Bridgford Foods Corporation

Bridgford Foods Corporation 10-Q 1 a92589e10vq.htm FORM 10-Q PERIOD END JULY 11, 2003

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 July 11, 2003


	[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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 [ ]

As of August 22, 2003 the registrant had 10,290,000 shares of common stock outstanding.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of The Exchange Act).


Yes [ ]		No [X]

Page 1 of 13 pages

TABLE OF CONTENTS


Part I. Financial Information
	Item 1. Financial Statements
		a. Consolidated Condensed Balance Sheets at July 11, 2003 and November 1, 2002
		b. Consolidated Condensed Statements of Income for the 12 weeks and 36 weeks ended July 11, 2003 and 13 weeks and 39 weeks ended August 2, 2002
		b. Consolidated Condensed Statements of Shareholders’ Equity for the 36 weeks ended July 11, 2003 and 39 weeks ended August 2, 2002
		c. Consolidated Condensed Statements of Cash Flows for the 36 weeks ended July 11, 2003 and 39 weeks ended August 2, 2002
		d. Notes to Consolidated Condensed Financial Statements
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
SIGNATURES
	Part II. Other Information
	Item 6. Exhibits and Reports on Form 8-K
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

BRIDGFORD FOODS CORPORATION
FORM 10-Q QUARTERLY REPORT
INDEX


		Page

Part I. Financial Information

Item 1. Financial Statements

a. Consolidated Condensed Balance Sheets at July 11, 2003 and November 1, 2002		3

b. Consolidated Condensed Statements of Income for the 12 weeks and 36 weeks ended July 11, 2003 and 13 weeks and 39 weeks ended August 2, 2002		4

b. Consolidated Condensed Statements of Shareholders’ Equity for the 36 weeks ended July 11, 2003 and 39 weeks ended August 2, 2002		4

c. Consolidated Condensed Statements of Cash Flows for the 36 weeks ended July 11, 2003 and 39 weeks ended August 2, 2002		5

d. Notes to Consolidated Condensed Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		8

Item 3. Quantitative and Qualitative Disclosures about Market Risk		11

Item 4. Controls and Procedures		11

Signatures		12

Part II. Other Information

Item 6. Exhibit and Reports on Form 8-K		13

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

Page 2 of 13 pages

Part I. Financial Information

Item 1. a.

BRIDGFORD FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS


			July 11			November 1
			2003			2002

			(Unaudited)
			(in thousands)			(in thousands)
ASSETS
Current assets:
	Cash and cash equivalents		$	13,537		$	10,305
	Accounts receivable, less allowance for doubtful accounts of $1,365 and $3,419			10,334			12,566
	Inventories (Note 2)			16,870			17,562
	Prepaid expenses and other current assets			5,399			5,980

		Total current assets		46,140			46,413
Property, plant and equipment, less accumulated depreciation of $42,306 and $39,373				18,095			19,030
Other non-current assets				12,039			11,739

			$	76,274		$	77,182

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	4,306		$	3,956
	Accrued payroll and other expenses			8,827			7,844

		Total current liabilities		13,133			11,800

Non-current liabilities				10,706			10,992

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 — 10,319 and 10,448 shares			10,376			10,505
	Capital in excess of par value			16,637			17,475
	Retained earnings			26,788			27,776

	Accumulated comprehensive loss			(1,366	)		(1,366	)

				52,435			54,390

			$	76,274		$	77,182

See accompanying notes to consolidated condensed financial statements.

Page 3 of 13 pages

Item 1. b.

BRIDGFORD FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)


	(in thousands, except per share amounts)					(in thousands, except per share amounts)

	12 weeks ended		13 weeks ended			36 weeks ended		39 weeks ended

	July 11		August 2			July 11		August 2
	2003		2002			2003		2002

Net sales	$	29,977	$	32,025		$	91,496	$	104,927

Cost of products sold, excluding depreciation		18,482		20,258			57,564		65,795
Selling, general and administrative expenses		9,839		11,363			30,366		31,611
Depreciation		991		1,097			2,973		3,295

		29,312		32,718			90,903		100,701

Income (loss) before taxes		665		(693	)		593		4,226
Income tax provision (benefit)		253		(263	)		225		1,606

Net income (loss)	$	412		($430	)	$	368	$	2,620

Basic earnings (loss) per share	$	.04		($.04	)	$	.04	$	.25

Basic shares computed		10,375		10,448			10,421		10,448

Diluted earnings (loss) per share	$	.04		($.04	)	$	.04	$	.25

Diluted shares computed		10,375		10,448			10,421		10,495

Cash dividends paid per share	$	.03	$	.07		$	.13	$	.21

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)


		(in thousands, except per share amounts)

		Common Stock						Capital						Accumulated
								in excess			Retained			Comprehensive
		Shares			Amount			of par			earnings			Income (loss)

November 2, 2001			10,448		$	10,505		$	17,475		$	29,355		$	0
	Net income											2,620
	Cash dividends ($.21 per share)											(2,193	)

August 2, 2002			10,448		$	10,505		$	17,475		$	29,782		$	0

November 1, 2002			10,448		$	10,505		$	17,475		$	27,776			($1,366	)
	Net income											368
	Shares repurchased		(129	)		(129	)		(838	)
	Cash dividends ($.13 per share)											(1,356	)

July 11, 2003			10,319		$	10,376		$	16,637		$	26,788			($1,366	)

See accompanying notes to consolidated condensed financial statements.

Page 4 of 13 pages

Item 1.c.

BRIDGFORD FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)


					36 weeks ended			39 weeks ended

					July 11			August 2
					2003			2002

					(in thousands)			(in thousands)
Cash flows from operating activities:
	Net income				$	368		$	2,620
	Income charges not affecting cash:
		Depreciation				2,973			3,295
		Provision for losses on accounts receivable				628			1,118
	Effect on cash of changes in assets and liabilities:
		Accounts receivable				1,604			(2,563	)
		Inventories				692			965
		Prepaid expenses and other current assets				581			1,040
		Other non-current assets				(300	)		(333	)
		Accounts payable				350			(3,608	)
		Accrued payroll and other expenses				983			1,857
		Non-current liabilities				(286	)		(1,641	)

				Net cash provided by operating activities		7,593			2,750

Cash used in investing activities:
			Additions to property, plant and equipment			(2,038	)		(2,696	)

Cash used in financing activities:
			Shares repurchased			(967	)		0
			Cash dividends paid			(1,356	)		(2,193	)

				Net cash used in financing activities		(2,323	)		(2,193	)

Net increase (decrease) in cash and cash equivalents						3,232			(2,139	)
Cash and cash equivalents at beginning of period						10,305			12,974

Cash and cash equivalents at end of period					$	13,537		$	10,835

Cash paid for income taxes					$	0		$	1,684

See accompanying notes to consolidated condensed financial statements.

Page 5 of 13 pages

Item 1.d.

BRIDGFORD FOODS CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1 — General Comments

The unaudited consolidated condensed financial statements of Bridgford Foods Corporation (the “Company”) for the twelve and thirty-six weeks ended July 11, 2003 and the thirteen and thirty-nine weeks ended August 2, 2002 have been prepared in conformity with the accounting principles described in the 2002 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 2002 Annual Report to Shareholders.

The Company has historically reported quarterly results to reflect fiscal quarters of 13 weeks in length. Starting with its 2003 fiscal year, the Company is changing its quarterly fiscal reporting periods to report results after 12, 24, 36 and 52 week periods (or 53 weeks as applicable). The Company changed its quarterly reporting periods during the fiscal year to align reported periods with its internal financial systems and provide more meaningful comparison with its peer group companies.

The provision for losses on accounts receivable is based on historical trends and current collectibility risk. Losses due to credit risk have been immaterial prior to the fiscal year 2002.

Revenues are recognized upon passage of title to the customer typically upon product shipment or delivery to customers.

Note 2 — Inventories

Inventories are comprised as follows at the respective periods:


	July 11		November 1
	2003		2002

	(in thousands)		(in thousands)
Meat, ingredients and supplies	$	4,232	$	4,187
Work in progress		2,449		1,940
Finished goods		10,190		11,435

	$	16,870	$	17,562

Note 3 — Basic and diluted earnings per share

The difference between the calculation of basic and diluted shares outstanding for the thirty-nine week period ended August 2, 2002 was a result of the dilutive effect of employee stock options totaling 250,000 shares. The effect of the employee stock options outstanding for the twelve and thirty-six weeks ended July 11, 2003 was not included in the calculation of diluted shares and diluted earnings per share as the options outstanding had an exercise price greater than the price of the stock at period end. The effect of the employee stock options outstanding for the thirteen weeks ended August 2, 2003 was not included in the calculation of diluted shares and diluted earnings per share as to do so would be antidilutive.

Page 6 of 13 pages

Note 4 — Stock-Based Compensation

The Company applies the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for stock-based compensation; therefore, no compensation expense has been recognized for its fixed stock option plans as options generally are granted at fair market value based upon the closing price on the date immediately preceding the grant date. The Company has adopted the disclosure requirements for SFAS No. 123, “Accounting for Stock-Based Compensation.” On December 31, 2002, the FASB issued SFAS No. 148, Accounting for Stock Based Compensation-Transition and Disclosure, which amends SFAS No. 123. SFAS No. 148 requires more prominent and frequent disclosures about the effects of stock-based compensation. Accordingly, if compensation expense for the Company’s stock options had been recognized, based upon the fair value of awards granted, the Company’s net income and earnings per share would have been reduced to the following pro forma amounts:


	(in thousands, except per share amounts)

	12 weeks ended			13 weeks ended

	July 11			August 2
	2003			2002

Net income (loss), as reported	$	412			($430	)
Proforma adjustment		(18	)		(37	)

Proforma net income	$	394			($467	)

Net income (loss) per share:
Basic — as reported	$	0.04			($0.04	)

Basic — proforma	$	0.04			($0.04	)

Diluted — as reported	$	0.04			($0.04	)

Diluted — proforma	$	0.04			($0.04	)

Weighted average shares
shares outstanding:
Basic		10,375			10,448

Diluted		10,375			10,448


	(in thousands, except per share amounts)

	36 weeks ended			39 weeks ended

	July 11			August 2
	2003			2002

Net income, as reported	$	368		$	2,620
Proforma adjustment		(55	)		(110	)

Proforma net income	$	313		$	2,510

Net income per share:
Basic — as reported	$	0.04		$	0.25

Basic — proforma	$	0.03		$	0.24

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