIOD-END> APR-25-1997
<EXCHANGE-RATE> 1
<CASH> 12,283
<SECURITIES> 0
<RECEIVABLES> 16,394
<ALLOWANCES> 0
<INVENTORY> 23,600
<CURRENT-ASSETS> 61,423
<PP&E> 687,705
<DEPRECIATION> 214,684
<TOTAL-ASSETS> 564,079
<CURRENT-LIABILITIES> 128,849
<BONDS> 0
<COMMON> 0
60
426
<OTHER-SE> 422,321
<TOTAL-LIABILITY-AND-EQUITY> 564,079
<SALES> 822,155
<TOTAL-REVENUES> 822,852
<CGS> 265,470
<TOTAL-COSTS> 663,727
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,505
<INCOME-PRETAX> 56,992
<INCOME-TAX> 20,916
<INCOME-CONTINUING> 36,076
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,076
<EPS-PRIMARY> .86
<EPS-DILUTED> .86
</TABLE>
