Bridgford Foods Corp 10Q Report 2010 2nd Qtr

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 April 16, 2010

[ ] 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 incorporation or organization)	(I.R.S. Employer 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 [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

		Large accelerated filer [ ]							Accelerated filer [ ]

		Non-accelerated filer [ ] (Do not check if smaller reporting company)							Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [ X ]

As of May 25, 2010 the registrant had 9,329,887 shares of common stock outstanding.

BRIDGFORD FOODS CORPORATION

FORM 10-Q QUARTERLY REPORT

References to "Bridgford Foods" or the "Company" contained in this Quarterly Report on Form 10-Q refer to Bridgford Foods Corporation.


Part I. Financial Information

Item 1. Financial Statements		Page

	a. Condensed Consolidated Balance Sheets at April 16, 2010 (unaudited) and October 31, 2009	3

	b. Condensed Consolidated Statements of Operations for the twelve and twenty-four weeks ended April 16, 2010
	and April 17, 2009 (unaudited)	4

	c. Condensed Consolidated Statements of Cash Flows for the twenty-four weeks ended April 16, 2010 and
	April 17, 2009 (unaudited)	5

	d. Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		10

Item 3. Quantitative and Qualitative Disclosures about Market Risk		18

Item 4T. Controls and Procedures		19

Part II. Other Information

Item 1A. Risk Factors		20

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		20

Item 6. Exhibits		21

Signatures		22

Items 1, 3 and 5 of Part II have been omitted because they are not applicable with respect to the current reporting period.

Part I. Financial Information

BRIDGFORD FOODS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	April 16, 2010			October 30, 2009
	(Unaudited)
ASSETS

Current assets:

Cash and cash equivalents	$	16,955		$	13,911
Accounts receivable, less allowance for doubtful accounts of $304
and $404, respectively, and promotional allowances of $2,040
and $1,962, respectively		8,189			9,718
Inventories, less inventory reserves of $138 and $101, respectively (Note 2)		13,970			15,595
Prepaid expenses and other current assets		1,046			789

		40,160			40,013

Property, plant and equipment, less
accumulated depreciation of $56,199
and $55,362, respectively		7,829			8,300

Other non-current assets		11,001			10,586
	$	58,990		$	58,899

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable	$	2,888		$	4,227
Accrued payroll, advertising and other expenses		8,026			8,987

		10,914			13,214

Non-current liabilities		13,524			13,262

		24,438			26,476

Commitments and Contingencies (Note 3)

Shareholders' equity:
Preferred stock, without par value
Authorized - 1,000 shares
Issued and outstanding - none		-			-

Common stock, $1.00 par value
Authorized - 20,000 shares
Issued and outstanding - 9,330 and 9,355 shares, respectively		9,387			9,412
Capital in excess of par value		10,418			10,646
Retained earnings		23,467			21,085
Accumulated other comprehensive loss		(8,720	)		(8,720	)
		34,552			32,423
	$	58,990		$	58,899

See accompanying notes to condensed consolidated financial statements.

BRIDGFORD FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	12 weeks ended				24 weeks ended
	April 16, 2010		April 17, 2009		April 16, 2010		April 17, 2009

Net sales	$	26,831	$	25,632	$	56,079	$	57,155
Cost of products sold		15,063		15,169		32,140		35,004

Gross margin		11,768		10,463		23,939		22,151

Selling, general and administrative expenses		9,513		9,373		19,924		19,580

Income before taxes		2,255		1,090		4,015		2,571
Income tax provision		350		-		700		-

Net income	$	1,905	$	1,090	$	3,315	$	2,571


Basic and diluted earnings per share	$	0.20	$	0.11	$	0.35	$	0.27

Basic and diluted shares computed		9,334		9,433		9,339		9,434


Cash dividends paid per share	$	-	$	-	$	0.10	$	-

See accompanying notes to condensed consolidated financial statements.

BRIDGFORD FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	24 weeks ended
	April 16, 2010			April 17, 2009


Cash flows from operating activities:

Net income	$	3,315		$	2,571

Income or charges not affecting cash and cash equivalents:
Depreciation		1,123			1,431
Recovery for losses on accounts receivable		(92	)		(26	)
Gain on sale of property, plant and equipment		(11	)		(9	)
Effect on cash and cash equivalents of changes in operating assets and liabilities:
Accounts receivable		1,621			1,467
Inventories		1,625			1,050
Prepaid expenses and other current assets		(257	)		(357	)
Other non-current assets		(415	)		72
Accounts payable		(1,339	)		982
Accrued payroll, advertising and other expenses		(961	)		(1,100	)
Non-current liabilities		261			12

Net cash provided by operating activities		4,870			6,093

Cash used in investing activities:
Proceeds from sale of property, plant and equipment		11			54
Additions to property, plant and equipment		(651	)		(774	)

Net cash used in investing activities		(640	)		(720	)

Cash used in financing activities:
Shares repurchased		(253	)		(12	)
Cash dividends paid		(933	)		-

Net cash used in financing activities		(1,186	)		(12	)

Net increase in cash and cash equivalents		3,044			5,361

Cash and cash equivalents at beginning of period		13,911			6,092

Cash and cash equivalents at end of period	$	16,955		$	11,453

Cash paid for income taxes	$	1,113		$	0

See accompanying notes to condensed consolidated financial statements.

BRIDGFORD FOODS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share amounts)

Note 1 - Summary of Significant Accounting Policies:

The unaudited consolidated condensed financial statements of Bridgford Foods Corporation (the "Company", "we", "our", "us") for the twelve and twenty-four weeks ended April 16, 2010 and April 17, 2009 have been prepared in conformity with the accounting principles described in the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2009 (the "Annual Report") and include all adjustments considered necessary by management for a fair presentation of the interim periods. This report should be read in conjunction with the Annual Report. Due to seasonality and other factors, interim results are not necessarily indicative of the results for the full year. New accounting pronouncements and their effect on the Company are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

The October 30, 2009 balance sheet within these interim condensed consolidated financial statements was derived from the audited fiscal 2009 financial statements.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results may vary from these estimates. Some of the estimates needed to be made by management include the allowance for doubtful accounts, promotional and returns allowances, inventory reserves and the estimated useful lives of property and equipment, and the valuation allowance for the Company’s deferred tax asset. Actual results could materially differ from these estimates. Amounts estimated related to liabilities for self-insured workers’ compensation, employee healthcare and pension benefits are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts which vary from our current estimates.

Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll, advertising and other expenses. The carrying amount of these instruments approximate fair market value due to the short maturity of these instruments. At April 16, 2010, the Company had accounts in excess of the Federal Deposit Insurance Corporation insurance coverage limit. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. The Company issues credit to a significant number of customers that are diversified over a wide geographic area. The Company monitors the payment histories of its customers and maintains an allowance for doubtful accounts which is reviewed for adequacy on a quarterly basis. The Company does not require collateral from its customers.

For the twenty-four weeks ended April 16, 2010 and April 17, 2009, Wal-Mart® accounted for 11.8% and 9.1%, respectively of consolidated revenues or 15.8% and 15.4% of consolidated accounts receivable.

The Company has changed the presentation of the Condensed Consolidated Statements of Operations to present a gross margin line item. As a result, depreciation previously presented separately is now part of cost of products sold and selling, general and administrative expenses. Prior year amounts have been reclassified to give effect to this presentation.

Note 2 - Inventories:

Inventories are comprised of the following at the respective period ends:

	(unaudited)
	April 16, 2010		October 30, 2009
Meat, ingredients and supplies	$	3,441	$	4,488
Work in progress		2,068		1,647
Finished goods		8,461		9,460
	$	13,970	$	15,595

Inventories are valued at the lower of cost (which approximates actual cost on a first-in, first-out basis) or market. Costs related to warehousing, transportation and distribution to customers are considered when computing market value. Inventories include the cost of ingredients, labor and manufacturing overhead. We regularly review inventory quantities on hand and write down any excess or obsolete inventories to estimated net realizable value. An inventory reserve is created when potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. Changes in economic conditions, production requirements, and lower than expected customer demand could result in additional obsolete or slow-moving inventory that cannot be sold or may need to be sold at reduced prices and could result in additional reserve provisions.

Note 3 - Commitments and Contingencies:

The Company leases certain transportation equipment under operating leases. The terms of the transportation leases provide for renewal options and contingent rental payments based upon mileage and adjustments of rental payments based on the Consumer Price Index. The Company also leases warehouse and/or office facilities throughout the United States and Canada through month-to-month rental agreements. No material changes have been made to these agreements during the first twenty-four weeks of fiscal 2010.

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company purchases bulk flour under short-term fixed price contracts during the normal course of business. Under these arrangements, the Company is obligated to purchase specific quantities at fixed prices, within the specified contract period. These contracts provide for automatic price increases if agreed quantities are not purchased within the specified contract period. No significant contracts remained unfulfilled at April 16, 2010.

Note 4 - Segment Information:

The Company has two reportable operating segments, Frozen Food Products (the processing and distribution of frozen products) and Refrigerated and Snack Food Products (the processing and distribution of refrigerated meat and other convenience foods).

We evaluate each segment's performance based on revenues and operating income. Selling, general and administrative expenses include corporate accounting, information systems, human resource management and marketing, which are managed at the corporate level. These activities are allocated to each operating segment based on revenues and/or actual usage.

The following segment information is presented for the twelve and twenty-four weeks ended April 16, 2010 and April 17, 2009.

			Refrigerated
			and
Twelve Weeks Ended	Frozen Food		Snack Food
April 16, 2010	Products		Products		Other			Elimination		Totals
Sales to external customers	$	13,385	$	13,446	$	-		$	-	$	26,831
Intersegment sales		-		289		-			289		-
Net sales		13,385		13,735		-			289		26,831
Cost of products sold		7,575		7,777		-			289		15,063
Gross margin		5,810		5,958		-			-		11,768
Selling, general and administrative expenses		4,027		5,448		38			-		9,513
Income (loss) before taxes		1,783		510		(38	)		-		2,255
Income tax provision		288		62		-			-		350
Net income (loss)	$	1,495	$	448	$	(38	)	$	-	$	1,905

Total assets	$	10,781	$	19,770	$	28,439		$	-	$	58,990
Additions to property, plant and equipment	$	112	$	112	$	27		$	-	$	251

			Refrigerated
			and
Twelve Weeks Ended	Frozen Food		Snack Food
April 17, 2009	Products		Products			Other			Elimination		Totals
Sales to external customers	$	11,600	$	14,032		$	-		$	-	$	25,632
Intersegment sales		-		188			-			188		-
Net sales		11,600		14,220			-			188		25,632
Cost of products sold		6,941		8,416			-			188		15,169
Gross margin		4,659		5,804			-			-		10,463
Selling, general and administrative expenses		3,950		5,382			41			-		9,373
Income (loss) before taxes		709		422			(41	)		-		1,090
Income tax provision		-		-			-			-		-
Net income (loss)	$	709	$	422		$	(41	)	$	-	$	1,090

Total assets	$	10,482	$	21,434		$	22,476		$	-	$	54,392
Additions to property, plant and equipment	$	232	$	33		$	44		$	-	$	309


			Refrigerated
			and
Twenty-four Weeks Ended	Frozen Food		Snack Food
April 16, 2010	Products		Products			Other			Elimination		Totals
Sales to external customers	$	25,612	$	30,467		$	-		$	-	$	56,079
Intersegment sales		-		537			-			537		-
Net sales		25,612		31,004			-			537		56,079
Cost of products sold		15,159		17,518			-			537		32,140
Gross margin		10,453		13,486			-			-		23,939
Selling, general and administrative expenses		7,755		12,092			77			-		19,924
Income (loss) before taxes		2,698		1,394			(77	)		-		4,015
Income tax provision		467		233			-			-		700
Net income (loss)	$	2,231	$	1,161		$	(77	)	$	-	$	3,315

Total assets	$	10,781	$	19,770		$	28,439		$	-	$	58,990
Additions to property, plant and equipment	$	242	$	395		$	15		$	-	$	652


			Refrigerated
			and
Twenty-four Weeks Ended	Frozen Food		Snack Food
April 17, 2009	Products		Products			Other			Elimination		Totals
Sales to external customers	$	25,714	$	31,441		$	-		$	-	$	57,155
Intersegment sales		-		358			-			358		-
Net sales		25,714		31,799			-			358		57,155
Cost of products sold		15,263		20,099			-			358		35,004
Gross margin		10,451		11,700			-			-		22,151
Selling, general and administrative expenses		7,792		11,707			81			-		19,580
Income (loss) before taxes		2,659		(7	)		(81	)		-		2,571
Income tax provision		-		-			-			-		-
Net income (loss)	$	2,659	$	(7	)	$	(81	)	$	-	$	2,571

Total assets	$	10,482	$	21,434		$	22,476		$	-	$	54,392
Additions to property, plant and equipment	$	534	$	148		$	92		$	-	$	774

Note 5 - Income Taxes:

The Company expects its effective tax rate for the 2010 fiscal year to be less than the federal statutory rate due to a full valuation allowance on all deferred tax assets. We recorded a provision for income taxes in the amount of $700 for the twenty-four week period ended April 16, 2010, related to federal and state taxes, based on the Company's expected annual effective tax rate.

Management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a "more likely than not" standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversals of existing taxable temporary differences. Management reevaluated the need for a full valuation allowance at April 16, 2010 based on both positive and negative evidence. The weight of negative factors and level of economic uncertainty in our current business continued to support the conclusion that the realization of its deferred tax assets does not meet the more likely than not standard. Therefore, a full valuation allowance will remain against the net deferred tax assets. The Company has established objective criteria that must be met before a release of the valuation allowance will occur.

We are subject to U.S. federal income tax, and are currently under audit by the Internal Revenue Service for the years ended November 1, 2002 through October 31, 2003 and November 3, 2006 through November 2, 2007. Our federal income tax returns are open to audit under the statute of limitations for the years ended October 31, 2008 through 2009. Our statute of limitations for our years ended November 1, 2002 through October 31,2003 have been extended to October 31, 2010. We believe the appropriate provisions for all outstanding issues have been made for all years under audit. We are subject to income tax in California and various other state taxing jurisdictions. Our state income tax returns are open to audit under the statute of limitations for the years ended October 29, 2005 through October 30, 2009. We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

Note 6 - Fair Value Measurements:

The Company uses established guidance for measuring fair value and to enhance disclosures about fair value measurements. This framework describes three levels of inputs that may be used to measure fair value:

• Level 1 inputs: Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

• Level 2 inputs: Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs: Level 3 inputs are unobservable and should be used to measure fair value to the extent that observable inputs are not available.

The hierarchy noted above requires us to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value.

Financial assets carried at fair value as of April 16, 2010 are classified below:

	Level 1		Level 2		Level 3		Total
Money market funds	$	6,040	$	-	$	-	$	6,040
Total	$	6,040	$	-	$	-	$	6,040

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

(dollars in thousands)

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 (the “Exchange Act”). 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 Quarterly Report on Form 10-Q. Assumptions relating to budgeting, marketing, and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, capital expenditure or other budgets, which may in turn affect our business, financial position, results of operations and cash flows. The reader is therefore cautioned not to place undue reliance on forward-looking statements contained herein and to consider other risks detailed more fully in our Annual Report on Form 10-K for the fiscal year ended October 30, 2009. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

Critical Accounting Policies and Management Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the respective reporting periods. Actual results could differ from those estimates. Amounts estimated related to liabilities for self-insured workers’ compensation, employee healthcare and pension benefits are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts which vary from our current estimates. We record promotional and returns allowances based on recent and historical trends. Management believes its current estimates are reasonable and based on the best information available at the time.

Our credit risk is diversified across a broad range of customers and geographic regions. Losses due to credit risk have recently been immaterial. The provision for doubtful accounts receivable is based on historical trends and current collection risk. We have significant amounts receivable with a few large, well known customers which, although historically secure, could be subject to material risk should these customers’ operations suddenly deteriorate. We monitor these customers closely to minimize the risk of loss. Sales to Wal-Mart® comprised 11.8% of revenues in the first twenty-four weeks of fiscal year 2010 and 15.8% of accounts receivable was due from Wal-Mart® at April 16, 2010. In comparison, Wal-Mart® comprised 9.1% of revenues for the first twenty-four weeks of fiscal year 2009 and 15.4% of accounts receivable at the end of the second quarter of fiscal year 2009.

Revenues are recognized upon passage of title to the customer, typically upon product pick-up, shipment or delivery to customers. Products are delivered to customers primarily through our own long-haul fleet or through our own direct store delivery system. The Company also uses independent distributors to deliver products in remote geographic areas of the country. Revenues are recognized upon shipment to the distributor, net of return allowances. Historically, returns from distributors have been minimal. The distributor pays for these products in full, typically within 15 days, and such payment is not contingent upon payment from the large chain stores. As a convenience to certain large chain stores, we bill such customers on behalf of the distributors and such distributors bear the risk of loss from collection. No additional revenue is recognized in conjunction with the billing services as these services are considered perfunctory to the overall transaction.

We record the cash surrender or contract value for life insurance policies as an adjustment of premiums paid in determining the expense or income to be recognized under the contract for the period.

Deferred taxes are provided for items whose financial and tax bases differ. A valuation allowance is provided against deferred tax assets when it is expected that it is more likely than not that the related asset will not be fully realized. During the fourth quarter of fiscal 2008, management recorded a full valuation reserve with respect to its deferred tax assets. The determination as to whether or not a deferred tax asset can be fully realized is subject to a significant degree of judgment, based at least partially upon a projection of future taxable income, which takes into consideration past and future trends in profitability, customer demand, supply costs, and multiple other factors, none of which are predictable. The Company policy outlines measurable objective criteria that must be met before a release of the valuation allowance will occur. Due to the degree of judgment involved, actual taxable income could differ materially from management's estimates, or the timing of taxable income could be such that the net operating losses could expire prior to their utilization. Management could determine in the future that the assets are realizable, materially increasing net income in one or many periods. Following a recognition, management could again change its determination in the future, materially decreasing income.

We provide tax reserves for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing, and is a subjective estimate. Although the outcome of these tax audits is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities if any, resulting from these reviews. Actual outcomes may differ materially from these estimates.

We assess the recoverability of our long-lived assets on an annual basis or whenever adverse events or changes in circumstances or business climate indicate that expected undiscounted future cash flows related to such long-lived assets may not be sufficient to support the net book value of such assets. If undiscounted cash flows are not sufficient to support the recorded assets, we recognize an impairment to reduce the carrying value of the applicable long-lived assets to their estimated fair value.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), was signed into law. The PPACA contains provisions which may impact the Company’s accounting of other postemployment benefit (OPEB) obligations in future periods. Regulatory guidance for implementation of some of the provisions of the PPACA has not yet been established. Requirements of the law include the removal of the lifetime limits on retiree medical coverage, expanding dependent coverage to age 26 and elimination of pre-existing conditions that may impact OPEB costs. We will continue to assess the accounting implications of the PPACA and its impact on our financial position and results of operation as more legislative and interpretive guidance becomes available. The potential future effects and cost of complying with the provisions of the PPACA is not determinable at this time.

Overview of Reporting Segments

We operate in two business segments -- the processing and distribution of frozen products (the Frozen Food Products Segment), and the processing and distribution of refrigerated and snack food products, (the Refrigerated and Snack Food Products Segment). For information regarding the separate financial performance of the business segments refer to Note 4 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. We manufacture and distribute products consisting of an extensive line of food products, including biscuits, bread dough items, roll dough items, dry sausage products, beef jerky and a variety of sandwiches and sliced luncheon meats. We purchase products for resale including a variety of jerky, cheeses, salads, party dips, Mexican foods, nuts and other delicatessen type food products.

Frozen Food Products Segment

In our Frozen Food Products Segment, we manufacture and distribute an extensive line of food products, including biscuits, bread dough items, roll dough items and sandwiches. All items within this Segment are considered similar products and have been aggregated at this level. Our frozen food division serves both food service and retail customers. We sell approximately 170 unique frozen food products through wholesalers, cooperatives and distributors to approximately 21,000 retail outlets and 22,000 restaurants and institutions.

Refrigerated and Snack Food Products Segment

In our Refrigerated and Snack Food Products Segment, we distribute both products manufactured by us and products manufactured or processed by third parties. All items within this Segment are considered similar products and have been aggregated at this level. The dry sausage division includes products such as jerky, meat snacks, sausage and pepperoni products. The deli division includes products such as ham, sandwiches, cheese, Mexican food, pastries and other delicatessen type food products. Our Refrigerated and Snack Food Products Segment sells approximately 240 different items through a direct store delivery network serving approximately 23,000 supermarkets, mass merchandise and convenience retail stores located in 49 states and Canada. These customers are comprised of large retail chains and smaller “independent” operators. Independent distributors serve approximately 2,400 customers of all types in areas impractical to serve by our Company-owned vehicles and personnel.

Results of Operations for the Twelve Weeks ended April 16, 2010 and Twelve Weeks ended April 17, 2009

(in thousands, except percentages)

Net Sales-Consolidated

Net sales increased by $1,199 (4.7%) to $26,831 in the second twelve weeks of the 2010 fiscal year compared to the same twelve-week period last year. The changes in net sales were comprised as follows:

Impact on Net Sales-Consolidated
Selling price per pound			-7.1	%