Bridgford Foods (BRID) 10-Q 3 Mar 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Jan. 20, 2017	Mar. 03, 2017
Document And Entity Information
Entity Registrant Name	BRIDGFORD FOODS CORP
Entity Central Index Key	14,177
Document Type	10-Q
Document Period End Date	Jan. 20, 2017
Amendment Flag	false
Current Fiscal Year End Date	--11-03
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		9,076,832
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 20, 2017	Oct. 28, 2016
Current assets:
Cash and cash equivalents	$ 12,497	$ 6,985
Accounts receivable, less allowance for doubtful accounts of $19 and $17, respectively, and promotional allowances of $2,524 and $2,271, respectively	16,868	16,582
Inventories, less inventory reserves of $279 and $308, respectively (Note 2)	19,168	24,081
Prepaid expenses and other current assets	1,525	937
Total current assets	50,058	48,585
Property, plant and equipment, net of accumulated depreciation and amortization of $62,868 and $62,330 respectively	10,719	10,362
Other non-current assets	14,054	13,775
Deferred income taxes	14,532	14,532
Total assets	89,363	87,254
Current liabilities:
Accounts payable	3,968	4,085
Accrued payroll, advertising and other expenses	4,440	4,089
Current portion of non-current liabilities	4,444	3,918
Income taxes payable	130	130
Total current liabilities	12,982	12,222
Non-current liabilities	34,998	36,123
Total liabilities	47,980	48,345
Shareholders' equity:
Preferred stock, without par value; authorized - 1,000 shares; issued and outstanding - none
Common stock, $1.00 par value; authorized - 20,000 shares; issued and outstanding -9,076 and 9,076 shares, respectively	9,134	9,134
Capital in excess of par value	8,298	8,298
Retained earnings	50,547	48,073
Accumulated other comprehensive loss	(26,596)	(26,596)
Total shareholders' equity	41,383	38,909
Total liabilities and shareholders' equity	$ 89,363	$ 87,254

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jan. 20, 2017	Oct. 28, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 19	$ 17
Accounts receivable, allowance for promotional allowances	2,524	2,271
Inventories, reserves	279	308
Property, plant and equipment, accumulated depreciation	$ 62,868	$ 62,330
Preferred stock, par value
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 1	$ 1
Common stock, authorized	20,000,000	20,000,000
Common stock, issued	9,076,000	9,076,000
Common stock, outstanding	9,076,000	9,076,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016
Income Statement [Abstract]
Net sales	$ 40,081	$ 36,156
Cost of products sold	25,166	22,377
Gross margin	14,915	13,779
Selling, general and administrative expenses	11,465	10,678
Income before taxes	3,450	3,101
Income tax provision	976	1,229
Net income	$ 2,474	$ 1,872
Net income per share - Basic and diluted	$ 0.27	$ 0.21
Weighted average common shares - Basic and diluted	9,077	9,079

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016
Cash flows from operating activities:
Net income	$ 2,474	$ 1,872
Income or charges not affecting cash and cash equivalents:
Depreciation	687	700
Provision for losses on (recovery on) accounts receivable	1	(82)
(Reduction in) provision for promotional allowances	(254)	643
Gain on sale of property, plant and equipment	(4)	(1)
Changes in operating assets and liabilities:
Accounts receivable	(33)	1,379
Inventories	4,913	3,650
Prepaid expenses and other current assets	(588)	(698)
Other non-current assets	(279)	322
Accounts payable	(117)	(1,133)
Accrued payroll, advertising and other expenses	877	(949)
Income taxes payable		1,342
Non-current liabilities	(1,092)	393
Net cash provided by operating activities	6,585	7,438
Cash used in investing activities:
Proceeds from sale of property, plant and equipment	4	1
Additions to property, plant and equipment	(1,044)	(578)
Net cash used in investing activities	(1,040)	(577)
Cash used in financing activities:
Shares repurchased		(25)
Payment of capital lease obligations	(33)	(36)
Net cash used in financing activities	(33)	(61)
Net increase in cash and cash equivalents	5,512	6,800
Cash and cash equivalents at beginning of period	6,985	5,842
Cash and cash equivalents at end of period	12,497	12,642
Supplemental cash flow information:
Cash paid for income taxes	$ 1,291	$ 153

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Jan. 20, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 1 - Summary of Significant Accounting Policies: The unaudited condensed consolidated financial statements of Bridgford Foods Corporation (the “Company”, “we”, “our”, “us”) for the twelve weeks ended January 20, 2017 and January 22, 2016 have been prepared in conformity with the accounting principles described in the Company’s Annual Report on Form 10-KA for the fiscal year ended October 28, 2016 (the “Annual Report”) and include all adjustments considered necessary by management for a fair presentation of the interim periods. This report should be read in conjunction with the Annual Report. Due to seasonality and other factors, interim results are not necessarily indicative of the results for the full year. Recent accounting pronouncements and their effect on the Company are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. The October 28, 2016 balance sheet amounts within these interim condensed consolidated financial statements were derived from the audited fiscal 2016 financial statements. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results may vary from these estimates. Some of the estimates needed to be made by management include the allowance for doubtful accounts, promotional and returns allowances, inventory reserves, the estimated useful lives of property, plant and equipment, and the valuation allowance for the Company’s deferred tax assets. Actual results could materially differ from these estimates. Amounts estimated related to liabilities for self-insured workers’ compensation, employee healthcare and pension benefits are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts which vary from our current estimates. Market conditions and the volatility in stock markets may cause significant changes in the measurement of our pension fund liabilities and the performance of our life insurance policies in future periods. Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll, advertising and other expenses. The carrying amount of these instruments approximate fair market value due to their short term maturity. At January 20, 2017, the Company had accounts in excess of the Federal Deposit Insurance Corporation insurance coverage limit. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. The Company grants payment terms to a significant number of customers that are diversified over a wide geographic area. The Company monitors the payment histories of its customers and maintains an allowance for doubtful accounts which is reviewed for adequacy on a quarterly basis. The Company does not require collateral from its customers. The table below shows customers that accounted for more than 20% of consolidated accounts receivable (“AR”) or 10% of consolidated sales for the twelve weeks ended January 20, 2017 and January 22, 2016, respectively. Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Sales AR January 20, 2017 37.0 % 31.7 % January 22, 2016 41.2 % 39.8 % Dollar General Sales AR January 20, 2017 8.9 % 24.0 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twelve weeks ended January 20, 2017 or the twelve weeks ended January 22, 2016. Subsequent events Management has evaluated events subsequent to January 20, 2017 through the date that the accompanying condensed consolidated financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustments of and/or disclosure in such financial statements. The Company obtained Chicago City Council approval on January 25, 2017 for a zoning change to our Chicago production plant property which management believes increases its value and flexibility going forward. The Company has identified an existing facility in the Chicago area and has entered into a non-binding purchase agreement for that property. The Company has made a total escrow deposit of $250 and is evaluating whether or not the facility meets its needs. Basic and diluted earnings per share Basic and diluted earnings per share are calculated based on the weighted average number of shares outstanding for all periods presented. No stock options, warrants, or convertible securities were outstanding as of January 20, 2017 or January 22, 2016.

Inventories

Inventories	3 Months Ended
	Jan. 20, 2017
Inventory Disclosure [Abstract]
Inventories	Note 2 - Inventories: Inventories are comprised of the following at the respective period ends: (unaudited) January 20, 2017 October 28, 2016 Meat, ingredients and supplies $ 5,698 $ 5,401 Work in progress 1,069 1,206 Finished goods 12,401 17,474 $ 19,168 $ 24,081 Inventories are valued at the lower of cost (which approximates actual cost on a first-in, first-out basis) or market. Costs related to warehousing, transportation and distribution to customers are considered when computing market value. Inventories include the cost of ingredients, labor and manufacturing overhead. We regularly review inventory quantities on hand and write down any excess or obsolete inventories to estimated net realizable value. An inventory reserve is created when potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. Changes in economic conditions, production requirements, and lower than expected customer demand could result in additional obsolete or slow-moving inventory that cannot be sold or may need to be sold at reduced prices and could result in additional reserve provisions.

Contingencies and Commitments

Contingencies and Commitments	3 Months Ended
	Jan. 20, 2017
Commitments and Contingencies Disclosure [Abstract]
Contingencies and Commitments	Note 3 - Commitments and Contingencies: We invested in OTR (over-the-road) tractors financed by a capital lease obligation in the amount of $1,060 during fiscal 2012. The total capital lease obligation remaining for transportation equipment as of January 20, 2017 is $520. The lease arrangement also contains a variable component of seven cents per mile based on miles driven over the lease life. The Company also leases warehouse and/or office facilities throughout the United States through month-to-month rental agreements. No material changes have been made to these agreements during the first twelve weeks of fiscal 2017. The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations. Most flour purchases are made at market price without contracts. However, the Company may purchase bulk flour at current market prices under short-term (30 - 120 days) fixed price contracts during the normal course of business. Under these arrangements, the Company is obligated to purchase specific quantities at fixed prices, within the specified contract period. These contracts provide for automatic price increases if agreed quantities are not purchased within the specified contract period. The contracts are not material. These contracts are typically settled within a month’s time and no significant contracts remain open at the close of the quarterly or annual reporting period. No significant contracts remained unfulfilled at January 20, 2017. The Company does not participate in the commodity futures market or hedging to limit commodity exposure.

Segment Information

Segment Information	3 Months Ended
	Jan. 20, 2017
Segment Reporting [Abstract]
Segment Information	Note 4 - Segment Information: The Company has two reportable operating segments, Frozen Food Products (the processing and distribution of frozen products) and Snack Food Products (the processing and distribution of meat and other convenience foods). We evaluate each segment’s performance based on revenues and operating income. Selling, general and administrative expenses include corporate accounting, information systems, human resource management and marketing, which are managed at the corporate level. These activities are allocated to each operating segment based on revenues and/or actual usage. Assets managed at the corporate level have been included as “other” in the accompanying segment information. The following segment information is presented for the twelve weeks ended January 20, 2017 and January 22, 2016. Segment Information Twelve weeks Ended January 20, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 11,715 $ 28,366 $ - $ 40,081 Cost of products sold 7,364 17,802 - 25,166 Gross margin 4,351 10,564 - 14,915 SG&A 3,573 7,892 - 11,465 Income before taxes 778 2,672 - 3,450 Total assets $ 10,290 $ 36,465 $ 42,608 $ 89,363 Additions to PP&E $ 25 $ 1,019 $ - $ 1,044 Twelve weeks Ended January 22, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 11,486 $ 24,670 $ - $ 36,156 Cost of products sold 7,106 15,271 - 22,377 Gross margin 4,380 9,399 - 13,779 SG&A 3,649 7,029 - 10,678 Income before taxes 731 2,370 - 3,101 Total assets $ 10,093 $ 29,163 $ 37,511 $ 76,767 Additions to PP&E $ 71 $ 509 $ (2 ) $ 578

Income Taxes

Income Taxes	3 Months Ended
	Jan. 20, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Note 5 – Income Taxes: The Company expects its effective tax rate for the 2017 fiscal year to be different from the federal statutory rate due to domestic production activities deductions, non-taxable gains and losses on life insurance policies and state taxes. The effective tax rate for the twelve week period ended January 20, 2017 was 28.3% for federal and state taxes. We recorded an income tax provision of $976 for the twelve week period ended January 20, 2017, related to federal and state taxes, based on the Company’s expected annual effective tax rate. Our income tax provision for the twelve week period ended January 22, 2016 was $1,229. The effective income tax rate differed from the applicable mixed statutory rate of approximately 37.7% primarily due to domestic production activities deductions under IRC Section 199. As of January 20, 2017, the Company did not have any outstanding federal or state net operating loss carryforwards. Our federal income tax returns are open to audit under the statute of limitations for the fiscal years ended on or about October 31, 2013 through 2015. We are subject to income tax in California and various other state taxing jurisdictions. Our California state income tax returns are open to audit under the statute of limitations for the fiscal years ended on or about October 31, 2012 through 2015.

Summary of Significant Accoun11

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Jan. 20, 2017
Accounting Policies [Abstract]
Subsequent events	Subsequent events Management has evaluated events subsequent to January 20, 2017 through the date that the accompanying condensed consolidated financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustments of and/or disclosure in such financial statements. The Company obtained Chicago City Council approval on January 25, 2017 for a zoning change to our Chicago production plant property which management believes increases its value and flexibility going forward. The Company has identified an existing facility in the Chicago area and has entered into a non-binding purchase agreement for that property. The Company has made a total escrow deposit of $250 and is evaluating whether or not the facility meets its needs.
Basic and Diluted Earnings Per Share	Basic and diluted earnings per share Basic and diluted earnings per share are calculated based on the weighted average number of shares outstanding for all periods presented. No stock options, warrants, or convertible securities were outstanding as of January 20, 2017 or January 22, 2016.

Summary of Significant Accoun12

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Jan. 20, 2017
Risks and Uncertainties [Abstract]
Schedule of Customer Concentration	Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Sales AR January 20, 2017 37.0 % 31.7 % January 22, 2016 41.2 % 39.8 % Dollar General Sales AR January 20, 2017 8.9 % 24.0 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twelve weeks ended January 20, 2017 or the twelve weeks ended January 22, 2016.

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Jan. 20, 2017
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories are comprised of the following at the respective period ends: (unaudited) January 20, 2017 October 28, 2016 Meat, ingredients and supplies $ 5,698 $ 5,401 Work in progress 1,069 1,206 Finished goods 12,401 17,474 $ 19,168 $ 24,081

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Jan. 20, 2017
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	The following segment information is presented for the twelve weeks ended January 20, 2017 and January 22, 2016. Segment Information Twelve weeks Ended January 20, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 11,715 $ 28,366 $ - $ 40,081 Cost of products sold 7,364 17,802 - 25,166 Gross margin 4,351 10,564 - 14,915 SG&A 3,573 7,892 - 11,465 Income before taxes 778 2,672 - 3,450 Total assets $ 10,290 $ 36,465 $ 42,608 $ 89,363 Additions to PP&E $ 25 $ 1,019 $ - $ 1,044 Twelve weeks Ended January 22, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 11,486 $ 24,670 $ - $ 36,156 Cost of products sold 7,106 15,271 - 22,377 Gross margin 4,380 9,399 - 13,779 SG&A 3,649 7,029 - 10,678 Income before taxes 731 2,370 - 3,101 Total assets $ 10,093 $ 29,163 $ 37,511 $ 76,767 Additions to PP&E $ 71 $ 509 $ (2 ) $ 578

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016
Escrow deposit	$ 250
Sales Revenue, Net [Member]
Concentration Risk, Percentage	10.00%	10.00%
Accounts Receivable [Member]
Concentration Risk, Percentage	20.00%	20.00%

Summary of Significant Accoun16

Summary of Significant Accounting Policies - Schedule of Customer Concentration (Details)	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016
Sales Revenue, Net [Member]
Concentration Risk, Percentage	10.00%	10.00%
Sales Revenue, Net [Member] | Wal-Mart [Member]
Concentration Risk, Percentage	37.00%	41.20%
Sales Revenue, Net [Member] | Dollar General [Member]
Concentration Risk, Percentage	8.90%
Accounts Receivable [Member]
Concentration Risk, Percentage	20.00%	20.00%
Accounts Receivable [Member] | Wal-Mart [Member]
Concentration Risk, Percentage	31.70%	39.80%
Accounts Receivable [Member] | Dollar General [Member]
Concentration Risk, Percentage	24.00%

Summary of Significant Accoun17

Summary of Significant Accounting Policies - Schedule of Customer Concentration (Details) (Parenthetical)	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016
Sales Revenue, Net [Member]
Concentration Risk, Percentage	10.00%	10.00%
Accounts Receivable [Member]
Concentration Risk, Percentage	20.00%	20.00%

Inventories - Schedule of Inven

Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Jan. 20, 2017	Oct. 28, 2016
Inventories - Schedule Of Inventories Details
Meat, ingredients and supplies	$ 5,698	$ 5,401
Work in progress	1,069	1,206
Finished goods	12,401	17,474
Total inventory	$ 19,168	$ 24,081

Contingencies and Commitments (

Contingencies and Commitments (Details Narrative) - USD ($) $ in Thousands	Jan. 20, 2017	Oct. 28, 2012
Commitments and Contingencies Disclosure [Abstract]
Capital lease obligations	$ 520	$ 1,060

Segment Information - Schedule

Segment Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016	Oct. 28, 2016
Sales	$ 40,081	$ 36,156
Cost of products sold	25,166	22,377
Gross margin	14,915	13,779
SG&A	11,465	10,678
Income before taxes	3,450	3,101
Total assets	89,363	76,767	$ 87,254
Additions to PP&E	1,044	578
Frozen Food Products [Member]
Sales	11,715	11,486
Cost of products sold	7,364	7,106
Gross margin	4,351	4,380
SG&A	3,573	3,649
Income before taxes	778	731
Total assets	10,290	10,093
Additions to PP&E	25	71
Snack Food Products [Member]
Sales	28,366	24,670
Cost of products sold	17,802	15,271
Gross margin	10,564	9,399
SG&A	7,892	7,029
Income before taxes	2,672	2,370
Total assets	36,465	29,163
Additions to PP&E	1,019	509
Other [Member]
Sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Total assets	42,608	37,511
Additions to PP&E		$ (2)

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Jan. 20, 2017	Jan. 22, 2016
Income Tax Disclosure [Abstract]
Federal and state tax percentage	28.30%	37.70%
Income tax provision	$ 976	$ 1,229
Net operating loss carryforward