Bridgford Foods Corporation made substantial
improvements in operations and financial results during
the 2006 fiscal year. Despite continuing increases in the
costs of raw materials, energy and all other services
purchased by the Company, increased selling prices and
the introduction and development of new products
resulted in improved operating margins and a profitable
bottom line. The promotions of William L. Bridgford to
Chairman of the Board of Directors and John V. Simmons
to President were announced in March of 2006.
SALES & EARNINGS
Sales in the 53 week 2006 fiscal year were
$134,264,000 after deductions for promotional costs,
an increase of $3,419,000, or 2.6%, over sales recorded
in the previous 52 week fiscal year. The Company
recorded a net profit of $1,240,000 in fiscal 2006, an
improvement of $2,183,000 over the net loss sustained
in fiscal year 2005. During the year we continued
to focus on the sale of higher margin products.
New products developed in 2006 included Bridgford
Party Trays, as shown on the cover of this report.
The continued popularity of Bridgford Cinnamon
Monkey Bread, introduced in 2005, led to the
development and introduction of microwavable frozen
Bridgford Garlic Parmesan Monkey Bread in late 2006,
another product we believe has great potential for
the future. We have continued to consolidate our
administrative and accounting functions at our Anaheim
headquarters, resulting in improved efficiency and
better management control. Raymond Lancy,
Executive Vice President and Chief Financial Officer,
and Cindy Matthews-Morales, Corporate Secretary,
have done a superb job of streamlining these functions
to reduce cost.
OPERATIONS
Our Superior Foods division in Dallas, which manufactures
Bridgford Monkey Bread, has operated at full capacity
virtually the entire year, under the direction of Division
President Blaine Bridgford. Alternatives to expand that
capacity are currently being evaluated. The Frozen-Rite
division, also in Dallas, has purchased new fabrication
equipment for the frozen dough roll line, which will
improve product yields and consistency. Vice President
of Manufacturing Joe deAlcuaz has contributed greatly
to operations at all of the Company’s locations,
including the ongoing refinement of the beef jerky
processing operation being developed at our Chicago
meat snack division. The Anaheim bakery operation
completed a successful transition to a new management
team during the year.
FINANCIAL MATTERS
Working capital at November 3, 2006 totaled
$31,682,000, $215,000 (0.7%) lower than at the
beginning of the fiscal year. The decrease was primarily
the result of an increase in the anticipated contribution
to the defined benefit pension plan of $1,674,000
offset by higher earnings. The Company purchased
28,000 shares of common stock at a cost of $187,000
($6.68 average cost per share) during the fiscal year.
Capital expenditures during the fiscal year totaled
$2,330,000. The working capital ratio decreased to 3.2
to 1 at November 3, 2006 compared to 3.7 to 1 at
October 28, 2005. The Company has remained free of
interest bearing debt for twenty consecutive years.
Shareholders’ equity totaled $50,186,000, an increase
of $1,924,000 (4.0%) compared to the end of the prior
year. The increase principally relates to higher net
income and a decrease in the minimum pension liability,
which is recorded in the Consolidated Statement of
Shareholders’ Equity and Comprehensive Income under
the “Accumulated other comprehensive income (loss)”
column. The decrease in this liability resulted primarily
from the freezing of benefit accruals under the
Company’s defined benefit pension plan effective May
12, 2006. No cash dividends were paid during the 2006
fiscal year as the Board of Directors suspended the cash
dividend at its May 2004 meeting in recognition of
lower profitability levels in recent years. Approximately
588,000 shares remain available for repurchase under
the 2.0 million share repurchase plan previously authorized
by the Board of Directors. Shareholders’ equity per share
was $5.04 at November 3, 2006 compared to $4.83 at
the end of fiscal 2005, an increase of 4.3%.
SUMMARY
In many ways 2006 was a year of transition for Bridgford
Foods. Reorganization of administrative duties, new
management personnel and renewed focus on core
products all contributed to improved results. While meat
raw material costs provided some modest relief during the
year, they were partially offset by higher costs for flour
and sugar. We believe that these trends will continue in
2007, and we have taken steps to improve our operating
margins, including price increases, personnel reductions
and productivity increases. Conversion of the Company’s
defined benefit pension plan for sales and administrative
employees during the year to a 401(k) plan will also have
a long-lasting favorable financial impact.
We thank our employees, directors, shareholders,
customers and suppliers for their support during 2006.
Bridgford Foods Corporation proudly celebrates
the 75th anniversary of its founding in 1932 by
Hugh H. Bridgford.
Respectfully submitted,
William L. Bridgford
Chairman
John V. Simmons
President
January 18, 2007 |
