Bridgford Foods (BRID) 10-Q 26 May 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Apr. 14, 2017	May 26, 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	Apr. 14, 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	Q2
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 14, 2017	Oct. 28, 2016
Current assets:
Cash and cash equivalents	$ 13,541	$ 6,985
Accounts receivable, less allowance for doubtful accounts of $21 and $17, respectively, and promotional allowances of $2,444 and $2,271, respectively	13,371	16,582
Inventories, less inventory reserves of $228 and $308, respectively (Note 2)	18,327	24,081
Prepaid expenses and other current assets	2,139	937
Total current assets	47,378	48,585
Property, plant and equipment, net of accumulated depreciation and amortization of $62,109 and $62,330 respectively	16,487	10,362
Other non-current assets	14,204	13,775
Deferred income taxes	14,532	14,532
Total assets	92,601	87,254
Current liabilities:
Accounts payable	4,291	4,085
Accrued payroll, advertising and other expenses	4,660	4,089
Current portion of non-current liabilities	4,387	3,918
Income taxes payable	130	130
Total current liabilities	13,468	12,222
Non-current liabilities	36,435	36,123
Total liabilities	49,903	48,345
Commitments and contingencies (Note 3)
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	51,862	48,073
Accumulated other comprehensive loss	(26,596)	(26,596)
Total shareholders' equity	42,698	38,909
Total liabilities and shareholders' equity	$ 92,601	$ 87,254

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Apr. 14, 2017	Oct. 28, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 21	$ 17
Accounts receivable, allowance for promotional allowances	2,444	2,271
Inventories, reserves	228	308
Property, plant and equipment, accumulated depreciation	$ 62,109	$ 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, shares authorized	20,000,000	20,000,000
Common stock, shares issued	9,076,000	9,076,000
Common stock, shares outstanding	9,076,000	9,076,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 14, 2017	Apr. 15, 2016	Apr. 14, 2017	Apr. 15, 2016
Income Statement [Abstract]
Net sales	$ 34,097	$ 31,145	$ 74,178	$ 67,301
Cost of products sold	21,140	18,914	46,306	41,291
Gross margin	12,957	12,231	27,872	26,010
Selling, general and administrative expenses	10,928	9,760	22,393	20,438
Income before taxes	2,029	2,471	5,479	5,572
Income tax provision	714	979	1,690	2,208
Net income	$ 1,315	$ 1,492	$ 3,789	$ 3,364
Net income per share - Basic and diluted	$ 0.15	$ 0.16	$ 0.42	$ 0.37
Weighted average common shares - Basic and diluted	9,077,000	9,077,000	9,077,000	9,079,000

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Apr. 14, 2017	Apr. 15, 2016
Cash flows from operating activities:
Net income	$ 3,789	$ 3,364
Income or charges not affecting cash and cash equivalents:
Depreciation	1,459	1,434
Provision for losses on (recovery on) accounts receivable	14	(130)
Reduction in for promotional allowances	(173)	(229)
Gain on sale of property, plant and equipment	(28)	(7)
Changes in operating assets and liabilities:
Accounts receivable	3,370	(117)
Inventories	5,754	1,400
Prepaid expenses and other current assets	(1,202)	(708)
Other non-current assets	(429)	84
Accounts payable	206	(1,082)
Accrued payroll, advertising and other expenses	1,040	(205)
Income taxes payable		864
Non-current liabilities	380	872
Net cash provided by operating activities	14,180	5,540
Cash used in investing activities:
Proceeds from sale of property, plant and equipment	28	12
Additions to property, plant and equipment	(7,584)	(1,015)
Net cash used in investing activities	(7,556)	(1,003)
Cash used in financing activities:
Shares repurchased		(40)
Payment of capital lease obligations	(68)	(73)
Net cash used in financing activities	(68)	(113)
Net increase in cash and cash equivalents	6,556	4,424
Cash and cash equivalents at beginning of period	6,985	5,842
Cash and cash equivalents at end of period	13,541	10,266
Supplemental cash flow information:
Cash paid for income taxes	$ 2,543	$ 1,559

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Apr. 14, 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 and twenty-four weeks ended April 14, 2017 and April 15, 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 April 14, 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 twenty-four weeks ended April 14, 2017 and April 15, 2016, respectively. Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Sales AR April 14, 2017 38.0 % 38.8 % April 15, 2016 39.1 % 45.7 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twenty-four weeks ended April 14, 2017 or the twenty-four weeks ended April 15, 2016. Subsequent events Management has evaluated events subsequent to April 14, 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. 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 April 14, 2017 or April 15, 2016.

Inventories

Inventories	6 Months Ended
	Apr. 15, 2016
Inventory Disclosure [Abstract]
Inventories	Note 2 - Inventories: Inventories are comprised of the following at the respective period ends: (unaudited) April 14, 2017 October 28, 2016 Meat, ingredients and supplies $ 5,916 $ 5,401 Work in progress 1,302 1,206 Finished goods 11,109 17,474 $ 18,327 $ 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.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Apr. 14, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	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 April 14, 2017 is $485. 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 twenty-four 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 April 14, 2017. The Company does not participate in the commodity futures market or hedging to limit commodity exposure. The Company obtained Chicago City Council approval on January 25, 2017 for a zoning change to its Chicago production plant property which management believes increases its value and flexibility going forward. The Company has purchased an existing facility in the Chicago area for approximately $5.6 million cash. The Company expects to invest approximately $2.0 million on building improvements before occupying the facility in the later part of fiscal year 2017.

Segment Information

Segment Information	6 Months Ended
	Apr. 14, 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 and twenty-four weeks ended April 14, 2017 and April 15, 2016. Segment Information Twelve weeks Ended April 14, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 10,817 $ 23,280 $ - $ 34,097 Cost of products sold 6,716 14,424 - 21,140 Gross margin 4,101 8,856 - 12,957 SG&A 3,386 7,542 - 10,928 Income before taxes 715 1,314 - 2,029 Total assets $ 10,844 $ 37,486 $ 44,271 $ 92,601 Additions to PP&E $ 79 $ 6,461 $ - $ 6,540 Twelve weeks Ended April 15, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 11,155 $ 19,990 $ - $ 31,145 Cost of products sold 6,987 11,927 - 18,914 Gross margin 4,168 8,063 - 12,231 SG&A 3,290 6,470 - 9,760 Income before taxes 878 1,593 - 2,471 Total assets $ 10,336 $ 33,161 $ 35,505 $ 79,002 Additions to PP&E $ 88 $ 349 $ $ 437 Twenty-four weeks Ended April 14, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 22,531 $ 51,647 $ - $ 74,178 Cost of products sold 14,080 32,226 - 46,306 Gross margin 8,451 19,421 - 27,872 SG&A 6,959 15,434 - 22,393 Income before taxes 1,492 3,987 - 5,479 Total assets $ 10,844 $ 37,486 $ 44,271 $ 92,601 Additions to PP&E $ 104 $ 7,480 $ - $ 7,584 Twenty-four weeks Ended April 15, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 22,641 $ 44,660 $ - $ 67,301 Cost of products sold 14,093 27,198 - 41,291 Gross margin 8,548 17,462 - 26,010 SG&A 6,939 13,499 - 20,438 Income before taxes 1,609 3,963 - 5,572 Total assets $ 10,336 $ 33,161 $ 35,505 $ 79,002 Additions to PP&E $ 159 $ 858 $ (2 ) $ 1,015

Income Taxes

Income Taxes	6 Months Ended
	Apr. 14, 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 twenty-four week period ended April 14, 2017 was 30.8% for federal and state taxes. We recorded an income tax provision of $1,690 for the twenty-four week period ended April 14, 2017, related to federal and state taxes, based on the Company’s expected annual effective tax rate. We recorded an income tax provision of $2,208 for the twenty-four week period ended April 15, 2016, related to federal and state taxes, based on the Company’s expected annual effective tax rate. As of April 14, 2017, the Company did not have any outstanding federal or state, other than california, 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)	6 Months Ended
	Apr. 14, 2017
Accounting Policies [Abstract]
Subsequent Events	Subsequent events Management has evaluated events subsequent to April 14, 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.
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 April 14, 2017 or April 15, 2016.

Summary of Significant Accoun12

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Apr. 14, 2017
Risks and Uncertainties [Abstract]
Schedule of Customer Concentration	Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Sales AR April 14, 2017 38.0 % 38.8 % April 15, 2016 39.1 % 45.7 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twenty-four weeks ended April 14, 2017 or the twenty-four weeks ended April 15, 2016.

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Apr. 14, 2017
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories are comprised of the following at the respective period ends: (unaudited) April 14, 2017 October 28, 2016 Meat, ingredients and supplies $ 5,916 $ 5,401 Work in progress 1,302 1,206 Finished goods 11,109 17,474 $ 18,327 $ 24,081

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Apr. 14, 2017
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	The following segment information is presented for the twelve and twenty-four weeks ended April 14, 2017 and April 15, 2016. Segment Information Twelve weeks Ended April 14, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 10,817 $ 23,280 $ - $ 34,097 Cost of products sold 6,716 14,424 - 21,140 Gross margin 4,101 8,856 - 12,957 SG&A 3,386 7,542 - 10,928 Income before taxes 715 1,314 - 2,029 Total assets $ 10,844 $ 37,486 $ 44,271 $ 92,601 Additions to PP&E $ 79 $ 6,461 $ - $ 6,540 Twelve weeks Ended April 15, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 11,155 $ 19,990 $ - $ 31,145 Cost of products sold 6,987 11,927 - 18,914 Gross margin 4,168 8,063 - 12,231 SG&A 3,290 6,470 - 9,760 Income before taxes 878 1,593 - 2,471 Total assets $ 10,336 $ 33,161 $ 35,505 $ 79,002 Additions to PP&E $ 88 $ 349 $ $ 437 Twenty-four weeks Ended April 14, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 22,531 $ 51,647 $ - $ 74,178 Cost of products sold 14,080 32,226 - 46,306 Gross margin 8,451 19,421 - 27,872 SG&A 6,959 15,434 - 22,393 Income before taxes 1,492 3,987 - 5,479 Total assets $ 10,844 $ 37,486 $ 44,271 $ 92,601 Additions to PP&E $ 104 $ 7,480 $ - $ 7,584 Twenty-four weeks Ended April 15, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 22,641 $ 44,660 $ - $ 67,301 Cost of products sold 14,093 27,198 - 41,291 Gross margin 8,548 17,462 - 26,010 SG&A 6,939 13,499 - 20,438 Income before taxes 1,609 3,963 - 5,572 Total assets $ 10,336 $ 33,161 $ 35,505 $ 79,002 Additions to PP&E $ 159 $ 858 $ (2 ) $ 1,015

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Details Narrative)	6 Months Ended
	Apr. 14, 2017	Apr. 15, 2016
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)	6 Months Ended
	Apr. 14, 2017	Apr. 15, 2016
Sales Revenue, Net [Member]
Concentration Risk, Percentage	10.00%	10.00%
Sales Revenue, Net [Member] | Wal-Mart [Member]
Concentration Risk, Percentage	38.00%	39.10%
Accounts Receivable [Member]
Concentration Risk, Percentage	20.00%	20.00%
Accounts Receivable [Member] | Wal-Mart [Member]
Concentration Risk, Percentage	38.80%	45.70%

Summary of Significant Accoun17

Summary of Significant Accounting Policies - Schedule of Customer Concentration (Details) (Parenthetical)	6 Months Ended
	Apr. 14, 2017	Apr. 15, 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	Apr. 14, 2017	Oct. 28, 2016
Inventories - Schedule Of Inventories Details
Meat, ingredients and supplies	$ 5,916	$ 5,401
Work in progress	1,302	1,206
Finished goods	11,109	17,474
Total inventory	$ 18,327	$ 24,081

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Apr. 14, 2017	Oct. 28, 2012
Capital lease obligations	$ 485	$ 1,060
Existing facility purchase, description	The Company has purchased an existing facility in the Chicago area for approximately $5.6 million cash.
Expected amount to be invested in subsequent period	$ 2,000,000
Building Improvements [Member]
Investment	$ 5,600,000

Segment Information (Details Na

Segment Information (Details Narrative)	6 Months Ended
	Apr. 14, 2017Segment
Segment Reporting [Abstract]
Number of operating segments	2

Segment Information - Schedule

Segment Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Apr. 14, 2017	Apr. 15, 2016	Apr. 15, 2016	Apr. 14, 2017	Apr. 15, 2016	Apr. 15, 2016	Oct. 28, 2016
Sales	$ 34,097	$ 31,145	$ 31,145	$ 74,178	$ 67,301	$ 67,301
Cost of products sold	21,140	18,914	18,914	46,306	41,291	41,291
Gross margin	12,957	12,231	12,231	27,872	26,010	26,010
SG&A	10,928	9,760	9,760	22,393	20,438	20,438
Income before taxes	2,029	2,471	2,471	5,479	5,572	5,572
Total assets	92,601	79,002	79,002	92,601	79,002	79,002	$ 87,254
Additions to PP&E	6,540	437		7,584		1,015
Frozen Food Products [Member]
Sales	10,817	11,155		22,531		22,641
Cost of products sold	6,716	6,987		14,080		14,093
Gross margin	4,101	4,168		8,451		8,548
SG&A	3,386	3,290		6,959		6,939
Income before taxes	715	878		1,492		1,609
Total assets	10,844	10,336	10,336	10,844	10,336	10,336
Additions to PP&E	79	88		104		159
Snack Food Products [Member]
Sales	23,280	19,990		51,647		44,660
Cost of products sold	14,424	11,927		32,226		27,198
Gross margin	8,856	8,063		19,421		17,462
SG&A	7,542	6,470		15,434		13,499
Income before taxes	1,314	1,593		3,987		3,963
Total assets	37,486	33,161	33,161	37,486	33,161	33,161
Additions to PP&E	6,461	349		7,480		858
Other [Member]
Sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Total assets	44,271	35,505	$ 35,505	44,271	$ 35,505	35,505
Additions to PP&E						$ (2)

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Apr. 14, 2017	Apr. 15, 2016	Apr. 14, 2017	Apr. 15, 2016	Apr. 15, 2016	Apr. 17, 2015
Income Tax Disclosure [Abstract]
Federal and state tax percentage			30.80%
Income tax provision	$ 714	$ 979	$ 1,690	$ 2,208	$ 2,208	$ 0
Net operating loss carryforward