10-Q 1 a73517e10-q.txt FORM 10-Q 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 ------ 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 -------------------------------------------------------------------------------- (Address of principal executive offices-Zip code) 714-526-5533 -------------------------------------------------------------------------------- (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 2 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 4 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 5 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 6 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 7 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 8 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