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It is a great pleasure to report that 1999 was a banner year for Bridgford Foods Corporation. New all-time record highs were attained in sales, earnings, dividends and capital. Net profits exceeded ten million dollars for the first time in our sixty-seven year history.

SALES, EARNINGS AND DIVIDENDS

Sales in fiscal 1999 reached $138,786,260, a record high by 3%. It was our fourteenth consecutive annual sales gain. Our meat snack division, Bridgford Foods of Illinois, again recorded outstanding sales volume increases as we added a variety of new flavors, sizes and improved packaging graphics to our meat snack line. Especially successful are our new 8-ounce packages of natural beef jerky. Bridgford's 4-ounce natural beef jerky continued to maintain the number one sales ranking for a meat snack product in American supermarkets and mass merchandising stores in 1999.

During the year, hundreds of new customers have been added to our direct distribution deli and meat snack systems. Two new frozen retail-pack par-baked roll items were successfully tested during the fall of 1999. We expect to bring these new items to market in the year 2000. Also, our new french dip sandwiches, as well as our sausage, cheese and egg breakfast sandwiches, have shown excellent sales gains during 1999.

Net income in 1999 reached a record high of $10,024,505. This represents a 15% gain over 1998 income. Bridgford has now set earnings records for three consecutive years and in 12 of the last 13 years. We experienced favorable flour costs in 1999. Meat costs increased substantially in the second half of 1999 when compared with costs in the first half of the year.

Cash dividends of twenty-four cents per share were paid in 1999 on the 11,369,812 shares outstanding. At the November 1999 Board of Directors meeting, the quarterly cash dividend rate was raised to 7¢ per share, a 17% increase.

FINANCIAL MATTERS

Shareholders equity increased more than 14% to $58,134,865 during 1999, a gain of $7,292,617. Working capital was $43,760,200 at year-end, more than 17% higher than at the end of fiscal 1998.

Our working capital ratio was a very strong 4.2 to 1 at year-end. We continued to be debt-free for the 13th consecutive year while investing $4,901,936 in property, plant and equipment. A $2,000,000 bank line of credit remains available to us for new business opportunities.

Employee stock options were authorized and issued to members of the Corporate Operating Committee during 1999. Options for shares were issued at a price of $10.00 per share. Members of the current Executive Committee are excluded from receiving options.

During November of 1999 the Board authorized the Company to repurchase up to 1,000,000 shares of its common stock on the open market. The Company believed that the stock was undervalued at the time and that the repurchase program is a good investment of available funds. The investment firm of Salomon Smith Barney was engaged to manage the repurchase program.

OPERATIONS

During 1999 we completed a new 27,000 square foot addition to our Chicago meat snack foods plant and warehouse. We also finished a 6,000 square foot freezer addition at our Dallas, Texas sandwich manufacturing plant. Plans for our 2000 fiscal year include expansion of the freezer at the Bridgford-Superior bakery and frozen dough plant in Dallas. We have offered to purchase property adjacent to both our Frozen-Rite and Superior plants in Dallas to facilitate future growth. The Company is adding substantial amounts of new modern equipment to its Chicago and Dallas facilities for expanded production of current and new products. We are experiencing higher meat raw material costs in the first quarter of 2000. It appears that grain supplies are plentiful and we do not expect higher costs for our basic bakery raw materials.

SUMMARY

Thank you to our customers, shareholders, directors, officers, associates and suppliers for enabling us to experience an extraordinarily successful year in 1999.

We are poised to continue our progress in the year 2000.

Respectfully submitted,

Allan L. Bridgford Chairman

Robert E. Schulze President