EVANS BOB FARMS INC, 10-K405, 1998-07-23

EVANS BOB FARMS INC
10-K405, 1998-07-23
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<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 24, 1998

[ ] 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 82 pages of which this is page 1.
The Exhibit Index begins at page 46.

<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 17, 1998.

<TABLE>
<S> <C>
Total shares outstanding 41,664,056

Number of shares owned beneficially and/or of record by directors 901,332
and executive officers*

Number of shares held by persons other than directors and executive 40,762,724
officers

Last quoted sale price $20.125

Market value of shares held by persons other than directors and $820,349,821
executive officers
</TABLE>

*For purposes of this computation, all executive officers and directors are
included, although not all are necessarily "affiliates."

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

41,664,056 shares of common stock with $.01 par value were outstanding at July
17, 1998.

DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<S> <C> <C>
1. Annual report to stockholders for the fiscal year ended
April 24, 1998 (in pertinent part, as indicated) . . . . . . . . . PART II.

2. Proxy statement dated Aug. 10, 1998, for the annual meeting of
stockholders to be held on Sept. 14, 1998
(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 wholly owned
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");
Hickory Specialties, Inc. ("Hickory Specialties") and BEF Aviation, Inc.
("Aviation"). 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 RE Holding. 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. On Oct. 24, 1997, Bob Evans Restaurants of
Michigan, Inc. ("Michigan Restaurants"), which was incorporated on Oct. 16,
1997, became a wholly owned subsidiary of BEF Ohio and Restaurants became a
wholly owned subsidiary of Michigan Restaurants. The registrant; BEF Holding
Co., Inc.; RE Holding; BEF REIT, Inc.; BEF Ohio; Restaurants; Michigan
Restaurants; Owens; Mrs. Giles; Hickory Specialties and Aviation 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 63% of total revenues from restaurant
operations are generated from 6 a.m. to 4 p.m. 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, Massachusetts, North Carolina and South Carolina and parts of
Missouri which are supplied by independent food distributors.

3
<PAGE> 4

RESTAURANTS IN OPERATION AT APRIL 24, 1998

<TABLE>
<CAPTION>
--------------------- --------------- ------------ ---------- ---------------
Traditional General Owens Total
Stores Restaurants
--------------------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C>
Delaware 4 4
--------------------- --------------- ------------ ---------- ---------------
Florida 24 1 25
--------------------- --------------- ------------ ---------- ---------------
Illinois 16 16
--------------------- --------------- ------------ ---------- ---------------
Indiana 51 51
--------------------- --------------- ------------ ---------- ---------------
Iowa 1 1
--------------------- --------------- ------------ ---------- ---------------
Kentucky 14 14
--------------------- --------------- ------------ ---------- ---------------
Maryland 16 16
--------------------- --------------- ------------ ---------- ---------------
Massachusetts 1 1
--------------------- --------------- ------------ ---------- ---------------
Michigan 37 37
--------------------- --------------- ------------ ---------- ---------------
Missouri 11 1 12
--------------------- --------------- ------------ ---------- ---------------
New Jersey 1 1
--------------------- --------------- ------------ ---------- ---------------
New York 13 13
--------------------- --------------- ------------ ---------- ---------------
North Carolina 2 2
--------------------- --------------- ------------ ---------- ---------------
Ohio 143 1 144
--------------------- --------------- ------------ ---------- ---------------
Pennsylvania 26 1 27
--------------------- --------------- ------------ ---------- ---------------
South Carolina 1 1
--------------------- --------------- ------------ ---------- ---------------
Tennessee 4 1 5
--------------------- --------------- ------------ ---------- ---------------
Texas 11 11
--------------------- --------------- ------------ ---------- ---------------
Virginia 10 10
--------------------- --------------- ------------ ---------- ---------------
West Virginia 16 1 17
--------------------- --------------- ------------ ---------- ---------------
TOTAL 390 7 11 408
--------------------- --------------- ------------ ---------- ---------------
</TABLE>

During the company's 1998 fiscal year, 19 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 1998 fiscal year, three Bob Evans Restaurants were closed in
Warren and Southfield, Mich., and Schaumberg, Ill., along with two Owens Family
Restaurants in Texas, 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, Massachusetts, North
Carolina and South Carolina, where the company has 25, one, two and one
restaurant(s), respectively, but does not have sausage distribution.

Seasonality

Certain restaurant locations, which are near major interstate highways,
experience increased revenues during the summer travel season.

4
<PAGE> 5

Labor and Fringe Benefit Expense

Competition for qualified labor was intense in 1998, and is expected to continue
in fiscal 1999, 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 significantly in 1998 and 1997, which had a
direct impact on operating profit. As a result, labor and fringe benefit expense
in the restaurant segment was 38.3 percent of sales in fiscal 1998 as compared
to 38.5 percent in fiscal 1997, both of which are high relative to prior years.
Congress is currently considering additional increases to the minimum wage rate
which would significantly impact the company's labor costs.

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, casual and fast-food restaurant chains, as well as with
individual restaurant operators, for favorable sites for expansion, as well as
for customer trial and return visits. 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 1998 fiscal year, and the company does not expect
food costs to fluctuate significantly during its 1999 fiscal year.

Advertising

The company spent approximately $27,008,000 in the restaurant segment for
advertising during its 1998 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 BreakfastSavors 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 1998, 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.
However, the company began testing a Carry Home Kitchen concept in one
restaurant during fiscal 1998. Through dedicated staffing and facilities, the
Carry Home Kitchen is aimed at increasing carryout business and customer
satisfaction.

5
<PAGE> 6

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. Product development has been concentrated on unique homestyle
options, as well as quality enhancements to some of the company's best-selling
items. The company's BreakfastSavors and LunchSavors programs, designed to drive
weekday sales, continue to be updated with new items to maintain the program's
success. Research and development expenses, to date, have not been material.

Restaurant Expansion

During fiscal 1999, the company plans to build and open at least 23 new
restaurants, about 80 percent of which will be constructed in current Bob Evans
Restaurant markets. Determined by anticipated business needs, approximately
three-quarters of the new restaurants will be the company's new 129-seat
building and the remaining will seat 167 people. 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, Owens Country Sausage and recently Country Creek Farm. 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 through grocers' freezers.

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.

6
<PAGE> 7

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 old fashioned potato salad, southern style potato salad,
chopped cole slaw, white meat chicken salad, creme macaroni salad, rotini pasta
salad, homestyle tuna and gourmet egg salad. 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. Bob Evans salads, produced by Mrs. Giles, 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 1998 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 its production plants. During fiscal
1998, foodservice volume accounted for approximately 10 percent of the company's
total volume sold and is expected to remain in that range in the 1999 fiscal
year. The company is also marketing its prepared salad products to institutional
and foodservice customers.

<TABLE>
<CAPTION>
% of Food Products Segment Revenues
FISCAL YEAR ENDED
------------------------------------------------------------------------
APRIL 24, 1998 APRIL 25, 1997 APRIL 26, 1996
-------------- -------------- --------------

<S> <C> <C> <C>
Sales of Bob Evans 56% 57% 56%
Products

Sales of Owens 21% 20% 21%
Country Sausage
Products

Sales of Mrs. Giles 9% 9% 10%
Products

Sales of Hickory 14% 14% 13%
Specialties Products
</TABLE>

7
<PAGE> 8

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 produce 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.

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
briquettes 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.

8
<PAGE> 9

(2) During the 1998 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. Warehousing is also used for
the frozen foods division which was established during fiscal 1996.

The marketing territory for Bob Evans brand products includes Ohio, Michigan,
Indiana, Illinois, Maryland, Delaware and the District of Columbia, as well as
portions of New Jersey, New York, Iowa, 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) Twenty-eight driver-salesmen, driving company-owned refrigerated
trucks, deliver products directly to supermarkets and independent
retail groceries.

Owens' marketing territory includes Texas, Arkansas, Oklahoma, New Mexico,
Louisiana, Arizona, Colorado, Nevada and portions of Mississippi and Kansas.
Owens Country Sausage products are available in more than 5,000 supermarkets and
independent retail groceries.

Distribution to the company's foodservice customers is accomplished through 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.

9
<PAGE> 10

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; shelf life of the Bob Evans salads from 21 to 28
days; and shelf life of the Mrs. Giles and Mrs. Kinser's 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. Products are
manufactured throughout the year. The smoke products sales are reasonably
constant throughout the year, matching production and sales. The charcoal
briquet sales are seasonal with the peak sales from April through September. The
off-season inventories of charcoal briquets permit a consistent production
schedule.

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. 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.

10
<PAGE> 11

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.

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 1998 fiscal year, the company spent approximately $10,833,000 for
advertising of its food products under the Bob Evans and Owens brand names.
Approximately 74% was spent on media with the remaining spent on production and
various promotional programs. The company spent approximately $554,000 on media
during the latest fiscal year to support its charcoal and liquid smoke flavoring
products and $168,000 to support the salad business with approximately 17% of
that spent on media.

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.

11
<PAGE> 12

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.

Expansion of Distribution Area

During fiscal 1998, distribution of frozen dinner rolls and buttermilk biscuits
was expanded to West Virginia.

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 1999 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 1998 fiscal year, hog prices averaged $40 per
hundredweight. The company expects live hog costs to be below last year's levels
during fiscal 1999.

Employees

The company had in its employment 29,172 persons in the restaurant segment and
2,017 persons in the food products segment as of April 24, 1998.

<PAGE> 13
Compliance with Environmental Protection Requirements

The company does not anticipate that compliance with federal, state and local
provisions which have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, will have a material effect upon the capital expenditures, earnings
or the competitive position of the company.

Sales, Operating Profit and Identifiable Assets

The following table sets forth, for each of the company's last three fiscal
years, the amounts of revenue from intersegment sales of its food products and
the amounts of revenue from sales to unaffiliated customers, operating profit
and identifiable assets attributable to each of the company's industry segments:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------
April 24, April 25, April 26,
1998 1997 1996
----------- ------------ -----------
<S> <C> <C> <C>
Sales:
- ------
Restaurant Operations: $645,330,000 $594,914,000 $590,063,000

Intersegment Sales of
Food Products: $ 33,678,000 $ 36,769,000 $ 36,638,000

Food Products (excluding
intersegment sales): $241,508,000 $227,241,000 $216,564,000

Operating Profit:
- -----------------
Restaurant Operations: $ 57,922,000 $ 50,892,000 $ 29,384,000*

Food Products: $ 16,538,000 $ 6,908,000 $ 17,169,000*

Identifiable Assets:
- --------------------
Restaurant Operations: $448,314,000 $431,332,000 $403,029,000

Food Products: $111,340,000 $113,875,000 $112,091,000
</TABLE>

* Includes pre-tax loss of $21,370,000 on the write-down of assets in the
restaurant segment and a pre-tax loss of $630,000 on the write-down of assets
in the food products segment.

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 1999 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," in the registrant's annual report to
stockholders for the fiscal year ended April 24, 1998, as well as other
assumptions, risks, uncertainties and factors previously disclosed in this Form
10-K, the company's securities filings and press releases.

<PAGE> 14

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 408 restaurants operated by the company, 353 are owned in fee and 55 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.

14
<PAGE> 15

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>
<S> <C>
Name, Age and Position with the Registrant; Period Principal Occupations for Past Five Years and
of Service as an Officer of the Registrant Other Information
- -------------------------------------------------- ---------------------------------------------
Daniel E. Evans, age 61; 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; 38 years as an officer of the
registrant.

Donald J. Radkoski, age 43, Group Vice President - Group Vice President - Finance Group
Finance Group, Treasurer and Chief Financial Officer since 1994, Treasurer and Chief
of the registrant; 10 years as an officer of the registrant. Financial Treasurer since 1993, Senior
Vice President in 1993, Vice President
of Finance and Assistant Treasurer from
1989 to 1993, of the registrant.

Stewart K. Owens, age 43; President, Chief Operating President and Chief Operating Officer
and a Director of the registrant; eight years as an since 1995, Executive Vice President and
officer of the registrant. Chief Operating 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.

Larry C. Corbin, age 56; Executive Vice President - Executive Vice President - Restaurant Division
Restaurant Division and a Director of the since 1995, Senior Group Vice President -
registrant; 24 years as an officer of the Restaurant Operations Group from 1994 to 1995,
registrant. Group Vice President - Business Development from
1990 to 1993, of the registrant.
</TABLE>

<PAGE> 16

<TABLE>
<S> <C>
Roger D. Williams, age 47; Executive Vice President - Executive Vice President - Food Products Division
Food Products Division of the registrant; 18 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, of
the registrant.

Howard J. Berrey, age 56; Group Vice President - Real Group Vice President - Real Estate/ Construction &
Estate/Construction & Engineering Group of the Engineering Group since 1990, of the registrant.
registrant; 20 years as an officer of the registrant.

James B. Radebaugh, age 50; Group Vice President - Group Vice President - Administration & Human
Administration & Human Resources Group of the Resources Group since 1994, Group Vice President -
registrant; eight years as an officer of the Corporate Development from 1990 to 1993, of the
registrant. registrant.

Mary L. Cusick, age 42; Vice President - Corporate Vice President - Corporate Communications since
Communications since 1990; eight years as an officer 1990, of the registrant.
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 in Note I,
Quarterly Financial Data, in the registrant's annual report to stockholders for
the fiscal year ended April 24, 1998, is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.

In accordance with General Instruction G(2), the information for the years 1994
through 1998 contained under the subcaption Consolidated Financial Review in the
registrant's annual report to stockholders for the fiscal year ended April 24,
1998, is incorporated herein by reference.

<PAGE> 17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF SELECTED FINANCIAL INFORMATION

In accordance with General Instruction G(2), the information contained under the
caption Management's Discussion and Analysis of Selected Financial Information
and under the caption Management's Discussion of Risk Factors in the
registrant's annual report to stockholders for the fiscal year ended
April 24, 1998, 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 and the auditor's report thereon included in the
registrant's annual report to stockholders for the fiscal year ended April 24,
1998, are incorporated herein by reference.

The Quarterly Financial Data included in Note I of the notes to consolidated
financial statements in the registrant's annual report to stockholders for the
fiscal year ended April 24, 1998, is also incorporated herein by reference.

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. 10, 1998, 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.

17
<PAGE> 18

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
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" in the registrant's proxy
statement dated Aug. 10, 1998, 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 committee of the registrant's board of directors on executive
compensation nor the performance graph included in the registrant's proxy
statement dated Aug. 10, 1998, 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. 10, 1998, 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.

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 25.

18
<PAGE> 19

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 46. 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.

<TABLE>
<CAPTION>
Executive Compensation Plans and Arrangements
---------------------------------------------

Exhibit No. Description Location
- ----------- ----------- --------

<S> <C> <C>
10(a) Restated Bob Evans Farms, Inc. and Affiliates Incorporated herein by reference to
401K Retirement Plan (effective Jan. 1, 1994, Exhibit 10(a) to the 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 Bob Evans Farms, Inc. Incorporated herein by reference to
and Affiliates 401K Retirement Plan Exhibit 10(b) to the Registrant's 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 Affiliates 401K Incorporated herein by reference to
Retirement Plan Trust (effective May 1, 1990) Exhibit 4(f) to the 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. 1987 Incentive Stock Incorporated herein 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 Feb. 24, 1989, between Daniel Incorporated herein by reference to
E. Evans and Bob Evans Farms, Inc.; and Exhibit 10(g) to the Registrant's
Schedule A To Exhibit 10(e)identifying other Annual Report on 10-K for its fiscal
substantially identical Agreements between Bob year ended April 28, 1989 Attached
Evans Farms, Inc. and certain of the executive hereto.
officers of Bob Evans Farms, Inc.
</TABLE>

19
<PAGE> 20

<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(f) Bob Evans Farms, Inc. 1989 Stock Option Plan Incorporated herein by reference To
for Nonemployee Directors Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Aug. 23, 1989 (Registration
No. 33-30665)

10(g) Bob Evans Farms, Inc. 1991 Incentive Stock Incorporated herein by reference To
Option Plan Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Sept. 13, 1991(Registration
No. 33-42778)

10(h) Bob Evans Farms, Inc. Supplemental Executive Incorporated herein 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. Nonqualified Stock Incorporated herein by reference To
Option 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. Long Term Incentive Plan Incorporated herein 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. 1994 Long Term Incentive Incorporated herein 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>

20
<PAGE> 21

<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(l) Bob Evans Farms, Inc. 1998 Supplemental Attached hereto.
Executive Retirement Plan

10(m) Bob Evans Farms, Inc. 1998 Directors Attached hereto.
Compensation Plan
</TABLE>

(b) Reports on Form 8-K
-------------------
There were no current reports on Form 8-K filed during the fiscal
quarter ended April 24, 1998.

(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.

21
<PAGE> 22

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, 1998 By: /s/ DONALD J. RADKOSKI
-------------------------------
Donald J. Radkoski
Group Vice President-Finance Group
and Treasurer (Chief
Financial Officer &
Chief Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/ DANIEL E. EVANS Chairman of the Board, July 22, 1998
- ----------------------------- Chief Executive Officer
Daniel E. Evans and Secretary

/s/ LARRY C. CORBIN Director July 22, 1998
- -----------------------------
Larry C. Corbin

/s/ DANIEL A. FRONK Director July 22, 1998
- -----------------------------
Daniel A. Fronk

/s/ MICHAEL J. GASSER Director July 22, 1998
- -----------------------------
Michael J. Gasser

/s/ E. W. (BILL) INGRAM Director July 22, 1998
- -----------------------------
E. W. (Bill) Ingram

<PAGE> 23

Signature Title Date
- --------- ----- ----

/s/ CHERYL L. KRUEGER Director July 22, 1998
- -----------------------------
Cheryl L. Krueger

/s/ G. ROBERT LUCAS II Director July 22, 1998
- -----------------------------
G. Robert Lucas II

/s/ STEWART K. OWENS Director July 22, 1998
- -----------------------------
Stewart K. Owens

/s/ ROBERT E. H. RABOLD Director July 22, 1998
- -----------------------------
Robert E.H. Rabold

/s/ DONALD J. RADKOSKI Group Vice President- July 22, 1998
- ----------------------------- Finance Group and Treasurer
Donald J. Radkoski (Chief Financial Officer &
Chief Accounting Officer)

<PAGE> 24

ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS
FISCAL YEAR ENDED APRIL 24, 1998
BOB EVANS FARMS, INC.
COLUMBUS, OHIO

<PAGE> 25

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 24, 1998, are incorporated by
reference in Item 8:

Consolidated Balance Sheets -- April 24, 1998, and April 25, 1997

Consolidated Statements of Income -- Years ended April 24, 1998, April
25, 1997, and April 26, 1996

Consolidated Statements of Stockholders' Equity -- Years ended April
24, 1998, April 25, 1997, and April 26, 1996

Consolidated Statements of Cash Flows -- Years ended April 24, 1998,
April 25, 1997, and April 26, 1996

Notes to Consolidated Financial Statements -- April 24, 1998

Report of Ernst & Young LLP, Independent Auditors

25
<PAGE> 26

CONSOLIDATED FINANCIAL REVIEW

Bob Evans Farms, Inc. and Subsidiaries

Dollars and shares in thousands, except per share data

<TABLE>
<CAPTION>
1998 1997 1996* 1995 1994
---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net Sales........................................ $886,838 $822,155 $806,627 $766,968 $699,038
Operating Income................................. 74,460 57,800 46,553 86,861 76,490
Income Before Income Taxes....................... 72,521 56,992 46,745 86,869 76,514
Income Taxes..................................... 26,833 20,916 17,529 33,359 28,332
Net Income....................................... 45,688 36,076 29,216 53,510 48,182
Earnings Per Share of Common Stock
Basic....................................... $1.10 $0.86 $0.69 $1.27 $1.15
Diluted..................................... 1.09 0.86 0.69 1.26 1.14

FINANCIAL POSITION
Working Capital.................................. $(40,870) $(67,426) $(57,532) $(33,195) $(12,111)
Property, Plant and Equipment-Net................ 485,949 473,021 447,243 416,848 349,770
Total Assets..................................... 579,931 564,079 535,813 488,101 413,875
Debt:
Short-Term (Line of Credit)................. 39,420 68,880 59,655 25,600 9,500
Long-Term................................... 1,223 1,587 1,927 2,250 0
Stockholders' Equity............................. 457,196 422,807 409,155 393,872 348,828

SUPPLEMENTAL INFORMATION FOR THE YEAR
Capital Expenditures............................. $47,801 $60,048 $80,967 $94,766 $72,910
Depreciation and Amortization.................... $32,882 $29,544 $28,459 $26,674 $23,937
Weighted-Average Shares Outstanding
Basic....................................... 41,610 41,987 42,311 42,179 42,006
Diluted..................................... 41,803 42,020 42,387 42,408 42,210
Cash Dividends Declared Per Share................ $0.32 $0.32 $0.32 $0.29 $0.27
Common Stock Market Prices:
High........................................ $22.19 $17.00 $21.13 $22.19 $23.25
Low......................................... $13.13 $12.13 $15.25 $19.50 $16.88

SUPPLEMENTAL INFORMATION AT YEAR-END
Employees........................................ 31,189 29,375 28,728 26,656 23,800
Shareholders..................................... 55,980 43,570 37,239 29,479 27,634
Market Price Per Share at Closing................ $20.25 $13.13 $16.13 $20.50 $21.25
Book Value Per Share............................. $10.97 $10.17 $9.68 $9.31 $8.29
</TABLE>

* Fiscal 1996 amounts reflect a pre-tax loss of $22,000 on the write-down
of assets, which reduced the income tax provision by $8,209 and
decreased net income by $13,791, or $0.33 per share. (See Note G in
Notes to Consolidated Financial Statements)

<PAGE> 27

CONSOLIDATED BALANCE SHEETS

Bob Evans Farms, Inc. and Subsidiaries

Dollars in thousands
<TABLE>
<CAPTION>
ASSETS APRIL 24, 1998 APRIL 25, 1997

<S> <C> <C>
CURRENT ASSETS
Cash and Equivalents.............................................. $15,397 $12,283
Trade Accounts Receivable......................................... 17,061 16,394
Inventories....................................................... 22,709 23,600
Federal and State Income Taxes.................................... 1,032 635
Deferred Income Taxes............................................. 7,559 6,182
Prepaid Expenses.................................................. 1,640 2,329
------- -------
TOTAL CURRENT ASSETS......................................... 65,398 61,423

PROPERTY, PLANT AND EQUIPMENT
Land.............................................................. 150,505 145,031
Buildings......................................................... 358,792 335,712
Machinery and Equipment........................................... 189,075 179,134
Construction in Progress.......................................... 271 5,876
Other............................................................. 26,601 21,952
-------- --------
725,244 687,705
Less Accumulated Depreciation..................................... 239,295 214,684
------- -------
NET PROPERTY, PLANT AND EQUIPMENT............................ 485,949 473,021

OTHER ASSETS
Deposits and Other................................................ 3,223 3,403
Long-Term Investments............................................. 6,264 5,101
Deferred Income Taxes............................................. 8,900 10,080
Cost in Excess of Net Assets Acquired............................. 9,399 9,938
Other Intangible Assets........................................... 798 1,113
-------- --------
TOTAL OTHER ASSETS........................................... 28,584 29,635
-------- --------
$579,931 $564,079
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Line of Credit.................................................... $39,420 $68,880
Accounts Payable.................................................. 7,909 7,119
Dividends Payable................................................. 3,334 3,327
Accrued Wages and Related Liabilities............................. 14,644 13,438
Other Accrued Expenses............................................ 40,961 36,085
-------- --------
TOTAL CURRENT LIABILITIES.................................... 106,268 128,849

LONG-TERM LIABILITIES
Deferred Income Taxes............................................. 15,244 10,836
Notes Payable (net of discount of $187 in 1998 and $303 in 1997).. 1,223 1,587
-------- --------
TOTAL LONG-TERM LIABILITIES.................................. 16,467 12,423

STOCKHOLDERS' EQUITY
Common Stock, $.01 par value; authorized 100,000,000
shares; issued 42,638,118 shares in 1998 and 1997............... 426 426
Preferred Stock, $500 par value; authorized 1,200
shares; issued 120 shares in 1998 and 1997...................... 60 60
Capital in Excess of Par Value.................................... 147,213 145,889
Retained Earnings................................................. 323,720 291,364
Treasury Stock, 964,013 shares in 1998 and
1,054,949 shares in 1997, at cost............................... (14,223) (14,932)
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................... 457,196 422,807
-------- --------
$579,931 $564,079
======== ========
See Notes to Consolidated Financial Statements
</TABLE>

27
<PAGE> 28

CONSOLIDATED STATEMENTS OF INCOME

Bob Evans Farms, Inc. and Subsidiaries

YEARS ENDED APRIL 24, 1998, APRIL 25, 1997 AND APRIL 26, 1996

Dollars in thousands, except per share data

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----

<S> <C> <C> <C>
NET SALES.................................................. $886,838 $822,155 $806,627

Cost of Sales.............................................. 271,448 265,470 246,020
Operating Wage and Fringe Benefit Expenses................. 275,559 256,569 248,000
Other Operating Expenses................................... 121,870 113,238 113,828
Selling, General and Administrative Expenses............... 111,860 100,628 102,621
Depreciation Expense....................................... 31,641 28,450 27,605
Loss on Impaired Assets.................................... 0 0 22,000
-------- -------- --------

OPERATING INCOME........................................... 74,460 57,800 46,553

Net Interest Income (Expense).............................. (1,939) (808) 192
-------- -------- --------

INCOME BEFORE INCOME TAXES................................. 72,521 56,992 46,745

PROVISIONS FOR INCOME TAXES

Federal.................................................... 21,901 17,165 14,304
State...................................................... 4,932 3,751 3,225
-------- -------- --------
26,833 20,916 17,529
-------- -------- --------

NET INCOME................................................. $ 45,688 $ 36,076 $ 29,216
======== ======== ========

Earnings Per Share - Basic................................. $1.10 $0.86 $0.69
======== ======== ========

Earnings Per Share - Diluted............................... $1.09 $0.86 $0.69
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements

28
<PAGE> 29

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Bob Evans Farms, Inc. and Subsidiaries

Dollars in thousands

<TABLE>
<CAPTION>
Capital in
Common Preferred Excess of Retained Treasury
Stock Stock Par Value Earnings Stock Total
----- ----- --------- -------- ----- -----

<S> <C> <C> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY AT 4/28/95 $426 $ 0 $144,741 $252,961 $(4,256) $393,872
- -------------------------------------- ------------ ------------ ------------- ------------ ------------- -------------
Net Income............................ 29,216 29,216
Dividends Declared.................... (13,542) (13,542)
Issuance of Preferred Stock........... 60 60
Treasury Stock Repurchased............ (2,091) (2,091)
Treasury Stock Reissued Under
Employee Plans.................... 369 755 1,124
Stock Options Granted Under Employee
Plans............................. 474 474
Other................................. 42 42

STOCKHOLDERS' EQUITY AT 4/26/96 426 60 145,584 268,677 (5,592) 409,155
- -------------------------------------- ------------ ------------ ------------- ------------ ------------- -------------
Net Income............................ 36,076 36,076
Dividends Declared.................... (13,399) (13,399)
Treasury Stock Repurchased............ (9,762) (9,762)
Treasury Stock Reissued Under
Employee Plans.................... 220 422 642
Stock Options Granted Under Employee
Plans............................. 85 85
Other................................. 10 10

STOCKHOLDERS' EQUITY AT 4/25/97 426 60 145,889 291,364 (14,932) 422,807
- -------------------------------------- ------------ ------------ ------------- ------------ ------------- -------------
Net Income............................ 45,688 45,688
Dividends Declared.................... (13,332) (13,332)
Treasury Stock Repurchased............ (3,470) (3,470)
Treasury Stock Reissued Under
Employee Plans.................... 789 4,179 4,968
Stock Options Granted Under Employee
Plans............................. 146 146
Tax Reductions - Employee Plans....... 389 389

STOCKHOLDERS' EQUITY AT 4/24/98 $426 $60 $147,213 $323,720 $(14,223) $457,196
</TABLE>

See Notes to Consolidated Financial Statements

29
<PAGE> 30

CONSOLIDATED STATEMENTS OF CASH FLOWS

Bob Evans Farms, Inc. and Subsidiaries

YEARS ENDED APRIL 24, 1998, APRIL 25, 1997, AND APRIL 26, 1996

Dollars in thousands
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income................................................................ $45,688 $36,076 $29,216
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization......................................... 32,882 29,544 28,459
Deferred Income Taxes................................................. 4,211 2,074 (6,174)
Loss (Gain) On Sale of Property and Equipment......................... 243 (146) 445
Loss on Impaired Assets............................................... 0 0 22,000
Compensation Expense Attributable to Stock Plans...................... 646 159 437
Cash Provided By (Used For) Current Assets and Current Liabilities:
Accounts Receivable................................................... (667) (1,885) 1,061
Inventories........................................................... 891 (2,724) (3,620)
Prepaid Expenses...................................................... 689 934 (327)
Accounts Payable...................................................... 790 1,179 (1,385)
Federal and State Income Taxes........................................ (8) (1,160) (4,056)
Accrued Wages and Related Liabilities................................. 1,206 (807) 928
Other Accrued Expenses................................................ 5,373 3,533 1,421
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES:....................... 91,944 66,777 68,405

INVESTING ACTIVITIES:
Purchase of Property, Plant and Equipment................................. (47,801) (60,048) (80,967)
Purchase of Long-Term Investments......................................... (1,550) (448) (2,590)
Proceeds from Sale of Property, Plant and Equipment....................... 2,492 5,844 522
Other..................................................................... 180 (448) (712)
--------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES:........................... (46,679) (55,100) (83,747)

FINANCING ACTIVITIES:
Cash Dividends Paid....................................................... (13,325) (13,454) (13,228)
Purchase of Treasury Stock................................................ (3,470) (9,762) (2,091)
Line of Credit............................................................ (29,460) 9,225 34,055
Payments on Principal of Note Payable..................................... (364) (340) (323)
Proceeds from Issuance of Preferred Stock................................. 0 0 60
Distribution of Treasury Stock Due to the Exercise of Stock Options
and Employee Bonuses.................................................. 4,468 568 787
--------- --------- ---------
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES:.................................. (42,151) (13,763) 19,260
--------- --------- ---------

INCREASE (DECREASE) IN CASH AND EQUIVALENTS............................... 3,114 (2,086) 3,918
CASH AND EQUIVALENTS AT THE
BEGINNING OF THE YEAR................................................. 12,283 14,369 10,451
-------- -------- --------
CASH AND EQUIVALENTS AT THE END OF THE YEAR............................... $15,397 $12,283 $14,369
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bob Evans Farms, Inc. and Subsidiaries

Dollars in thousands, except per share amounts

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS: Bob Evans Farms, Inc. owns and operates 408
restaurants in 20 states as Bob Evans Restaurants and Owens Family Restaurants.
The company also produces fresh and fully cooked pork 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 1998, 1997 and 1996 refer to fiscal years ended
April 24, 1998; April 25, 1997; and April 26, 1996, 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
($11,467 in 1998 and $11,103 in 1997) and finished goods ($11,242 in 1998 and
$12,497 in 1997).

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.

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 24, 1998, and April 25, 1997, was
$4,076 and $3,537, respectively.

FINANCIAL INSTRUMENTS: The fair values of the company's financial
instruments approximate their carrying values at April 24, 1998, and April 25,
1997. The company entered into an interest rate swap agreement with a bank in
1998 as a hedge against the interest rate risk associated with its borrowings.
The swap agreement, with a notional amount of $25 million, effectively locked in
a portion of the company's

<PAGE> 32

variable-rate line of credit liability at a fixed rate of 6.18% for 10 years.
The differential to be paid or received is accrued as interest rates change and
is recognized as an adjustment to interest expense in the statements of income.
The company does not use derivative financial instruments for speculative
purposes.

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 $38,564; $36,841; and $37,626 in 1998, 1997 and 1996,
respectively.

COST OF SALES: Cost of sales represents food cost in the restaurant
segment and cost of materials in the food products segment.

EARNINGS PER SHARE: In 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share. The company adopted SFAS No. 128 in the third quarter of
fiscal 1998. All earnings per share data presented in these financial statements
have been restated to conform with SFAS No. 128. Basic earnings per share
computations are based on the weighted-average number of shares of common stock
outstanding during the period presented. Diluted earnings per share calculations
reflect the assumed exercise and conversion of employee stock options.

The numerator in calculating both basic and diluted earnings per share
for each year is reported net income. The denominator is based on the following
weighted-average number of common shares outstanding:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Basic.......................................... 41,610,000 41,987,000 42,311,000
Effect of Dilutive Stock Options............... 193,000 33,000 76,000
------------ ------------- -------------
Diluted........................................ 41,803,000 42,020,000 42,387,000
</TABLE>

Options to purchase 776,000; 1,172,000; and 984,000 shares of common
stock in 1998, 1997 and 1996, respectively, were excluded from the diluted
earnings per share calculations since they were anti-dilutive.

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 1997 and 1996 amounts have been reclassified
to conform with the 1998 classification.

EFFECT OF NEW ACCOUNTING STANDARDS: In 1997, the FASB issued SFAS No.
130, Reporting Comprehensive Income, which requires that an enterprise report
the change in its net assets during the period from nonowner sources, and SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information,
which establishes annual and interim reporting and disclosure standards for an
enterprise's operating segments. Adoption of these statements will not impact
the company's consolidated financial position, results of operations nor cash
flows, and will be limited to the form and content of its

<PAGE> 33

disclosures. Both statements are effective for fiscal years beginning after Dec.
15, 1997, and will be adopted by the company in fiscal 1999.

NOTE B - CREDIT ARRANGEMENTS

The company has arrangements with certain banks from which it may
borrow up to $120,000 on a short-term basis. The arrangements are reviewed
annually for renewal. At April 24, 1998, $39,420 was outstanding under these
arrangements. During 1998 and 1997, respectively, the maximum amounts
outstanding under these arrangements were $72,050 and $74,225, and the average
amounts outstanding were $53,685 and $66,612 with weighted-average interest
rates of 6.26% and 6.08%. All interest paid on these arrangements is at floating
rates.

Interest costs of $1,085; $2,934; and $2,394 incurred in 1998, 1997 and
1996, respectively, were capitalized in connection with the company's
construction activities.

NOTE C - PROFIT SHARING PLAN

The company has a profit sharing plan which covers substantially all
employees who have 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 1998, 1997 and 1996 were
$3,209; $2,343; and $2,994, respectively.

NOTE D - COMMITMENTS AND CONTINGENCIES

At April 24, 1998, the company had contractual commitments
approximating $22,930 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, in the opinion of the
company, these actions should not ultimately have a material adverse effect on
the financial position or results of operations of the company.

NOTE E - STOCK-BASED COMPENSATION 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 not be less than 50% of the fair market value of the stock at the
date of grant; all other plans provide that the option price shall be the fair
market value of the stock at the grant date. Options may be granted for a period
of up to 10 years under the 1985, 1987, 1991 and 1994 plans, and five years
under the 1989 plan.

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.

<PAGE> 34

Since the company intends to fund and settle its obligations under the SERP on a
current basis, the company anticipates that no long-term unfunded pension
obligations will arise under the SERP.

The following table summarizes option-related activity for the last
three years:

<TABLE>
<CAPTION>
SHARES PRICE RANGE
------ -----------
<S> <C> <C> <C>
OUTSTANDING, APRIL 28, 1995 1,464,004 $ 8.63 to $21.25

Granted............................................ 198,275 10.19 to 16.13
Exercised.......................................... (44,914) 8.63 to 20.19
Canceled or expired................................ (54,379) 8.69 to 20.50

OUTSTANDING, APRIL 26, 1996 1,562,986 8.69 to 21.25

Granted............................................ 152,913 8.00 to 16.50
Exercised.......................................... (19,662) 13.69 to 13.97
Canceled or expired................................ (179,547) 8.00 to 20.50

OUTSTANDING, APRIL 25, 1997 1,516,690 8.00 to 21.25

Granted............................................ 378,364 6.56 to 16.44
Exercised.......................................... (280,613) 8.69 to 20.50
Canceled or expired................................ (97,224) 13.13 to 20.50

OUTSTANDING, APRIL 24, 1998 1,517,217 6.56 to 21.25
</TABLE>

At April 24, 1998, options for 1,517,217 shares were outstanding at a
weighted-average exercise price of $15.70 and options for 842,939 shares were
exercisable at a weighted-average exercise price of $16.61. In addition to the
outstanding options, 750,045 stock option shares were available for grant at
April 24, 1998.

The following table summarizes information regarding stock options
outstanding at April 24, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
NUMBER WEIGHTED-AVG. WEIGHTED-AVG. NUMBER WEIGHTED-AVG.
OUTSTANDING REMAINING EXERCISE EXERCISABLE EXERCISE
RANGE OF EXERCISE PRICES AT 4/24/98 CONTRACTUAL LIFE PRICE AT 4/24/98 PRICE
- ----------------------------- ---------------- -------------------- ------------------ --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$ 6.56 to $10.99 323,420 14.15 $ 9.37 210,278 $ 9.34
11.00 to 14.99 97,920 4.00 13.13 12,960 13.13
15.00 to 15.99 343,956 8.15 15.31 11,760 15.31
16.00 to 18.99 136,391 2.94 16.30 45,950 16.50
19.00 to 19.99 353,560 0.51 19.00 353,560 19.00
20.00 to 21.25 261,970 1.49 20.24 208,431 20.21

$ 6.56 to $21.25 1,517,217 5.76 $15.70 842,939 $16.61
</TABLE>

The company applies Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for employee stock options. Accordingly, no compensation expense has
been recognized for the stock option plans when the exercise price of the
options is equal to or greater than the fair market value of the stock at the
grant date. Compensation expense

<PAGE> 35

recognized in income for stock options granted at less than fair market value in
1998, 1997 and 1996 was $146, $85 and $474, respectively. The company has
adopted the disclosure-only provisions of SFAS No. 123, Accounting for
Stock-Based Compensation. Had the company elected to recognize compensation
expense using the fair value method prescribed by SFAS No. 123, net income and
earnings per share would not have been materially affected for the years
reported. The financial effects of applying SFAS No. 123 for the years reported
may not be representative of the effects on reported net income and earnings per
share in future years.

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
1998 and 1997, no shares were awarded as part of the LTIP. Compensation expense
attributable to the plan was $500 in 1998, $74 in 1997 and de minimis in 1996.

NOTE F - 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 24, 1998, and April 25, 1997, were as follows:

<TABLE>
<CAPTION>
1998 1997
---- ----
Deferred tax liabilities:
<S> <C> <C>
Accelerated depreciation..................... $15,030 $ 9,717
Other taxes.................................. 214 1,119
--------- --------

Total deferred tax liabilities............... 15,244 10,836

Deferred tax assets:
Loss on impaired assets...................... 7,478 8,263
Self-insurance............................... 5,400 4,653
Vacation pay................................. 1,012 1,018
Stock compensation plans..................... 1,384 1,333
Accrued bonus................................ 201 425
Inventory and other.......................... 984 570
--------- --------
Total deferred tax assets.................... 16,459 16,262
--------- --------

NET DEFERRED TAX ASSETS.................. $1,215 $ 5,426
========= ========
</TABLE>

35
<PAGE> 36

Significant components of the provisions for income taxes are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current
Federal...................................... $20,880 $15,896 $20,113
State........................................ 5,054 2,983 4,209
------- ------- -------
Total Current............................ 25,934 18,879 24,322

Deferred:
Federal...................................... 1,021 1,269 (5,809)
State........................................ (122) 768 (984)
------- ------- -------
Total Deferred........................... 899 2,037 (6,793)
$26,833 $20,916 $17,529
======= ======= =======
</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>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Tax at statutory rate............................. $25,382 $19,947 $16,400
State income tax (net)............................ 3,206 2,438 2,100
Other............................................. (1,755) (1,469) (971)
--------- --------- ----------

Provisions for income taxes....................... $26,833 $20,916 $17,529
========= ========= ==========
</TABLE>

Taxes paid during 1998, 1997 and 1996 were $22,630; $22,147; and $28,429,
respectively.

NOTE G - IMPAIRMENT OF LONG-LIVED ASSETS

In 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 SFAS 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 were impaired, and wrote them down by $22,000 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 loss was
comprised of a $21,370 write-down in the restaurant segment and a $630
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 income 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 cash equivalents
and income taxes.

<PAGE> 37

Information on the company's industry segments is summarized as
follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Sales
Restaurant operations....................... $645,330 $594,914 $590,063
Food products............................... 275,186 264,010 253,202
-------- -------- --------
920,516 858,924 843,265
Intersegment sales of food products......... (33,678) (36,769) (36,638)
-------- -------- --------
TOTAL................................... $886,838 $822,155 $806,627
======== ======== ========

Operating Income
Restaurant operations....................... $ 57,922 $ 50,892 $ 29,384*
Food products............................... 16,538 6,908 17,169*
-------- -------- --------
TOTAL................................... $ 74,460 $ 57,800 $ 46,553*
======== ======== ========

Depreciation and Amortization Expense
Restaurant operations....................... $ 22,991 $ 20,137 $ 20,911
Food products............................... 9,891 9,407 7,548
-------- -------- --------
TOTAL................................... $ 32,882 $ 29,544 $ 28,459
======== ======== ========

Capital Expenditures
Restaurant operations....................... $ 41,794 $ 51,808 $ 56,429
Food products............................... 6,007 8,240 24,538
-------- -------- --------
TOTAL................................... $ 47,801 $ 60,048 $ 80,967
======== ======== ========

Identifiable Assets
Restaurant operations....................... $448,314 $431,332 $403,029
Food products............................... 111,340 113,875 112,091
-------- -------- --------
559,654 545,207 515,120
General corporate assets.................... 20,277 18,872 20,693
-------- -------- --------
TOTAL................................... $579,931 $564,079 $535,813
======== ======== ========
</TABLE>

*Includes pre-tax loss of $21,370 on the write-down of assets in the restaurant
segment and a pre-tax loss of $630 on the write-down of assets in the food
products segment. (See Note G)

<PAGE> 38

NOTE I - QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------------------------- ------------------------ ---------------------- ------------------------
1998 1997 1998 1997 1998 1997 1998 1997
------------- ----------- ----------- ------------ ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales........... $222,045 $213,060 $224,675 $206,244 $219,621 $199,189 $220,497 $203,662
Gross profit........ 150,953 145,087 155,443 139,812 153,073 133,020 155,921 138,766
Operating income.... 17,062 14,176 19,369 15,038 18,104 12,442 19,925 16,144
Net income.......... 10,361 8,901 11,698 9,682 11,145 7,806 12,484 9,687
Earnings per share
Basic.......... $ 0.25 $ 0.21 $ 0.28 $ 0.23 $ 0.27 $ 0.19 $ 0.30 $ 0.23
Diluted........ 0.25 0.21 0.28 0.23 0.27 0.19 0.30 0.23
Common stock market
prices:
High........... $18.00 $17.00 $19.63 $14.88 $22.19 $13.88 $21.88 $14.25
Low............ 13.13 13.50 16.44 12.75 17.75 12.13 19.06 13.00
Cash dividends
declared $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08
</TABLE>

o Gross profit represents net sales less cost of sales (materials)
o Each fiscal quarter is comprised of a 13-week period
o Total quarterly earnings per share may not equal the annual amount because
earnings per share is calculated independently for each quarter
o Stock prices are for the NASDAQ National Market (trading symbol - BOBE),
which is the principal market for the company's common stock
o The number of record holders of the company's common stock at May 29, 1998,
was 55,980

38
<PAGE> 39

AUDITOR'S REPORT

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 24, 1998, and April 25, 1997, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended April 24, 1998. 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 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 24, 1998, and April 25, 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended April 24, 1998, in conformity with generally
accepted accounting principles.

/s/ Ernst & Young LLP
- ---------------------
Columbus, Ohio
May 29, 1998

39
<PAGE> 40

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 $64.7 million, or 7.9%, in 1998 compared to 1997. The increase was
comprised of a $50.4 million increase in restaurant segment sales and a $14.3
million increase in food products segment sales. Net sales in 1997 represented a
1.9% increase over 1996 sales.

Restaurant segment sales accounted for 72.8%, 72.4% and 73.2% of total
sales for 1998, 1997 and 1996, respectively. The $50.4 million additional
restaurant sales in 1998 represented an 8.5% increase over 1997 sales, which
were 0.8% higher than 1996 sales. Excluding the Cantina del Rio Mexican concept
which the company closed in August 1996, the fiscal 1997 sales increase was
4.0%.

The increase in sales in 1998 was the result of a 4.6% increase in
same-store sales as well as more restaurants in operation. Same-store sales
increased in all four quarters of 1998, and included an average menu price
increase of 2.9% for the year. Menu price increases were 1.9% in 1997 and 2.8%
in 1996. The improvement in same-store sales has continued unabated since the
fall of 1996. New restaurant openings also provided additional sales growth:
stores in operation totaled 408 at the end of 1998 compared to 394 at the end of
1997. Included in fiscal 1998 openings were the company's first restaurants in
North Carolina and Massachusetts. During 1998, the company closed five
under-performing restaurants.

Management believes that a renewed focus on customer service as well as
continuing efforts to fine-tune the menu have contributed to improved restaurant
sales. The company has made a commitment to have more servers working during
peak demand times at the restaurants. Additionally, increased efforts have been
made to ensure that each restaurant has a fully staffed management team. As a
result of these commitments, management believes that employees and managers are
able to spend more time with each customer resulting in improved customer
satisfaction and ultimately, increased sales. In both 1998 and 1997, the
company's menus were updated at various times to keep them fresh and to provide
seasonal favorites. Additional goals of menu changes were to focus attention on
the most popular items, simplify preparation and reduce the number of
ingredients in-store. Various promotional programs were employed throughout 1998
and 1997, including those involving gift certificates and children's programs.
No single menu item nor promotional program had a material impact on sales
although management believes that without the menu changes or promotional
programs, same-store sales comparisons would have been less favorable.

Food products segment sales accounted for 27.2%, 27.6% and 26.8% of
total sales for 1998, 1997 and 1996, respectively. The $14.3 million (6.3%)
sales increase in the food products segment in 1998 was comprised of an $11.2
million sales increase in sausage and other products and a $3.1 million increase
in sales at Hickory Specialties. The $10.7 million (4.9%) 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.

Increases in sausage sales in 1998 were due mostly to a 3% increase in
pounds sold of comparable products. Additional sales were provided by newer
products, such as refrigerated home fries, sausage gravy and ham steak. In 1997,
comparable pounds sold declined 4.0%, but wholesale price increases

<PAGE> 41

intended to help offset the impact of high hog costs resulted in the overall
sausage sales increase. Additional volume in 1997 was provided by several new
products including: frozen entrees, mini-hotcakes with a maple sausage patty,
and the geographical expansion of other products. Although wholesale prices the
company charges for its sausage products were increased twice in 1997 and
decreased once in 1998 (April), the average price charged in 1998 was roughly
comparable to 1997. The benchmark retail price averaged approximately $3.07 in
both 1998 and 1997 and $2.74 in 1996.

Mrs. Giles Country Kitchens and Hickory Specialties had combined sales
of $55.7 million in 1998, $52.2 million in 1997 and $49.1 million in 1996. These
amounts represented 23.1%, 23.0% and 22.7% of total food products segment sales
in 1998, 1997 and 1996, respectively. The sales increases in both 1998 and 1997
occurred in charcoal products; sales of salad products and liquid-smoke
flavorings were not appreciably different.

COST OF SALES

As a percentage of sales, the consolidated cost of sales (cost of
materials) was 30.6%, 32.3% and 30.5% in 1998, 1997 and 1996, respectively. The
restaurant segment cost of sales percentage (food cost) was 26.2%, 26.6% and
26.8% in 1998, 1997 and 1996, respectively. These decreases were due mostly to
various changes in product mix as well as the effect of menu price increases
discussed in the sales section above. The food products segment cost of sales
percentage was 42.5%, 47.2% and 40.6% in 1998, 1997 and 1996, respectively. The
fluctuations of this measure were due to significant changes in hog costs, which
averaged $40.43, $51.05 and $36.43 per hundredweight in 1998, 1997 and 1996,
respectively. These averages represented a 20.8% decrease in 1998 and a 40.1%
increase in 1997. As hog prices rose quickly in early 1997 and remained
relatively high through most of the first half of 1998, the company raised its
prices several times to help mitigate the financial impact of the increase in
material costs. However, the price increases were limited in order to preserve
market share. Hog costs dropped in the last half of 1998, and the company
responded with a price reduction in April 1998.

OPERATING WAGE AND FRINGE BENEFIT EXPENSES

Consolidated operating wage and fringe benefit expenses were 31.1%,
31.2% and 30.7% of sales in 1998, 1997 and 1996, respectively. In the restaurant
segment, labor and fringe benefit expenses were 38.3%, 38.5% and 37.4% of sales
in 1998, 1997 and 1996, respectively. Although historically high, the relative
improvement from 1997 to 1998 was the result of lower health insurance costs as
well as the closing in August 1996 of the Cantina del Rio restaurants, which had
much higher wage costs than the company's other restaurants. Without these
positive impacts, 1998 comparisons would have been less favorable due to higher
hourly labor costs. The increase from 1996 to 1997 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 11.8%, 12.0% and 12.8% of sales in 1998, 1997 and 1996,
respectively. The improvement in 1998 was attributable mostly to lower health
insurance costs as well as operating efficiencies attained by transferring the
production of some products to different facilities. The improvement in 1997 was
due to the fact that the growth in food products sales was primarily the result
of price increases rather than additional production, thereby resulting in the
lower ratio; the volume of sausage produced was lower in 1997 than in 1996.

<PAGE> 42

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 13.7%, 13.8% and 14.1% of sales in 1998, 1997 and 1996,
respectively. The ratios for both 1998 and 1997 were positively impacted in
comparison to the preceding year by the August 1996 closing of the Cantina del
Rio restaurants, which had higher operating expenses than the company's other
restaurants. Also benefiting the 1998 comparison was a small decrease in
utilities expense. However, the benefit provided by these items in 1998 was
mostly offset by increases in restaurant supplies and general liability
expenses. Benefiting the 1997 comparison were lower general liability insurance
and advertising expenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

As a percentage of sales, consolidated selling, general and
administrative expenses were 12.6%, 12.2% and 12.7% in 1998, 1997 and 1996,
respectively. The most significant components of selling, general and
administrative expenses were wages and fringe benefits and food products segment
promotional and advertising expenses. As hog costs trended downward in the last
half of 1998 (see cost of sales section earlier), the company opted to
significantly increase promotional activity to stimulate sales rather than to
decrease base prices. This policy led to significant increases in selling,
general and administrative expenses in 1998, although sausage profit margins
increased considerably due to the lower hog costs. The decrease in 1997 was due
mostly to lower corporate administrative expenses which were offset somewhat by
increased promotional expenses at Hickory Specialties.

TAXES

The effective federal and state income tax rates were 37.0%, 36.7% and
37.5% in 1998, 1997 and 1996, respectively. The lower tax rate in 1997 was
attributable mostly to decreases in state income taxes and an increase in
investment tax credit activity. In fiscal 1999, the effective tax rate is
expected to approximate 37.0%.

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 $15.4 million at
April 24, 1998, and $12.3 million at April 25, 1997. Dividends paid represented
29.2% of net income in 1998 and 37.3% of net income in 1997.

Bank lines of credit were used for liquidity needs and capital
expansion during 1998 and 1997. At April 24, 1998, $39.4 million was outstanding
under such arrangements. The bank lines of credit available were $120.0 million
during 1998. The company believes that the funds needed for capital expenditures
and working capital during 1999 will be generated internally and from available
bank lines of credit.

At April 24, 1998, the company had contractual commitments for
restaurant construction, plant equipment additions and the purchases of land and
inventory of approximately $22.9 million. Capital expenditures for 1999 are
expected to approximate $58.0 million and depreciation and amortization expenses
are expected to approximate $35.0 million. The company plans to open
approximately 23 to 28 restaurants in fiscal 1999, as well as upgrade various
property, plant and equipment in both segments.

<PAGE> 43

YEAR 2000

In 1998, the company established a formal plan to assess the impact of
the year 2000 on the software and hardware utilized in its internal operations,
including those that affect customers, suppliers and other constituents. The
company intends to have all changes to software and hardware necessitated by the
year 2000 issue completed in a timely manner, and that all such systems will be
year 2000 compliant by Dec. 31, 1999. The company is also contacting critical
suppliers of products and services to determine that the suppliers' operations
and the products and services they provide are or will be year 2000 compliant.
The current estimated costs associated with the necessary changes are not
material in any year to the company's consolidated financial position, results
of operations or cash flows. However, the company could be adversely impacted if
its suppliers and customers do not make necessary changes to their own systems
and products successfully and in a timely manner. All modification costs
relating to this issue are expensed as incurred.

<PAGE> 44

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: competition, same-store
sales, labor and fringe benefit expenses, restaurant closings, governmental
initiatives and 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. Several restaurant chains have struggled to
maintain market share and have had to close substantial numbers of locations.
Same-store sales for Bob Evans Restaurants rebounded strongly in 1998 (4.6%
increase) after two years of declines: 1.0% in 1997 and 1.8% in 1996. The impact
of same-store sales on overall sales and corresponding profit margins is
significant. Management is continually evaluating all restaurants in order to
identify under-performing units. In fiscal 1998, the company closed five
restaurants. Depending on profitability, as well as changes in site and access,
the company may close other restaurants in fiscal 1999.

Competition for qualified labor was intense in 1998, and is expected to
continue in fiscal 1999, 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 significantly in 1998 and 1997, which had a
direct impact on operating profit. Congress is currently considering additional
increases to the minimum wage rate which would significantly impact the
company's labor costs.

Plans are to add approximately 23 to 28 new restaurants in 1999 in
comparison to 19 in 1998 and 23 in 1997. This growth plan is still slower than
the 37 restaurants and 44 restaurants opened in fiscal 1996 and fiscal 1995,
respectively. Availability of sites and weather conditions generate uncertainty
in restaurant expansion.

Food products segment business risks include: hog costs, governmental
initiatives and general (economy, weather, consumer acceptance, etc.). In the
food products segment, uncertainties in fiscal 1999 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 in fiscal 1999 include shredded hash browns and cinnamon biscuits.

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 manufacturing of
its food products. Continued emphasis upon quality control programs, such as the
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. Although the company is planning on having all
its systems year 2000 compliant on a timely basis, the company could be
adversely impacted if any of its systems, or those of any of its significant
suppliers or customers, are not 2000 compliant in a timely

44
<PAGE> 45

manner. Other uncertainties, such as changes in general economic conditions,
weather and consumers' changing lifestyles 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 1999 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> 46

BOB EVANS FARMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED APRIL 24, 1998

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
3(a) Certificate of Incorporation of the Registrant Incorporated herein by reference to
(filed with the Delaware secretary of state on Exhibit 3 (a) to the Registrant's
Nov. 4, 1985) Annual Report on Form 10-K for its
fiscal year ended April 24, 1987
(File No. 0-1667)

3(b) Certificate of Amendment of Certificate Incorporated herein by reference to
of Incorporation of the Registrant dated Exhibit 3(b) to the Registrant's
Aug. 26, 1987 (filed with the Delaware Annual Report on Form 10-K for its
secretary of state on Sept. 4, 1987) fiscal year ended April 28, 1989
(File No. 0-1667)

3(c) Certificate of Adoption of Amendment to Incorporated herein by reference to
Certificate of Incorporation of the Registrant Exhibit 3(c) to the Registrant's
dated Aug. 9, 1993 (filed with the Delaware Annual Report on Form 10-K for its
secretary of state on Aug. 10, 1993) fiscal year ended April 29, 1994
(File No. 0-1667)

3(d) Restated Certificate of Incorporation of Incorporated herein by reference to
Registrant reflecting amendments through Aug. Exhibit 3(d) to the Registrant's
10, 1993. Note: filed for purposes of SEC Annual Report on Form 10-K for its
reporting compliance only -- this document has fiscal year ended April 29, 1994
not been filed with the Delaware secretary of (File No. 0-1667)
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>

<PAGE> 47

<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
3(f) Amended By-Laws of the Registrant. Note: filed Attached hereto.
for purposes of SEC reporting compliance only

10(a) Restated Bob Evans Farms, Inc. and Affiliates Incorporated herein by reference to
401K Retirement Plan (effective Jan. 1, 1994, Exhibit 10(a) to the Registrant's
except as otherwise provided) Annual Report on Form 10-K for the
fiscal year ended April 28, 1995
(File No. 0-1667)

10(b) Amendment No. 1 to the Bob Evans Farms, Inc. and Incorporated herein by reference to
Affiliates 401K Retirement Plan Exhibit 10(b) to the Registrant's
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 Affiliates 401K Incorporated herein by reference to
Retirement Plan Trust (effective May 1, 1990) Exhibit 4(f) to the Registrant's Pre-
Effective Amendment No. 1 to Form S-8
Registration Statement, filed April 27, 1990
(Registration No. 33-34149)

10(e) Agreement, dated Feb. 24, 1989, between Daniel Incorporated herein by reference to
E. Evans and Bob Evans Farms, Inc.; and, Exhibit 10(g) to the Registrant's
Schedule A To Exhibit 10(e) identifying other Annual Report on 10-K for its fiscal
substantially identical Agreements between Bob year ended April 28, 1989 (File
Evans Farms, Inc. and certain of the executive No. 0-1667); Attached hereto.
officers of Bob Evans Farms, Inc.
</TABLE>

47
<PAGE> 48

<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(f) Bob Evans Farms, Inc. 1989 Stock Option Plan for Incorporated herein by reference To
Nonemployee Directors Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Aug. 23, 1989
(Registration No. 33-30665)

10(h) Bob Evans Farms, Inc. Supplemental Executive Incorporated herein 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. Nonqualified Stock Option Incorporated herein 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. Long Term Incentive Plan Incorporated herein 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. 1994 Long Term Incentive Incorporated herein 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>

<PAGE> 49

<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<S> <C> <C>
10(l) Bob Evans Farms, Inc. 1998 Supplemental Attached hereto.
Executive Retirement Plan

10(m) Bob Evans Farms, Inc. 1998 Directors Attached hereto.
Compensation Plan

13 Registrant's Annual Report to Stockholders for Attached hereto.
the fiscal year ended April 24, 1998 (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 Attached hereto.

23 Consent of Ernst & Young, LLP Attached hereto.

27 Financial Data Schedule Attached hereto.
</TABLE>

<PAGE> 1

Exhibit 3(f)

AMENDED
BY-LAWS
OF
BOB EVANS FARMS, INC.

ARTICLE I
OFFICES

Section 1. The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware.

Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.

ARTICLE II
MEETINGS OF STOCKHOLDERS

Section 1. All meetings of the stockholders shall be held at such place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.

Section 2. Annual meetings of stockholders for the purpose of electing
directors and for the transaction of such other proper business as may come
before such meetings shall be held on the second Monday in September if not a
legal holiday, and if a legal holiday, then on the next day following, or on
such other date as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.

Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.

Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the corporation's principal office. The
list shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is present.

Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chief executive officer and shall be called
by the chief executive officer or secretary at the request in writing of
two--thirds of the board of directors or of the holders of a majority of the
stock issued and outstanding and entitled to

50
<PAGE> 2

vote on the date such request was received by the corporation. Such request
shall state the purpose or purposes of the proposed meeting.

Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.

Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.

Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation or by--laws a different vote is required in which
case such express provision shall govern and control the decision of such
question.

Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after eleven
months from its date, unless the proxy provides for a longer period.

Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by all of the holders of outstanding stock who would be
entitled to notice of such meeting.

ARTICLE III
DIRECTORS

Section 1. The number of directors of the corporation shall be not less
than nine (9) nor more than fifteen (15). Initially there shall be nine (9)
directors and thereafter the number of directors shall be as provided from time
to time in the by--laws, provided that no amendment to the by--laws decreasing
the number of directors shall have the effect of shortening the term of any
incumbent director, and provided further that no action shall be taken by the
directors (whether through amendment of the by--laws or otherwise) to increase
the number of directors as provided in the by--laws from time to time unless at
least

51
<PAGE> 3

eighty percent (80%) of the directors then in office shall concur in said
action. Directors need not be stockholders.

Commencing with the election of directors at the 1986 annual meeting of
stockholders, the board of directors shall be divided into three classes,
designated class I, class II and class III, as nearly equal in number as
possible, and the term of office of directors in one class shall expire at each
annual meeting of stockholders, and in all cases as to each director until a
successor shall be elected and shall qualify, or until his earlier resignation,
removal from office, death or incapacity. Additional directorships resulting
from an increase in number of directors shall be apportioned among the classes
as equally as possible. The initial term of office of directors of class I shall
expire at the annual meeting of stockholders in 1987, that of class II shall
expire at the annual meeting of stockholders in 1988, and that of class III
shall expire at the annual meeting of stockholders in 1989, and in all cases as
to each director until a successor shall be elected and shall qualify, or until
his earlier resignation, removal from office, death or incapacity. At each
annual meeting of stockholders the number of directors equal to the number of
directors of the class whose term expires at the time of such meeting (or, if
less, the number of directors properly nominated and qualified for election)
shall be elected to hold office until the third succeeding annual meeting of
stockholders after their election.

Section 2. Vacancies and newly--created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, or by a sole remaining director, and the directors
so chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until their successors are duly elected and
shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.

Section 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by--laws directed or required to be
exercised or done by the stockholders.

Section 4. Only persons who are nominated in accordance with the procedures
set forth in these By-laws shall be eligible to serve as directors. Nominations
of persons for election to the Board may be made at a meeting of stockholders
(a) by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation who (i) is a stockholder of record as of the record date for
the Annual Meeting of Stockholders, (ii) is entitled to vote for the election of
directors at such meeting and (iii) complies with the notice procedures set
forth in this Section 4. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 60 nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting or such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the Corporation's books,
of such stockholder and (ii) the class and number of shares of

52
<PAGE> 4

the Corporation which are beneficially owned by such stockholder. At the request
of the Board, any person nominated by the Board for election as a director shall
furnish to the Secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible to serve as a director of the Corporation unless
nominated in accordance with the procedures set forth in these Bylaws. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws and that the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this Section 4, a stockholder shall
also comply with all applicable requirements of the Securities and Exchange Act
of 1934, as amended, and the rules and regulations thereunder with respect to
the matters set forth in this Section 4.

MEETINGS OF THE BOARD OF DIRECTORS

Section 5. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.

Section 6. The first meeting of each newly elected board of directors shall
be held immediately after the annual meeting of stockholders at the same place
as such annual meeting is held and no notice of such meeting shall be necessary
to the newly elected directors in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held at the
time and place provided herein, the meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided for special
meetings of the board of directors, or as shall be specified in a written waiver
signed by all of the directors.

Section 7. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.

Section 8. Special meetings of the board of directors may be called by the
chairman of the board or the president on three days' notice to each director,
either personally or by mail or by telegram; special meetings shall be called by
the chairman of the board or the president or the secretary in like manner and
on like notice on the written request of two directors.

Section 9. At all meetings of the board of directors a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

Section 10. Unless otherwise restricted by the certificate of incorporation
or these by--laws, any action required or permitted to be taken at any meeting
of the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board of directors or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board of directors or committee.

Section 11. Unless otherwise restricted by the certificate of incorporation
or these by--laws, members of the board of directors, or any committee
designated by the board of directors, may participate in a meeting of the board
of directors, or any committee, by means of conference telephone or

53
<PAGE> 5

similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

COMMITTEES OF DIRECTORS

Section 12. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of not less than three directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.

In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.

Any such committee to the extent provided in the resolution of the board of
directors, shall have and may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.

Section 13. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.

COMPENSATION OF DIRECTORS

Section 14. Unless otherwise restricted by the certificate of incorporation
or these by--laws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

REMOVAL OF DIRECTORS

Section l5. Notwithstanding any other provisions of the certificate of
incorporation or the by--laws of the corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, the certificate of
incorporation or the by--laws of the corporation), any director or the entire
board of directors of the corporation may be removed from office at any time,
with or without cause, but only by the affirmative vote of the holders of at
least eighty percent (80%) of all of the outstanding shares of capital stock of
the corporation entitled to vote on the election of directors at a meeting of
stockholders called for that purpose, except that if the board of directors, by
an affirmative vote of at least two--thirds (66-2/3%)

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<PAGE> 6

of the entire board of directors, recommends removal of a director to the
stockholders, such removal may be effected by the affirmative vote of the
holders of at least a majority of the outstanding shares of capital stock of the
corporation entitled to vote on the election of directors at a meeting of
stockholders for that purpose.

ARTICLE IV
NOTICES

Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.

Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by--laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

ARTICLE V
OFFICERS

Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a chairman of the board and chief executive officer, a
president, a vice-president, a secretary and a treasurer. The board of directors
may also choose additional vice--presidents, (including Senior, executive or
assistant vice--presidents), and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by--laws otherwise provides.

Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a chairman, a president, one or more
vice--presidents, a secretary and a treasurer.

Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.

Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.

Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.

55
<PAGE> 7

CHAIRMAN OF THE BOARD
(CHIEF EXECUTIVE OFFICER)

Section 6. The chairman of the board of directors shall be the chief
executive officer of the corporation and shall have general control and
management of the business affairs and policies of the corporation. He shall be
generally responsible for the proper conduct of the business of the corporation.
During the absence or disability of the president, he shall exercise all the
powers and discharge all the duties of the president. He shall preside at all
meetings of the stockholders and of the board of directors at which he is
present; and, in his absence, the president shall preside at such meetings. He
shall have such other powers and perform such other duties as from time to time
may be conferred or imposed upon him by the board of directors.

Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.

THE PRESIDENT

Section 8. The president of the corporation shall be the principal
operating and administrative officer of the corporation. If there is no chairman
of the board or during the absence or disability of the chairman of the board,
he shall exercise all of the powers and discharge all of the duties of the
chairman of the board. He shall, in the absence of the chairman of the board,
possess power to sign all certificates, contracts and other instruments of the
corporation. He shall, in the absence of the chairman of the board, preside at
all meetings of the stockholders and of the board of directors. He shall perform
all such other duties as are incident to his office or are properly required of
him by the board of directors.

THE VICE--PRESIDENTS

Section 9. In the absence of the president or in the event of his inability
or refusal to act, the vice--president (or in the event there be more than one
vice--president, the vice--presidents in the order designated by the directors,
or in the absence of any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice--presidents shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.

THE SECRETARY AND ASSISTANT SECRETARY

Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
chief executive officer, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.

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<PAGE> 8

Section 11. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

Section 12. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.

Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chief executive officer and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the corporation.

Section 14. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed each year) in such sum and with such
surety or sureties as shall be satisfactory to the board of directors for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.

Section 15. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.

ARTICLE VI
CERTIFICATE OF STOCK

Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman of the board of directors, or the president or a vice--president and
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.

Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.

LOST CERTIFICATES

Section 3. The board of directors (through the corporation's duly
authorized officers) may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of

<PAGE> 9

that fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
board of directors (through the corporation's duly authorized officers) may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

TRANSFER OF STOCK

Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

FIXING RECORD DATE

Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.

REGISTERED STOCKHOLDERS

Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS

Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.

Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, deem proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall

58
<PAGE> 10

deem conducive to the interest of the corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.

ANNUAL STATEMENT

Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.

CHECKS

Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.

FISCAL YEAR

Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.

SEAL

Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.

ARTICLE VIII
AMENDMENTS

Section 1. These by-laws may be amended or repealed by affirmative vote of
the holders of record of shares entitling them to exercise a majority of the
voting power on such proposal; provided, however, that the provisions set forth
in this Article VIII, in Article II, Sections 5 and 8 and in Article III,
Sections 1 and 14, herein may not be repealed or amended in any respect unless
such action is approved by the affirmative vote of the holders of eighty percent
(80%) of the stock issued and outstanding and entitled to vote thereon.

ARTICLE IX
INDEMNIFICATION

Section 1. Each director or officer of the Corporation who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or officer of the Corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted by Delaware Law against all expense, liability and loss (including
attorneys' fees, judgments, fines, taxes, penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith; provided, however, that, except as provided in Section 2 hereof with
respect to

59
<PAGE> 11

proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Section
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if Delaware Law so
requires, expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be advanced only upon delivery to the Corporation
of an undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this Section or otherwise.

Section 2. If a claim under Section 1 is not paid in full by the
Corporation within sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall also be entitled to be paid the
expense of prosecuting or defending such suit. It shall be a defense of the
Corporation in any suit brought by an indemnitee to enforce a right to
indemnification hereunder (but not in a suit to enforce a right to an
advancement of expenses) that the indemnitee has not met the applicable standard
of conduct set forth in Delaware Law, and a final adjudication that an
indemnitee has not met such standard shall entitle the Corporation to recover
such expenses pursuant to the terms of an undertaking. Neither the failure of
the Corporation (including the Board, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
Delaware Law, nor an actual determination by the Corporation (including the
Board, independent legal counsel or its stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses, the burden of proving that the indemnitee is not
entitled to be indemnified in any respect, or to such advancement of expenses,
under this Article IX or otherwise shall be on the Corporation.

Section 3. The Corporation may, to the extent approved or ratified from
time to time by the Board, grant rights to indemnification, and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent contemplated by this Article IX with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.

Section 4. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other sections of this Article IX shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Corporation's or any other
corporation's Certificate of Incorporation or By-laws, other charter documents,
agreement, vote of stockholders or disinterested directors or otherwise, or
under Delaware Law or any other applicable statute or regulation, both as to
action in such person's official capacity and as to action in another capacity
while holding such office.

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<PAGE> 12

Section 5. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article IX shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person, except in
any such case to the extent that any grant of rights to indemnification and
advancement of expenses pursuant to Section 3 otherwise provides, and shall be
binding upon any successor to the Corporation to the fullest extent permitted by
Delaware Law, as from time to time in effect.

Section 6. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article IX or Delaware Law.

Section 7. For purposes of this Article, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to a director or officer of the Corporation "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves services by,
such director or officer with respect to an employee benefit plan, its
participants, or beneficiaries. For purposes of determining whether a person has
met the applicable standard of conduct set forth in Delaware Law, a person who
acted in good faith and in a manner such person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
Corporation."

Section 8. In the event that any provision of this Article IX is determined
by a court of competent jurisdiction to require the Corporation to do or to fail
to do an act which is in violation of applicable law, such provision shall be
limited or modified in its application to the minimum extent necessary to avoid
a violation of law, and, as so limited or modified, such provision and the
balance of this Article IX shall be enforceable by an indemnitee in accordance
with its terms.

<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.

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
1998 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

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>

<PAGE> 1

Exhibit 10(l)

BOB EVANS FARMS, INC.
1998
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION......................................................................................1

ARTICLE I - DEFINITIONS...........................................................................2
1.01 Definitions............................................................................2
1.02 Usage..................................................................................3

ARTICLE II - ELIGIBILITY AND PARTICIPATION........................................................3
2.01 Eligibility............................................................................3
2.02 Participation..........................................................................4

ARTICLE III - PLAN CONTRIBUTIONS..................................................................4
3.01 Company Contribution...................................................................4
3.02 Stock Options..........................................................................4
3.03 Accounts...............................................................................4
3.04 Vesting................................................................................4
3.05 Time and Form of Payment...............................................................5
3.06 Interest...............................................................................5

ARTICLE IV - DEATH AND DISABILITY PROVISIONS......................................................6
4.01 Distribution of Account on a Participant's Death Prior to Retirement...................6
4.02 Distribution of Account on a Participant's Total and Permanent Disability..............6
4.03 Designation of Beneficiary.............................................................6

ARTICLE V - CHANGE IN CONTROL.....................................................................7
5.01 Change in Control......................................................................7
5.02 Vesting Upon Change in Control.........................................................7
5.03 Future Service Contribution Made Upon Change in Control................................7

ARTICLE VI - ADMINISTRATION.......................................................................8
6.01 Administration.........................................................................8
6.02 Duties.................................................................................8
6.03 Fees...................................................................................8
</TABLE>

<PAGE> 2

BOB EVANS FARMS, INC.
1998
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS
(CONT'D)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VII - CLAIMS REVIEW PROCEDURE.............................................................9
7.01 General................................................................................9
7.02 Denials................................................................................9
7.03 Notice.................................................................................9
7.04 Appeals Procedures.....................................................................9
7.05 Review.................................................................................9

ARTICLE VIII - GENERAL...........................................................................10
8.01 Plan Amendment or Termination.........................................................10
8.02 No Employment Rights..................................................................10
8.03 Nonassignability......................................................................10
8.04 Severability..........................................................................10
8.05 Notification of Addresses.............................................................10
8.06 Applicable Law........................................................................10

ARTICLE IX - FUNDING.............................................................................11
9.01 Unfunded Status.......................................................................11
9.02 No Claim Against the Company..........................................................11

APPENDIX A - ELIGIBLE PARTICIPANTS

APPENDIX B - COMPANY CONTRIBUTION
</TABLE>

64
<PAGE> 3

BOB EVANS FARMS, INC.
1998
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

INTRODUCTION

The purpose of this Supplemental Executive Retirement Plan (the "Plan")
is to provide a further means whereby Bob Evans Farms, Inc., a Delaware
Corporation (the "Company") may afford financial security to a select group of
Participants of the Company, who render valuable services to the Company,
constituting an important contribution toward its continued growth and success,
by providing for additional future compensation so that such Participants may be
retained and their productive efforts encouraged, all as provided herein.

The Plan is intended to be an unfunded plan for purposes of providing
supplemental retirement benefits to a select group of management or highly
compensated employees as such group is described under Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA. The Plan is not intended to be a plan
described in Section 401(a) of the Code.

The Plan is intended to supersede the Bob Evans Farms, Inc.
Supplemental Executive Retirement Plan previously adopted by the Company on
April 17, 1992.

ARTICLE I

DEFINITIONS

1.01 DEFINITIONS. Wherever used in the Plan, the following words and
phrases shall have the meaning set forth below unless the context plainly
requires a different meaning.

(a) "ADMINISTRATOR" means the Committee or the persons appointed
by the Committee to administer the Plan.

(b) "ACCOUNT" means an account established under the Plan for each
Participant for purposes of tracking the accumulated value of
Company Contributions.

(c) "AFFILIATE" means a member of a controlled group of
corporations, within the meaning of section 414(b) of the
Code, which includes the Company; a trade or business (whether
or not incorporated) which is in common control with the
Company as determined in accordance with section 414(c) of the
Code; or any organization which is a member of an affiliated
service group, within the meaning of section 414(m) of the
Code, which includes the Company, and any other organization
required to be aggregated with the Company pursuant to section
414(o) of the Code and which adopts this Plan with the consent
of the Company.

(d) "BOARD" means the Board of Directors of the Company.

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<PAGE> 4

(e) "CODE" means the Internal Revenue Code of 1986, as amended.
Any reference to a particular Code section shall include any
provision which modifies, replaces or supersedes it.

(f) "COMMITTEE" means the Compensation Committee of the Board or
any other such Committee that may be appointed by the Board
from time to time.

(g) "COMMON SHARES" means the shares of common stock of the
Company, par value $0.01 per share, or any security of the
Company issued in substitution, exchange or in lieu thereof.

(h) "COMPENSATION" means the amount of a Participant's
compensation as defined in Section 415(c)(3) of the Code,
including any salary reduction contributions which are
excluded from gross income under Sections 125 and 402(a)(8) of
the Code, but excluding any long-term incentive awards (e.g.,
performance share awards, restricted stock, or stock
appreciation rights), grants of any nonqualified stock options
or the exercise of a Code Section 83(b) election by a
Participant.

(i) "COMPANY" means Bob Evans Farms, Inc., a corporation
organized under the laws of the state of Delaware, and any
successor thereto.

(j) "COMPANY CONTRIBUTION" means an amount credited to a
Participant's Account under the terms of the Plan.

(k) "EARLY RETIREMENT DATE" means retirement from employment with
the Company and all Affiliates after attaining age 55 and
completion of ten (10) Years of Service.

(l) "EFFECTIVE DATE" means May 1, 1998.

(m) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended. Any reference to a particular section of
ERISA shall include any provision which modifies, replaces or
supersedes it.

(n) "NORMAL RETIREMENT DATE" means the date a Participant attains
age 62.

(o) "PARTICIPANT" means an employee who satisfies the
requirements of Article II.

(p) "PLAN" means the plan to provide Company Contributions as set
forth herein and as amended from time to time, which shall be
known as Bob Evans Farms, Inc. 1998 Supplemental Executive
Retirement Plan.

(q) "PLAN YEAR" means the 52/53 week year ending on the last
Friday in April of each year.

(r) "TERMINATION FOR CAUSE" means the termination of a
Participant's employment according to the Company's customary
procedures, due to any act of fraud or intentional
misrepresentation or embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
Affiliate, the conviction of a felony or intentional and
repeated violations of the written policies or procedures of
the Company or any Affiliate.

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<PAGE> 5

(s) "TOTAL AND PERMANENT DISABILITY" means a mental or physical
condition which, according to the Company's customary
procedures, renders a Participant unable or incompetent to
carry out the job responsibilities which such Participant held
or the tasks to which such Participant was assigned at the
time the disability was incurred, and which is expected to be
permanent or for an indefinite duration exceeding one year.

(t) "VALUATION DATE" means the date as of which the Participant's
Company Contribution shall be determined and shall mean the
last day of the Plan Year or any other date established by the
Committee.

(u) "YEARS OF SERVICE" means the full and partial years (in
increments of one-twelfth (1/12th) years) of active employment
with the Company during which substantial services were
rendered as an employee, commencing on the date the
Participant was first employed by the Company and ending on
the earlier of the Participant's termination of employment,
Normal Retirement Date or the Plan Year ending in 2002;
however, in no event beyond the 65th anniversary of the
Participant's date of birth. At the discretion of the Board,
Participants may be granted additional Years of Service for
purposes of determining benefits under the Plan.

1.02 USAGE. Except as otherwise indicated by the context, any masculine
terminology used herein shall also include the feminine and vice versa and the
definition of any term herein in the singular shall also include the plural and
vice versa.

ARTICLE II

ELIGIBILITY AND PARTICIPATION

2.01 ELIGIBILITY. The Committee shall, from time to time, in its
discretion, designate certain key employees as Participants for the purpose of
eligibility to participate in the Plan. Such Participants shall be designated in
Appendix A, as the same may be amended from time to time. Notwithstanding the
foregoing, a Participant shall be eligible to participate in the Plan only to
the extent, and for the period that, he is a member of a select group of
management or highly compensated employees as defined under Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA.

2.02 PARTICIPATION. An individual who is eligible to participate in the
Plan pursuant to Section 2.01 shall become a Participant at such time and for
such period as determined by the Committee.

ARTICLE III

PLAN CONTRIBUTIONS

3.01 COMPANY CONTRIBUTION. The Company shall make a Company
Contribution to a Participant's Account, as determined in Appendix B, for each
Participant who was employed by the Company on the last day of the Plan Year.
The Company may also make a "final" Company Contribution reflecting the portion
of the year worked in the year the Participant retires if he is then vested in
his Account pursuant to Section 3.04.

3.02 STOCK OPTIONS. The Committee, in its discretion, may authorize a
Participant to elect to receive his Company Contribution in the form of
non-qualified stock options ("stock options") granted

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<PAGE> 6

pursuant to the Bob Evans Farms, Inc. 1998 Stock Option and Incentive Plan or
any other plan designated by the Committee. A Participant shall make his
election, if any, under this Section 3.02, according to practices and procedures
established by the Committee, but in no event later than 60 days prior to the
allocation of the Company Contribution. To the extent a Participant makes an
election to receive stock options under this Section 3.02, such award shall be
in lieu of the Company Contribution otherwise due for the Plan Year.

3.03 ACCOUNTS. The Administrator shall establish and maintain, pursuant
to the terms of the Plan, an Account for each Participant consisting of amounts
credited to such Account pursuant Sections 3.01 and 3.06. All amounts which are
credited to the Account shall be credited solely for the purposes of accounting
and computation, and shall remain assets of the Company subject to the claims of
the Company's general creditors. The balance of a Participant's Account
represents his entire benefit under this Plan.

3.04 VESTING. (a) Except as provided below, a Participant who is in the
active employ of the Company or an Affiliate shall have a vested right to his
Account upon the occurrence of any of the following:

(i) the attainment of his Early Retirement Date;
(ii) the attainment of his Normal Retirement Date;
(iii) the occurrence of a Change in Control as defined in
Section 5.01;
(iv) his death prior to actual retirement; or
(v) his Total and Permanent Disability prior to actual
retirement.

(b) Notwithstanding the preceding paragraph, a Participant's Account
shall be forfeited, and no benefits shall be payable hereunder with respect to
him or his beneficiaries, in the event of:

(i) his Termination for Cause; or

(ii) his termination of employment with the Company prior
to satisfying the requirements for vesting as set
forth in paragraph (a) above.

3.05 TIME AND FORM OF PAYMENT. A Participant who retires under this
Plan on or after his Early Retirement Date or Normal Retirement Date shall then
be entitled to, and shall receive, an installment distribution of his Account.
The first payment shall be made within 60 days of the Participant's termination
of employment in an amount equal to 1/10th of the balance of his Account. Within
60 days of the Plan Year end following the date of the first payment, the second
payment shall be due. The amount of the second payment shall be equal to 1/9th
of the balance of the Account on that Plan Year end. Successive distributions
shall be due within 60 days of each following Plan Year end such that the total
Account shall be distributed in ten substantially equal payments. This
installment distribution shall be the manner in which an Account shall be
distributed (the default distribution), unless elected otherwise by the
Participant as described below.

A Participant may elect either of the following alternative distributions in
lieu of the default distribution:

(i) A lump sum distribution, to be made within 60 days
of his termination of employment, in an amount equal
to the balance of his Account.

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<PAGE> 7

(ii) A ten year installment distribution, calculated in
the same manner as the default distribution,
commencing on the Plan Year end following the
Participant's 65th birthday.

A Participant may make such election according to procedures established by the
Committee. Nevertheless, the default distribution shall apply unless a valid
alternative election is in effect, and an alternative election must be requested
more than one year prior to the Participant's termination of employment in order
to be considered valid.

3.06 INTEREST. At the end of each Plan Year, a Participant's Account
shall be credited with interest in the amount specified pursuant to procedures
established by the Committee. In determining the amount of interest to credit,
the Committee shall refer to the investment yield on funds held in a grantor
trust, and shall credit (or debit as appropriate) each Participant's Account
with interest solely according to the investment performance of such trust. The
Committee may change the grantor trust from which the investment yield is
tracked from time to time, though any such change will only apply to interest
credits for Plan Years which commence after the Committee's authorization of the
change. A Participant's Account will continue to be credited with interest until
the Account is fully distributed to the Participant.

ARTICLE IV

DEATH AND DISABILITY PROVISIONS

4.01 DISTRIBUTION OF ACCOUNT ON A PARTICIPANT'S DEATH PRIOR TO
RETIREMENT. If a Participant dies while employed by the Company or an Affiliate
prior to termination of employment, or following his termination of employment
and prior to the distribution of his Account, his designated Beneficiary at the
date of death shall be entitled to receive the balance of his Account. If the
Participant were vested at the time of death, such distribution(s) shall be made
to the Beneficiary as if the Participant had retired instead of having died. If
the Participant were not vested at the time of death, a lump sum distribution
shall be made within 60 days of the Participant's death, in an amount equal to
the balance of the Participant's Account. If a Participant dies after
termination of employment, the form of distribution in effect under Section 3.05
shall be retained.

4.02 DISTRIBUTION OF ACCOUNT ON A PARTICIPANT'S TOTAL AND PERMANENT
DISABILITY. If a Participant incurs a Total and Permanent Disability prior to
his termination of employment with the Company or an Affiliate, he shall be
entitled to receive the balance of his Account. If the Participant were vested
at the time of a Total and Permanent Disability, such distribution(s) shall be
made as if the Participant had retired instead of having incurred a Total and
Permanent Disability. If the Participant were not vested at the time of a Total
and Permanent Disability, a lump sum distribution shall be made within 60 days
of the Committee's determination of Participant's Total and Permanent
Disability, in an amount equal to the balance of the Participant's Account. If a
Participant incurs a Total and Permanent Disability after termination of
employment, the form of distribution in effect under Section 3.05 shall be
retained.

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<PAGE> 8

4.03 DESIGNATION OF BENEFICIARY. A Participant may, by written
instruction delivered to the Administrator during the Participant's lifetime,
designate one or more primary and contingent beneficiaries to receive the
balance of the Participant's Account that may be payable hereunder following the
Participant's death, and may designate the proportions in which such
beneficiaries are to receive such payments. A Participant may change such
designations from time to time, and the last written designation filed with the
Administrator prior to the Participant's death shall control. If a Participant
fails to specifically designate a beneficiary, or if no designated beneficiary
survives the Participant, payment shall be made by the Administrator in the
following order of priority:

(a) to the Participant's surviving spouse; or if none,

(b) to the Participant's children, per stirpes; or if
none;

ARTICLE V

CHANGE IN CONTROL

5.01 CHANGE IN CONTROL. A "Change in Control" shall be deemed to
occur on the earliest of the following dates:

(a) the date any entity or person (including a "group" as
defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) shall have become the beneficial owner of, or
shall have obtained voting control over, twenty
percent (20%) or more of the outstanding Common
Shares;

(b) the date the stockholders of the Company approve a
definitive agreement (i) to merge or consolidate the
Company with or into another corporation, in which
the Company is not the continuing or surviving
corporation or pursuant to which any Common Shares
would be converted into cash, securities or other
property of another corporation, other than a merger
of the Company in which holders of Common Shares
immediately prior to the merger have the same
proportionate ownership of shares of the surviving
corporation immediately after the merger as
immediately before, or (ii) to sell or otherwise
dispose of substantially all the assets of the
Company; or

(c) the date there shall have been a change in a majority
of the Board within a twelve (12) month period;
provided, however, that any new director whose
nomination for election by the Company's stockholders
was approved, or who was appointed or elected to the
Board by, the vote of two-thirds of the directors
then still in office who were in office at the
beginning of the twelve (12) month period shall not
be counted in determining whether there has been such
a change in a majority of the Board.

5.02 VESTING UPON CHANGE IN CONTROL. Each Participant shall become
fully vested in his Account upon the occurrence of a Change in Control as
defined in Section 5.01.

5.03 FUTURE SERVICE CONTRIBUTION UPON CHANGE IN CONTROL. Upon the
occurrence of a Change in Control, a Participant shall have a special Company
Contribution made to his Account as of the

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<PAGE> 9

date of the Change in Control. The amount of his special Company Contribution
shall be determined based upon the procedures established in Appendix B.

ARTICLE VI

ADMINISTRATION

6.01 ADMINISTRATION. The Administrator shall be responsible for the
general administration of the Plan and shall perform all administrative
functions and shall interpret, construe and apply the Plan provisions in
accordance with its terms. The Administrator may establish, adopt or revise
rules and regulations as it deems necessary or advisable for the administration
of the Plan. The Administrator may consult with and rely upon the advice of such
counsel, actuaries and advisors as it shall see fit.

6.02 DUTIES. The Administrator shall have the following rights, powers,
and duties:

(a) The decision of the Administrator in matters within
its jurisdiction shall be final, binding and
conclusive upon the Company and upon any other person
affected by such decision subject to the claims
procedure hereinafter set forth.

(b) The Administrator shall have the duty and authority
to interpret and construe the Plan provisions, to
determine eligibility for benefits and the
appropriate amount of any benefits, to decide any
question which may arise regarding the rights of
employees, Participants, and beneficiaries, and the
amounts of their respective interests, to adopt such
rules and to exercise such powers as the
Administrator may deem necessary for the
administration of the Plan, and to exercise any other
rights, powers or privileges granted to the
Administrator by the terms of the Plan.

(c) The Administrator shall maintain reasonable records
of its decisions. Its records shall contain all
relevant data pertaining to the Participant and his
rights and duties under the Plan. The Administrator
shall have the duty to maintain Account records of
all Participants.

(d) The Administrator shall cause the principal
provisions of the Plan to be communicated to the
Participants, and a copy of the Plan and other
documents shall be available at the principal office
of the Company for inspection by the Participants at
reasonable times determined by the Administrator.

(e) The Administrator shall periodically report to the Board
with respect to the status of the Plan.

6.03 FEES. No fee or compensation shall be paid to any person for
services as the Administrator.

ARTICLE VII

CLAIMS REVIEW PROCEDURE

7.01 GENERAL. Any claim for Plan benefits shall be filed by the
Participant or beneficiary on the form prescribed for such purpose with the
Administrator.

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<PAGE> 10

7.02 DENIALS. If a Company Contribution or any other claim under the
Plan is wholly or partially denied, notice of the decision shall be furnished to
the Participant or beneficiary (claimant) as the case may be by the
Administrator within a reasonable period of time after such decision is reached.

7.03 NOTICE. Any claimant who is denied a claim for benefits shall be
furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent provision of the
Plan upon which the denial is based;

(d) an explanation of the claim review procedure under
the Plan.

7.04 APPEALS PROCEDURE. In order that a claimant may appeal a denial
of a claim, the claimant or the claimant's duly authorized representative may:

(a) request a review by written application to the
Administrator, or its designee, no later than 60 days
after receipt by the claimant of written notification
of denial of a claim;

(b) review pertinent documents; and

7.05 REVIEW. A decision on review of a denied claim shall be made not
later than 60 days after receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered within a reasonable period of time, but not later
than 120 days after receipt of a request for review. The decision on review
shall be in writing and shall include the specific reason(s) for the decision
and the specific reference(s) to the pertinent provisions of the Plan on which
the decision is based.

ARTICLE VIII

GENERAL

8.01 PLAN AMENDMENT OR TERMINATION. The Company reserves the right to
amend or terminate the Plan in any manner that it deems advisable, by a
resolution of the Board. Notwithstanding the preceding sentence, no amendment or
termination of the Plan shall reduce the benefit of any Participant determined
as of the day immediately preceding the effective date of such amendment or
termination.

8.02 NO EMPLOYMENT RIGHTS. Nothing herein shall constitute a contract
of continuing employment or in any manner obligate the Company to continue the
service of a Participant, or obligate a Participant to continue in the service
of the Company, and nothing herein shall be construed as fixing or regulating
the compensation paid to any Participant.

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<PAGE> 11

8.03 NONASSIGNABILITY. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall, prior to actual payment,
be subject to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.

8.04 SEVERABILITY. If any provision of the Plan shall be held illegal
or invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Plan, but the Plan shall be construed and enforced
as if such illegal or invalid provision had never been included herein.

8.05 NOTIFICATION OF ADDRESSES. Each Participant and each beneficiary
shall file with the Administrator, from time to time, in writing, the post
office address of the Participant, the post office address of each beneficiary,
and each change of post office address. Any communication, statement or notice
addressed to the last post office address filed with the Administrator (or if no
address was filed, then to the last post office address of the Participant or
beneficiary as shown on the Company's records) shall be binding on the
Participant and each beneficiary for all purposes of the Plan and neither the
Administrator nor the Company shall be obligated to search for or ascertain the
whereabouts of any Participant or beneficiary.

8.06 APPLICABLE LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Ohio, except to the extent that such
state laws may be preempted by federal law.

ARTICLE IX

FUNDING

9.01 UNFUNDED PLAN. The Plan, at all times, shall be entirely unfunded
and shall constitute merely the unsecured promise of the Company to make
payments as provided for herein.

9.02 NO CLAIM AGAINST THE COMPANY. Neither a Participant nor any other
person shall acquire by reason of the Plan any right in or title to any assets,
funds or property of the Company whatsoever including, without limiting the
generality of the foregoing, any specific funds or assets which the Company, in
its sole discretion, may set aside in anticipation of a liability hereunder. Any
trust which is created in connection with this Plan or any agreement shall
provide that the assets of the trust are subject to the claims of the Company's
general creditors. A Participant shall have only a contractual right to the
amounts, if any, payable hereunder unsecured by any asset of the Company.

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<PAGE> 12

APPENDIX A

ELIGIBLE PARTICIPANTS AS OF APRIL 24, 1998

Earl Beery
Merl Beery
Howard Berrey
Lindsay Borden
Lowell Call
Gene Campbell
Andrew Charles
Larry Corbin
John Curry
Mary Cusick
Randy Earle
Dan Evans
Kathy Evans
Roy Getz
Joe Gillen
Richard Hall
Judy Harrington
Terry Hemmer
Randy Hicks
Anton (Skip) Larson
Joe LeGros
Richard Lindner
Dave McHolland
Jim Merchant
Jack Mills
Pat Moeller
Raymond Nemunaitis
Rinzy Nocero
Stewart Owens
James Radebaugh
Don Radkoski
Joe Reed
Terry Russell
Jim Scott
Pete Steininger
Jonathon Swiskow
Steve Warehime
Bob White
Roger Williams

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<PAGE> 13

APPENDIX B

COMPANY CONTRIBUTION

B.01 DEFINITIONS. The following terms that are used in this Appendix B
are defined as follows:

(a) "ACTUARIAL PRESENT VALUE" shall be determined using generally
accepted actuarial principles and the assumptions contained
herein. An interest rate of 10% will be used in determining
present value for the period of time from the date a Company
Contribution is determined to the Participant's assumed
benefit commencement date. The assumed benefit commencement
date shall be as defined in Section B.03 of this Appendix B.

(b) "ANNUITY VALUE" means the present value of a single life
annuity calculated using the 1983 Group Annuity Mortality
Table for Males, an 8% discount rate, with payments assumed to
commence at the benefit commencement date, as defined in
Section B.03 of this Appendix or Section B.03 of this
Appendix, as appropriate.

(c) "COMPOUNDED VALUE" means the computed value of any stock
options which are granted under the Bob Evans Farms, Inc. 1998
Stock Option and Incentive Plan (or any other plan designated
by the Committee) and designated by the Committee to be
applied under Section 3.05 and Appendix B. Such computed value
shall be determined by (i) crediting interest (as specified
below) to the "Fair Market Value" (as such term is defined in
the Bob Evans Farms, Inc. 1998 Stock Option and Incentive
Plan) of the Common Shares subject to the applicable stock
option and (ii) then subtracting the option price associated
with such stock option. For purposes of this computation,
interest shall be credited at a rate of eight percent (8%),
compounded annually pursuant to procedures established by the
Committee.

(d) "FINAL AVERAGE PAY" means the Participant's average
Compensation over the five (5) consecutive Years of Service
during the 10 year period prior to his Normal Retirement Date
which produces the highest such average; provided, however,
that if a Participant has fewer than five (5) Years of Service
at his Normal Retirement Date, "Final Average Compensation"
shall mean the average of his Compensation during all of his
Years of Service. For purposes of determining any
Participant's Final Average Pay, only Compensation and Years
of Service after April 26, 1991 shall be considered. Final
Average Pay will be determined by projecting a Participant's
"Average Pay" from the last day of the Plan Year to the Plan
Year ending prior to the Participant's Normal Retirement Date
assuming that "Average Pay" increases at 4% per annum.
"Average Pay" for this purpose will be the average
Compensation of the Participant for the five year period (or
total service period if employed less than five years) ending
on the last day of the Plan Year of the award. Compensation
during the Plan Year end containing the Participant's Normal
Retirement Date will be considered only when a Participant
attains his Normal Retirement Date. Final Average Pay for Plan
Years ending after a Participant's Normal Retirement Date will
equal the Participant's Final Average Pay as of his Normal
Retirement Date.

(e) "QUALIFIED PLAN BENEFIT" means the annual benefit, expressed
in the form of a single life annuity, that can be derived from
the sum of all employer-provided benefits under all plans

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<PAGE> 14

of the Company or any Affiliate intended to be qualified under
Code Section 401(a). The amount of such single life annuity
shall be determined using the 1983 Group Annuity Mortality
Table for Males, an interest rate of eight percent (8%), and
benefit commencement at Normal Retirement Date. For purposes
of this definition, "employer-provided benefits" means all
such benefits funded exclusively by employer contributions
(and earnings thereon), for periods of employment prior to
Normal Retirement Date and shall include any previous
distribution of such benefits, including but not limited to,
in-service withdrawals, retirement and disability benefits, or
distributions pursuant to any domestic relations order. For
Participants who have not attained their Normal Retirement
Date, future Company Contributions and Account earnings will
be projected based on procedures established by the
Administrator. Further, a Participant's salary-reduction
contributions described in Code Section 402(a)(8) (and any
earnings thereon) shall not be treated as benefits funded
exclusively by employer contributions.

(f) "PRIOR SERVICE DATE" means last day of the Company's
1997 fiscal year.

(g) "PRIOR SERVICE RATE" means the accrual percentage used to
determine the Target Benefit for Years of Service prior to the
Prior Service Date. The Prior Service Rate shall be equal to
the product of (i) and (ii) below, where:

(i) equals the lesser of A) 40% or B) the product of 2%
and a Participant's projected Years of Service at
Normal Retirement Date.

(ii) equals the ratio of a Participant's Years of Service
earned as of the Prior Service Date to his projected
Years of Service at Normal Retirement Date.

(h) "FUTURE SERVICE RATE" means the accrual percentage used to
determine the Target Benefit for Years of Service after the
Prior Service Date. The Future Service Rate shall be equal to
the product of (i) and (ii) where:

(i) equals the lesser of A) 55% or B) the product of
2.75% and a Participant's Years of Service projected
to Normal Retirement Date, with such product reduced,
but not below 0, by the Prior Service Rate.

(ii) equals the lesser of 1 or the ratio of A) a
Participant's actual Years of Service earned after
the Prior Service Date over B) the greater of five or
a Participant's projected Years of Service at his
Normal Retirement Date that were earned after the
Prior Service Date.

(i) "SOCIAL SECURITY BENEFIT" means fifty percent (50%) of the
maximum annual benefit payable under the Social Security Act,
relating to Old-Age and Disability Benefits (as defined by the
Social Security Act), as of the Participant's Normal
Retirement Date.

(j) "TARGET BENEFIT" means the annual benefit determined as the
greater of the sum of (i) and (ii) or (iii); with such amount
reduced by (iv), where:

(i) the Prior Service Rate multiplied by Final Average
Pay,

(ii) the Future Service Rate multiplied by Final Average
Pay,

(iii) the Target Benefit in effect on the prior
determination date,

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<PAGE> 15

(iv) the product of (A) the sum of the Social Security
Benefit and the Qualified Plan Benefit, and (B) the
lesser of 1 or the ratio of a Participant's actual
Years of Service over his projected Years of Service
at his Normal Retirement Date.

B.02 BENEFIT EARNED. The Benefit Earned by a Participant each year
shall equal the Annuity Value of the increase, if any, of the Target Benefit in
effect on the last day of the Plan Year over the Target Benefit in effect on the
last day of the preceding Plan Year. When determining the Annuity Value of the
Target Benefit, payments are assumed to commence as defined in Section B.03 of
this Appendix B.

B.03 COMPANY CONTRIBUTION FORMULA. The Company Contribution for a given
Plan Year will be determined by computing the Actuarial Present Value of the
Benefit Earned, as defined in Section B.02 of this Appendix B. When determining
the Company Contribution for Plan Years ending prior to the Participant's Normal
Retirement Date, the Target Benefit is assumed to commence at the Participant's
Normal Retirement Date. When determining the Company Contribution for Plan Years
ending after the Participant's Normal Retirement Date, the Target Benefit is
assumed to commence upon the Participant's 65th birth date.

B.04 COMPUTATION OF AVAILABLE STOCK OPTIONS MADE UNDER THE BOB EVANS
FARMS, INC. 1998 STOCK OPTION AND INCENTIVE PLAN. The number of available stock
options for a Participant's election pursuant Section 3.02 shall be determined
such that the Compounded Value of the stock options equals the Benefit Earned,
as defined in Section B.02 of this Appendix B.

B.05 FUTURE SERVICE CONTRIBUTION UPON CHANGE IN CONTROL. Upon the
occurrence of a Change in Control, a Participant, having a Prior Service Rate,
shall have a special Company Contribution made to his Account as of the
occurrence of the Change in Control. The amount of his special Company
Contribution shall be subject to the following modification(s):

(a) The Participant's Target Benefit in effect prior to the Change
in Control shall be unaffected.

(b) The Participant's Target Benefit in effect as of the Change in
Control shall be calculated as the product of (i), (ii) and
(iii) below, reduced by the sum of (iv) and (v) with such
result multiplied by (vi); each as defined below:

(i) The lesser of 20 and Years of Service earned upon the
occurrence of the Change in Control.

(ii) 2.75%.

(iii) The Participant's Final Average Pay.

(iv) The Participant's Social Security Benefit.

(v) The Participant's Qualified Plan Benefit.

(vi) the lesser of (A) 1.0 or (B) the ratio of a
Participant's Years of Service upon the occurrence of
the Change in Control to his projected Years of
Service at his Normal Retirement Date.

<PAGE> 1

Exhibit 10(m)

1998 DIRECTORS COMPENSATION PLAN
APPROVED AND EFFECTIVE 5-1-98 BY THE BOARD OF DIRECTORS

Salaried Directors Annual Retainer

All salaried directors shall be paid an annual retainer of $14,400. This
retainer shall be paid to each salaried director at a rate of $1,200 per month.
All payments shall be made on or before the first of each month.

Non-Salaried Directors Annual Retainer

All non-salaried directors shall receive an annual retainer of $32,000. This
retainer shall be paid in two parts. $15,000 shall be paid in twelve monthly
checks of $1,250, paid on or before the first of each month. Stock shall be
awarded annually to each non-salaried director. This stock award shall have a
value of $17,000 and shall be awarded on the third day following the release of
annual fiscal year end earnings.

Committee Duties

Non-salaried directors are expected to attend approximately five regularly
scheduled committee meetings per year. Committees shall meet as the business
requires.

Committee Chairpersons shall receive $1,000 per meeting.

Committee members shall receive $750 per meeting.

All meeting fees shall be paid on or before the first day of the month following
the committee meeting.

Annual Stock Option

Every Year on the third day following the release of annual fiscal year end
earnings, each non-salaried director shall be granted non-qualified stock
options unless otherwise determined by the Compensation Committee of the Board
and approved by the Board of Directors. Each year the option amount shall be
determined by a Black-Scholes multiple applied to the total value of the
directors annual retainer of $32,000. Effective June, 1999

Special Assignments and Projects

When the Chairman of the Board determines that the assistance of a non-salaried
director on a project shall be beneficial that director shall be compensated on
a per diem basis in the amount that a committee member receives for attending a
committee meeting.

Directors Benefits

$50,000 Life Insurance
Group Healthcare at no cost, at the option of each director. Out of pocket
expenses to and from meetings.

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<PAGE> 2

Directors Retirement and Benefits

Mandatory Retirement: Any director who reaches the age of 70 will automatically
- ---------------------
retire.

Early Retirement: A director may retire with 10 years of service after attaining
- -----------------
age 55.

Retired directors will receive group Healthcare at no cost for the remainder of
their life. The Health Plan becomes a Medicare supplement when the retired
director is Medicare eligible.**

Term and Effect

This 1998 Directors Compensation Plan will be reviewed periodically by the
Compensation Committee and may be terminated by the Committee at its discretion
at any time; provided that, notwithstanding anything else to the contrary
herein, the amount of shares which may be issued under this Plan shall not
exceed 25,000 shares (not to include any shares issued pursuant to the exercise
of stock options granted hereunder). This Plan supersedes and replaces the Bob
Evans Farms, Inc. 1989 Stock Option Plan for Nonemployee Directors (the "1989
Plan") to the extent the 1989 Plan provides for the future issuance to
nonemployee directors of non-qualified stock options.

**Currently under review and subject to change.

<PAGE> 1

Exhibit 21

SUBSIDIARIES OF BOB EVANS FARMS, INC.
-------------------------------------

<TABLE>
<CAPTION>
State or Other Jurisdiction of
Name Incorporation or Organization
- ---- -----------------------------
<S> <C>
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
Bob Evans Restaurants of Michigan, Inc. Delaware
</TABLE>

<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, 1998, included in the 1998
Annual Report to Stockholders of Bob Evans Farms, Inc.

We also consent to the incorporation by reference of our report dated May 29,
1998, with respect to the consolidated financial statements incorporated herein
by reference in the following Registration Statements:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
o Form S-8 No. 33-17978 -- 1987 Incentive Stock Option Plan

o Form S-8 No. 33-30665 -- 1989 Stock Option Plan for Nonemployee Directors

o Form S-8 No. 33-34149 -- 401K Retirement Plan

o Form S-8 No. 33-42778 -- 1991 Incentive Stock Option Plan

o Form S-8 No. 33-53166 -- Nonqualified Stock Option Plan

o Form S-8 No. 33-69022 -- Long Term Incentive Plan for Managers

o Form S-8 No. 33-55269 -- 1994 Long Term Incentive Plan

o Form S-8 No. 33-58443 -- Dividend Reinvestment and Stock Purchase Plan

o Form S-3 No. 333-17815 -- Dividend Reinvestment and Stock Purchase Plan
(additional shares)
</TABLE>

/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP

Columbus, Ohio
July 21, 1998

<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 24, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-24-1998
<PERIOD-START> APR-26-1997
<PERIOD-END> APR-24-1998
<EXCHANGE-RATE> 1
<CASH> 15,397
<SECURITIES> 0
<RECEIVABLES> 17,061
<ALLOWANCES> 0
<INVENTORY> 22,709
<CURRENT-ASSETS> 65,398
<PP&E> 725,244
<DEPRECIATION> 239,295
<TOTAL-ASSETS> 579,931
<CURRENT-LIABILITIES> 106,268
<BONDS> 0
0
60
<COMMON> 426
<OTHER-SE> 456,710
<TOTAL-LIABILITY-AND-EQUITY> 579,931
<SALES> 886,838
<TOTAL-REVENUES> 886,838
<CGS> 271,448
<TOTAL-COSTS> 700,518
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,939
<INCOME-PRETAX> 72,521
<INCOME-TAX> 26,833
<INCOME-CONTINUING> 45,688
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,688
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.09

</TABLE>