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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 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-1667
Bob Evans Farms, Inc.
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(Exact name of company as specified in its charter)
Delaware 31-4421866
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3776 South High Street, Columbus, Ohio 43207
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: 614-491-2225
--------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock with $.01 par value
--------------------------------
(Title of class)
This report contains 79 pages of which this is page 1. The Exhibit Index begins
at page 48.
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Indicate by check mark whether the company (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 company 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 company'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 company. The aggregate market value has been computed
by reference to the last quoted sale price of the company's common stock (the
only common equity), as of July 16, 1999.
<TABLE>
<S> <C>
Total shares outstanding 39,644,627
Number of shares owned beneficially and/or of record by directors 790,149
and executive officers*
Number of shares held by persons other than directors and executive 38,854,478
officers
Last quoted sale price (as of the close of business on July 27, 1999) $21.00
Market value of shares held by persons other than directors and $815,944,038
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 company's classes of
common stock, as of the latest practicable date:
39,644,627 shares of common stock with $.01 par value were outstanding at July
16, 1999.
<TABLE>
<CAPTION>
DOCUMENTS INCORPORATED BY REFERENCE
<C> <S> <C>
1. Annual report to stockholders for the fiscal year ended
April 30, 1999 (in pertinent part, as indicated).................................... PART II.
2. Proxy statement dated Aug. 9, 1999, for the annual meeting of
stockholders to be held on Sept. 13, 1999 (in pertinent part,
as indicated)........................................................................PART III.
</TABLE>
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PART I
Item 1. BUSINESS.
Bob Evans Farms, Inc. (the company) 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 company. 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 BEF RE Holding Co., Inc. On April 26, 1997, Bob Evans Restaurants,
Inc. (Restaurants), which was incorporated on April 23, 1997, became a wholly
owned subsidiary of BEF Ohio and RE Holding became a wholly owned subsidiary of
Restaurants. 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. On Aug. 3, 1998, Owens Foods, Inc., which was incorporated
on Aug. 3, 1998, became a wholly owned subsidiary of Owens. Also on Aug. 3,
1998, Owens Country Foods, Inc., which was incorporated on July 8, 1998, became
a wholly owned subsidiary of Owens Foods, Inc. Bob Evans Farms, Inc.; 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 as the company.
On April 23, 1999, the company sold substantially all of the assets of Mrs.
Giles and substantially all of the assets associated with the charcoal
operations of Hickory Specialties.
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 company experienced a same-store sales increase of 5.6 percent in
fiscal 1999 as compared to a 4.6 percent increase during fiscal 1998 in its
restaurant segment.
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 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 percent of total revenues from restaurant operations
are generated from 6 a.m. to 4 p.m., with the balance generated from 4 p.m. to
closing. Sales on Saturday and Sunday account for approximately 39 percent of a
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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.
<TABLE>
<CAPTION>
Restaurants in Operation at April 30, 1999
===============================================================================
Traditional General Owens Total
Stores Restaurants
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<S> <C> <C> <C> <C>
Delaware 5 5
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Florida 24 1 25
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Illinois 15 15
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Indiana 51 51
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Iowa 1 1
-------------------------------------------------------------------------------
Kentucky 14 14
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Maryland 17 17
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Massachusetts 1 1
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Michigan 37 37
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Missouri 11 1 12
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New Jersey 1 1
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New York 13 13
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North Carolina 4 4
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Ohio 151 1 152
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Pennsylvania 28 1 29
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South Carolina 1 1
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Tennessee 3 1 4
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Texas 11 11
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Virginia 11 11
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West Virginia 19 1 20
-------------------------------------------------------------------------------
TOTAL 406 7 11 424
===============================================================================
</TABLE>
During the company's 1999 fiscal year, 20 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 1999 fiscal year, four Bob Evans Restaurants were closed in
Alsip, Ill., Hammond, Ind., Manchester, Mo., and Knoxville, Tenn., 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 have been established over the
years. It has deviated from this
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practice only in Florida, Massachusetts, North Carolina and South Carolina,
where the company does not have sausage distribution.
Seasonality
Certain restaurant locations, which are near major interstate highways,
generally experience increased revenues during the summer travel season.
Restaurant Expansion
During fiscal 2000, the company plans to build and open 26 new restaurants,
about 85 percent of which will be constructed in current Bob Evans Restaurant
markets. Determined by anticipated business needs, approximately 85 percent of
the new restaurants will be the company's 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. As a further commitment to customer satisfaction and same-store sales
growth, the company plans to remodel approximately 60 restaurants to various
degrees: from major remodels and expansions to minor equipment and decor updates
during fiscal 2000. The restaurant remodel/rebuild plan, which requires a
significant increase in capital expenditures compared to fiscal 1999,
demonstrates the company's commitment to customer service and satisfaction.
Carryout Business
During fiscal 1999, carryout business in the company's restaurants accounted for
4 percent 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. To increase carryout business and customer satisfaction, the company
is introducing Carry Home Kitchen areas into its restaurants. Through dedicated
staffing and facilities, the Carry Home Kitchen is designed to not only better
serve customers wanting carryout but also has a residual benefit of increased
eat-in dessert sales as a result of the dessert case in the Carry Home Kitchen.
Carry Home Kitchens will be installed in all new restaurants built during fiscal
2000, as well as seven existing restaurants.
Retail
The company has offered some retail items for sale on a limited basis in its
traditional units and on a much larger scale in its seven Restaurant and General
Stores. During fiscal 2000, the company plans to introduce 60 additional Corner
Cupboard retail areas, which will bring the total to approximately 80, in
traditional restaurants. This retail area offers similar gifts and retail food
items as the Restaurant and General Stores in a scaled-down version.
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
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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.
Labor and Fringe Benefit Expense
Competition for qualified labor was intense in 1999 and is expected to continue
in fiscal 2000, as unemployment remains historically low in most of the
company's marketing area. Increases in the federally mandated minimum wage rate
in 1998 and 1997 have had a direct impact on operating profit. Labor and fringe
benefit expense in the restaurant segment was 38.8 percent of sales in fiscal
1999 as compared to 38.3 percent in fiscal 1998, both of which are high from a
historical perspective. Congress is currently considering additional increases
to the minimum wage rate which would significantly impact the company's labor
costs.
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 decrease in food costs
during the company's 1999 fiscal year, and the company does not currently
anticipate that food costs will fluctuate significantly during its 2000 fiscal
year.
Advertising
The company spent approximately $28.5 million in the restaurant segment for
advertising during its 1999 fiscal year. Seventy-eight 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 seasonal menu items, Breakfast Savors and Lunch
Savors. 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
trials. During fiscal 1999, the company became a primary sponsor of a Busch
Series NASCAR team for additional promotional opportunities.
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 Breakfast Savors and Lunch Savors 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.
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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 continues to devote time and effort on both new product development
and sales of its pork sausage and ham products to institutional and foodservice
purchasers. In addition to the company's well-known meat offerings, the company
increased its presence with other refrigerated items including potatoes, deli
salads and gravies during fiscal 1999. Fresh deli salads will continue to be
produced under the Mrs. Giles trade name by Reser's Fine Foods, Inc. as a result
of the sale of substantially all assets of Mrs. Giles to Reser's Fine Foods,
Inc. in April of 1999. The company also has a frozen foods division which
creates new points of distribution through grocers' freezers, primarily with
dough items and frozen entrees. Several items in the Bob Evans and Owens product
lines are microwaveable convenience items for meals and snacks.
During fiscal 1999, 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 1999,
foodservice sales accounted for approximately 10 percent of the company's food
products sales and is expected to remain in that range in fiscal 2000.
Through Hickory Specialties, the company is also involved in food-related
products which complement its existing food products business. Hickory
Specialties produces liquid smoke flavorings under the brand name of Zesti
Smoke. Hickory Specialties' products are marketed nationwide, and the company is
exploring various opportunities abroad. Previously, Hickory Specialties also
produced charcoal, however, during the fourth quarter of fiscal 1999, the
company sold substantially all of the assets of Hickory Specialties' charcoal
operations to Royal Oak Sales, Inc.
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<TABLE>
<CAPTION>
% of Food Products Segment Revenues
FISCAL YEAR ENDED
--------------------------------------------------
APRIL 30, 1999 APRIL 24, 1998 APRIL 25, 1997
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<S> <C> <C> <C>
Sales of Bob Evans 57% 56% 57%
Products
Sales of Owens 20% 21% 20%
Country Sausage
Products
Sales of Mrs. Giles 10% 9% 9%
Products*
Sales of Hickory 13% 14% 14%
Specialties Products*
</TABLE>
*On April 23, 1999, the company sold substantially all of the assets of Mrs.
Giles and substantially all of the assets of Hickory Specialties' charcoal
operations.
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 also manufacture the products for sale to foodservice
distributors. Prior to the January 1999 federal mandate, all Bob Evans
production plants adopted the Hazard Analysis of Critical Control Points plan to
further enhance the company's food safety efforts.
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. The company generally has not experienced difficulty
in procuring live hogs for its pork sausage products.
Hickory Specialties liquid smoke flavoring products are produced at the
company's plants in Crossville, Tenn.; Greenville, Mo.; and Summer Shade, Ky.
The company generally has not experienced difficulty in obtaining raw materials
for its Hickory Specialties products and does not currently anticipate future
difficulty in that regard.
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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 and
other refrigerated products bearing the Bob Evans brand name. One
hundred four driver-salesmen, employed by the company and driving
company-owned refrigerated trucks, deliver the company's products
directly to more than 8,500 grocery stores.
(2) On a smaller scale, the company uses alternate distribution methods for
its sausage products such as 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. During fiscal
2000, the company plans to expand its distribution to the Kansas City
metropolitan area.
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 market
areas. Thereafter, the products are shipped to individual retail
outlets.
(2) Twenty-six driver-salesmen, driving company-owned refrigerated trucks,
deliver products directly to grocery stores.
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 grocery stores.
Distribution to the company's foodservice customers is accomplished through food
brokers and distributors.
Hickory Specialties' liquid smoke flavoring products are distributed nationally
and internationally to food products manufacturers and pet food manufacturers,
through brokers and distributors and through direct shipment to customers.
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Inventory Levels
All of the company's products are highly perishable in nature and require proper
refrigeration. Shelf life of the products ranges from 18 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
because such products are generally manufactured only to meet existing demand
and are delivered to retail outlets within a three-day period after processing.
Because the demand for Hickory Specialties' liquid smoke flavoring products is
generally constant and does not fluctuate greatly with the seasons, they are
manufactured throughout the year which generally enables production and sales to
match.
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 months
from October through April. The company continues to promote products for summer
outdoor grilling in an attempt to create more volume during the summer months.
The company competes primarily on the basis of the price and quality of its
sausage products. The company is in direct competition with a large number and
variety of producers and wholesalers of similar products, including companies
active both locally and nationally, companies engaged in a general meat packing
business and companies in the same specialized field. Many such competitors have
substantially greater financial resources and higher volumes of total sales than
the company. The company believes that sales of its products constitute a
significant portion of sales of sausage of comparable price and quality in the
majority of its market areas.
The 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 1999 fiscal year, the company spent approximately $12 million for
advertising of its food products under the Bob Evans and Owens brand names.
Approximately 67 percent was
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spent on media with the remaining spent to build brand awareness and to
encourage consumers to try the company's food products. During the 1999 fiscal
year, the company spent approximately $0.7 million on advertising for products
sold by Mrs. Giles and Hickory Specialties.
Dependence on a Single Customer
Bob Evans and Owens products are sold through more than 13,500 retail grocery
stores and are available through such stores to approximately 50 percent of the
population of the continental United States. The company's liquid smoke
flavoring products are sold nationally and internationally. The company is not
dependent upon a single customer or group of affiliated customers.
Sales on Credit; Aged Product
The company typically allows seven to 30-day terms on the sales of its food
products, and up to 60 days on its liquid smoke 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, historically the company has not 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.
Expansion of Distribution Area
In fiscal 2000, the company plans to expand distribution of Bob Evans Sausage to
the Kansas City metropolitan area.
The company has no current plans for further geographic expansion of its
distribution area for Owens Country Sausage or liquid smoke flavoring products
in fiscal 2000.
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 1999 fiscal year, hog prices averaged $26 per
hundredweight. The company expects live hog costs to increase from the record
lows of fiscal 1999 but be relatively moderate during fiscal 2000.
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GENERAL
Employees
The company had in its employment 30,495 persons in the restaurant segment and
1,868 persons in the food products segment as of April 30, 1999.
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
(Dollars in thousands)
April 30, April 24, April 25,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Sales:
Restaurant Operations: $708,896 $645,330 $594,914
Intersegment Sales of
Food Products: $ 32,765 $ 33,678 $ 36,769
Food Products (excluding
intersegment sales): $259,607 $241,508 $227,241
Operating Profit:
Restaurant Operations: $ 65,905 $ 57,922 $ 50,892
Food Products: $ 26,043 $ 16,538 $ 6,908
Identifiable Assets:
Restaurant Operations: $470,033 $448,314 $431,332
Food Products: $ 77,412 $105,076 $108,774
</TABLE>
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Year 2000
In 1998, the company established a formal plan to assess the impact of the year
2000 issue on the software and hardware utilized in its internal operations,
including those that affect customers, suppliers and other constituents. The
company has plans such that all changes to software and hardware necessitated by
the year 2000 issue will be completed in a timely manner, and that all such
systems will be year 2000 compliant by Dec. 31, 1999. The company contacted
critical suppliers of products and services to determine if the suppliers'
operations and the products and services they provide are year 2000 compliant.
Management will continue to monitor critical suppliers' progress with their year
2000 projects. The current estimated costs associated with implementing the
company's year 2000-readiness plan 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.
State of Readiness
The company has addressed the impact on both information technology ("IT") and
non-IT systems. An assessment of steps the company will take to address year
2000 problems, with all of its systems, is complete. The implementation of these
steps and the testing of systems are more than 95% complete. All phases of
implementation and testing are expected to be completed by the fall of 1999. The
company is actively monitoring the status of year 2000 projects at third parties
with which the company has material relationships.
Costs to Address Year 2000 Issues
Historical and estimated future costs of implementing the company's year 2000
readiness plan are expected to total less than $500,000.
Risks Associated With year 2000 Issues
Management believes that the aforementioned plan is comprehensive and will
reduce the risks associated with year 2000 issues to a minimal level for its
internal systems. The risks to the company of third parties' (e.g. utility
companies, banks and other critical suppliers and customers) failure to be year
2000 compliant is difficult to determine, but could be potentially significant.
Contingency Plan
The company does not yet have a formal contingency plan, but is in the process
of creating one. The contingency plan is expected to be completed by Dec. 15,
1999.
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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 fiscal 2000 and beyond to differ materially from those expressed in such
forward-looking statements. These important factors include, without limitation,
changes in hog costs, changes in the labor market, the possibility of severe
weather conditions where the company operates its restaurants, the assumptions,
risks and uncertainties set forth under the caption "Management's Discussion of
Risk Factors," in the company's annual report to stockholders for the fiscal
year ended April 30, 1999, as well as other assumptions, risks, uncertainties
and factors previously disclosed in this Form 10-K, the company's securities
filings and press releases.
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 424 restaurants operated by the company, 370 are owned in fee and 54 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 liquid smoke manufacturing
plant in each of Tennessee, Kentucky and Missouri. All of these properties are
owned in fee by the company. The company owns regional sales offices in
Westland, Mich., and in Houston 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.
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Executive Officers of the Company
The following table sets forth the executive officers of the company and certain
information with respect to each executive officer. Unless otherwise indicated,
each person has held his or her principal occupation for more than five years.
The executive officers are appointed by and serve at the pleasure of the Board
of Directors.
<TABLE>
<CAPTION>
Name, Age and Position with the Company; Period of Principal Occupations for Past Five Years and
Service as an Officer of the Company Other Information
- ------------------------------------------------------- ------------------------------------------------------------
<S> <C>
Daniel E. Evans, age 62; Chairman of the Board, Chief Chairman of the Board, Chief Executive Officer and
Executive Officer, Secretary and a Director of the Secretary since 1971 of the company.
company; 39 years as an officer of the company.
Donald J. Radkoski, age 44, Group Vice President - Group Vice President - Finance Group since 1994,
Finance Group, Treasurer and Chief Financial Officer Treasurer and Chief Financial Officer since 1993,
of the company; 11 years as an officer of the Senior Vice President in 1993, Vice President of
company. Finance and Assistant Treasurer from 1989 to 1993,
of the company.
Stewart K. Owens, age 44; President, Chief Operating President and Chief Operating Officer since 1995,
Officer and a Director of the company; nine years as Executive Vice President and Chief Operating Officer
an officer of the company. from 1994 to 1995, and Group Vice President - Food
Products Group from 1990 to 1993, in each case of the
company. President and Chief Operating Officer of Owens
Country Sausage, Inc., a subsidiary of the company, from
1984 to 1996.
Larry C. Corbin, age 57; Executive Vice President - Executive Vice President - Restaurant Division since 1995,
Restaurant Division and a Director of the company; Senior Group Vice President - Restaurant Operations Group
25 years as an officer of the company. from 1994 to 1995, Group Vice President - Business
Development from 1990 to 1993, of the company.
Roger D. Williams, age 48; Executive Vice President - Executive Vice President - Food Products Division
Food Products Division of the company; 19 years as since 1997, Executive Vice President - Food
an officer of the company. 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
company.
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
Name, Age and Position with the Company; Period of Principal Occupations for Past Five Years and
Service as an Officer of the Company Other Information
- ------------------------------------------------------- ------------------------------------------------------------
<S> <C>
Howard J. Berrey, age 57; Group Vice President - Group Vice President - Real Estate/Construction &
Real Estate/Construction & Engineering Group of the Engineering Group since 1990, of the company.
company; 21 years as an officer of the company.
James B. Radebaugh, age 51; Former Group Vice Resigned from the company on March 12, 1999. Group Vice
President - Administration & Human Resources Group President - Administration & Human Resources Group from
of the company; nine years as an officer of the 1994 to 1999, Group Vice President - Corporate Development
company. from 1990 to 1993, of the company.
Mary L. Cusick, age 43; Vice President - Corporate Vice President - Corporate Communications since
Communications since 1990; nine years as an officer 1990, of the company.
of the company.
</TABLE>
PART II
Item 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
In accordance with General Instruction G(2), the information in Note H,
Quarterly Financial Data, in the company's annual report to stockholders for the
fiscal year ended April 30, 1999, is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA.
In accordance with General Instruction G(2), the information for the years 1995
through 1999 contained under the subcaption Consolidated Financial Review in the
company's annual report to stockholders for the fiscal year ended April 30,
1999, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
In accordance with General Instruction G(2), the information contained under the
caption Management's Discussion and Analysis of Selected Financial Information
in the company's annual report to stockholders for the fiscal year ended
April 30, 1999, is incorporated herein by reference.
16
<PAGE> 17
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not material.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and the auditor's report thereon included in the
company's annual report to stockholders for the fiscal year ended April 30,
1999, are incorporated herein by reference.
The Quarterly Financial Data included in Note H of the notes to consolidated
financial statements in the company's annual report to stockholders for the
fiscal year ended April 30, 1999, 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 COMPANY.
In accordance with General Instruction G(3), the information contained under the
caption "ELECTION OF DIRECTORS" in the company's definitive proxy statement
dated Aug. 9, 1999, 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 Company." The company is not
required to make any disclosure pursuant to Item 405 of Regulation S-K.
Item 11. EXECUTIVE COMPENSATION.
In accordance with General Instruction G(3), the information contained under the
captions "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS" and "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" in the company's proxy statement
dated Aug. 9, 1999, 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 company's board of directors on executive
compensation nor the performance graph included in the company's proxy statement
dated Aug. 9, 1999, shall be deemed to be incorporated herein by reference.
17
<PAGE> 18
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 company's
definitive proxy statement dated Aug. 9, 1999, to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A promulgated under the
Securities Exchange Act of 1934, is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In accordance with General Instruction G(3), the information contained under the
caption "ELECTION OF DIRECTORS" in the company's definitive proxy statement
dated Aug. 9, 1999, 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.
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.
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 48. 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.
18
<PAGE> 19
Executive Compensation Plans and Arrangements
<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<C> <S> <C>
10(a) Restated Bob Evans Farms, Inc. and Incorporated herein by reference to
Affiliates 401K Retirement Plan Exhibit 10(a) to the Company's Annual
(effective Jan. 1, 1994, except as Report on Form 10-K for the fiscal year
otherwise provided) ended April 28, 1995 (File No. 0-1667)
10(b) Amendment No. 1 to the Bob Evans Incorporated herein by reference to
Farms, Inc. and Affiliates 401K Exhibit 10(b) to the Company's Annual
Retirement Plan 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 Incorporated herein by reference to
401K Retirement Plan Trust (effective Exhibit 4(f) to the Company's Pre-
May 1, 1990) Effective Amendment No. 1 to Form S-8
Registration State- ment, filed April
27, 1990 (Registration No. 33-34149)
10(d) Bob Evans Farms, Inc. 1987 Incentive Incorporated herein by reference to
Stock Option Plan Exhibit 4(a) to the Company's
Registration Statement on Form S-8,
filed Oct. 19, 1987 (Registration No.
33-17978)
10(e) Agreement, dated Feb. 24, 1989, Incorporated herein by reference to
between Daniel E. Evans and Bob Evans Exhibit 10(g) to the Company's Annual
Farms, Inc.; and Schedule A to Report on 10-K for its fiscal year
Exhibit 10(e) identifying other ended April 28, 1989 Attached hereto.
substantially identical Agreements
between Bob Evans Farms,
Inc. and certain of the executive
officers of Bob Evans Farms, Inc.
10(f) Bob Evans Farms, Inc. 1989 Stock Incorporated herein by reference to
Option Plan for Nonemployee Directors Exhibit 4(d) to the Company's
Registration Statement on Form S-8,
filed Aug. 23, 1989
(Registration No. 33-30665)
10(g) Bob Evans Farms, Inc. 1991 Incentive Incorporated herein by reference to
Stock Option Plan Exhibit 4(d) to the Company's
Registration Statement on Form S-8,
filed Sept. 13, 1991
(Registration No. 33-42778)
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit No. Description Location
- ----------- ----------- --------
<C> <S> <C>
10(h) Bob Evans Farms, Inc. Supplemental Incorporated herein by reference to
Executive Retirement Plan Exhibit 10(i) to the Company'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 Incorporated herein by reference to
Stock Option Plan Exhibit 10(j) to the Company'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 Incorporated herein by reference to
Incentive Plan for Managers Exhibit 10(k) to the Company'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 Incorporated herein by reference to
Incentive Plan Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the fiscal
year ended April 29, 1994
(File No. 0-1667)
10(l) Bob Evans Farms, Inc. Supplemental Incorporated herein by reference to
Executive Retirement Plan Exhibit 10(l) to the Company's Annual
Report on Form 10-K for the fiscal
year ended April 24, 1998
(File No. 0-1667)
10(m) Bob Evans Farms, Inc. 1998 Directors Incorporated herein by reference to
Compensation Plan Exhibit 10(m) to the Company's Annual
Report on Form 10-K for the fiscal
year ended April 24, 1998
(File No. 0-1667)
10(n) Bob Evans Farms, Inc. 1998 Stock Incorporated herein by reference to
Option and Incentive Plan Exhibit 4(f) to the Company's
Registration Statement on Form S-8
filed March 22, 1999 (Registration No.
33-74829)
10(o) Bob Evans Farms, Inc. Dividend Incorporated herein by reference to
Reinvestment and Stock Purchase Plan the Company's Registration Statement
on Form S-3 filed March 19, 1999
(Registration No. 333-74739)
10(p) Bob Evans Farms, Inc. Nonqualified Attached hereto.
Salary Deferral Plan
</TABLE>
20
<PAGE> 21
(b) Reports on Form 8-K
A current report on Form 8-K was filed by the company on April 30,
1999, with respect to (i) the sale by the company of substantially all
of the assets of Mrs. Giles and (ii) substantially all of the assets
associated with Hickory Specialties charcoal operations (File No.
0-1667)
(c) Exhibits
See Item 14(a) (3) above.
(d) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have
been omitted.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Bob Evans Farms, Inc.
July 19, 1999 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 company and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Daniel E. Evans Chairman of the Board, July 19, 1999
- ------------------------------------ Chief Executive
Daniel E. Evans Officer and Secretary
/s/ Larry C. Corbin Director July 19, 1999
- ------------------------------------
Larry C. Corbin
/s/ Daniel A. Fronk Director July 19, 1999
- ------------------------------------
Daniel A. Fronk
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael J. Gasser Director July 19, 1999
- ------------------------------------
Michael J. Gasser
/s/ E.W. (Bill) Ingram III Director July 19, 1999
- ------------------------------------
E.W. (Bill) Ingram III
/s/ Cheryl L. Krueger-Horn Director July 19, 1999
- ------------------------------------
Cheryl L. Krueger-Horn
/s/ G. Robert Lucas II Director July 19, 1999
- ------------------------------------
G. Robert Lucas II
/s/ Stewart K. Owens Director July 19, 1999
- ------------------------------------
Stewart K. Owens
/s/ Robert E.H. Rabold Director July 19, 1999
- ------------------------------------
Robert E.H. Rabold
/s/ Donald J. Radkoski Group Vice President- July 19, 1999
- ------------------------------------- Finance Group and Treasurer
Donald J. Radkoski (Chief Financial Officer
& Chief Accounting Officer)
</TABLE>
23
<PAGE> 24
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS
FISCAL YEAR ENDED APRIL 30, 1999
BOB EVANS FARMS, INC.
COLUMBUS, OHIO
24
<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 30, 1999, are incorporated by
reference in Item 8:
Consolidated Financial Review -- April 30, 1999, April 24, 1998, April
25, 1997, April 26, 1996 and April 28, 1995
Consolidated Balance Sheets -- April 30, 1999 and April 24, 1998
Consolidated Statements of Income -- Years ended April 30, 1999, April
24, 1998 and April 25, 1997
Consolidated Statements of Stockholders' Equity -- Years ended April
30, 1999, April 24, 1998 and April 25, 1997
Consolidated Statements of Cash Flows -- Years ended April 30, 1999,
April 24, 1998 and April 25, 1997
Notes to Consolidated Financial Statements -- April 30, 1999
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 amounts
<TABLE>
<CAPTION>
1999 1998 1997 1996* 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales $ 968,503 $ 886,838 $ 822,155 $ 806,627 $ 766,968
Operating income 91,948 74,460 57,800 46,553 86,861
Income before income taxes 91,374 72,521 56,992 46,745 86,869
Income taxes 33,808 26,833 20,916 17,529 33,359
Net income 57,566 45,688 36,076 29,216 53,510
Earnings per share of common stock:
Basic $ 1.40 $ 1.10 $ 0.86 $ 0.69 $ 1.27
Diluted $ 1.39 $ 1.09 $ 0.86 $ 0.69 $ 1.26
FINANCIAL POSITION
Working capital $ (35,378) $ (40,870) $ (67,426) $ (57,532) $ (33,195)
Property, plant and equipment - net 493,369 485,949 473,021 447,243 416,848
Total assets 590,452 579,931 564,079 535,813 488,101
Debt:
Short-term (line of credit) 25,000 39,420 68,880 59,655 25,600
Long-term 833 1,223 1,587 1,927 2,250
Stockholders' equity 470,095 457,196 422,807 409,155 393,872
SUPPLEMENTAL INFORMATION FOR THE YEAR
Capital expenditures $ 68,525 $ 47,801 $ 60,048 $ 80,967 $ 94,766
Depreciation and amortization $ 35,386 $ 32,882 $ 29,544 $ 28,459 $ 26,674
Weighted-average shares outstanding:
Basic 41,210 41,610 41,987 42,311 42,179
Diluted 41,509 41,803 42,020 42,387 42,408
Cash dividends declared per share $ 0.35 $ 0.32 $ 0.32 $ 0.32 $ 0.29
Common stock market prices:
High $ 26.13 $ 22.19 $ 17.00 $ 21.13 $ 22.19
Low $ 18.25 $ 13.13 $ 12.13 $ 15.25 $ 19.50
SUPPLEMENTAL INFORMATION AT YEAR-END
Employees 32,363 31,189 29,375 28,728 26,656
Stockholders 44,173 43,980 43,570 37,239 29,479
Market price per share at closing $ 18.31 $ 20.25 $ 13.13 $ 16.13 $ 20.50
Book value per share $ 11.67 $ 10.97 $ 10.17 $ 9.68 $ 9.31
</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.
26
<PAGE> 27
CONSOLIDATED BALANCE SHEETS
BOB EVANS FARMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Dollars in thousands
ASSETS APRIL 30, 1999 April 24, 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents............................................................ $ 25,455 $ 15,397
Accounts receivable............................................................. 17,036 17,061
Inventories..................................................................... 14,299 22,709
Federal and state income taxes.................................................. 0 1,032
Deferred income taxes........................................................... 8,150 7,559
Prepaid expenses................................................................ 1,697 1,640
-------- --------
TOTAL CURRENT ASSETS...................................................... 66,637 65,398
PROPERTY, PLANT AND EQUIPMENT
Land............................................................................ 155,271 150,505
Buildings....................................................................... 370,513 358,792
Machinery and equipment......................................................... 188,181 189,075
Construction in progress........................................................ 2,127 271
Other........................................................................... 34,320 26,601
-------- --------
750,412 725,244
Less accumulated depreciation................................................... 257,043 239,295
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT......................................... 493,369 485,949
OTHER ASSETS
Deposits and other.............................................................. 3,505 3,223
Long-term investments........................................................... 8,331 6,264
Deferred income taxes........................................................... 9,767 8,900
Cost in excess of net assets acquired........................................... 8,360 9,399
Other intangible assets......................................................... 483 798
-------- --------
TOTAL OTHER ASSETS........................................................ 30,446 28,584
-------- --------
$590,452 $579,931
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
27
<PAGE> 28
<TABLE>
<CAPTION>
Dollars in thousands
LIABILITIES AND STOCKHOLDERS' EQUITY APRIL 30, 1999 April 24, 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Line of credit.................................................................. $ 25,000 $ 39,420
Accounts payable................................................................ 9,559 7,909
Dividends payable............................................................... 3,626 3,334
Federal and state income taxes.................................................. 896 0
Accrued wages and related liabilities........................................... 17,009 14,644
Other accrued expenses.......................................................... 45,925 40,961
-------- --------
TOTAL CURRENT LIABILITIES................................................. 102,015 106,268
LONG-TERM LIABILITIES
Deferred compensation........................................................... 184 0
Deferred income taxes........................................................... 17,325 15,244
Notes payable (net of discount of $97 in 1999 and $187 in 1998)................. 833 1,223
-------- --------
TOTAL LONG-TERM LIABILITIES............................................... 18,342 16,467
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 100,000,000 shares;
issued 42,638,118 shares in 1999 and 1998.................................... 426 426
Preferred stock, $500 par value; authorized 1,200 shares; issued 120 shares
in 1999 and 1998............................................................. 60 60
Capital in excess of par value.................................................. 151,364 147,213
Retained earnings............................................................... 366,924 323,720
Treasury stock, 2,353,332 shares in 1999 and 964,013 shares
in 1998, at cost............................................................. (48,679) (14,223)
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................................ 470,095 457,196
-------- --------
$590,452 $579,931
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
28
<PAGE> 29
CONSOLIDATED STATEMENTS
OF INCOME
BOB EVANS FARMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Dollars in thousands, except per share amounts
YEARS ENDED APRIL 30, 1999;
APRIL 24, 1998; AND APRIL 25, 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES..................................................... $ 968,503 $ 886,838 $ 822,155
Cost of sales.............................................. 275,898 271,448 265,470
Operating wage and fringe benefit expenses................. 306,816 275,559 256,569
Other operating expenses................................... 132,123 121,870 113,238
Selling, general and administrative expenses............... 127,531 111,860 100,628
Depreciation expense....................................... 34,187 31,641 28,450
--------- --------- ---------
OPERATING INCOME 91,948 74,460 57,800
Net interest............................................... (574) (1,939) (808)
--------- --------- ---------
INCOME BEFORE INCOME TAXES 91,374 72,521 56,992
PROVISIONS FOR INCOME TAXES
Federal.................................................... 27,595 21,901 17,165
State...................................................... 6,213 4,932 3,751
--------- --------- ---------
33,808 26,833 20,916
--------- --------- ---------
NET INCOME $ 57,566 $ 45,688 $ 36,076
========= ========= =========
EARNINGS PER SHARE - BASIC $1.40 $1.10 $0.86
===== ===== =====
EARNINGS PER SHARE - DILUTED $1.39 $1.09 $0.86
===== ===== =====
</TABLE>
See Notes to Consolidated Financial Statements
29
<PAGE> 30
CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' EQUITY
BOB EVANS FARMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Dollars in thousands Capital
Common Preferred in Excess Retained Treasury
Stock Stock of Par Value Earnings Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 57,566 57,566
Dividends declared (14,362) (14,362)
Treasury stock repurchased (42,284) (42,284)
Treasury stock reissued under employee plans 3,319 7,828 11,147
Stock options granted under employee plans 165 165
Tax reductions - employee plans 667 667
- ------------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity at 4/30/99 $426 $60 $151,364 $366,924 $ (48,679) $470,095
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements
30
<PAGE> 31
CONSOLIDATED STATEMENTS
OF CASH FLOWS
BOB EVANS FARMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Dollars in thousands
YEARS ENDED APRIL 30, 1999;
APRIL 24, 1998; AND APRIL 25, 1997 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,566 $ 45,688 $ 36,076
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . 35,386 32,882 29,544
Deferred compensation. . . . . . . . . . . . . . . . . . 184 0 0
Deferred income taxes. . . . . . . . . . . . . . . . . . 623 4,211 2,074
Loss (gain) on sale of assets. . . . . . . . . . . . . . 25 243 (146)
Compensation expense attributable to stock plans . . . . 1,168 646 159
Cash provided by (used for) current assets and current
liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . . (1,391) (667) (1,885)
Inventories. . . . . . . . . . . . . . . . . . . . . . . (224) 891 (2,724)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . (155) 689 934
Accounts payable . . . . . . . . . . . . . . . . . . . . 1,650 790 1,179
Federal and state income taxes . . . . . . . . . . . . . 2,683 (8) (1,160)
Accrued wages and related liabilities. . . . . . . . . . 2,661 1,206 (807)
Other accrued expenses . . . . . . . . . . . . . . . . . 5,646 5,373 3,533
--------- --------- ---------
Net cash provided by operating activities. . . . . . . 105,822 91,944 66,777
Investing Activities:
Purchase of property, plant and equipment . . . . . . . . . . (68,525) (47,801) (60,048)
Purchase of long-term investments . . . . . . . . . . . . . . (2,412) (1,550) (448)
Proceeds from sale of property, plant
and equipment. . . . . . . . . . . . . . . . . . . . . 11,336 2,492 5,844
Cash proceeds from divestitures . . . . . . . . . . . . . . . 24,901 0 0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44) 180 (448)
--------- --------- ---------
Net cash used in investing activities. . . . . . . . . (34,744) (46,679) (55,100)
Financing Activities:
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . (14,070) (13,325) (13,454)
Purchase of treasury stock. . . . . . . . . . . . . . . . . . (42,284) (3,470) (9,762)
Line of credit. . . . . . . . . . . . . . . . . . . . . . . . (14,420) (29,460) 9,225
Payments on principal of note payable . . . . . . . . . . . . (390) (364) (340)
Distribution of treasury stock due to the exercise of stock
options and employee bonuses. . . . . . . . . . . . 10,144 4,468 568
--------- --------- ---------
Net cash used in financing activities. . . . . . . . . (61,020) (42,151) (13,763)
--------- --------- ---------
Increase (Decrease) In Cash And Equivalents. . . . . . . . . . . 10,058 3,114 (2,086)
Cash And Equivalents At The Beginning Of The Year. . . . . . . . 15,397 12,283 14,369
--------- --------- ---------
Cash And Equivalents At The End Of The Year. . . . . . . . . . . $ 25,455 $ 15,397 $ 12,283
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
31
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: Bob Evans Farms, Inc. owns and operates 424
restaurants in 20 states under the names of Bob Evans Restaurants and Owens
Family Restaurants. The company also produces fresh and fully cooked pork
products, as well as other food products, that are distributed primarily to
grocery stores in the East North Central, Mid-Atlantic, Southern and
Southwestern United States. Frozen rolls, biscuits and entrees are distributed
primarily to grocery stores in Ohio and various surrounding areas. The company's
liquid-smoke flavorings are distributed nationally and internationally. In April
1999, the company sold its salad production and charcoal manufacturing
businesses (see Note C).
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 1999, 1998 and 1997 refer to fiscal years ended
April 30, 1999; April 24, 1998; and April 25, 1997, respectively. Fiscal 1999
was comprised of 53 weeks as compared to 1998 and 1997, which were both
comprised of 52 weeks.
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 includes raw materials and supplies ($9,188
in 1999 and $11,467 in 1998) and finished goods ($5,111 in 1999 and $11,242 in
1998).
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,
primarily 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 30, 1999, and April 24, 1998, was
$4,615 and $4,076, respectively.
FINANCIAL INSTRUMENTS: The fair values of the company's financial
instruments approximate their carrying values at April 30, 1999, and April 24,
1998. 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 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.
32
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
ADVERTISING COSTS: The company expenses advertising costs as incurred.
Advertising expense was $41,150; $38,564; and $36,841 in 1999, 1998 and 1997,
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: 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>
1999 1998 1997
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic 41,210,000 41,610,000 41,987,000
Dilutive stock options 299,000 193,000 33,000
---------- ---------- ----------
Diluted 41,509,000 41,803,000 42,020,000
</TABLE>
Options to purchase 367,000; 776,000; and 1,172,000 shares of common
stock in 1999, 1998 and 1997, 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 1998 and 1997 amounts have been reclassified
to conform to the 1999 classification.
EFFECT OF NEW ACCOUNTING STANDARDS: In 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 130, Reporting Comprehensive Income, which requires that an enterprise
report the change in its equity during the period from nonowner sources as other
comprehensive income. The company has evaluated the statement and determined
that there are no items that qualify as other comprehensive income. As a result,
comprehensive income is the same as reported net income.
In 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires an entity to recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Gains or losses resulting
from changes in the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge accounting. The
company is currently assessing the impact of this statement on the company's
consolidated financial statements. The company plans to adopt SFAS No. 133 in
fiscal 2002 if the FASB's current Exposure Draft to delay the effective date of
SFAS No. 133 is approved.
33
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
NOTE B -- CREDIT ARRANGEMENTS
The company has arrangements with certain banks from which it may
borrow up to $100,000 on a short-term basis. The arrangements are reviewed
annually for renewal. At April 30, 1999, $25,000 was outstanding under these
arrangements. During 1999 and 1998, respectively, the maximum amounts
outstanding under these arrangements were $44,240 and $72,050, and the average
amounts outstanding were $30,229 and $53,685 with weighted-average interest
rates of 6.11% and 6.26%. All interest paid on these arrangements is at floating
rates (see Financial Instruments in Note A).
Interest costs of $911; $1,085; and $2,934 incurred in 1999, 1998 and
1997, respectively, were capitalized in connection with the company's
construction activities.
NOTE C -- DIVESTITURES
In April 1999, the company sold its salad production and charcoal
manufacturing businesses. The purchase prices of the two transactions totaled
$29,152 (comprised of $24,901 in cash and the remainder in short-term
receivables) plus the assumption of $1,673 of liabilities. No material gain or
loss was realized on the transactions. The company's results of operations for
1999 included net sales and operating income of $46,318 and $355, respectively,
from the divested businesses.
NOTE D -- 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 30,
1999, and April 24, 1998, were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 April 24, 1998
-------------- --------------
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation/asset disposals.......... $15,640 $15,030
Other taxes....................................... 1,685 214
------- -------
Total deferred tax liabilities.................... 17,325 15,244
Deferred tax assets:
Loss on impaired assets........................... 7,546 7,478
Self-insurance.................................... 5,705 5,400
Vacation pay...................................... 1,080 1,012
Stock compensation plans.......................... 2,221 1,384
Accrued bonus..................................... 762 201
Inventory and other............................... 603 984
------- -------
Total deferred tax assets......................... 17,917 16,459
------- -------
Net deferred tax assets...................... $ 592 $ 1,215
======= =======
</TABLE>
34
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
Significant components of the provisions for income taxes are as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current:
Federal...................... $26,869 $20,880 $15,896
State........................ 6,316 5,054 2,983
------- ------- -------
Total current............. 33,185 25,934 18,879
Deferred:
Federal...................... 726 1,021 1,269
State........................ (103) (122) 768
------- ------- -------
Total deferred............ 623 899 2,037
------- ------- -------
Total tax provisions $33,808 $26,833 $20,916
======= ======= =======
</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>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Tax at statutory rate........... $31,981 $25,382 $19,947
State income tax (net).......... 4,039 3,206 2,438
Other........................... (2,212) (1,755) (1,469)
------- ------- -------
Provisions for income taxes..... $33,808 $26,833 $20,916
======= ======= =======
</TABLE>
Taxes paid during 1999, 1998 and 1997 were $28,687; $22,630; and
$22,147, respectively.
NOTE E -- STOCK-BASED COMPENSATION PLANS
The company has employee stock option plans adopted in 1987, 1991, 1994
and 1998; 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. The 1998 plan provides that the option price for 1) incentive
stock options shall be the fair market value of the stock at the grant date and
2) nonqualified stock options shall be determined by the compensation committee
of the board of directors. 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 five years under the 1989 plan and up to 10 years under
all other plans.
The company's supplemental executive retirement plan (SERP) provides
retirement benefits to certain key management employees of the company and its
subsidiaries. The purpose of the 1992 nonqualified stock option plan discussed
earlier is to fund and settle benefit contributions 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, it operates 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.
35
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
The following table summarizes option-related activity for the last
three years:
<TABLE>
<CAPTION>
Shares Price Range
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
------------------------------------------------------------------------------------------
Granted 414,889 9.94 to 21.38
Exercised (592,988) 6.56 to 21.38
Canceled or expired (155,410) 6.56 to 21.38
------------------------------------------------------------------------------------------
Outstanding, April 30, 1999 1,183,708 6.56 to 21.38
------------------------------------------------------------------------------------------
</TABLE>
In addition to the outstanding options, 5,486,410 stock option shares
were available for grant at April 30, 1999. The following table summarizes
information regarding stock options outstanding at April 30, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- ----------------------------------
Number Weighted-Avg. Weighted-Avg. Number Weighted-Avg.
Outstanding Remaining Exercise Exercisable Exercise
Range of Exercise Prices at 4/30/99 Contractual Life Price at 4/30/99 Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 6.56 to $10.99 300,268 13.15 $ 9.43 197,941 $ 9.40
11.00 to 14.99 66,990 2.99 13.13 29,510 13.13
15.00 to 15.99 279,869 7.25 15.31 79,789 15.31
16.00 to 19.99 94,115 2.19 16.43 58,754 16.28
20.00 to 21.37 86,977 0.74 20.33 86,977 20.33
21.38 to 21.38 355,489 7.72 21.38 16,660 21.38
- -------------------------------------------------------------------------------------------------------------------------------
$ 6.56 to $21.38 1,183,708 7.77 $15.97 469,631 $13.95
- -------------------------------------------------------------------------------------------------------------------------------
</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 recognized in income for stock options granted
at less than fair market value in 1999, 1998 and 1997 was $165, $146 and $85,
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
36
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
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
1999, 55,157 shares were awarded as part of the LTIP. No shares were awarded in
1998 or 1997. Compensation expense attributable to the plan was $1,003 in 1999,
$500 in 1998 and $74 in 1997.
NOTE F -- OTHER COMPENSATION PLANS
The company has a profit sharing plan that 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 1999, 1998 and 1997 were
$3,850; $3,209; and $2,343, respectively.
The company's SERP provides executives with an option to accept all or
a portion of individual awards in the form of nonqualified deferred
compensation. The company's expense related to contributions to the SERP
deferred compensation plan was $1,026 in 1999. There was no such expense in 1998
or 1997.
NOTE G -- COMMITMENTS AND CONTINGENCIES
At April 30, 1999, the company had contractual commitments
approximating $25,131 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.
37
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
NOTE H -- QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $240,337 $222,045 $239,328 $224,675 $250,530 $219,621 $238,308 $220,497
Gross profit 168,347 150,953 172,677 155,443 181,040 153,073 170,541 155,921
Operating income 22,741 17,062 24,693 19,369 22,910 18,104 21,604 19,925
Net income 14,103 10,361 15,397 11,698 14,280 11,145 13,786 12,484
Earnings per share
Basic $ 0.34 $ 0.25 $ 0.37 $ 0.28 $ 0.35 $ 0.27 $ 0.34 $ 0.30
Diluted 0.34 0.25 0.37 0.28 0.34 0.27 0.34 0.30
Common stock market
prices:
High $ 21.69 $ 18.00 $ 20.75 $ 19.63 $ 26.13 $ 22.19 $ 23.38 $ 21.88
Low 19.31 13.13 18.25 16.44 19.69 17.75 18.31 19.06
Cash dividends declared $ .08 $ .08 $ .09 $ .08 $ .09 $ .08 $ .09 $ .08
</TABLE>
Gross profit represents net sales less cost of sales (materials).
Each fiscal quarter is comprised of a 13-week period, except the third quarter
of 1999, which had 14 weeks.
Total quarterly earnings per share may not equal the annual amount because
earnings per share is calculated independently for each quarter.
Stock prices are for the NASDAQ National Market (trading symbol - BOBE), which
is the principal market for the company's common stock.
The number of record holders of the company's common stock at June 14, 1999, was
44,031.
38
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BOB EVANS FARMS, INC. AND SUBSIDIARIES . APRIL 30, 1999
Dollars in thousands unless otherwise noted, except per share amounts
NOTE I -- INDUSTRY SEGMENTS
In 1999, the company adopted SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. 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, long-term investments and income taxes.
Information on the company's industry segments is summarized as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales
Restaurant operations $ 708,896 $ 645,330 $ 594,914
Food products 292,372 275,186 264,010
----------- ----------- -----------
1,001,268 920,516 858,924
Intersegment sales of food products (32,765) (33,678) (36,769)
----------- ----------- -----------
TOTAL $ 968,503 $ 886,838 $ 822,155
=========== =========== ===========
Operating Income
Restaurant operations $ 65,905 $ 57,922 $ 50,892
Food products 26,043 16,538 6,908
----------- ----------- -----------
TOTAL $ 91,948 $ 74,460 $ 57,800
=========== =========== ===========
Depreciation and Amortization Expense
Restaurant operations $ 26,475 $ 22,991 $ 20,137
Food products 8,911 9,891 9,407
----------- ----------- -----------
TOTAL $ 35,386 $ 32,882 $ 29,544
=========== =========== ===========
Capital Expenditures
Restaurant operations $ 61,055 $ 41,794 $ 51,808
Food products 7,470 6,007 8,240
----------- ----------- -----------
TOTAL $ 68,525 $ 47,801 $ 60,048
=========== =========== ===========
Identifiable Assets
Restaurant operations $ 470,033 $ 448,314 $ 431,332
Food products 77,412 105,076 108,774
----------- ----------- -----------
547,445 553,390 540,106
General corporate assets 43,007 26,541 23,973
----------- ----------- -----------
TOTAL $ 590,452 $ 579,931 $ 564,079
=========== =========== ===========
</TABLE>
39
<PAGE> 40
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Stockholders and Board of Directors of Bob Evans Farms, Inc.:
We have audited the accompanying consolidated balance sheets of Bob Evans
Farms, Inc. and subsidiaries as of April 30, 1999, and April 24, 1998, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended April 30, 1999. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Bob Evans
Farms, Inc. and subsidiaries at April 30, 1999, and April 24, 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended April 30, 1999, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
- ---------------------
Columbus, Ohio
June 4, 1999
40
<PAGE> 41
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 $81.7 million, or 9.2%, in 1999 over 1998. Results for 1999 benefited
from an additional week of operations compared to 1998 and 1997. The 1999
increase was comprised of a $63.6 million increase in restaurant segment sales
and an $18.1 million increase in food products segment sales. Net sales in 1998
represented a 7.9% increase over 1997 sales.
Restaurant segment sales accounted for 73.2%, 72.8% and 72.4% of total
sales for 1999, 1998 and 1997, respectively. The $63.6 million additional
restaurant sales in 1999 represented a 9.9% increase over 1998 sales, which were
8.5% higher than 1997 sales.
The increase in restaurant sales in 1999 was the result of a 5.6%
increase in same-store sales (excluding the effect of the extra week in 1999) as
well as more restaurants in operation. Same-store sales increased in all four
quarters of 1999, and included an average menu price increase of 2.6% for the
year. Menu price increases were 2.9% in 1998 and 1.9% in 1997. The improvement
in same-store sales has continued since the fall of 1996. New restaurant
openings also provided additional sales growth: stores in operation totaled 424
at the end of 1999 compared to 408 at the end of 1998. The fiscal 1999 openings
included further expansion into North Carolina, Missouri and Delaware, as well
as additional stores in West Virginia, Maryland, Virginia, Illinois, Ohio,
Pennsylvania and Indiana. During 1999, the company closed four under-performing
restaurants. The following chart summarizes the openings and closings during the
last two years:
<TABLE>
<CAPTION>
BEGINNING OPENED CLOSED ENDING
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL YEAR 1999
First Quarter 408 0 1 407
Second Quarter 407 2 1 408
Third Quarter 408 5 1 412
Fourth Quarter 412 13 1 424
FISCAL YEAR 1998
First Quarter 394 4 1 397
Second Quarter 397 5 1 401
Third Quarter 401 3 1 403
Fourth Quarter 403 7 2 408
</TABLE>
Management believes that the 1999 sales increase was the result of
several factors including: carefully targeted seasonal product promotions; a
comprehensive redesign of the menu, which incorporated an improved layout; a
modification and emphasis on carryout procedures that led to a 20.5% same-store
carryout sales increase; and expanded efforts to ensure that each restaurant is
fully staffed at both the manager and hourly levels. Management believes that
all of these factors have led to improved customer service, satisfaction and,
ultimately, increased sales.
Various promotional programs were employed throughout 1999 and 1998,
including those involving gift certificates, children's programs and seasonal
menu offerings. No single menu item or promotional program had a material impact
on sales, although management believes that without the menu changes and
promotional programs, same-store sale comparisons would have been less
favorable.
41
<PAGE> 42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
SELECTED FINANCIAL INFORMATION
BOB EVANS FARMS, INC. AND SUBSIDIARIES
Food products segment sales accounted for 26.8%, 27.2% and 27.6% of
total sales for 1999, 1998 and 1997, respectively. The $18.1 million (7.5%)
sales increase in the food products segment in 1999 was comprised of a $15.2
million sales increase in sausage and other products and a $2.9 million increase
in sales at two of the company's wholly owned subsidiaries, Mrs. Giles Country
Kitchens (Giles) and Hickory Specialties (Hickory). 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. Giles and Hickory's charcoal operations were sold in 1999.
The divestitures did not materially affect the 1999 comparisons since both
transactions occurred in the last week of the company's fiscal year. The 1999
sales increase for these subsidiaries did not translate to a material increase
in operating income since both companies experienced higher overall operating
expenses. The company's results of operations for 1999 included net sales and
operating income of $46,318 and $355, respectively, from the divested
businesses.
Increases in sausage sales in 1999 were primarily due to a 10% increase
in pounds sold of comparable products (excluding the effect of the extra week in
1999). In 1998, comparable pounds sold increased 3% over 1997. In 1999 and 1998,
additional sales were provided by newer products, such as refrigerated home
fries, hash browns, sausage gravy, ham steak and frozen rolls, biscuits and
entrees. The average benchmark retail price for a one-pound roll of sausage in
1999 remained at $2.99 compared to an average price of $3.07 for 1998 and 1997.
Increased promotional activity and discounted wholesale and retail
prices for most of the company's sausage products are factors that have
contributed to the significant increase in the volume sold. The average price
decrease reduced net sales but was not significant enough to offset the sales
increase provided by the additional volume sold.
COST OF SALES
Consolidated cost of sales (cost of materials) was 28.5%, 30.6% and
32.3% of sales in 1999, 1998 and 1997, respectively.
In the restaurant segment, food cost (cost of sales) was 25.7%, 26.2%
and 26.6% of sales in 1999, 1998 and 1997, respectively. The improvement in food
cost was reflective of changes in product mix, as well as the effect of menu
price increases previously discussed in the sales section. Management believes
that changes made in the menu layout to highlight higher margin offerings
contributed to the positive changes in product mix.
In the food products segment, cost of sales was 36.1%, 42.5% and 47.2%
of sales in 1999, 1998 and 1997, respectively. The decreases were due to
significant reductions in hog costs, which averaged $25.59, $40.43 and $51.05
per hundredweight in 1999, 1998 and 1997, respectively. These averages
represented a 36.7% decrease in 1999 on top of a 20.8% decrease in 1998. Hog
costs trended downward from the first quarter of 1998 through the third quarter
of 1999, when they were at record-low levels. Hog costs began rising near the
end of 1999's third quarter.
OPERATING WAGE AND FRINGE BENEFIT EXPENSES
Consolidated operating wage and fringe benefit expenses were 31.7%,
31.1% and 31.2% of sales in 1999, 1998 and 1997, respectively.
42
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
SELECTED FINANCIAL INFORMATION
BOB EVANS FARMS, INC. AND SUBSIDIARIES
In the restaurant segment, operating wage and fringe benefit expenses
represented 38.8% of sales for 1999; 38.3% for 1998; and 38.5%, for 1997. The
increase in 1999 was primarily due to higher management wages and health
insurance costs. The increased management wages reflect a continuing effort by
the company to provide competitive wages. The 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 to
1997 would have been less favorable due to higher hourly labor costs.
In the food products segment, operating wage and fringe benefit
expenses were 12.2% of sales for 1999; 11.8% for 1998; and 12.0% for 1997. The
increase in 1999 is primarily due to the significant increase in volume produced
in the current year, which required additional labor resources. 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.
OTHER OPERATING EXPENSES
Approximately 90% of other operating expenses occurred in the
restaurant segment; the most significant components of which were advertising,
utilities, repair and maintenance, restaurant supplies, general liability
insurance and taxes (other than income taxes). Consolidated other operating
expenses represented 13.6%, 13.7% and 13.8% of sales in 1999, 1998 and 1997,
respectively. Most components of other operating expenses, as a percentage of
sales, were comparable or slightly less in 1999 compared to 1998. The exception
to the comparison was repair and maintenance expense, which increased at a
higher rate than the sales increase. In 1998, the decrease was provided by a
small decrease in utilities expense which was offset by increases in restaurant
supplies and general liability expenses. Comparisons for both 1999 and 1998 were
positively impacted by the fixed nature of many of the expenses: as sales
increased, these costs remained steady or increased at a slower rate than the
sales growth.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The most significant components of selling, general and administrative
expenses were wages and fringe benefits and food products segment promotional
and advertising expenses. Consolidated selling, general and administrative
expenses represented 13.2%, 12.6% and 12.2% of sales in 1999, 1998 and 1997,
respectively. The increases in both 1999 and 1998 reflected the increased
promotional activity for the company's sausage products. As hog prices trended
downward in the last half of 1998, the company opted to significantly increase
in-store promotions and advertising allowances to stimulate sales rather than to
decrease base prices. This policy led to significant increases in selling,
general and administrative expenses in both 1999 and 1998, although sausage
profit margins increased considerably due to the lower hog costs. In 1999,
additional increases resulted from higher bonus expense.
TAXES
The effective federal and state income tax rates were 37.0%, 37.0% and
36.7% in 1999, 1998 and 1997, respectively. The lower rate in 1997 was
attributable mostly to decreases in state income taxes and
43
<PAGE> 44
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
SELECTED FINANCIAL INFORMATION
BOB EVANS FARMS, INC. AND SUBSIDIARIES
an increase in investment tax credit activity. In fiscal 2000, 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 $25.5 million at
April 30, 1999, and $15.4 million at April 24, 1998. Dividends paid represented
24.4% of net income in 1999 and 29.2% of net income in 1998.
Bank lines of credit were used for liquidity needs and capital
expansion during 1999 and 1998. At April 30, 1999, $25.0 million was outstanding
under such arrangements. The bank lines of credit available were $100.0 million
during 1999. The company believes that the funds needed for capital expenditures
and working capital during fiscal 2000 will be generated internally and from
available bank lines of credit.
At April 30, 1999, the company had contractual commitments for
restaurant construction, plant equipment additions and the purchases of land and
inventory of approximately $25.1 million. Capital expenditures for fiscal 2000
are expected to approximate $89.0 million and depreciation and amortization
expenses are expected to approximate $38.0 million. The company plans to open
approximately 26 restaurants in fiscal 2000, rebuild 12 others and upgrade
various property, plant and equipment in both segments.
YEAR 2000
In 1998, the company established a formal plan to assess the impact of
the year 2000 issue on the software and hardware utilized in its internal
operations, including those that affect customers, suppliers and other
constituents. The company has plans such that all changes to software and
hardware necessitated by the year 2000 issue will be completed in a timely
manner, and that all such systems will be year 2000 compliant by Dec. 31, 1999.
The company has contacted critical suppliers of products and services to
determine if the suppliers' operations and the products and services they
provide are year 2000 compliant. Management will continue to monitor critical
suppliers' progress with their year 2000 projects. The current estimated costs
associated with implementing the company's year 2000-readiness plan 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.
State of readiness: The company has addressed the impact on both
information technology ("IT") and non-IT systems. An assessment of steps the
company will take to address year 2000 problems, with all of its systems, is
complete. The implementation of these steps and the testing of systems are more
than 95% complete. All phases of implementation and testing are expected to be
completed by the fall of 1999. The company is actively monitoring the status of
year 2000 projects at third parties with which the company has material
relationships.
44
<PAGE> 45
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
SELECTED FINANCIAL INFORMATION
BOB EVANS FARMS, INC. AND SUBSIDIARIES
Costs to address year 2000 issues: Historical and estimated future
costs of implementing the company's year 2000-readiness plan are expected to
total less than $500,000.
Risks associated with year 2000 issues: Management believes that the
aforementioned plan is comprehensive and will reduce the risks associated with
year 2000 issues to a minimal level for its internal systems. The risks to the
company of third parties' (e.g. utility companies, banks and other critical
suppliers and customers) failure to be year 2000 compliant is difficult to
determine, but could be potentially significant.
Contingency Plan: The company does not yet have a formal contingency
plan, but is in the process of creating one. The contingency plan is expected to
be completed by Dec. 15, 1999.
45
<PAGE> 46
MANAGEMENT'S DISCUSSION OF RISK FACTORS
BOB EVANS FARMS, INC. AND SUBSIDIARIES
Management believes that the current reported financial information is
indicative of future operating results and is not aware of any material events
or uncertainties that would indicate otherwise. However, some level of business
risk and uncertainty is present in any industry; the following documents some of
the risks specific to 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.).
The restaurant industry is an intensely competitive environment that
will continue to challenge and influence the company's restaurant segment.
Competition from restaurants in the quick service, casual dining and
family-style categories is greater than ever. Increased numbers of restaurants
have provided more options for consumers and have tended to suppress the
industry's same-store sales. The industry has seen several restaurant chains
struggle to maintain market share and that have had to close substantial numbers
of locations. Same-store sales for Bob Evans Restaurants have been strong for
two years: the increase was 5.6% in 1999 on top of 4.6% in 1998. The impact of
same-store sales on overall sales and corresponding profit margins is
significant. All restaurants continue to be evaluated by management in order to
identify under-performing units. In fiscal 1999, the company closed four
restaurants. Depending on profitability, as well as changes in site and access,
the company may close other restaurants in fiscal 2000.
Competition for qualified labor was a challenge in fiscal 1999, and is
expected to continue in fiscal 2000. Increases in federally mandated minimum
wage rates increased restaurant labor costs significantly in 1998 and 1997 and
may have an impact on fiscal 2000 and the future as Congress considers
additional increases to the minimum wage rate.
Availability of sites and weather conditions generate uncertainty when
evaluating future expansion. However, the plans for fiscal 2000 are to add
approximately 26 new restaurants in comparison to 20 in 1999 and 19 in 1998.
Food products segment business risks include: hog costs, governmental
initiatives and general (economy, weather, consumer acceptance, etc.). The
prices paid in the live hog market have always been an uncertainty for the food
products segment, as highlighted in fiscal 1999 with the extremely low prices.
Another uncertainty is the consumer acceptance of new items. Some of the planned
product introductions in fiscal 2000 include bacon, turkey breasts, mashed
potatoes and new varieties of gravy.
The restaurant and food products segments share various risks and
uncertainties. Food safety is an issue that has taken precedence: 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. The company has continued emphasis
upon quality control programs that limit the company's exposure including
compliance with all aspects of the Hazard Analysis of Critical Control Points
program. Increased government 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 to have all its systems year 2000
compliant on a timely basis and to have a formal contingency plan in place, the
company could be adversely impacted if any of its systems or those of any of its
significant suppliers or customers are not year 2000 compliant in a timely
manner. Other uncertainties, such as changes in general economic conditions,
weather and consumers' changing lifestyles and eating habits also impose various
degrees of risk to the company's businesses.
46
<PAGE> 47
MANAGEMENT'S DISCUSSION OF RISK FACTORS
BOB EVANS FARMS, INC. AND SUBSIDIARIES
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 FISCAL 2000 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 THE "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.
47
<PAGE> 48
BOB EVANS FARMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED APRIL 30, 1999
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<C> <S> <C>
3(a) Certificate of Incorporation of the Incorporated herein by reference to
Company (filed with the Delaware Exhibit 3 (a) to the Company's Annual
secretary of state on Nov. 4, 1985) Report on Form 10-K for its fiscal
year ended April 24, 1987
(File No. 0-1667)
3(b) Certificate of Amendment of Incorporated herein by reference to
Certificate of Incorporation of the Exhibit 3(b) to the Company's Annual
Company dated Aug. 26, 1987 (filed Report on Form 10-K for its fiscal
with the Delaware secretary of state year ended April 28, 1989
on Sept. 4, 1987) (File No. 0-1667)
3(c) Certificate of Adoption of Amendment Incorporated herein by reference to
to Certificate of Incorporation of Exhibit 3(c) to the Company's Annual
the Company dated Aug. 9, 1993 (filed Report on Form 10-K for its fiscal
with the Delaware secretary of state year ended April 29, 1994
on Aug. 10, 1993) (File No. 0-1667)
3(d) Restated Certificate of Incorporation Incorporated herein by reference to
of Company reflecting amendments Exhibit 3(d) to the Company's Annual
through Aug. 10, 1993. Note: filed Report on Form 10-K for its fiscal
for purposes of SEC reporting year ended April 29, 1994
compliance only -- this document has (File No. 0-1667)
not been filed with the Delaware
secretary of state
3(e) By-Laws of the Company Incorporated herein by reference to
Exhibit 3(c) to the Company's Annual
Report on Form 10-K for its fiscal
year ended April 24, 1987
(File No. 0-1667)
3(f) Amended and Restated By-Laws of the Incorporated herein by reference to
Company. Note: filed for purposes of Exhibit 3(f) to the company's Annual
SEC reporting compliance only Report on Form 10-K for its fiscal
year ended April 24, 1998
(File No. 0-1667)
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<C> <S> <C>
10(a) Restated Bob Evans Farms, Inc. and Incorporated herein by reference to
Affiliates 401K Retirement Plan Exhibit 10(a) to the Company's Annual
(effective Jan. 1, 1994, except as Report on Form 10-K for the fiscal year
otherwise provided) ended April 28, 1995
(File No. 0-1667)
10(b) Amendment No. 1 to the Bob Evans Incorporated herein by reference to
Farms, Inc. and Affiliates 401K Exhibit 10(b) to the Company's Annual
Retirement Plan 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 Incorporated herein by reference to
401K Retirement Plan Trust (effective Exhibit 4(f) to the Company's Pre-
May 1, 1990) 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 Incorporated herein by reference to
Stock Option Plan Exhibit 4(a) to the Company's
Registration Statement on Form S-8,
filed Oct. 19, 1987 (Registration No.
33-17978)
10(e) Agreement, dated Feb. 24, 1989, Incorporated herein by reference to
between Daniel E. Evans and Bob Evans Exhibit 10(g) to the Company's Annual
Farms, Inc.; and, Schedule A to Report on 10-K for its fiscal year
Exhibit 10(e) identifying other ended April 28, 1989
substantially identical Agreements (File No. 0-1667); Attached hereto.
between Bob Evans Farms, Inc. and
certain of the executive officers of
Bob Evans Farms, Inc.
10(f) Bob Evans Farms, Inc. 1989 Stock Incorporated herein by reference to
Option Plan for Nonemployee Directors Exhibit 4(d) to the Company's Regis-
tration Statement on Form S-8, filed
Aug. 23, 1989
(Registration No. 33-30665)
10(g) Bob Evans Farms, Inc. 1991 Incentive Incorporated herein by reference to
Stock Option Plan Exhibit 4(d) to the Company's Regis-
tration Statement on Form S-8, filed
Sept. 13, 1991
(Registration No. 33-42778)
</TABLE>
49
<PAGE> 50
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<C> <S> <C>
10(h) Bob Evans Farms, Inc. Supplemental Incorporated herein by reference to
Executive Retirement Plan Exhibit 10(i) to the Company'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 Incorporated herein by reference to
Stock Option Plan Exhibit 10(j) to the Company'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 Incorporated herein by reference to
Incentive Plan for Managers Exhibit 10(k) to the Company'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 Incorporated herein by reference to
Incentive Plan Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the fiscal
year ended April 29, 1994
(File No. 0-1667)
10(l) Bob Evans Farms, Inc. 1998 Incorporated herein by reference to
Supplemental Executive Retirement Plan Exhibit 10(l) to the Company's Annual
Report on Form 10-K for the fiscal
year ended April 24, 1998
(File No. 0-1667)
10(m) Bob Evans Farms, Inc. 1998 Directors Incorporated herein by reference to
Compensation Plan Exhibit 10(m) to the Company's Annual
Report on Form 10-K for the fiscal
year ended April 24, 1998
(File No. 0-1667)
10(n) Bob Evans Farms, Inc. 1998 Stock Incorporated herein by reference to
Option and Incentive Plan Exhibit 4(f) to the Company's
Registration Statement on Form S-8
filed March 22, 1999 (Registration
No. 33-74829)
10(o) Bob Evans Farms, Inc. Dividend Incorporated herein by reference to
Reinvestment and Stock Purchase Plan the Company's Registration Statement
on Form S-3 filed March 19, 1999
(Registration No. 333-74739)
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<C> <S> <C>
10(p) Bob Evans Farms, Inc. Nonqualified Attached hereto.
Salary Deferral Plan
13 Company's Annual Report to Incorporated herein.
Stockholders for the fiscal year
ended April 30, 1999 (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 Company Attached hereto.
23 Consent of Ernst & Young, LLP Attached hereto.
27 Financial Data Schedule Attached hereto.
</TABLE>
51
<PAGE> 52
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>
52
<PAGE> 1
EXHIBIT 10(p)
BOB EVANS FARMS, INC.
NONQUALIFIED SALARY DEFERRAL PLAN
Effective January 1, 1999
53
<PAGE> 2
BOB EVANS FARMS, INC.
NONQUALIFIED SALARY DEFERRAL PLAN
Effective January 1, 1999, Bob Evans Farms, Inc. adopts this Plan to provide
deferred compensation to a select group of its management or highly compensated
employees. This Plan is intended to be an unfunded, nonqualified program of
deferred compensation within the meaning of Title I of ERISA.
ARTICLE I
DEFINITIONS
Whenever used in this Plan, the following words and phrases will have the
meaning given below. Also, the singular form of any term will include the
plural, the plural form will include the singular, the masculine pronoun will
include the feminine and the feminine pronoun will include the masculine. Other
words and phrases also may be defined in the Plan text.
Accounts means the Nonqualified Employee Deferral Account and Employer
Nonqualified Matching Contribution Account established for each Participant
under Section 4.01.
Affiliate means any entity which, together with the Company, is a member of a
controlled group of corporations or of a commonly controlled group of trades or
businesses [as defined in Code (delta)(delta)414(b) and (c), as modified by
Code(delta)415(h)] or of an affiliated service group [as defined in Code
(delta)414(m)] or other organization described in Code (delta)414(o).
Beneficiary means the person designated by a Participant under Section 2.02 to
receive any death benefits payable under Section 6.03.
Board of Directors or Board means the Company's board of directors.
Change in Control means the earliest of:
(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) has become the
beneficial owner of, or has obtained voting control over, 20 percent or more of
the Company's common stock (par value $0.01 per share) or any Company security
issued in substitution, exchange or in lieu of the Company's common stock
("Common Shares");
(b) The date the Company's stockholders 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 before 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 of
the Company's assets; or
(c) The date there is a change in a majority of the Board of Directors within a
12 month period; provided, however, that any new director whose nomination for
election by the Company's shareholders was approved, or who was appointed or
elected to the Board by, the vote of two-thirds of the directors
54
<PAGE> 3
then still in office who were in office at the beginning of the 12 month period
will not be counted when determining if there has been a change in the majority
of the Board.
Code means the Internal Revenue Code of 1986, as amended.
Committee means the Plan Committee described in Article VII.
Company means Bob Evans Farms, Inc. and any successor to it.
Compensation means (a) each Participant's taxable remuneration earned from an
Employer after the latest of (i) the Effective Date, (ii) the date he or she
becomes a Participant or (iii) the date specified in the Participant's Deferral
Notice, (b) reduced by any non-cash remuneration and (c) increased by deferrals
made during the same period under (i) the Qualified 401K Plan, (ii) this Plan
and (iii) any cafeteria plan maintained by an Employer pursuant to Code
(delta)125.
Deferral Notice means the Salary Deferral Notice and the Bonus Deferral Notice
that each Executive must complete to specify the portion of his or her regular
Compensation and periodic bonus to be deferred to the Plan. Although a copy of
this form is attached to the Plan, it is not a part of the Plan and may be
modified by the Committee without separate action by the Board.
Distribution Accounts means the In-Service Distribution Account established
under Section 6.02(a), the Education Distribution Account established under
Section 6.02(b) and the Retirement Distribution Account established under
Section 6.02(c).
Effective Date means January 1, 1999.
Employer means the Company and any Affiliate which, with the Company's consent,
adopts this Plan and joins in the Trust Agreement.
Employer Nonqualified Matching Contribution Account means the account
established for each Participant to which Employer contributions described in
Section 3.02 are allocated.
Enrollment Form means the form that each Executive must complete before he or
she may participate in the Plan. To be effective, this notice must include all
of the information described in Section 2.01(b). Although a copy of this form is
attached to the Plan, it is not a part of the Plan and may be modified by the
Committee without separate action by the Board.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Executive means each person employed by an Employer who (a) is a member of its
select group of management or is a highly compensated employee and (b) has met
the eligibility conditions described in Article II.
Forfeitures means the amount of a Participant's Employer Nonqualified Matching
Contribution Account that the Participant is not entitled to receive because he
or she terminates employment before meeting the conditions described in Section
6.07.
Inactive Participant means a Participant who is actively employed by an Employer
but (a) no longer meets the eligibility conditions described in Section 2.01; or
(b) has suspended his or her deferrals under Section 3.01(b).
55
<PAGE> 4
Investment Funds means the funds established by the Committee under Section 5.01
to measure the investment gains and losses attributable to each Participant's
Accounts.
Nonqualified Employee Deferral Account means the account established for each
Participant to which the deferrals described in Section 3.01 are allocated.
Participant means (a) an Executive who is participating in the Plan as provided
in Section 2.01, (b) an Inactive Participant or (c) a former Executive who has
terminated employment with each Employer but for whom Participant Accounts are
being maintained.
Plan means the Bob Evans Farms, Inc. and Affiliates Executive Deferral Program,
as described in this document and as it may be amended.
Plan Year means each 12-month period that begins on January 1, 1999 (and
anniversaries of that date) while the Plan is in effect.
Qualified 401K Plan means the Bob Evans Farms, Inc. and Affiliates 401K
Retirement Plan, as it may be amended.
Qualified 401K Limit means the portion of his or her Compensation that a
Participant could contribute to the Qualified 401K Plan but for (a) the limits
imposed by Code (delta)(delta)401(a)(17), 402(g) and 415 and (b) the actual
deferral percentage for highly compensated employees calculated under the
Qualified 401K Plan.
Spouse or Surviving Spouse means an individual who is legally married to the
Participant.
Trust Agreement means the agreement, and any amendments to that agreement,
between the Company and the Trustee providing for the management, investment and
disbursement of funds held in the Trust Fund.
Trust Fund means the fund established under the Trust Agreement. The Trust Fund
may be comprised of one or more Investment Funds.
Trustee means the bank, trust company or individual designated by the Company to
hold and invest the Trust Fund and to pay Plan benefits and expenses authorized
by the Committee.
Valuation Date means the last day of each calendar quarter during each Plan
Year, or more frequent periods if the Committee, in its sole discretion, decides
that more frequent valuations are needed for any reason.
Years of Vesting Service means "Years of Service," calculated for vesting
purposes under the Qualified 401K Plan.
ARTICLE II
PARTICIPATION
2.01. Eligibility and Election to Participate
(a) In its sole discretion, the Committee will decide which Executives may
participate in the Plan and the earliest date on which they may participate. The
Committee also will calculate and apprise Executives of the applicable Qualified
401K Limit for each Plan Year.
56
<PAGE> 5
(b) Before he or she may participate in the Plan, each eligible Executive must
complete:
(i) An Enrollment Form specifying (A) the date on which the Executive
elects to participate (which may not be earlier than the date specified
by the Committee), (B) the Distribution Accounts to which these
deferrals will be allocated and when these amounts will be distributed
(Section 6.02), (C) if appropriate, how his or her Accounts will be
distributed (Section 6.06), (D) how the value of his or her Accounts
will be measured (subject to the restrictions imposed under Section
5.01), and (E) his or her Beneficiary. The elections made in an
Enrollment Form will continue to be effective until changed as provided
in Section 3.01(b).
(ii) A Salary Deferral Notice, to specify the portion of his or her
regular Compensation to be deferred to the Plan and/or a Bonus Deferral
Notice to specify the portion of his or her bonus to be deferred to the
Plan. The elections made in these forms will continue to be effective
until changed as provided in Section 3.01(b).
(c) An eligible Executive will continue to participate until the earlier of the
date he or she (i) becomes an Inactive Participant or (ii) terminates employment
with all Employers.
2.02. Designation of Beneficiary
(a) Each Executive must designate one or more Beneficiaries when he or she
completes an Enrollment Form. Unless a Participant who designates more than one
Beneficiary also specifies the sequence or the portion of the death benefit to
be paid to each Beneficiary, the death benefit will be paid in equal shares to
all named Beneficiaries.
(b) A Participant may change his or her Beneficiary at any time by identifying
the new Beneficiary in the appropriate portion of a revised Enrollment Form and
delivering that completed form to the Committee. No change of Beneficiary will
be effective until the revised Enrollment Form is received by the Committee. The
identity of a Participant's Beneficiary will be based only on the designation in
the form described in this Section and will not be inferred from any other
evidence.
(c) If a Participant has not made an effective Beneficiary designation or if his
or her Beneficiary dies before the Participant, Plan death benefits will be paid
to the Participant's Surviving Spouse. If there is no Surviving Spouse, these
death benefits will be paid to (i) the Participant's issue, then living, per
stirpes; or, if there are none (ii) the Participant's executors or
administrators. Any minor's share of a Plan death benefit will be paid to the
adult who has been appointed to act as the minor's legal guardian and who has
assumed custody and support of that minor.
(d) The Participant and the Beneficiary (and not the Committee) are responsible
for ensuring that the Committee has the Beneficiary's current address.
ARTICLE III
CONTRIBUTIONS
3.01. Participant Deferrals
(a) Each Participant may elect for each Plan Year to defer up to (i) 100 percent
of the bonus component of his or her Compensation plus (ii) 25 percent of his or
her regular Compensation (i.e., Compensation excluding any bonus) reduced by
(iii) his or her Qualified 401K Limit for that same Plan Year. These amounts
will be credited to the Participant's Nonqualified Employee Deferral Account.
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<PAGE> 6
(b) A Participant may change or suspend the amount being deferred by revising
the appropriate Deferral Notice or Enrollment Form. Any change, including a
complete cessation of deferrals under Section 3.01(a), will not be effective
until the Plan Year that begins after the revised Deferral Notice is received by
the Committee. A Participant who suspends his or her deferrals may rejoin the
Plan by returning to the Committee a completed Enrollment Form and completes a
Salary and/or Bonus Deferral Notice that includes all of the information
described in Section 2.01(b). This new election will be effective on the later
of (i) the date specified in the Enrollment Form or (ii) the first day of the
next Plan Year but only if the Inactive Participant is then an Executive.
(c) Participant deferrals will be made only by payroll deductions authorized by
the Participant.
3.02. Employer Nonqualified Matching Contribution
(a) The Employer intends to make annual contributions to the Plan from its
current or accumulated profits. This contribution will be calculated for each
Plan Year under the following formula:
(i) The percentage of compensation to be matched under the Qualified
401K Plan for that Plan Year, minus
(ii) The actual deferral percentage for all highly compensated
employees calculated for that Plan Year under the Qualified 401K Plan,
multiplied by
(iii) The rate at which deferrals are matched under the Qualified 401K
Plan for that Plan Year.
(b) Employer Nonqualified Matching Contributions made under this formula will be
allocated to the Employer Nonqualified Matching Contribution Accounts of
Participants who both (i) deferred a portion of their Compensation to the Plan
for the Plan Year for which the matching contribution is made; and (ii) are
employed by an Employer on the last day of the Plan Year for which the
contribution is made.
ARTICLE IV
PARTICIPANT'S ACCOUNTS; ALLOCATIONS
4.01. Participant's Accounts
The Committee will maintain:
(a) An Employer Nonqualified Matching Contribution Account to record the
Participant's share of:
(i) The Employer Nonqualified Matching Contributions calculated under
Section 3.02, adjusted by the net income, gains or losses attributable
to those amounts (Section 4.03); minus
(ii) Any distributions made from this account.
(b) A Nonqualified Employee Deferral Account to record:
(i) The Participant's deferrals calculated under Section 3.01, adjusted
by the net income, gains or losses attributable to those amounts
(Section 4.03); minus
(ii) Any withdrawals or distributions made from this account.
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4.02. Allocations to Distribution Accounts
(a) When completing an Enrollment Form, each Participant may direct that the
deferrals made under Section 3.01 be allocated among one or more of three
Distribution Accounts. These accounts are (i) an In-Service Distribution
Account, that will be distributed under the terms of Section 6.02(a), (ii) an
Education Distribution Account, that will be distributed under the terms of
Section 6.02(b) or (iii) a Retirement Distribution Account, that will be
distributed under the terms of Section 6.02(c). This designation may be changed
by filing a revised Enrollment Form with the Committee. However, any change will
be effective only with respect to deferrals made after the later of (iv) the
date specified in the revised Enrollment Form or (v) the first day of the next
Plan Year.
(b) If a Participant does not specify the Distribution Accounts to which his or
her deferrals are to be allocated, the full value of his or her Accounts will be
allocated to the Retirement Distribution Account.
(c) A Participant's share of the Employer's Nonqualified Matching Contribution
Account always will be allocated to his or her Retirement Distribution Account
(Section 6.02(c)).
4.03. Calculating Net Gains or Losses; Crediting of Accounts
As of each Valuation Date, the fair market value of each Investment Fund will be
calculated under Section 5.02. Any increase or decrease in the value of each
Investment Fund, less associated administrative and other Plan expenses
described in Section 7.07, will be allocated to the Accounts of each Participant
who invested in that fund since the preceding Valuation Date. This allocation
will be based on (a) the value of the Investment Fund on the preceding valuation
date and (b) the portion of that value comprised of the Participant's Accounts.
4.04. Limitation on Reversion of Contributions
Except as provided in the Trust Agreement, all Participant deferrals and
Employer Nonqualified Matching Contributions will be held for the exclusive
benefit of Participants and their Beneficiaries and may not revert to any
Employer. However, any Employer Nonqualified Matching Contribution that is made
by an Employer under a mistake of fact may be returned to the Employer within
one year after it is contributed to the Plan or, at the Employer's discretion,
may be applied to offset future Employer Nonqualified Matching Contributions.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS AND VALUATION OF FUNDS
5.01. Investment Funds
The Committee will establish and maintain one or more Investment Funds that will
be used to measure the value of each Participant's Accounts. The Trustee will
account for each Participant's investment in each Investment Fund as if that
investment had actually been made, although neither the Employer nor the Trustee
is obliged to make the investment chosen by the Participant. Each Participant
must select the Investment Fund or funds that will be used to measure the value
of his or her Accounts by completing the appropriate section of the Enrollment
Form. Rules and regulations relating to Participant investment selections,
including the frequency with which investment selections may be changed and the
minimum percentage of a Participant's Account that may be treated as invested in
each Investment Fund, will be established, from time to time, by the Committee
and announced to Participants.
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<PAGE> 8
5.02. Valuation of Trust Fund
As of each Valuation Date, the Trustee will determine the actual market value of
the Trust Fund and the value of each Investment Fund established by the
Committee under Section 5.01. The value of each Investment Fund will be
calculated as if it had been invested as directed by Participants. The value of
each Investment Fund will be allocated to Participants' Accounts as provided in
Section 4.03. If the value of the Trust Fund is greater than the combined values
of all Investment Funds, the excess will be applied to reduce the Employer's
Nonqualified Matching Contributions for the current or next Plan Year.
ARTICLE VI
AMOUNT AND DISTRIBUTION OF BENEFITS
6.01. Distribution Events
Participants' Accounts will be distributed at the earlier of (a) the time the
Participant specifies in his or her Enrollment Form (Section 2.01(b)) or (b) the
date the Participant (i) dies (Section 6.03), (ii) becomes disabled (Section
6.04),(iii) incurs a financial hardship (Section 6.05) or (iv) terminates
employment with all Employers.
6.02. Specified Distributions
Subject to Section 9.01, when completing an Enrollment Form, each Participant
must specify the date that the vested value of his or her Accounts will be
distributed and the portion of his or her Nonqualified Employee Deferral Account
that is to be allocated to each Distribution Account. Once made, this selection
will continue to apply until it is changed, subject to the limitations described
in Section 4.02. Nevertheless, amounts credited to a Participant's Employer
Nonqualified Matching Contribution Account will always be credited to the
Participant's Retirement Distribution Account (see Section 6.02(c)). Amounts
allocated to a Distribution Account will be distributed under the following
terms:
(a) In-Service Distribution Account The value of amounts allocated to a
Participant's In-Service Distribution Account will be distributed on the
earliest of the date the Participant (i) specified in his or her Enrollment
Form, (ii) dies (Section 6.03), (iii) becomes disabled (Section 6.04), or (iv)
incurs a financial hardship (Section 6.05).
(b) Education Distribution Account The value of amounts credited to a
Participant's Education Distribution Account will be distributed beginning on
the date specified by the Participant in his or her Enrollment Form.
(c) Retirement Distribution Account: The vested value of amounts credited to a
Participant's Retirement Distribution Account will be distributed beginning on
the earlier of the date the Participant (i) specifies in his or her Enrollment
Form Notice, (ii) dies (Section 6.03), (iii) becomes disabled (Section 6.04),
(iv) incurs a financial hardship (Section 6.05) or (v) terminates employment
after reaching age 55 (Section 6.06(a)).
(d) Failure to Specify Distribution Account. A Participant who fails to specify
to which Distribution Account his Accounts will be allocated will be treated as
having elected to have the full value of his Accounts allocated to a Retirement
Distribution Account.
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(e) Effect of Termination Before Age 55. Any amount credited to the account of a
Participant who terminates employment from all Employers before he or she
reaches age 55 will be distributed in a single lump sum as soon as
administratively possible after that termination occurs.
6.03. Death Benefits
The undistributed value of the Accounts established for a deceased Participant
will be paid to that Participant's Beneficiary as of the Valuation Date
following the Participant's death. Any Beneficiary claiming a death benefit
under the Plan must provide the Committee with satisfactory proof of the
Participant's death before any death benefit will be paid. Distributions from
this account will be made in the form described in Section 6.06.
6.04. Disability Benefits
A Participant who becomes disabled before terminating employment with all
Employers will receive a distribution of 100 percent of the undistributed value
of his or her Accounts, determined as of the Valuation Date following the date
of disability. A Participant will be considered disabled on the date that it is
established by a licensed physician selected by the Committee that he or she is
not able to engage in any substantial gainful activity because of a medically
determinable physical or mental impairment that is expected to result in death
or to be of long, continued and indefinite duration. The Committee will
consistently apply uniform principles when determining if a Participant is
disabled. Distributions from this account will be made in the form described in
Section 6.06.
6.05. Hardship Withdrawals
In its sole discretion, the Committee may distribute all or a portion of the
vested value of a Participant's Nonqualified Employee Deferral Account before
the date otherwise determined under Section 6.02 if the Committee decides that
the Participant has encountered a severe financial hardship. For these purposes,
a Participant will have incurred a "severe financial hardship" only if he or she
needs an immediate distribution to meet a current and heavy financial expense
associated with (i) a sudden or unexpected illness or accident incurred by the
Participant or a member of the Participant's immediate family or (ii) the loss
of the Participant's property due to casualty or other similar extraordinary and
unforeseeable circumstance attributable to events beyond the Participant's
control. A distribution based on financial hardship (iii) will be taken
proportionately from each of his Distribution Accounts and (iv) will not be
larger than the smaller of (A) the amount needed to meet the immediate financial
need created by the hardship or (B) the value of the Participant's Nonqualified
Employee Deferral Account as of the most recent Valuation Date. Distributions
from this account will be taken proportionately from each Distribution Account
and will be made in the form described in Section 6.06.
6.06. Amount and Payment of Withdrawals
Subject to Section 9.01:
(a) Retirement Distribution Accounts: All distributions made to a Participant
who terminates employment after reaching age 55 will be effective as of the
Valuation Date immediately preceding the date the distribution is to be made and
will be paid in the form the Participant selected from among those described in
the Enrollment Form. These distribution forms will be limited to (i) a single
lump sum payment of the full value of the Participant's Account, or (ii) a
series of monthly, quarterly or annual installments (whichever the Participant
selected) for a period not longer than ten years. A Participant may ask the
Committee to change the form in which his or her benefit will (or is) being
distributed. This
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<PAGE> 10
request must be made and writing and will be approved by the Committee only to
the extent that it affects distributions made more than 12 months after the date
that request is received by the Committee. The amount to be distributed will be
taken proportionately from each Distribution Account.
(b) Subject to Sections 6.02(e), all distributions from a Participants Education
Distribution Account will be made in five annual installments beginning on the
date specified by the Participant in his or her Deferral Notice. However, if a
Participant terminates employment before age 55 any unpaid balance credited to
his or her Education or In-Service Distribution Accounts will be distributed as
a lump sum as soon as administratively possible after termination occurs.
(c) Other Distributions or Withdrawals: All other distributions or withdrawals
(including those made to a Participant who terminates employment with all
Employers before reaching age 55) will be effective as of the Valuation Date
immediately preceding the date the distribution is to be made. The appropriate
amount will be taken from the Participant's Distribution Account as of that
Valuation Date and, subject to Section 6.07, paid to the Participant in a single
lump sum.
(d) Full Discharge. Once a Participant's Accounts have been fully distributed,
the Company, all Employers and the Plan will have no further liability to the
Participant or, if appropriate, to his or her Beneficiary.
6.07. Vested Benefits
(a) The benefit payable under the Plan to any Participant will equal 100 percent
of the value of his or her Nonqualified Employee Deferral Account and the
percentage of the undistributed value of his or her Employer Nonqualified
Matching Contribution Account to which he or she is entitled by application of
the vesting schedule contained in paragraphs (b) and (c) of this Section.
(b) Subject to paragraph (c) of this Section and Section 9.01, a Participant
will be vested in amounts credited to his or her Employer Nonqualified Matching
Contribution Account under the following table:
<TABLE>
<CAPTION>
YEARS OF VESTING
SERVICE WHEN
PARTICIPANT
TERMINATES
EMPLOYMENT VESTED PERCENTAGE
---------- -----------------
<S> <C>
1 0
2 0
3 20
4 40
5 60
6 80
7 100
</TABLE>
(c) Regardless of his or her Years of Vesting Service, a Participant will be
fully vested in his or her Employer Nonqualified Matching Contribution Account
at the earliest of (i) age 55, (ii) the date the Participant dies (iii) the date
the Committee concludes that the Participant is disabled or (iv) the date of any
Change in Control.
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<PAGE> 11
(d) Any forfeitures arising by application of the vesting schedule described in
paragraph (b) will be applied to reduce future Employer Nonqualified Matching
Contributions.
6.08. Distribution of Benefits
The Committee will apprise the Trustee, in writing, of the form in which
payments are to be made under the Plan and the date they are to be paid. Benefit
distributions will begin as soon as practicable after the Trustee receives that
written notice from the Committee, but not later than 60 days after the date the
benefit became payable.
ARTICLE VII
PLAN COMMITTEE
7.01. Appointment of Committee
The Board of Directors will appoint a committee of at least three persons to
administer the Plan. A Committee member may resign at any time by sending
written notice to the Board specifying the effective date of his or her
termination (which must always be prospective). Vacancies in the Committee will
be filled by the Board as the need arises. Also, in its sole discretion, the
Board may remove any Committee member at any time by giving written notice of
removal to the affected Committee member and specifying the effective date of
that action (which must always be prospective).
7.02. Powers and Duties
The Committee is fully empowered to exercise complete discretion to administer
the Plan and to construe and apply all of its provisions. The Committee may
delegate any of its powers and duties to any other person or organization. These
powers and duties include:
(a) Deciding which employees are Executives, which of them may participate in
the Plan, the extent of their Years of Vesting Service and the value of their
benefit;
(b) Resolving disputes that may arise with regard to the rights of Executives,
Participants and their legal representatives or Beneficiaries under the terms of
the Plan. Subject to Section 7.08, the Committee's decisions in these matters
will be final in each case;
(c) Obtaining from each Employer, Participant and Beneficiary information that
the Committee needs to determine any Participant's or Beneficiary's rights and
benefits under the Plan. The Committee may rely conclusively upon any
information furnished by an Employer, a Participant or Beneficiary;
(d) Compiling and maintaining all records it needs to administer the Plan;
(e) Upon request, furnishing the Company with reasonable and appropriate reports
of its administration of the Plan;
(f) Authorizing the Trustee to distribute all benefits that are payable under
the Plan;
(g) Engaging legal, administrative, actuarial, investment, accounting,
consulting and other professional services that the Committee believes are
necessary and appropriate;
(h) Adopting rules and regulations for the administration of the Plan that are
not inconsistent with the terms of the Plan; and
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<PAGE> 12
(i) Doing and performing any other acts provided for in the Plan.
7.03. Actions by the Committee
The Committee may act at a meeting, or in writing without a meeting, by the vote
or assent of a majority of its members. The Committee will appoint one of its
members to act as a secretary to record all Committee action. The Committee also
may authorize one or more of its members to execute papers and perform other
ministerial duties on behalf of the Committee.
7.04. Interested Committee Members
No member of the Committee may participate in any Committee action that directly
affects that member's individual interest in the Plan. These matters will be
determined by a majority of the remainder of the Committee.
7.05. Indemnification
(a) The Company will indemnify and hold harmless any Committee member or
employee who performs services to or on behalf of the Plan ("Indemnified Party")
against all liabilities and all reasonable expenses (including attorney fees and
amounts paid in settlement other than to the Employer) incurred or paid in
connection with any threatened or pending action, suit or proceeding brought by
any party in connection with the Plan. However, this indemnification will not
extend to any Indemnified Party whose conduct in connection with the Plan is
found to have been grossly negligent or wrongful. This determination will be
based on any final judgment rendered in connection with the action, suit or
proceeding complaining of the conduct or its effect or, if no final judgment is
rendered, by a majority of the Board of Directors or by independent counsel to
whom the Board of Directors has referred the matter.
(b) The obligations under this section may be satisfied, in the Company's
discretion, through the purchase of a policy or policies of insurance providing
equivalent protection.
7.06. Conclusiveness of Action
Subject to Section 7.08, any action on matters within the discretion of the
Committee will be conclusive, final and binding upon all Participants and upon
all persons claiming any rights hereunder including Beneficiaries.
7.07. Payment of Expenses
(a) Committee members will not be separately compensated for their services as
Committee members. However, the Employer will reimburse Committee members for
all appropriate expenses they incur while carrying out their Plan duties.
(b) The compensation or fees of accountants, counsel and other specialists and
any other costs of administering the Plan or Trust Fund will be charged to the
Trust Fund unless paid by the Company or allocated among Employers. Also, the
Company or an Employer may advance funds to the Trust to meet these fees and
expenses and may seek subsequent reimbursement for these amount but only if (i)
before the advance is made, the Company or Employer apprises the Committee that
reimbursement will be requested and (ii) reimbursement is requested in writing
received by the Committee before the end of the Plan Year during which the
advance was made.
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7.08. Claims Procedure
(a) Filing Claims. Any Participant or Beneficiary who believes that he or she is
entitled to an unpaid Plan benefit may file a claim with the Committee.
(b) Notification to Claimant. If a claim is wholly or partially denied, the
Committee will send a written notice of denial to the claimant. This notice must
be written in a manner calculated to be understood by the claimant and must
include:
(i) The specific reason or reasons for which the claim was denied;
(ii) Specific reference to pertinent Plan provisions, rules, procedures
or protocols upon which the Committee relied to deny the claim;
(iii) A description of any additional material or information that the
claimant may file to perfect the claim and an explanation of why this
material or information is necessary; and
(iv) A description of the steps the claimant may take to appeal an
adverse determination.
The Committee will render its decision within 90 days of receiving a benefit
claim. However, if special circumstances (such as the need for additional
information) require additional time, this decision will be rendered as soon as
possible, but, not later than 180 days after receipt of the claim and only if
the Committee notifies the claimant, in writing, that it needs more time to
review a claim and why that additional time is needed. If the Committee does not
issue its decision within this period, the claim will be deemed to have been
denied.
(c) Review Procedure. If a claim has been wholly or partially denied, the
affected claimant, or his or her authorized representative may:
(i) Request that the Committee reconsider its initial denial by filing
a written appeal no more than 60 days after receiving written notice
that all or part of the initial claim was denied;
(ii) Review pertinent documents and other material upon which the
Committee relied when denying the initial claim; and
(iii) Submit a written description of the reasons for which the
claimant disagrees with the Committee's initial adverse decision.
An appeal of an initial denial of benefits and all supporting material must be
made in writing and directed to the Committee. The Committee is solely
responsible for reviewing all benefit claims and appeals and taking all
appropriate steps to implement its decision.
The Committee's decision on review will be sent to the claimant in writing and
will include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, as well as specific references to the
pertinent Plan provisions, rules, procedures or protocols upon which the
Committee relied to deny the appeal.
The Committee will render its decision within 60 days of receiving a benefit
appeal. However, if special circumstances (such as the need to hold a hearing on
any matter pertaining to the denied claim) require
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<PAGE> 14
additional time, this decision will be rendered as soon as possible, but not
later than 120 days after receipt of the claimant's written appeal and only if
the Committee notifies the claimant, in writing, that it needs more time to
review an appeal and why that additional time is needed. If the Committee does
not issue its decision within this period, the claim will be deemed to have been
denied.
ARTICLE VIII
AMENDMENT TO THE PLAN
8.01. Right to Amend
The Company may modify, alter or amend the Plan at any time. However, no
amendment may affect any Participant's or Beneficiary's vested rights accrued
under the Plan before the effective date of that amendment. If an amendment
changes the vesting schedule described in Section 6.07(b), each Participant
having three or more Years of Vesting Service may elect, to have his or her
vested rights computed without regard to that amendment but only if the
Participant files a written election to this effect with the Committee during
the period beginning on the date the amendment is adopted and ending on the
later of (a) 60 days after the date the amendment is adopted; (b) 60 days after
the amendment is effective; or (c) 60 days after the Participant is issued a
written notice of the amendment.
8.02. Amendment Procedure
The Board of Directors, an executive committee of the Board of Directors, or
other Board committee or any executive officer to which or to whom the Board of
Directors delegates discretionary authority over the Plan, may exercise the
Company's right to amend the Plan.
ARTICLE IX
TERMINATION OF THE PLAN
9.01. Right to Terminate
The Company may terminate the Plan in whole or in part at any time by written
action of its Board of Directors. Each Participant affected by a full or partial
Plan termination or by a complete discontinuance of contributions will be 100
percent vested in the value of all of his or her Accounts. Also, the Committee
may (a) distribute an affected Participant's Accounts at the time the Plan
terminates or partially terminates, even if this date is earlier than the date
benefits otherwise would be distributed under Article VI or (b) hold those
benefits until they are otherwise payable under the terms of the Plan.
9.02. Plan Merger and Consolidation
If the Plan is merged into or consolidated with any other plan, each affected
Participant will be entitled to a benefit immediately after the merger,
consolidation or transfer (determined as if the surviving plan had then
terminated) at least equal to the benefit he or she had accrued immediately
before the merger or consolidation (determined as if the Plan terminated
immediately before that merger or consolidation).
9.03. Successor Employer
If any Employer dissolves into, reorganizes, merges into or consolidates with
another business entity, provision may be made by which the successor will
continue the Plan and Trust, in which case the successor will be substituted for
the Employer under the terms and provisions of this Plan and the Trust
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<PAGE> 15
Agreement. The substitution of the successor for the Employer will constitute an
assumption by the successor of all Plan liabilities and the successor will have
all of the powers, duties and responsibilities of the Employer under the Plan.
ARTICLE X
UNFUNDED PLAN
Notwithstanding any Plan provision to the contrary, the Plan constitutes an
unfunded, unsecured promise by each Employer to pay only those benefits that are
accrued by Participants under the terms of the Plan. Neither the Company nor any
Affiliate will segregate any assets into a fund established exclusively to pay
Plan benefits unless the Company in its sole discretion, establishes a trust for
the purpose of holding assets from which all or part of a Plan benefit may be
paid. Neither the Company nor any Affiliate is liable for the payment of Plan
benefits that are actually paid from a trust established for that purpose.
However, the Company (and each Affiliate) are obliged to pay any benefits not
paid from any trust. Also, Participants, Beneficiaries and other persons
claiming a Plan benefit through them have only the rights of general unsecured
creditors and do not have any interest in or right to any specific asset of any
Employer. Nothing in this Plan constitutes a guaranty by the Company, any
Affiliate or any other entity or person that the assets of the Employer or any
Affiliate will be sufficient to pay Plan benefits.
ARTICLE XI
MISCELLANEOUS
11.01. Voluntary Plan
The Plan is purely voluntary on the part of each Employer; neither the
establishment of the Plan nor any amendment to it nor the creation of any fund
or account nor the payment of any benefits may be construed as giving any person
(a) a legal or equitable right against any Employer, the Trustee or the
Committee other than those specifically granted under the Plan or conferred by
affirmative action of the Committee or any Employer in a manner that is
consistent with the terms and provisions of this Plan or (b) the right to be
retained in the service of any Employer. All Participants remain subject to
discharge to the same extent as though this Plan had not been established.
11.02. Non-alienation of Benefits
The right of a Participant, Beneficiary or any other person to receive Plan
benefits may not be assigned, transferred, pledged or encumbered except as
provided in the Participant's Beneficiary designation, by will or by applicable
laws of descent and distribution. Any attempt to assign, transfer, pledge or
encumber a Plan benefit will be null and void and of no legal effect.
11.03. Inability to Receive Benefits
Any Plan benefit payable to a Participant or Beneficiary who is declared
incompetent will be paid to the guardian, conservator or other person legally
charged with the care of his or her person or estate. Also, if the Committee, in
its sole discretion, concludes that a Participant or Beneficiary is unable to
manage his or her financial affairs, the Committee may, but is not required to,
direct the Company or Trustee to distribute Plan benefits to any one or more of
his or her Spouse, lineal ascendants or descendants or other close living
relatives of the Participant or Beneficiary who demonstrates to the satisfaction
of the Committee the propriety of those distributions. Any payment made under
this Section will completely discharge the Plan's liability with respect to that
payment. The Committee is not required to see to the application of any
distribution made to any person.
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<PAGE> 16
11.04. Lost Participants
Each Participant is obliged to keep the Committee apprised of his or her current
mailing address and that of his or her Beneficiary. The Committee's obligation
to search for any Participant or Beneficiary is limited to sending a registered
or certified letter to the Participant's or Beneficiary's last known address.
Any amounts credited to the Accounts of any Participant or Beneficiary who does
not file a claim for benefits with the Committee will be forfeited no later than
12 months after benefits are otherwise payable and applied to reduce future
Employer Nonqualified Matching Contributions. However, this forfeited benefit
will be restored and paid if the Committee subsequently approves a claim for
benefits under the procedures described in Section 7.08.
11.05. Limitation of Rights
Nothing in the Plan, expressed or implied, is intended or may be construed as
conferring upon or giving to any person, firm or association (other than the
Company, an Affiliate, Participants, their Beneficiaries and their successors in
interest) any right, remedy or claim under or by reason of this Plan.
11.06. Invalid Provision
If any provision of this Plan is held to be illegal or invalid for any reason,
the Plan will be construed and enforced as if the offending provision had not
been included in the Plan. However, that determination will not affect the
legality or validity of the remaining parts of this Plan.
11.07. One Plan
This Plan may be executed in any number of counterparts, each of which will be
deemed to be an original.
11.08. Governing Law
The Plan will be governed by and construed in accordance with the laws of the
United States and, to the extent applicable, the laws of Ohio.
Executed effective January 1, 1999, unless otherwise specifically stated herein.
BOB EVANS FARMS, INC.
By: /s/ Daniel E. Evans
---------------------------------
Print Name: Daniel E. Evans
Title: Chairman of the Board and CEO
Date: 10/28/98
68
<PAGE> 17
BOB EVANS FARMS, INC.
NONQUALIFIED SALARY DEFERRAL PLAN
ENROLLMENT FORM
Name: __________________________________________________________________________
Soc. Sec. No.: _________________________________________________________________
Date of Birth: _________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Eligibility Date: ______________________________________________________________
Enrollment Date (may not be earlier than Eligibility Date): ____________________
Note: The elections you make by completing this form will remain in effect until
changed or revoked.
(i) If you want to change any one of the elections you make when
completing this form, you must complete and deliver to the Committee a
new Enrollment Form completing only those sections you want to change.
(ii) Any change (other than to name a new Beneficiary - Section 4) will
not be effective until the first day of the Plan Year that begins after
the revised Enrollment Form is delivered to the Committee.
(iii) If you suspend your deferrals by completing Section 6, (A) your
election to suspend will not be effective until the first day of the
Plan Year that begins after you return a completed Enrollment Form to
the Committee and (B) you may not participate in the Plan again until
you complete and return to the Committee a new Enrollment Form and then
only if the Committee agrees that you are eligible to participate in
the Plan on that date.
69
<PAGE> 18
PART A ELECTION TO PARTICIPATE
Complete this portion of this form if you decide to participate in the Bob Evans
Farms, Inc. Nonqualified Salary Deferral Plan. Complete Part B of this form if
you do not want to participate in this program.
1. DISTRIBUTION ACCOUNTS.
I direct that amounts attributable to my deferrals be allocated to the
following Distribution Accounts:
Note:
(i) If you do not complete this portion of the form, 100 percent of
your Plan Accounts will be allocated to your Retirement Distribution
Account.
(ii) The percentages allocated to all accounts may never be larger than
100 percent.
(iii) Regardless of the election you make under this Section, your Plan
benefit will be distributed as a lump sum if you terminate employment
before reaching age 55.
(iv) All amounts attributable to your share of the Employer's
contribution will be allocated to your Retirement Distribution Account.
_____% or $_____ to an In-Service Distribution Account, to be
distributed in a lump sum on the earlier of the date (i) I
die, (ii) become disabled, (iii) incur a financial hardship,
or (iv) ____________________________________________ (insert a
specific date).
This amount will be invested in (select one):
_____ the Income Fund;
_____ the Income Growth Fund; or
_____ the Growth Fund
Note: You may elect only one investment fund for amounts credited to
this Distribution Account.
_____% or $_____ to an Education Distribution Account, to be
distributed in five annual installments beginning on
_____________________________________________________________
(insert a specific date).
70
<PAGE> 19
This amount will be invested in (select one):
_____ the Income Fund;
_____ the Income Growth Fund; or
_____ the Growth Fund
Note: You may elect only one investment fund for amounts credited to
this Distribution Account
_____% or $_____ to a Retirement Distribution Account, to be
distributed on (i) the earlier of the date (a) I die, (b)
become disabled or (c) incur a financial hardship, or, if
later, (ii) the date (a) I terminate employment or (b)
______________ (insert a specific date).
This amount will be invested in (select one):
_____ the Income Fund;
_____ the Income Growth Fund; or
_____ the Growth Fund
Note: You may elect only one investment fund for amounts credited to
this Distribution Account
2. METHOD OF PAYMENT (RETIREMENT DISTRIBUTION ACCOUNT).
(a) I understand that payments from my In-Service Distribution Account
will be made in a single lump sum at the time indicated in Section 1,
payments from my Education Distribution will be made in five annual
installments and that I will receive a lump sum payment of all amounts
credited to my accounts if I terminate employment before reaching age
55.
(b) I choose to receive payments from my Retirement Distribution
Account in:
(i) _____% a lump sum;
(ii) _____% in _____ substantially equal monthly installments;
(iii) _____% in _____ substantially equal quarterly
installments; or
(iv) _____% in _____ substantially equal annual installments.
71
<PAGE> 20
3. INVESTMENT OF ACCOUNTS.
Earnings on my Accounts will be calculated as described in separate material
distributed by the Committee.
4. DESIGNATION OF BENEFICIARY.
(a) Primary Beneficiary:
I designate the following persons as my Primary Beneficiary or
Beneficiaries to receive the portion of my Deferred Contribution
Account that is not distributed to me before my death. This benefit
will be paid, in the proportion specified, to:
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
Note: You are not required to name more than one Primary Beneficiary but if you
do, the sum of these percentages may not be larger than 100 percent.
(b) Contingent Beneficiary
If one or more of my Primary Beneficiaries dies before I die, I direct that any
Plan death benefit that might otherwise have been paid to that Beneficiary:
_____ Be paid to my other named Primary Beneficiaries in proportion
to the allocation given above (ignoring the interest allocated
to the deceased Primary Beneficiary); or
72
<PAGE> 21
_____ Be distributed among the following Contingent Beneficiaries.
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
______% to ____________________________________________________________
(Name) (Relationship)
Address: ______________________________________________________________
Note: You are not required to name more than one Contingent Beneficiary but if
you do, the sum of these percentages may not be larger than 100 percent.
5. ACKNOWLEDGMENT.
I acknowledge that (i) the Plan is unfunded and is maintained primarily
for the purpose of providing deferred compensation to a select group of
management or highly compensated employees (as defined in the Employee
Retirement Income Security Act of 1974, as amended) and that I have no
right or claim to receive amounts credited to my Accounts other than
those specifically granted by the terms of the Plan and (ii) I am
solely responsible for ensuring that the Committee's files contain my
current mailing address and that of my Beneficiary.
6. SUSPENSION OF DEFERRALS.
I elect to suspend all deferrals to the Plan. In doing so, I understand
that (i) this election will not be effective until the first day of the
Plan Year that begins after this election is delivered to the Committee
and will not accelerate the date on which any Plan benefits are
payable, (ii) I am still responsible for directing the investment of my
Accounts and (iii) I may not again participate in the Plan until the
later of the date (A) I deliver to the Committee a completed Enrollment
Form or (B) the date that the Committee decides that I may resume
participation.
73
<PAGE> 22
This election supersedes any earlier Enrollment Form I may have completed. This
election can be revoked or modified only by returning to the Committee a
completed version of this from specifying the revised rate of deferral.
- --------------------------
Date ------------------------------------------
Signature
------------------------------------------
Name (please print)
Received by Committee on:
-----------------
By:
--------------------------------------
PART B WAIVER OF PARTICIPATION
Complete this portion of this form if you decide not to participate in the Bob
Evans Farms, Inc. Nonqualified Salary Deferral Plan. Complete Part A of this
form if you want to participate in this program.
I elect to waive participation in the Bob Evans Farms, Inc. Nonqualified Salary
Deferral Plan. In doing so, I understand that I will not earn a benefit under
this program unless I revoke this waiver and complete Part A of this form at a
time that I am eligible to participate in the Plan.
- --------------------------
Date ------------------------------------------
Signature
------------------------------------------
Name (please print)
Received by Committee on:
-----------------
By:
--------------------------------------
74
<PAGE> 23
BOB EVANS FARMS, INC.
NONQUALIFIED SALARY DEFERRAL PLAN
SALARY DEFERRAL NOTICE
Name: __________________________________________________________________________
Soc. Sec. No.: _________________________________________________________________
Date of Birth: _________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Effective Date (may not be earlier than the first day of the Plan Year starting
after this notice is returned to the Committee): _______________________________
Note: (i) The elections you make by completing this form will remain in effect
until changed or revoked. However, any change will not be effective until the
first day of the Plan Year that begins after the revised Salary Deferral Notice
is delivered to the Committee.
(ii) The maximum amount that may be deferred is 25 percent of your regular cash
compensation (i.e., the amount shown on your IRS Form W-2 minus any noncash
earnings - such as the taxable value of fringe benefits) plus (ii) 100 percent
of your bonus, minus (iii) the maximum amount that "highly compensated
employees" as a group may defer to the Bob Evans Farms, Inc. and Affiliates 401K
Retirement Plan. The Plan Committee can help you calculate the maximum amount
you may defer for each year.
(iii) You may defer all or a portion of your bonus by completing a separate form
called the "Bob Evans Farms, Inc. Nonqualified Salary Deferral Plan - Bonus
Deferral Form.
In accordance with the provisions of the Bob Evans Farms, Inc.
Nonqualified Salary Deferral Plan (the "Plan") and subject to the
limits described in the Plan, I elect to defer __________% of my
regular Compensation (as defined in the Plan).
- --------------------------
Date ------------------------------------------
Signature
------------------------------------------
Name (please print)
Received by Committee on:
-----------------
By:
--------------------------------------
75
<PAGE> 24
BOB EVANS FARMS, INC.
NONQUALIFIED SALARY DEFERRAL PLAN
BONUS DEFERRAL NOTICE
Name: __________________________________________________________________________
Soc. Sec. No.: _________________________________________________________________
Date of Birth: _________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Effective Date (may not be earlier than the first day of the Plan Year starting
after this notice is returned to the Committee): _______________________________
Note: (i) The elections you make by completing this form will remain in effect
until changed or revoked. However, any change will not be effective until the
first day of the Plan Year that begins after the revised Bonus Deferral Notice
is delivered to the Committee.
(ii) The maximum amount that may be deferred is 25 percent of your regular cash
compensation (i.e., the amount shown on your IRS Form W-2 minus any noncash
earnings - such as the taxable value of fringe benefits) plus (ii) 100 percent
of your bonus, minus (iii) the maximum amount that "highly compensated
employees" as a group may defer to the Bob Evans Farms, Inc. and Affiliates 401K
Retirement Plan. The Plan Committee can help you calculate the maximum amount
you may defer for each year.
(iii) You may defer a portion of your regular salary by completing a separate
form called the "Bob Evans Farms, Inc. Nonqualified Salary Deferral Plan.
In accordance with the provisions of the Bob Evans Farms, Inc.
Nonqualified Salary Deferral Plan (the "Plan") and subject to the
limits described in the Plan, I elect to defer __________% of my bonus.
- --------------------------
Date ------------------------------------------
Signature
------------------------------------------
Name (please print)
Received by Committee on:
-----------------
By:
--------------------------------------
76
<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
Owens Foods, Inc. Texas
Owens Country Foods, 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>
77
<PAGE> 1
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Bob Evans Farms, Inc. of our report dated June 4, 1999, included in the 1999
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:
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 Trust
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. 33-74829 -- 1998 Stock Option and Incentive Plan
o Form S-3 No. 333-74739 -- Dividend Reinvestment and Stock
Purchase Plan
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Columbus, Ohio
July 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF INCOME OF BOB EVANS
FARMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K FOR
THE PERIOD ENDED APRIL 30, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> APR-25-1998
<PERIOD-END> APR-30-1999
<EXCHANGE-RATE> 1
<CASH> 25,455
<SECURITIES> 0
<RECEIVABLES> 17,036
<ALLOWANCES> 0
<INVENTORY> 14,299
<CURRENT-ASSETS> 66,637
<PP&E> 750,412
<DEPRECIATION> 257,043
<TOTAL-ASSETS> 590,452
<CURRENT-LIABILITIES> 102,015
<BONDS> 0
0
60
<COMMON> 426
<OTHER-SE> 469,609
<TOTAL-LIABILITY-AND-EQUITY> 590,452
<SALES> 968,503
<TOTAL-REVENUES> 968,503
<CGS> 275,898
<TOTAL-COSTS> 749,024
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 574
<INCOME-PRETAX> 91,374
<INCOME-TAX> 33,808
<INCOME-CONTINUING> 57,566
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,566
<EPS-BASIC> 1.40
<EPS-DILUTED> 1.39
</TABLE>
