Bridgford Foods (BRID) 10-Q 18 Aug 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	8 Months Ended
	Jul. 07, 2017	Aug. 18, 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	Jul. 7, 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	Q3
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 07, 2017	Oct. 28, 2016
Current assets:
Cash and cash equivalents	$ 10,659	$ 6,985
Accounts receivable, less allowance for doubtful accounts of $21 and $17, respectively, and promotional allowances of $2,436 and $2,271, respectively	18,818	16,582
Inventories, less inventory reserves of $298 and $308, respectively (Note 2)	20,128	24,081
Prepaid expenses and other current assets	924	937
Total current assets	50,529	48,585
Property, plant and equipment, net of accumulated depreciation and amortization of $62,605 and $62,330, respectively	17,957	10,362
Other non-current assets	14,502	13,775
Deferred income taxes	14,532	14,532
Total assets	97,520	87,254
Current liabilities:
Accounts payable	4,462	4,085
Accrued payroll, advertising and other expenses	5,116	4,089
Current portion of non-current liabilities	4,867	3,918
Income taxes payable	130	130
Total current liabilities	14,575	12,222
Non-current liabilities	38,188	36,123
Total liabilities	52,763	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	53,921	48,073
Accumulated other comprehensive loss	(26,596)	(26,596)
Total shareholders’ equity	44,757	38,909
Total liabilities and shareholders’ equity	$ 97,520	$ 87,254

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jul. 07, 2017	Oct. 28, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 21	$ 17
Accounts receivable, allowance for promotional allowances	2,436	2,271
Inventories, reserves	298	308
Property, plant and equipment, accumulated depreciation	$ 62,605	$ 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		8 Months Ended
	Jul. 07, 2017	Jul. 08, 2016	Jul. 07, 2017	Jul. 08, 2016
Income Statement [Abstract]
Net sales	$ 36,609	$ 29,892	$ 110,787	$ 97,193
Cost of products sold	22,590	17,719	68,896	59,010
Gross margin	14,019	12,173	41,891	38,183
Selling, general and administrative expenses	10,917	9,862	33,310	30,300
Income before taxes	3,102	2,311	8,581	7,883
Income tax provision	1,043	489	2,733	2,697
Net income	$ 2,059	$ 1,822	$ 5,848	$ 5,186
Net income per share – Basic and diluted	$ 0.22	$ 0.20	$ 0.64	$ 0.57
Weighted average common shares – Basic and diluted	9,077,000	9,077,000	9,077,000	9,078,000

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	8 Months Ended
	Jul. 07, 2017	Jul. 08, 2016
Cash flows from operating activities:
Net income	$ 5,848	$ 5,186
Income or charges not affecting cash and cash equivalents:
Depreciation	2,130	2,040
Provision for losses on (recovery on) accounts receivable	26	(128)
(Reduction in) provision for promotional allowances	(166)	367
(Gain) loss on sale of property, plant and equipment	(52)	3
Changes in operating assets and liabilities:
Accounts receivable	(2,096)	112
Inventories	3,953	(1,598)
Prepaid expenses and other current assets	13	(726)
Other non-current assets	(727)	(50)
Accounts payable	377	232
Accrued payroll, advertising and other expenses	1,985	168
Income taxes payable		1,322
Non-current liabilities	2,147	2,124
Net cash provided by operating activities	13,438	9,052
Cash used in investing activities:
Proceeds from sale of property, plant and equipment	52	15
Additions to property, plant and equipment	(9,725)	(2,486)
Net cash used in investing activities	(9,673)	(2,471)
Cash used in financing activities:
Shares repurchased		(40)
Payment of capital lease obligations	(91)	(97)
Net cash used in financing activities	(91)	(137)
Net increase in cash and cash equivalents	3,674	6,444
Cash and cash equivalents at beginning of period	6,985	5,842
Cash and cash equivalents at end of period	10,659	12,286
Supplemental cash flow information:
Cash paid for income taxes	$ 2,579	$ 1,589

Summary of Significant Accounti

Summary of Significant Accounting Policies	8 Months Ended
	Jul. 07, 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 thirty-six weeks ended July 7, 2017 and July 8, 2016 have been prepared in conformity with the accounting principles described in the Company’s Annual Report on Form 10-K for the fiscal year ended October 28, 2016 (as amended on Form 10-K/A 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 July 7, 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 thirty-six weeks ended July 7, 2017 and July 8, 2016, respectively. Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Sales AR July 7, 2017 38.7 % 48.1 % July 8, 2016 38.3 % 45.6 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the thirty-six weeks ended July 7, 2017 or the thirty-six weeks ended July 8, 2016. Subsequent events Management has evaluated events subsequent to July 7, 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 July 7, 2017 or July 8, 2016.

Inventories

Inventories	8 Months Ended
	Jul. 07, 2017
Inventory Disclosure [Abstract]
Inventories	Note 2 - Inventories: Inventories are comprised of the following at the respective period ends: (unaudited) July 7, 2017 October 28, 2016 Meat, ingredients and supplies $ 5,731 $ 5,401 Work in progress 1,688 1,206 Finished goods 12,709 17,474 $ 20,128 $ 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	8 Months Ended
	Jul. 07, 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 July 7, 2017 is $462. 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 thirty-six 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 July 7, 2017. The Company does not participate in the commodity futures market or hedging to limit commodity exposure. The Company purchased an existing facility in the Chicago area for approximately $5.6 million cash on March 23, 2017. The Company has spent approximately $1.8 million on building improvements through the end of the third quarter of fiscal 2017 and expects to spend approximately $2.0 million in total on improvements upon completion of the renovations. Initial product shipments were received at the new facility on July 27, 2017 as the facility commenced operations.

Segment Information

Segment Information	8 Months Ended
	Jul. 07, 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 thirty-six weeks ended July 7, 2017 and July 8, 2016. Segment Information Twelve weeks Ended July 7, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 10,200 $ 26,409 $ - $ 36,609 Cost of products sold 6,429 16,161 - 22,590 Gross margin 3,771 10,248 - 14,019 SG&A 3,348 7,569 - 10,917 Income before taxes 423 2,679 - 3,102 Total assets $ 10,552 $ 46,444 $ 40,524 $ 97,520 Additions to PP&E $ 156 $ 1,985 $ - $ 2,141 Twelve weeks Ended July 8, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 9,170 $ 20,722 $ - $ 29,892 Cost of products sold 5,834 11,885 - 17,719 Gross margin 3,336 8,837 - 12,173 SG&A 3,207 6,655 - 9,862 Income before taxes 129 2,182 - 2,311 Total assets $ 10,112 $ 36,228 $ 37,788 $ 84,128 Additions to PP&E $ 268 $ 1,152 $ 51 $ 1,471 Thirty-six weeks Ended July 7, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 32,731 $ 78,056 $ - $ 110,787 Cost of products sold 20,510 48,386 - 68,896 Gross margin 12,221 29,670 - 41,891 SG&A 10,309 23,001 - 33,310 Income before taxes 1,912 6,669 - 8,581 Total assets $ 10,552 $ 46,444 $ 40,524 $ 97,520 Additions to PP&E $ 260 $ 9,465 $ - $ 9,725 Thirty-six weeks Ended July 8, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 31,811 65,382 - 97,193 Cost of products sold 19,927 39,083 - 59,010 Gross margin 11,884 26,299 - 38,183 SG&A 10,145 20,155 - 30,300 Income before taxes 1,739 6,144 - 7,883 Total assets $ 10,112 $ 36,228 $ 37,788 $ 84,128 Additions to PP&E $ 427 $ 2,010 $ 49 $ 2,486

Income Taxes

Income Taxes	8 Months Ended
	Jul. 07, 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 thirty-six week period ended July 7, 2017 was 31.8% for federal and state taxes. We recorded an income tax provision of $2,733 for the thirty-six week period ended July 7, 2017, related to federal and state taxes, based on the Company’s expected annual effective tax rate. We recorded an income tax provision of $2,697 for the thirty-six week period ended July 8, 2016, related to federal and state taxes, based on the Company’s expected annual effective tax rate. As of July 7, 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 2016. 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 2016.

Summary of Significant Accoun11

Summary of Significant Accounting Policies (Policies)	8 Months Ended
	Jul. 07, 2017
Accounting Policies [Abstract]
Subsequent Events	Subsequent events Management has evaluated events subsequent to July 7, 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 July 7, 2017 or July 8, 2016.

Summary of Significant Accoun12

Summary of Significant Accounting Policies (Tables)	8 Months Ended
	Jul. 07, 2017
Accounting Policies [Abstract]
Schedule of Customer Concentration	Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Sales AR July 7, 2017 38.7 % 48.1 % July 8, 2016 38.3 % 45.6 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the thirty-six weeks ended July 7, 2017 or the thirty-six weeks ended July 8, 2016.

Inventories (Tables)

Inventories (Tables)	8 Months Ended
	Jul. 07, 2017
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories are comprised of the following at the respective period ends: (unaudited) July 7, 2017 October 28, 2016 Meat, ingredients and supplies $ 5,731 $ 5,401 Work in progress 1,688 1,206 Finished goods 12,709 17,474 $ 20,128 $ 24,081

Segment Information (Tables)

Segment Information (Tables)	8 Months Ended
	Jul. 07, 2017
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	The following segment information is presented for the twelve and thirty-six weeks ended July 7, 2017 and July 8, 2016. Segment Information Twelve weeks Ended July 7, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 10,200 $ 26,409 $ - $ 36,609 Cost of products sold 6,429 16,161 - 22,590 Gross margin 3,771 10,248 - 14,019 SG&A 3,348 7,569 - 10,917 Income before taxes 423 2,679 - 3,102 Total assets $ 10,552 $ 46,444 $ 40,524 $ 97,520 Additions to PP&E $ 156 $ 1,985 $ - $ 2,141 Twelve weeks Ended July 8, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 9,170 $ 20,722 $ - $ 29,892 Cost of products sold 5,834 11,885 - 17,719 Gross margin 3,336 8,837 - 12,173 SG&A 3,207 6,655 - 9,862 Income before taxes 129 2,182 - 2,311 Total assets $ 10,112 $ 36,228 $ 37,788 $ 84,128 Additions to PP&E $ 268 $ 1,152 $ 51 $ 1,471 Thirty-six weeks Ended July 7, 2017 Frozen Food Products Snack Food Products Other Totals Sales $ 32,731 $ 78,056 $ - $ 110,787 Cost of products sold 20,510 48,386 - 68,896 Gross margin 12,221 29,670 - 41,891 SG&A 10,309 23,001 - 33,310 Income before taxes 1,912 6,669 - 8,581 Total assets $ 10,552 $ 46,444 $ 40,524 $ 97,520 Additions to PP&E $ 260 $ 9,465 $ - $ 9,725 Thirty-six weeks Ended July 8, 2016 Frozen Food Products Snack Food Products Other Totals Sales $ 31,811 65,382 - 97,193 Cost of products sold 19,927 39,083 - 59,010 Gross margin 11,884 26,299 - 38,183 SG&A 10,145 20,155 - 30,300 Income before taxes 1,739 6,144 - 7,883 Total assets $ 10,112 $ 36,228 $ 37,788 $ 84,128 Additions to PP&E $ 427 $ 2,010 $ 49 $ 2,486

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Details Narrative)	8 Months Ended
	Jul. 07, 2017	Jul. 08, 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)	8 Months Ended
	Jul. 07, 2017	Jul. 08, 2016
Sales Revenue, Net [Member]
Concentration Risk, Percentage	10.00%	10.00%
Sales Revenue, Net [Member] | Wal-Mart [Member]
Concentration Risk, Percentage	38.70%	38.30%
Accounts Receivable [Member]
Concentration Risk, Percentage	20.00%	20.00%
Accounts Receivable [Member] | Wal-Mart [Member]
Concentration Risk, Percentage	48.10%	45.60%

Summary of Significant Accoun17

Summary of Significant Accounting Policies - Schedule of Customer Concentration (Details) (Parenthetical)	8 Months Ended
	Jul. 07, 2017	Jul. 08, 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	Jul. 07, 2017	Oct. 28, 2016
Inventory Disclosure [Abstract]
Meat, ingredients and supplies	$ 5,731	$ 5,401
Work in progress	1,688	1,206
Finished goods	12,709	17,474
Total inventory	$ 20,128	$ 24,081

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	Mar. 23, 2017	Jul. 07, 2017	Oct. 28, 2012
Capital lease obligations		$ 462	$ 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
Building Improvements [Member]
Investment	$ 5,600	$ 1,800

Segment Information (Details Na

Segment Information (Details Narrative)	8 Months Ended
	Jul. 07, 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		8 Months Ended
	Jul. 07, 2017	Jul. 08, 2016	Jul. 07, 2017	Jul. 08, 2016	Oct. 28, 2016
Sales	$ 36,609	$ 29,892	$ 110,787	$ 97,193
Cost of products sold	22,590	17,719	68,896	59,010
Gross margin	14,019	12,173	41,891	38,183
SG&A	10,917	9,862	33,310	30,300
Income before taxes	3,102	2,311	8,581	7,883
Total assets	97,520	84,128	97,520	84,128	$ 87,254
Additions to PP&E	2,141	1,471	9,725	2,486
Frozen Food Products [Member]
Sales	10,200	9,170	32,731	31,811
Cost of products sold	6,429	5,834	20,510	19,927
Gross margin	3,771	3,336	12,221	11,884
SG&A	3,348	3,207	10,309	10,145
Income before taxes	423	129	1,912	1,739
Total assets	10,552	10,112	10,552	10,112
Additions to PP&E	156	268	260	427
Snack Food Products [Member]
Sales	26,409	20,722	78,056	65,382
Cost of products sold	16,161	11,885	48,386	39,083
Gross margin	10,248	8,837	29,670	26,299
SG&A	7,569	6,655	23,001	20,155
Income before taxes	2,679	2,182	6,669	6,144
Total assets	46,444	36,228	46,444	36,228
Additions to PP&E	1,985	1,152	9,465	2,010
Other [Member]
Sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Total assets	40,524	37,788	40,524	37,788
Additions to PP&E		$ 51		$ 49

Income Taxes (Details Narrative

Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		8 Months Ended
	Jul. 07, 2017	Jul. 08, 2016	Jul. 07, 2017	Jul. 08, 2016
Income Tax Disclosure [Abstract]
Federal and state tax percentage			31.80%
Income tax provision	$ 1,043	$ 489	$ 2,733	$ 2,697
Net operating loss carryforward