1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 4, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ to ______________
COMMISSION FILE NUMBER 0-2396
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BRIDGFORD FOODS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-1778176
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
1308 N. PATT STREET, ANAHEIM, CA 92801
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(Address of principal executive offices-Zip code)
714-526-5533
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months ( or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
As of June 15, 2001 the registrant had 10,523,512 shares of common stock
outstanding.
Number of pages in this Form 10-Q 8
(end of cover page) Page 1 of 8 pages
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BRIDGFORD FOODS CORPORATION
FORM 10-Q QUARTERLY REPORT
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
a. Consolidated Condensed Balance Sheets at May 4, 2001
and November 3, 2000........................................... 3
b. Consolidated Condensed Statements of Income for the
13 and 26 weeks ended May 4, 2001 and April 28, 2000........... 4
b. Consolidated Condensed Statements of Shareholders' Equity
for the 26 weeks ended May 4, 2001 and April 28, 2000.......... 4
c. Consolidated Condensed Statements of Cash Flows for the
26 weeks ended May 4, 2001 and April 28, 2000.................. 5
d. Notes to Consolidated Condensed Financial Statements........... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk........ 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the the
undersigned thereunto duly authorized.
BRIDGFORD FOODS CORPORATION
---------------------------
(Registrant)
June 15, 2001 By: /s/ Robert E. Schulze
- ------------- ---------------------------------
Date R. E. Schulze, President,
Principal Financial Officer
Page 2 of 8 pages
3
Item 1. a.
BRIDGFORD FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
MAY 4
2001 NOVEMBER 3
(UNAUDITED) 2000
-------------- --------------
(in thousands) (in thousands)
ASSETS
Current assets:
Cash and cash equivalents $17,384 $18,301
Accounts receivable, less allowance
for doubtful accounts of $773 and $694 13,070 13,642
Inventories (Note 2) 15,685 18,191
Prepaid expenses and other current assets 3,450 2,965
------- -------
Total current assets 49,589 53,099
Property, plant and equipment, less accumulated
depreciation of $33,724 and $31,599 18,878 18,964
Other non-current assets 11,133 10,617
------- -------
$79,600 $82,680
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,027 $ 7,723
Accrued payroll and other expenses 5,673 6,787
Income taxes payable 44 120
------- -------
Total current liabilities 9,744 14,630
------- -------
Non-current liabilities 11,981 11,854
------- -------
Shareholders' equity:
Preferred stock, without par value
Authorized - 1,000,000 shares
Issued and outstanding - none
Common stock, $1.00 par value
Authorized - 20,000,000 shares Issued
and outstanding - 10,523,912 and
10,615,312 shares 10,586 10,672
Capital in excess of par value 18,440 19,459
Retained earnings 28,849 26,065
------- -------
57,875 56,196
------- -------
$79,600 $82,680
======= =======
See accompanying notes to consolidated condensed financial statements.
Page 3 of 8 pages
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Item 1. b.
BRIDGFORD FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
13 WEEKS ENDED 26 WEEKS ENDED
(in thousands) (in thousands)
-------------------- --------------------
MAY 4 APRIL 28 MAY 4 APRIL 28
2001 2000 2001 2000
------- -------- ------- --------
Net sales $38,497 $36,816 $80,777 $77,160
------- ------- ------- -------
Cost of products sold,
excluding depreciation 23,411 21,841 48,284 46,290
Selling, general and
administrative expenses 11,142 10,212 23,486 21,322
Depreciation 1,063 932 2,126 1,861
------- ------- ------- -------
35,616 32,985 73,896 69,473
------- ------- ------- -------
Income before taxes 2,881 3,831 6,881 7,687
Income tax provision 1,095 1,456 2,615 2,921
------- ------- ------- -------
Net income $ 1,786 $ 2,375 $ 4,266 $ 4,766
======= ======= ======= =======
Basic earnings per share $ .17 $ .22 $ .40 $ .43
======= ======= ======= =======
Basic shares computed 10,551 10,899 10,576 11,103
======= ======= ======= =======
Diluted earnings per share $ .17 $ .22 $ .40 $ .43
======= ======= ======= =======
Diluted shares computed 10,606 10,899 10,629 11,103
======= ======= ======= =======
Cash dividends paid per share $ .07 $ .07 $ .14 $ .14
======= ======= ======= =======
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(in thousands)
Comon Stock Capital
------------------------ in excess Retained
Shares Amount of par earnings
------- -------- -------- --------
October 29, 1999 11,370 $ 11,427 $ 26,347 $20,361
Net income 4,766
Shares repurchased (532) (532) (4,358)
Cash dividends ($.14 per share) (1,558)
------- -------- -------- -------
April 28, 2000 10,838 $ 10,895 $ 21,989 $23,569
======= ======== ======== =======
November 3, 2000 10,615 $ 10,672 $ 19,459 $26,065
Net income 4,266
Shares repurchased (86) (86) (1,019)
Cash dividends ($.14 per share) (1,482)
------- -------- -------- -------
May 4, 2001 10,529 $ 10,586 $ 18,440 $28,849
======= ======== ======== =======
See accompanying notes to consolidated condensed financial statements.
Page 4 of 8 pages
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Item 1.c.
BRIDGFORD FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
26 WEEKS ENDED
--------------------------------
MAY 4 APRIL 28
2001 2000
-------------- --------------
(in thousands) (in thousands)
Cash flows from operating activities:
Net income $ 4,266 $ 4,766
Income charges not affecting cash:
Depreciation 2,126 1,861
Provision for losses on accounts receivable 86 91
Gain on sale of land (675)
Effect on cash of changes in assets and liabilities:
Accounts receivable 486 1,395
Inventories 2,506 1,631
Prepaid expenses and other (485) 147
Other non-current assets (516) (340)
Accounts payable and accrued expenses (4,810) (1,401)
Income taxes payable (76) (466)
Non-current liabilities 127 203
-------- --------
Net cash provided by operating activities 3,710 7,212
-------- --------
Cash used in investing activities:
Proceeds from sale of land 675
Additions to property, plant and equipment (2,040) (2,439)
-------- --------
Net cash used in investing activities (2,040) (1,764)
-------- --------
Cash used for financing activities:
Shares repurchased (1,105) (4,890)
Cash dividends paid (1,482) (1,558)
-------- --------
Net cash used in financing activities (2,587) (6,448)
-------- --------
Net decrease in cash and cash equivalents (917) (1,000)
Cash and cash equivalents at beginning of period 18,301 25,021
-------- --------
Cash and cash equivalents at end of period $ 17,384 $ 24,021
======== ========
Cash paid for income taxes $ 3,696 $ 4,008
======== ========
See accompanying notes to consolidated condensed financial statements.
Page 5 of 8 pages
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Item 1.d.
BRIDGFORD FOODS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1 - General Comments
The unaudited consolidated condensed financial statements of the Company for the
thirteen and twenty-six weeks ended May 4, 2001 and April 28, 2000 have been
prepared in conformity with the accounting principles described in the 2000
Annual Report to Shareholders and include all adjustments considered necessary
by management for a fair statement of the interim periods. Such adjustments
consist only of normal recurring items. This report should be read in
conjunction with the Company's 2000 Annual Report to Shareholders.
Note 2 - Inventories
Inventories are comprised as follows at the respective periods:
MAY 4 NOVEMBER 3
2001 2000
-------------- --------------
(in thousands) (in thousands)
Meat, ingredients
and supplies $ 3,963 $ 3,909
Work in progress 2,004 2,193
Finished goods 9,718 12,089
------- -------
$15,685 $18,191
======= =======
Note 3 - Basic and diluted earnings per share
The difference between basic and diluted earnings per share for the thirteen
week and twenty-six week periods ended May 4, 2001 was a result of the dilutive
effect of employee stock options totaling 250,000 shares. The effect of the
250,000 employee stock options outstanding for the thirteen and twenty-six weeks
ended April 28, 2000 was not included in diluted earnings per share as to do so
would be antidilutive.
Page 6 of 8 pages
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ITEM 2.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q under Item 2., "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
Form 10-Q constitute "forward-looking statements" within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934. In addition, the
Company may from time to time make oral forward-looking statements. Such forward
looking statements involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance, or achievements of
Bridgford Foods Corporation to be materially different from any future results,
performance or achievements expressed or implied by such forward looking
statements. Such factors include, among others, the following: general economic
and business conditions; the impact of competitive products and pricing; success
of operating initiatives; development and operating costs; advertising and
promotional efforts; adverse publicity; acceptance of new product offerings;
consumer trial and frequency; changes in business strategy or development plans;
availability, terms and deployment of capital; availability of qualified
personnel; commodity, labor, and employee benefit costs; changes in, or failure
to comply with, government regulations; weather conditions; construction
schedules; and other factors referenced in this Form 10-Q and in Bridgford Foods
Corporation's Annual Report on Form 10-K for the fiscal year ended November 3,
2000. Because of these and other factors that may affect the Company's operating
results, past financial performance should not be considered an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's operating results are heavily dependent upon the prices paid for
raw materials. The marketing of the Company's value-added products does not lend
itself to instantaneous changes in selling prices. Changes in selling prices are
relatively infrequent and do not compare with the volatility of commodity
markets.
Sales increased by $1,681,000 (4.6%) to $38,497,000 in the second thirteen weeks
of the 2001 fiscal year compared to the same period last year. Compared to the
prior thirteen-week period, sales decreased $3,782,000 (9.0%). The sales
increase compared to the second thirteen weeks of 2000 relates primarily to
higher unit sales volume. The sales decrease compared to the prior thirteen-week
period ended February 2, 2001 (not shown) relates to lower sales volume and
normal seasonal trends in the Company's business activities. Sales for the first
twenty-six weeks of fiscal year 2001 increased by $3,617,000 (4.7%) to
$80,777,000 compared to the same period in the prior fiscal year. This increase
relates to higher unit sales volume and increased selling prices.
Cost of products sold increased by $1,570,000 (7.2%) in the second thirteen
weeks of the 2001 fiscal year to $23,411,000 compared to the same period in
2000. The increase in cost of sales relates to higher sales volume. The cost of
sales increase outpaced the sales increase primarily as a result of higher
ingredient costs and changes in product mix in the second quarter of fiscal year
2001. Compared to the prior thirteen-week period (not shown), the cost of
products sold decreased $1,462,000 (5.9%) due primarily to lower unit sales. The
cost of sales decrease did not directly relate to the sales decrease due to
higher ingredient costs experienced in the second thirteen weeks of fiscal year
2001 compared to the first thirteen weeks of fiscal 2001. Cost of sales
increased in the first twenty-six weeks of fiscal year 2001 by $1,994,000 (4.3%)
to $48,284,000 compared to the same period in the prior fiscal year. Cost of
sales in the first twenty-six weeks increased primarily as a result of higher
sales and higher ingredient costs.
Selling, general and administrative expenses increased by $930,000 (9.1%) to
$11,142,000 in the second thirteen weeks of 2001 compared to the same period
last year. The increase primarily relates to higher sales volume compared to the
prior year. Compared to the prior thirteen-week period (not shown), selling,
general and administrative expenses decreased by $1,202,000 (9.7%) primarily as
a result of lower sales volume and seasonally lower expenses compared to the
prior thirteen-week period. Selling, general and administrative expenses
increased by $2,164,000 (10.2%) in the first twenty-six weeks of fiscal 2001.
The increase primarily relates to higher sales volume compared to the prior
year. In addition, costs for insurance and fuel also increased
disproportionately to sales compared to the prior twenty-six week period.
Depreciation expense increased by $131,000 (14.1%) in the second thirteen weeks
of the 2001 fiscal year compared to the same period in 2000. Depreciation
expense increased $265,000 (14.2%) in the first twenty-six weeks of fiscal 2001
compared to the prior fiscal twenty-six week period. Depreciation increased as a
result of increased capital expenditures.
Page 7 of 8 pages
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
The effective income tax rate was 38.0% in the second thirteen weeks of fiscal
2001, consistent with the prior fiscal year and the prior thirteen-week period.
Cash and cash equivalents decreased $917,000 (5.0%) to $17,384,000 during the
first twenty-six weeks of the 2001 fiscal year. The principal items affecting
the $3,710,000 net cash provided by operating activities were net income of
$4,266,000, depreciation of $2,126,000 and inventory reductions of $2,506,000
offset by reductions in accounts payable and accrued expenses of $4,810,000.
Cash used in investing activities for the first twenty-six weeks of fiscal 2001
consisted of $2,040,000 in additions to property, plant and equipment. This
amount reflects the Company's continued investment in processing, transportation
and information technology equipment.
Cash used for financing activities consists of cash dividends in the amount of
$1,482,000 and $1,558,000, respectively, in the first twenty-six weeks of fiscal
years 2001 and 2000. The decrease in cash dividends reflects the purchase of
840,900 common shares under the Company's stock repurchase program since
November 2000.
The Company remained free of interest bearing debt during the second thirteen
weeks of 2001. The Company's revolving line of credit with Bank of America
expires April 30, 2002 and provides for borrowings up to $2,000,000. The Company
has not borrowed under this line for more than fourteen consecutive years.
The impact of inflation on the Company's financial position and results of
operations has not been significant. Management is of the opinion that the
Company's strong financial position and its capital resources are sufficient to
provide for its operating needs and capital expenditures.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have significant overall currency exposure at May 4, 2001
and April 28, 2000. The Company's financial instruments consist of cash and cash
equivalents and life insurance policies at May 4, 2001 and April 28, 2000. The
carrying value of the Company's financial instruments approximated their fair
market values based on current market prices and rates. It is not the Company's
policy to enter into derivative financial instruments. The Company does not
currently have any significant foreign currency exposure.
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) - Reports on Form 8-K
No Report on Form 8-K has been filed during the quarter for which this report is
filed.
Page 8 of 8 pages