Bridgford | Investor Service

	Page 27

Had compensation cost for the Company’s Stock Option Plan been determined based on the fair value of the options consistent with FAS 123, during the fiscal years ended October 28, 2005 and October 29, 2004, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

	For the year ended

	October 28, 2005	October 29, 2004

Net income (loss) as reported	$(943)	$24
Deduct: Pro forma compensation expense, net of tax	—	—

Pro forma net income (loss)	$(943)	$24

Basic and diluted earnings (loss) per share as reported	$(0.09)	—
Pro forma basic and diluted (loss) earning per share	$(0.09)	—
Weighted average shares outstanding, basic	9,994,816	10,131,570
Weighted average shares outstanding, diluted	9,994,816	10,131,570

The fair value of compensatory stock options was estimated using the Black-Scholes option-pricing model using the following weighted average assumptions at the date of issuance:

Risk-free interest rate	5.34%
Expected years until exercise	6.0 years
Expected stock volatility	40.00%
Expected dividends	2.20%

The following balances are reflected as of November 3, 2006:

Options Outstanding		Weighted average remaining life (years)	Options Exercisable Weighted average exercise price	Shares	Weighted average exercise price
Exercise price	Shares	Weighted average remaining life (years)	Options Exercisable Weighted average exercise price	Shares	Weighted average exercise price

$10	250,000	2.5	$10	250,000	$10

The following balances are reflected as of October 28, 2005:

Options Outstanding		Weighted average remaining life (years)	Options Exercisable Weighted average exercise price	Shares	Weighted average exercise price
Exercise price	Shares	Weighted average remaining life (years)	Options Exercisable Weighted average exercise price	Shares	Weighted average exercise price

$10	250,000	3.5	$10	250,000	$10


The following balances are reflected as of October 29, 2004:

Options Outstanding		Weighted average remaining life (years)	Options Exercisable Weighted average exercise price	Shares	Weighted average exercise price
Exercise price	Shares	Weighted average remaining life (years)	Options Exercisable Weighted average exercise price	Shares	Weighted average exercise price

$10	250,000	4.5	$10	250,000	$10

Basic and diluted earnings per share

Basic earnings per share is calculated based on the weighted average number of shares outstanding for all periods presented. Diluted earnings per share is calculated based on the weighted average number of shares outstanding plus shares issuable on conversion or exercise of all potentially dilutive securities (stock options).

Foreign currency transactions

The Company’s foreign branch located in Canada enters into transactions that are denominated in a foreign currency. The related transaction gains and losses arising from changes in exchange rates are not material and are included in selling, general and administrative expenses in the consolidated statement of operations in the period the transaction occurred.

Comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity (net assets) of a business enterprise during the period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) consists of net income (loss), the additional minimum pension liability adjustment and unrealized gains on equity securities. The Company’s cost basis in the stock is equal to the fair market value at the date of issuance. During fiscal years 2006, 2005 and 2004 the Company recognized a minimum pension liability in accordance with the provisions of SFAS No. 87 “Employers’ Accounting for Pensions”. The impact of this transaction has been recorded as a component of shareholders’ equity, net of tax. No effect has been given to these transactions in the consolidated statement of cash flows.

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Exhibit: 21.1 23.1 23.2 31.1 31.2 32.1 32.2