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 07, 2006

o 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated Filer o Non-accelerated filer x

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

Yes o No x

As of August 21, 2006 the registrant had 9,964,000 shares of common stock outstanding.

BRIDGFORD FOODS CORPORATION

FORM 10-Q QUARTERLY REPORT

INDEX

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

a. Consolidated Condensed Balance Sheets at July 7, 2006 (unaudited) and October 28, 2005

b. Consolidated Condensed Statements of Operations for the twelve and thirty-six weeks ended July 7, 2006 and July 8, 2005 (unaudited)

c. Consolidated Condensed Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the thirty-six weeks ended July 7, 2006 (unaudited)

d. Consolidated Condensed Statements of Cash Flows for the thirty-six weeks ended July 7, 2006 and July 8, 2005 (unaudited)

e. Notes to Consolidated Condensed Financial Statements (unaudited)

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

Part II. Other Information

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

Item 6. Exhibits

Signatures

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

Part I. Financial Information

Item 1. a.

BRIDGFORD FOODS CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except per share amounts)

	July 7			October 28
	2006			2005
	(Unaudited)
ASSETS

Current assets:

Cash and cash equivalents	$	15,524		$	10,355
Accounts receivable, less allowance for doubtful accounts of $491 and $468, respectively, and promotional allowances of $1,688 and $2,092, respectively	9,047			9,508
Inventories (Note 2)	17,519			21,324
Prepaid expenses and other current assets	2,505			2,551

Total current assets	44,595			43,738

Property, plant and equipment, less accumulated depreciation of $53,417 and $50,731, respectively	13,297			14,519

Other non-current assets	13,739			14,706
	$	71,631		$	72,963

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable	$	1,940		$	3,806
Accrued payroll, advertising and other expenses	8,628			8,035

Total current liabilities	10,568			11,841

Non-current liabilities	10,827			12,860

Commitments (Note 6)

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 - 9,965 and 9,986 shares	10,022			10,043
Capital in excess of par value	14,263			14,394
Retained earnings	26,047			25,889
Accumulated other comprehensive loss	(96		)	(2,064
	50,236			48,262
	$	71,631		$	72,963

See accompanying notes to consolidated condensed financial statements.

Item 1. b.

BRIDGFORD FOODS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	12 weeks ended		12 weeks ended			36 weeks ended			36 weeks ended
	July 7		July 8			July 7			July 8
	2006		2005			2006			2005
	(in thousands, except per share amounts)					(in thousands, except per share amounts)

Net sales	$	28,169	$	27,656		$	91,049		$	88,961

Cost of products sold, excluding depreciation	17,024		17,241			58,087			57,672

Selling, general and administrative expenses	10,019		9,321			30,230			29,503
Depreciation	892		1,028			2,676			3,085
Gain on sale of equity securities	—		—			(106		)	—
	27,935		27,590			90,887			90,260

Income (loss) before taxes	234		66			162			(1,299		)

Income tax provision (benefit)	10		(177		)	4			(696		)

Net income (loss)	$	224	$	243		$	158		$	(603	)

Basic and diluted income (loss) per share	$	.02	$	.03		$	.02		$	(.06	)

Basic and diluted shares computed	9,964		9,994			9,968			9,998

Item 1. c.

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

											Accumulated
						Capital					other
	Common Stock					in excess			Retained		comprehensive
	Shares		Amount			of par			earnings		income (loss)			Total
October 28, 2005	9,986		$	10,043		$	14,394		$	25,889	$	(2,064	)	$	48,262
Shares repurchased	(21	)	(21		)	(131		)						(152		)
Net income									158					158
Other comprehensive income (loss):
Reclassification adjustment for gain included in net income											(56		)	(56		)
Minimum pension liability											2,024			2,024
Comprehensive income														2,126
July 7, 2006	9,965		$	10,022		$	14,263		$	26,047	$	(96	)	$	50,236

See accompanying notes to consolidated condensed financial statements.

Item 1. d.

BRIDGFORD FOODS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	36 weeks ended			36 weeks ended
	July 7			July 8
	2006			2005
	(in thousands)			(in thousands)

Cash flows from operating activities:

Net income (loss)	$	158		$	(603	)

Income charges not affecting cash:
Depreciation	2,676			3,085
Recovery on losses on accounts receivable	(324		)	(192		)
Effect on cash of changes in assets and liabilities:
Accounts receivable, net	785			2,447
Inventories	3,805			2,503
Prepaid expenses and other current assets	(12		)	(706		)
Other non-current assets	(301		)	(374		)
Accounts payable	(1,866		)	535
Accrued payroll, advertising and other expenses	593			(704		)
Income taxes payable	—			(913		)
Non-current liabilities	1,261			1,180

Net cash provided by operating activities	6,775			6,258

Cash used in investing activities:
Additions to property, plant and equipment	(1,454		)	(1,134		)

Net cash used in investing activities	(1,454		)	(1,134		)

Cash used in financing activities:
Shares repurchased	(152		)	(98		)

Net cash used in financing activities	(152		)	(98		)

Net increase in cash and cash equivalents	5,169			5,026

Cash and cash equivalents at beginning of period	10,355			7,972

Cash and cash equivalents at end of period	$	15,524		$	12,998

Cash paid for income taxes	$	26		$	684

See accompanying notes to consolidated condensed financial statements.

Item 1. e.

BRIDGFORD FOODS CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except share and per share amounts)

Note 1 - The Company and Summary of Significant Accounting Policies:

The unaudited consolidated condensed financial statements of Bridgford Foods Corporation (the “Company”) for the twelve and thirty-six weeks ended July 7, 2006 and July 8, 2005 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 28, 2005 (the “Annual Report”) 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 Annual Report. Due to seasonality and other factors, interim results are not necessarily indicative of the results to be expected for the full year.

On February 22, 2006 the Company sold 5,028 shares of common stock of Sears Holdings Corporation received as the result of the bankruptcy of a significant customer. This transaction resulted in a pre-tax gain of $106 and a reduction in other comprehensive income of $67.

Note 2 - Inventories:

Inventories are comprised as follows at the respective periods:

	July 7 2006		October 28 2005

Meat, ingredients and supplies	$	4,727	$	6,433
Work in progress	1,357		2,293
Finished goods	11,435		12,598
	$	17,519	$	21,324

In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151, “Inventory Costs”. The Statement requires abnormal amounts of inventory costs related to amounts of idle freight, handling costs and spoilage be recognized as current period expenses. The standard is effective for fiscal years beginning after June 15, 2005 with early application permitted. The Company’s policy has always been to handle inventory costs in a manner consistent with the provisions of this Statement, and, therefore, the adoption had no impact.

Note 3 - Basic and diluted earnings per share:

The Company had 250,000 employee stock options outstanding during the twelve and thirty-six week periods ended July 7, 2006 and July 8, 2005. The effect of the employee stock options outstanding for the twelve and thirty-six weeks ended July 7, 2006 and July 8, 2005 was not included in the calculation of diluted shares and diluted earnings per share as to do so would be anti-dilutive.

Note 4 - Retirement and Other Benefit Plans:

The Company has noncontributory-trusteed defined benefit retirement plans for sales, administrative, supervisory and certain other employees. The benefits under these plans are primarily based on years of service and compensation levels. The Company’s funding policy is to contribute annually the maximum amount deductible for federal income tax purposes, without regard to the plans’ unfunded current liability. The measurement date for the plans is the Company’s fiscal year end.

Net pension cost consisted of the following:

	36 weeks ended			36 weeks ended
	July 7 2006			July 8 2005

Service cost	$	1,082		$	1,151
Interest cost	1,355			1,235
Expected return on plan assets	(1,064		)	(963		)
Amortization of unrecognized transition liability or (asset)	—			—
Amortization of net loss from earlier periods	191			—
Amortization of transition asset (15.2 years)	—			253
Amortization of unrecognized prior service cost	22			29
Curtailment Cost	8			—
Net pension cost	$	1,594		$	1,705

The Company funded its annual contribution of $1,800 to the plans during July of 2006.

In the third quarter of fiscal 2006, the Company froze the defined benefit pension plan accrued benefits for members employed by the Company within administration, sales or supervisory job classification or within a non- bargaining class (the Corporate Group). This action is defined as a curtailment under SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” and, therefore, the Company recognized a curtailment loss of approximately $8. As a result of this action, net pension costs will be reduced in future periods.

Note 5 - Stock-Based Compensation:

In December 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment”. SFAS No. 123R requires public companies to measure and recognize compensation expense for all share-based payments to employees, including grants of employee stock options, in the financial statements based on the fair value at the date of the grant. The Statement also clarifies and expands SFAS No. 123’s guidance in several areas, including measuring fair value, classifying an award as equity or as a liability, and attributing compensation cost to reporting periods. SFAS No. 123R became effective for the Company’s fiscal year ending November 3, 2006. The Company has not issued, awarded, granted or entered into any stock-based payment agreements since April 29, 1999. The modified prospective adoption of SFAS No. 123R did not have any impact on the Company’s financial condition or results of operations for the first thirty-six weeks ended July 7, 2006.

Prior to adoption of SFAS No. 123R, the Company adopted SFAS No. 123 ‘“Accounting for Stock-Based Compensation” which allowed the Company to apply the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for stock-based compensation and, therefore, no compensation expense was recognized for its fixed stock option plans as options are generally granted at fair market value based upon the closing price on the date immediately preceding the grant date. On December 31, 2002 the FASB issued SFAS No. 148, “Accounting for Stock Based Compensation- Transition and Disclosure”, which amended 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, there would have been no impact on the Company’s net income and earnings per share for the first thirty-six weeks ending July 8, 2005.

No options were granted during the first thirty-six weeks of the fiscal year ending November 3, 2006 and during the first thirty-six weeks of the fiscal year ended October 28, 2005.

Note 6 - Commitments:

The Company leases certain transportation and computer equipment under operating leases. The terms of the transportation leases provide for annual renewal options and contingent rental payments based upon mileage and adjustments of rental payments based on the Consumer Price Index. No material changes have been made to these contracts during the first thirty-six weeks of fiscal 2006.

Note 7 - 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).

The Company evaluates 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 thirty-six week periods ended July 7, 2006 and July 8, 2005.

Twelve Weeks Ended July 7, 2006	Frozen Food Products			Refrigerated and Snack Food Products			Other			Elimination		Totals
Sales	$	10,183		$	17,986		$	—		$	—	$	28,169
Intersegment sales	—			596			—			596		—
Net sales	10,183			18,582			—			596		28,169
Cost of products sold, excluding depreciation	6,065			11,555			—			596		17,024
Selling, general and administrative expenses	3,139			6,880			—			—		10,019
Depreciation	290			504			98			—		892
Gain on sale of equity securities	—			—			—			—		—
	9,494			18,939			98			596		27,935
Income (loss) before taxes	689			(357		)	(98		)	—		234
Income tax provision (benefit)	224			(214		)	—			—		10
Net income (loss)	$	465		$	(143	)	$	(98	)	$	—	$	224

Total assets	$	11,133		$	28,626		$	31,872		$	—	$	71,631
Additions to property, plant and equipment	$	(94	)	$	505		$	28		$	—	$	439

Twelve Weeks Ended July 8, 2005	Frozen Food Products		Refrigerated and Snack Food Products			Other			Elimination		Totals
Sales	$	9,570	$	18,086		$	—		$	—	$	27,656
Intersegment sales	—		904			—			904		—
Net sales	9,570		18,990			—			904		27,656
Cost of products sold, excluding depreciation	5,145		13,000			—			904		17,241
Selling, general and administrative expenses	2,917		6,404			—			—		9,321
Depreciation	398		527			103			—		1,028
	8,460		19,931			103			904		27,590
Income (loss) before taxes	1,110		(941		)	(103		)	—		66
Income tax provision (benefit)	274		(451		)	—			—		(177		)
Net income (loss)	$	836	$	(490	)	$	(103	)	$	—	$	243

Total assets	$	11,157	$	31,765		$	31,474		$	—	$	74,396
Additions to property, plant and equipment	$	132	$	309		$	(2	)	$	—	$	439

Thirty-Six Weeks Ended July 7, 2006	Frozen Food Products		Refrigerated and Snack Food Products			Other			Elimination		Totals
Sales	$	34,281	$	56,768		$	—		$	—	$	91,049
Intersegment sales	—		1,797			—			1,797		—
Net sales	34,281		58,565			—			1,797		91,049
Cost of products sold, excluding depreciation	20,265		39,619			—			1,797		58,087
Selling, general and administrative expenses	10,009		20,221			—			—		30,230
Depreciation	871		1,509			296			—		2,676
Gain on sale of equity securities	—		(106		)	—			—		(106		)
	31,145		61,243			296			1,797		90,887
Income (loss) before taxes	3,136		(2,678		)	(296		)	—		162
Income tax provision (benefit)	1,136		(1,132		)	—			—		4
Net income (loss)	$	2,000	$	(1,546	)	$	(296	)	$	—	$	158

Total assets	$	11,133	$	28,626		$	31,872		$	—	$	71,631
Additions to property, plant and equipment	$	156	$	1,197		$	101		$	—	$	1,454

Thirty-Six Weeks Ended July 8, 2005	Frozen Food Products		Refrigerated and Snack Food Products		Other		Elimination		Totals
Sales	$	30,915	$	58,046	$	—	$	—	$	88,961
Intersegment sales	—		2,289		—		2,289		—
Net sales	30,915		60,335		—		2,289		88,961
Cost of products sold, excluding depreciation	17,225		42,736		—		2,289		57,672
Selling, general and administrative expenses	8,905		20,598		—		—		29,503
Depreciation	1,192		1,585		308		—		3,085
	27,322		64,919