10-K405 1 a68805e10-k405.txt FORM 10-K405 FISCAL YEAR END NOVEMBER 3, 2000 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED NOVEMBER 3, 2000 [ ] 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 ------ 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 No.) 1308 North Patt Street, Anaheim, California 92801 ------------------------------------------- ------------------ (Address of principal executive offices) (Zip code) (714) 526-5533 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $1.00 per share --------------------------------------- (Title of class) 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 --- --- 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 registrant'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 --- The aggregate market value of voting stock held by non-affiliates of the registrant on January 23, 2001 was $38,989,000. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 10,577,412 shares of Common Stock, par value of $1.00 per share, as of January 23, 2001. DOCUMENTS INCORPORATED BY REFERENCE Items 5, 6, 7 and 8 of Part II are incorporated by reference from the registrant's Annual Report to Shareholders for the fiscal year ended November 3, 2000. Items 10, 11, 12 and 13 of Part III are incorporated by reference from the registrant's Proxy Statement for the Annual Meeting of Shareholders to be held March 14, 2001. 2 PART I ITEM 1. BUSINESS Background of Business Bridgford Foods Corporation, a California corporation (collectively with its subsidiaries, the "Company"), was organized in 1952. The Company originally began its operations as a retail meat market in San Diego, California, and evolved into a meat wholesaler for hotels and restaurants, a distributor of frozen food products, a processor and packer of meat and a manufacturer and distributor of frozen food products for sale on a retail and wholesale basis. For more than the past five years, the Company and its subsidiaries have been primarily engaged in the manufacturing, marketing and distribution of an extensive line of frozen, refrigerated and snack food products throughout the United States. The Company has not been involved in any bankruptcy, receivership or similar proceedings, nor has it been party to any merger, acquisition, etc. or acquired or disposed of any material amounts of assets during the past five years. Substantially all of the assets of the Company have been acquired in the ordinary course of business. The Company had no significant change in the type of products produced or distributed, nor in the markets or methods of distribution since the beginning of the fiscal year. Certain statements in this report constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. 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 report. Description of Business The Company operates in one business segment - the manufacture and distribution of frozen, refrigerated and snack food products. The products manufactured and distributed by the Company consist of an extensive line of food products, including a variety of sliced luncheon meats and cheeses, wieners, bacon, sandwiches, dry sausages, biscuits, bread dough items and roll dough items. The products purchased by the Company for resale include a variety of jerky, cheeses, salads, party dips, Mexican foods, nuts and other delicatessen type food products. In the aggregate, the Company manufactures or distributes a product line consisting of a total of approximately 470 food products. 2000 1999 1998 ---- ---- ---- Products manufactured or processed by the Company 68% 69% 76% Items manufactured or processed by third parties for distribution 32% 31% 24% --- --- --- 100% 100% 100% === === === 2 3 Although the Company has recently introduced several new products, none of these products have contributed significantly to the Company's revenue growth for the fiscal year. The Company's sales are not subject to material seasonal variations. Historically the Company has been able to respond quickly to the receipt of orders and, accordingly, the Company does not maintain a significant sales backlog. The Company and its industry generally have no unusual demands or restrictions on working capital items. The Company is not dependent upon a single customer, or a few customers, the loss of which would have a material adverse effect on the Company's results of operations. During the last fiscal year the Company did not enter into any new markets or any significant contractual or other material relationships. The Company has two classes of similar food products, each of which has accounted for 10% or more of consolidated sales in the prior three fiscal years listed below. The following table shows sales, as a percentage of consolidated sales, for each of these two classes of similar products for each of the last three fiscal years: 2000 1999 1998 ---- ---- ---- Frozen Food Products 37% 38% 41% Refrigerated and Snack Food Products 63% 62% 59% --- --- --- 100% 100% 100% === === === To date, federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the environment, have not had a material effect on the Company's business. Product Planning and Research and Development The Company continually monitors the consumer acceptance of each product within its extensive product line. Individual products are regularly added to and deleted from the Company's product line. The addition or deletion of any product has not had a material effect on the Company's operations. The Company believes that a key factor in the success of its products is its system of carefully targeted research and testing of its products to ensure high quality and that each product matches an identified market opportunity. The emphasis in new product introductions in the past few years has been in microwaveable, single service items. The Company is constantly searching to develop new products to complement its existing product line and improved processing techniques and formulas for its existing product line. The Company utilizes an in-house test kitchen to research and experiment with unique food preparation methods, improve quality control and analyze new ingredient mixtures. The Company does not anticipate any significant change in product-mix as a result of its research and development efforts. Marketing, Sales and Distribution The Company markets and sells its products with its own sales force, brokers, cooperatives, wholesalers and independent distributors. Currently, products are sold by the Company's own sales force to approximately 37,000 retail food stores located in 49 states and Canada. In addition, the Company sells its products through wholesalers, cooperatives and distributors to approximately an additional 23,000 retail outlets and 22,000 restaurants and institutions. The Company's annual advertising expenditures are directed towards retail and institutional customers. These customers participate in various special promotional programs including "slotting" and direct advertising allowances sponsored by the Company. The Company also invests in general consumer advertising in various newspapers and periodicals. The Company directs advertising at food service customers with campaigns in major industry publications and through Company participation in trade shows throughout the United States. 3 4 Competition The products of the Company are sold under highly competitive conditions. All food products can be considered competitive with other food products, but the Company regards its principal competitors to include national, regional and local producers and distributors of refrigerated, frozen and snack food products. Several of the Company's competitors include large companies with substantially greater financial and marketing resources than those of the Company. Existing competitors may broaden their product lines and potential competitors may enter or increase their focus on the Company's market, resulting in greater competition for the Company. The Company believes that its products compete favorably with those of the Company's competitors. Such competitors' products compete against those of the Company for retail shelf space, institutional distribution and customer preference. Employees At the end of fiscal 2000, the Company had approximately 730 employees, approximately 40% of whose employment relationship with the Company was governed by collective bargaining agreements. These agreements currently expire between January 2001 and December 2003. The Company believes that its relationship with its employees is good. Raw Materials Although the Company has numerous sources of raw materials, the availability of raw materials is subject to some volatility. From time to time drought or flood conditions affect the cost of grain products adversely in the short run, and costs of meat products in the subsequent two to five year cycle. Similarly, periods of surplus grain products, usually occasioned by favorable growing weather and adequate moisture, result in an increased supply and lowering of grain costs in ensuing seasons. Government commodity programs and export enhancement programs can also have material effects on commodity prices. These programs are generally not predictable beyond published information. ITEM 2. PROPERTIES The Company owns the following facilities: PROPERTY LOCATION SQUARE FOOTAGE ACREAGE ----------------- -------------- ------- Anaheim, California 100,000 5 Modesto, California 2,500 1/3 Dallas, Texas 94,000 4 Dallas, Texas 30,000 2 Dallas, Texas 16,000 1 Dallas, Texas 3,200 1.5 Statesville, North Carolina 42,000 8 Chicago, Illinois 156,000 1.5 The foregoing plants are, in general, fully utilized by the Company for processing, warehousing, distributing and administrative purposes. The Company also leases small warehouse and/or office facilities through the United States and Canada. The Company believes that its properties are adequate to satisfy its foreseeable needs. Additional properties may be acquired and/or plants expanded if favorable opportunities and conditions arise. 4 5 ITEM 3. LEGAL PROCEEDINGS No material legal proceedings were pending at November 3, 2000 against the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to the Company's shareholders during the fourth quarter of the fiscal year ended November 3, 2000. EXECUTIVE OFFICERS OF THE REGISTRANT The names, ages and positions of all the executive officers of the Company as of January 1, 2001 are listed below. Messrs. Hugh Wm. Bridgford and Allan L. Bridgford are brothers. Officers are normally appointed annually by the board of directors at their meeting immediately following the annual meeting of shareholders. All executive officers are full-time employees of the Company, except for Allan L. Bridgford and Hugh Wm. Bridgford, who work 80% of full-time. Name Age Position(s) with the Company ---- --- ---------------------------- Allan L. Bridgford 65 Chairman and member of the Executive Committee Robert E. Schulze 66 President and member of the Executive Committee Hugh Wm. Bridgford 69 Vice President and Chairman of the Executive Committee Salvatore F. DeGeorge 69 Senior Vice President Lawrence D. English 69 Vice President 5 6 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS The Company's Common Stock, par value $1.00 per share (the "Common Stock"), is traded in the over-the-counter market and prices are quoted on The Nasdaq National Market under the symbol "BRID." As of January 1, 2001, there were 509 holders of record of the Company's Common Stock. The market price and dividend information with respect to the Company's Common Stock are set forth on the inside cover of the Company's 2000 Annual Report to Shareholders incorporated herein by reference. Future dividends will be dependent upon future earnings, financial requirements and other factors. ITEM 6. SELECTED FINANCIAL DATA The information set forth on page 4 of the Company's 2000 Annual Report to Shareholders is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information set forth on pages 4 and 5 of the Company's 2000 Annual Report to Shareholders is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company did not have significant overall currency exposure at November 3, 2000. The Company's financial instruments consist of cash and cash equivalents and life insurance policies at November 3, 2000 and 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information set forth on pages 6 through 11 of the Company's 2000 Annual Report to Shareholders in the sections thereof entitled "Consolidated Balance Sheets", "Consolidated Statements of Income", "Consolidated Statements of Shareholders' Equity", "Consolidated Statements of Cash Flows", "Notes to Consolidated Financial Statements" and "Report of Independent Accountants" is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 6 7 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information set forth in the Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders to be held on March 14, 2001 is incorporated herein by reference. Information concerning the executive officers of the Company is set forth in Part I hereof under the heading "Executive Officers of the Registrant". ITEM 11. EXECUTIVE COMPENSATION Information set forth in the Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders to be held on March 14, 2001 is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information set forth in the Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders to be held on March 14, 2001 is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information set forth in the Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders to be held on March 14, 2001 is incorporated herein by reference. 7 8 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: (1) Financial Statements. See "Index to Consolidated Financial Statements" included in this report. (2) Financial Statement Schedule. See "Index to Consolidated Financial Statements" included in this report. (3) Exhibits. The exhibits filed as a part of this report are listed in the accompanying "Index to Exhibits". (b) Report on Form 8-K. The Company did not file a Current Report on Form 8-K during the quarter ended November 3, 2000. 8 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRIDGFORD FOODS CORPORATION By: /s/ Allan L. Bridgford -------------------------------- Allan L. Bridgford, Chairman Date: January 26, 2001 POWER OF ATTORNEY We, the undersigned directors and officers of Bridgford Foods Corporation do hereby constitute and appoint Allan L. Bridgford and Robert E. Schulze, or either of them, with full power of substitution and resubstitution, our true and lawful attorneys and agents, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, or their substitutes, may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in connection with this Annual Report on Form 10-K, including specifically, but without limitation, power and authority to sign for us or any of us in our names and in the capacities indicated below, any and all amendments; and we do hereby ratify and confirm all that the said attorneys and agents, or either of them, shall do or cause to be done by virtue hereof. 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 registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Allan L. Bridgford Chairman January 26, 2001 ------------------------------ (Principal Executive Officer) Allan L. Bridgford /s/ Robert E. Schulze President January 26, 2001 ------------------------------ (Principal Financial and Robert E. Schulze Accounting Officer) /s/ Hugh Wm. Bridgford Vice President January 26, 2001 ------------------------------ Hugh Wm. Bridgford /s/ Paul A. Gilbert Director January 8, 2001 ------------------------------ Paul A. Gilbert /s/ John W. McNevin Director January 8, 2001 ------------------------------ John W. McNevin /s/ Steven H. Price Director January 8, 2001 ------------------------------ Steven H. Price /s/ Norman V. Wagner II Director January 8, 2001 ------------------------------ Norman V. Wagner II /s/ Paul R. Zippwald Director January 8, 2001 ------------------------------ Paul R. Zippwald
9 10 BRIDGFORD FOODS CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements of the Registrant and its subsidiaries, including the report thereon of PricewaterhouseCoopers LLP dated December 22, 2000, appearing on pages 6 through 11 of the accompanying 2000 Annual Report to Shareholders are incorporated by reference in this Annual Report on Form 10-K. With the exception of the aforementioned information and the information incorporated in Items 5, 6, 7 and 8, the 2000 Annual Report to Shareholders is not to be deemed filed as part of this Annual Report on Form 10-K. The following Financial Statement Schedule should be read in conjunction with the financial statements in such 2000 Annual Report to Shareholders. Page ---- Report of Independent Accountants on Financial Statement Schedules F-1 Financial Statement Schedule for the three years ended November 3, 2000: Schedule II - Valuation and Qualifying Accounts F-2 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 10 11 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Bridgford Foods Corporation Our audits of the consolidated financial statements referred to in our report dated December 22, 2000 appearing on page 11 of the 2000 Annual Report to Shareholders of Bridgford Foods Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP Orange County, California December 22, 2000 F-1 12 BRIDGFORD FOODS CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Provision for Accounts Balance at Balance at losses on written off close beginning Accounts less of of period Receivable Recoveries period ---------- ------------- ----------- ---------- October 30, 1998 Allowance for doubtful accounts $577,156 $254,150 $248,519 $582,787 ======== ======== ======== ======== October 29, 1999 Allowance for doubtful accounts $582,787 $221,650 $157,218 $647,219 ======== ======== ======== ======== November 3, 2000 Allowance for doubtful accounts $647,219 $324,650 $277,378 $694,491 ======== ======== ======== ========
F-2 13 BRIDGFORD FOODS CORPORATION INDEX TO EXHIBITS EXHIBIT NO. PAGE NO. ------- -------- 3.5 Restated Articles of Incorporation, dated December 29, 1989 (filed as Exhibit 3.5 to Form 10 on January 28, 1993 and incorporated herein by reference). N/A 3.6 Amendment to Articles of Incorporation, dated July 27, 1990 (filed as Exhibit 3.6 to Form 10 on January 28, 1993 and incorporated herein by reference). N/A 3.7 By-laws, as amended (filed as Exhibit 2 to Form 10 on January 28,1993 and incorporated herein by reference). N/A 10.1 Bridgford Foods Corporation Defined Benefit Pension Plan (filed as Exhibit 10.1 to Form 10 on January 28, 1993 and incorporated herein by reference). N/A 10.2 Bridgford Foods Corporation Supplemental Executive Retirement Plan (filed as Exhibit 10.2 to Form 10 January 28, 1993 and incorporated herein by reference). N/A 10.3 Bridgford Foods Corporation Deferred Compensation Savings Plan (filed as Exhibit 10.3 to Form 10 January 28, 1993 and incorporated herein by reference). N/A 13.1 2000 Annual Report to Shareholders. N/A 21.1 Subsidiaries of the Registrant. N/A 23.1 Consent of Independent Accountants. N/A 24.1 Power of Attorney (filed as Exhibit 24.1 to Form 10 January 26, 2001 and incorporated herein by reference). N/A 27.1 Financial Data Schedule for the fiscal year ended November 3, 2000 submitted to the Securities Exchange Commission in electronic format (for SEC information only). N/A