To Our Shareholders
Bridgford Foods made good progress during 2004 in
developing new products, improving our plants and
increasing our selling efforts. Unfortunately, we experi-
enced very high commodity costs in 2004 which have
continued into the 2005 fiscal year. The prices for meat
raw materials, especially pork, have reduced our operat-
ing margins to a break-even level overall, even with
price increases on all of the branded products we sell.
Fuel, energy, health care, pension and workers’ com-
pensation costs all contributed to our high expense
level in 2004.
SALES AND EARNINGS
Net of promotional costs, our sales in 2004 were
$137,865,000, an increase of $1,614,000, or 1.2%, over
sales recorded in the previous fiscal year. Increased sales
of pepperoni and sausage party bites, in addition to
sales of our new beef jerky shredder products, as shown
on the cover of this report, contributed to our sales
increase. Shipments of Bridgford Old South Buttermilk
Biscuits are also recording greater sales volume.
Sandwich sales increased in 2004 with our Ham &
Cheese Meal Kits showing the best improvement. Net
income in 2004 was $24,000, a disappointing result,
which was greatly affected by the higher commodity
costs we experienced. Higher selling prices were not
enough to overcome the extraordinary increases in
these costs.
OPERATIONS
Our new spiral freezer system, put into operation at the
Dallas Frozen-Rite plant during late 2003, substantially
improved efficiency in filling 2004 holiday orders and
reducing advance production storage costs. During
2004, Superior Foods of Dallas developed technology
and equipment to produce an exciting new product
that will go into retail test markets in March of 2005. The
Statesville, North Carolina bakery plant expanded its
capacity to make specialty dough items for the food
service trade. Bridgford’s Chicago dry sausage factory
has established a new major product manufacturing line
scheduled for completion in the second quarter of
2005, that will substantially increase Chicago plant pro-
duction. We have also reorganized our Anaheim deli-
catessen foods production operations to improve pro-
ductivity and profit margins.
FINANCIAL MATTERS
Working capital at October 29, 2004 totaled $31,736,000,
$1,461,000 (4.4%) less than at the beginning of the fis-
cal year. The decline resulted from the Company’s pur-
chase of 274,000 shares of common stock in the
amount of $2,108,000 ($7.69 average cost per share)
and capital expenditures of $3,444,000, partially offset
by lower dividend payments. The working capital ratio
declined slightly to 3.5 to 1 at October 29, 2004 com-
pared to 3.7 to 1 a year earlier. The Company has
remained free of interest bearing debt for eighteen
consecutive years.
Shareholders’ equity totaled $48,664,000, a decrease of
$3,669,000 (7.0%) compared to the end of the prior
year. The decrease principally relates to common stock
purchases noted previously and the recognition of an
increase in the minimum pension liability, which is
recorded in the Statement of Shareholders’ Equity
under the “Accumulated Other Comprehensive Loss”
column. The increase in this liability results from the
application of a lower discount rate used to measure
the accumulated pension benefit obligation and less
favorable investment results in recent years. The Board
of Directors suspended the quarterly cash dividend at
its May 2004 meeting in recognition of lower profitabil-
ity levels in recent quarters. Approximately 130,000
shares remain available for purchase under the 1.5 mil-
lion share repurchase plan previously authorized by the
Board of Directors. Shareholders’ equity per share was
$4.87 at October 29, 2004 compared to $5.09, a
decrease of 4.3% compared to the prior fiscal year end.
SUMMARY
2004 was a difficult year because of the escalating costs
outlined in this report. We are working hard to reduce
these expenses in 2005. Commodity prices remain
extremely high at this time. We believe that we can
improve sales and earnings during 2005 through cost
containment and sales emphasis on branded manufac-
tured products. We appreciate the dedication of our
employees and directors and the support of sharehold-
ers, customers and suppliers.
Respectfully submitted,
January 18, 2005
Allan L. Bridgford
Chairman
William L. Bridgford
President
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 29, 2004
Commission file number: 0-2396
BRIDGFORD FOODS CORPORATION
(Exact name of Registrant as specified in its charter)
California
( State of incorporation)
95-1778176
(I.R.S. Employer
Identification No.)
1308 North Patt Street
Anaheim, California 92801
(Address of principal executive offices)
(714) 526-5533
(Registrant’s telephone number, including area code)
Title of Each Class
Common Stock, par value $1.00 per share
Name of Exchange on Which Registered
Nasdaq National Market
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 (cid:1) No (cid:2)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes (cid:2) No (cid:1)
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes (cid:2) No
(cid:1)
The aggregate market value of voting stock held by non-affiliates of the registrant on April 16, 2004 was $21,804,000.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest
practicable date:
9,999,361 shares
As of January 27, 2005
(This page intentionally left blank.)
INDEX TO FORM 10K
2
PART I ................................................................................................................................................................................................
2
Item 1. Business................................................................................................................................................................
6
Item 2. Properties................................................................................................................................................................
Item 3. Legal Proceedings .........................................................................................................................................................
6
6
Item 4. Submission of Matters to a Vote of Security Holders ................................................................................................
7
PART II...............................................................................................................................................................................................
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity
7
Securities...............................................................................................................................................................................
Item 6. Selected Financial Data .................................................................................................................................................
7
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ................................
8
Item 7A. Quantitative and Qualitative Disclosures about Market Risk .....................................................................................
11
Item 8. Consolidated Financial Statements and Supplementary Data .......................................................................................
11
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................ 12
12
Item 9A. Controls and Procedures.............................................................................................................................................
PART III .............................................................................................................................................................................................
14
Item 10. Directors and Executive Officers of the Registrant ................................................................................................ 14
14
Item 11. Executive Compensation .............................................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management ................................................................ 14
Item 13. Certain Relationships and Related Transactions ................................................................................................ 14
14
Item 14. Principal Accounting Fees and Services......................................................................................................................
PART IV .............................................................................................................................................................................................
15
Item 15. Exhibits and Financial Statement Schedules ...............................................................................................................
15
SIGNATURES ................................................................................................................................................................ 16
1
Item 1.
Business
PART I
This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include, but are
not limited to, statements regarding the following: general economic and business conditions; the impact of competitive
product 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 Report.
The forward-looking statements included herein are based on current expectations that involve a number of risks and
uncertainties. These forward-looking statements are based on assumptions regarding the Company’s business, which involve
judgments with respect to, among other things, future economic and competitive conditions, and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company.
Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, actual
results may differ materially from those set forth in the forward-looking statements. In light of the significant uncertainties
inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as
representation by the Company or any other person that the objectives or plans of the Company will be achieved. The
forward-looking statements contained herein speak as of the date of this report and the Company undertakes no obligation to
update such statements after the date hereof.
Background of Business
Bridgford Foods Corporation, a California corporation (collectively with its subsidiaries, the “Company”) was
organized in 1952. The Company originally began its operations in 1932 as a retail meat market in San Diego, California, and
evolved into a meat wholesaler for hotels and restaurants, a distributor of frozen food products, a processor and packer of
meat and a manufacturer and distributor of frozen food products for sale on a retail and wholesale basis. For more than the
past five years, the Company and its subsidiaries have been primarily engaged in the manufacturing, marketing and
distribution of an extensive line of frozen, refrigerated and snack food products throughout the United States. The Company
has not been involved in any bankruptcy, receivership or similar proceedings, nor has it been party to any merger,
acquisition, etc. or acquired or disposed of any material amounts of assets during the past five years. Substantially all of the
assets of the Company have been acquired in the ordinary course of business. The Company had no significant change in the
type of products produced or distributed, nor in the markets or methods of distribution since the beginning of the fiscal year.
Description of Business
The Company operates in two business segments – the processing and distribution of frozen products, and, the
processing and distribution of refrigerated and snack food products. The products manufactured and distributed by the
Company consist of an extensive line of food products, including biscuits, bread dough items, roll dough items, dry sausage
products and a variety of sandwiches and sliced luncheon meats. The products purchased by the Company for resale include a
variety of jerky, cheeses, salads, party dips, Mexican foods, nuts and other delicatessen type food products.
Products manufactured or processed by the Company .................................................................
Items manufactured or processed by third parties for distribution................................................
69%
31%
70%
30%
69%
31%
100% 100% 100%
2004
2003
2002
Although the Company has recently introduced several new products, none of these products have contributed
significantly to the Company’s revenue growth for the fiscal year. The Company’s sales are not subject to material seasonal
variations. Historically the Company has been able to respond quickly to the receipt of orders and, accordingly, the Company
does not maintain a significant sales backlog. The Company and its industry generally have no unusual demands or
restrictions on working capital items. During the last fiscal year the Company did not enter into any new markets or any
significant contractual or other material relationships.
2
The Company has two classes of similar food products, each of which has accounted for 10% or more of consolidated
sales in the prior three fiscal years listed below. The following table shows sales, as a percentage of consolidated sales, for
each of these two classes of similar products for each of the last three fiscal years:
Frozen Food Products ...................................................................................................................
Refrigerated and Snack Food Products.........................................................................................
32%
68%
34%
66%
35%
65%
100% 100% 100%
2004
2003
2002
To date, federal, state and local environmental laws and regulations, including those relating to the discharge of
materials into the environment, have not had a material effect on the Company’s business.
Major Product Classes
Frozen Food Products
The Company’s frozen food division serves both food service and retail customers. The Company sells approximately
200 unique frozen food products through wholesalers, cooperatives and distributors to approximately 17,000 retail outlets
and 21,000 restaurants and institutions.
Frozen Food Products – Food Service Customers
The food service industry is composed of establishments that serve food outside the home and includes restaurants, the
food operations of health care providers, schools, hotels, resorts, corporations, and other traditional and non-traditional food
service outlets. Growth in this industry has been driven by the increase in away-from-home meal preparation, which has
accompanied the expanding number of both dual income and single-parent households. Another trend within the food service
industry is the growth in the number of non-traditional food service outlets such as convenience stores, retail stores and
supermarkets. These non-traditional locations often lack extensive cooking, storage or preparation facilities, resulting in a
need for pre-cooked and prepared foods similar to those provided by the Company. The expansion in the food service
industry has also been accompanied by the continued consolidation and growth of broadline and specialty food service
distributors, many of which are long-standing customers of the Company.
The Company supplies its food service customers generally through distributors that take title to the product and resell
it. Among the Company’s customers are many of the country’s largest broadline and specialty food service distributors. For
these and other large end purchasers, the Company’s products occasionally go through extensive qualification procedures and
its manufacturing capabilities are subjected to thorough review by the end purchasers prior to the Company’s approval as a
vendor. Large end purchasers typically select suppliers that can consistently meet increased volume requirements on a
national basis during peak promotional periods. The Company believes that its manufacturing flexibility, national presence
and long-standing customer relationships should pose barriers to entry for other manufacturers seeking to provide similar
products to the Company’s current large food service end purchasers, although no assurances can be given.
Frozen Food Products – Retail Customers
The majority of the Company’s existing and targeted retail customers are involved in the resale of branded and private
label packaged foods. The same trends which have contributed to the increase in away-from-home meal preparation have also
fueled the growth in easy to prepare, microwaveable frozen and refrigerated convenience foods. Among the fastest growing
segments is the frozen and refrigerated hand-held foods market. This growth has been driven by improved product quality
and variety and the increasing need for inexpensive and healthy food items that require minimal preparation. Despite rapid
growth, many categories of frozen and refrigerated hand-held foods have achieved minimal household penetration. The
Company believes it has been successful in establishing and maintaining supply relationships with certain selected leading
retailers in this market.
Frozen Food Products – Sales and Marketing
The Company’s frozen food business covers the United States and Canada. In addition to regional sales managers, the
Company maintains a network of independent food service and retail brokers covering most of the states as well as Canada.
Brokers are compensated on a commission basis. The Company believes that its broker relationships, in close cooperation
with the regional sales managers, are a valuable asset providing significant new product and customer opportunities. The
regional sales managers perform several significant functions for the Company, including identifying and developing new
3
business opportunities and providing customer service and support to the Company’s distributors and end purchasers through
the effective use of the Company’s broker network.
The Company’s annual advertising expenditures are directed towards retail and institutional customers. These
customers participate in various special promotional and marketing programs and direct advertising allowances sponsored by
the Company. The Company also invests in general consumer advertising in various newspapers and periodicals. The
Company directs advertising at food service customers with campaigns in major industry publications and through Company
participation in trade shows throughout the United States.
Refrigerated and Snack Food Products – Customers
The Company’s refrigerated and snack food products division sells approximately 310 different items through a direct
store delivery network serving approximately 36,000 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. This part of the Company’s
business is highly competitive. Proper placement of the Company’s product lines is critical to selling success since most
items could be considered “impulse” items which are often consumed shortly after purchase. The Company’s ability to sell
successfully to this distribution channel depends on aggressive marketing and maintaining relationships with key buyers.
Refrigerated and Snack Food Products – Sales and Marketing
The Company’s direct store delivery network consists of two separate divisions, refrigerated and non-refrigerated
snack food products. Refrigerated snack food products are distributed through five different regions located in the southwest,
primarily operating in California, Arizona and Nevada. Non-refrigerated snack food products are distributed in seventeen
geographic regions across the United States and Canada, each managed by regional sales managers. The regional sales
managers perform several significant functions for the Company including identifying and developing new business
opportunities and providing customer service and support to the Company’s customers. The Company also utilizes the
services of brokers where appropriate to support efficient product distribution and customer satisfaction.
Product Planning and Research and Development
The Company continually monitors the consumer acceptance of each product within its extensive product line.
Individual products are regularly added to and deleted from the Company’s product line. The addition or deletion of any
product has not had a material effect on the Company’s operations in the current fiscal year. The Company believes that a
key factor in the success of its products is its system of carefully targeted research and testing of its products to ensure high
quality and that each product matches an identified market opportunity. The emphasis in new product introductions in the
past several years has been in single service items. The Company is constantly searching to develop new products to
complement its existing product line and improved processing techniques and formulas for its existing product line. The
Company utilizes in-house test kitchens to research and experiment with unique food preparation methods, improve quality
control and analyze new ingredient mixtures. The Company’s refrigerated and snack food products segment has established a
new major manufacturing line scheduled for completion in the second quarter of fiscal year 2005. The Company does not
anticipate any significant change in product-mix as a result of its current research and development efforts.
Competition
The products of the Company are sold under highly competitive conditions. All food products can be considered
competitive with other food products, but the Company considers its principal competitors to include national, regional and
local producers and distributors of refrigerated, frozen and snack food products. Several of the Company’s competitors
include large companies with substantially greater financial and marketing resources than those of the Company. Existing
competitors may broaden their product lines and potential competitors may enter or increase their focus on the Company’s
market, resulting in greater competition for the Company. The Company believes that its products compete favorably with
those of the Company’s competitors. Such competitors’ products compete against those of the Company for retail shelf
space, institutional distribution and customer preference.
Importance of Key Customers
One customer comprised approximately 14.6% of sales during the 2004 fiscal year.
4
Employees
The Company has approximately 780 employees, approximately 46% of whose employment relationship is governed
by collective bargaining agreements. These agreements currently expire or expired (agreements covering 19 union
employees) between March 2004 and March 2007. The Company believes that its relationship with employees is favorable.
General Risks of Food Industry
The food industry, and the markets within the food industry in which the Company competes, are subject to various
risks, including: adverse changes in general economic conditions, evolving consumer preferences, nutritional and health-
related concerns, federal, state and local food inspection and processing controls, consumer product liability claims, risks of
product tampering, and the availability and expense of liability insurance. The meat and poultry industries have recently been
subject to increasing scrutiny due to the association of meat and poultry products with recent outbreaks of illness, and on rare
occasions even death, caused by food borne pathogens. Product recalls are sometimes required in the food industries to
withdraw contaminated or mislabeled products from the market.
Risks Relating to Suppliers and Raw Materials
The Company purchases large quantities of commodity pork, beef and flour. Historically, market prices for products
processed by the Company have fluctuated in response to a number of factors, including changes in the United States
government farm support programs, changes in international agricultural and trading policies, weather and other conditions
during the growing and harvesting seasons.
Risks Relating to Government Regulation
The operations of the Company are subject to extensive inspection and regulation by the United States Department of
Agriculture (the “USDA”), the Food and Drug Administration (the “FDA”) and by other federal, state and local authorities,
regarding the processing, packaging, storage, transportation, distribution and labeling of products that are manufactured,
produced and processed by the Company. The Company’s processing facilities and products are subject to continuous
inspection by USDA and/or other federal, state and local authorities. On July 25, 1996, the USDA issued strict new policies
concerning contamination by food borne pathogens such as E. coli, Listeria Monocytogenes and Salmonella, and established
a new system of regulation known as the Hazard Analysis Critical Control Points (“HACCP”) program. The HACCP
program requires all meat and poultry processing plants to develop and implement sanitary operating procedures and other
program requirements on or before January 26, 1998. The Company believes that it is currently in compliance with all
material governmental laws and regulations (including the January 1998 HACCP requirements), and that it maintains all
material permits and licenses relating to its operations.
On October 6, 2003, new USDA regulations regarding the control of Listeria Monocytogenes in Ready-To-Eat Meat
and Poultry Products took effect. These regulations require environmental and/or finished product testing for harmful bacteria
that may be present. This testing could result in products being retained, recalled or destroyed if Listeria Monocytogenes is
detected. The Company believes that it is in full compliance with these regulations.
Risks Relating to Dependence on Key Management
The Company’s executive officers and certain other key employees have been primarily responsible for the
development and expansion of the Company’s business, and the loss of the services of one or more of these individuals could
have an adverse effect on the Company. The Company’s success will be dependent in part upon its continued ability to
recruit, motivate and retain qualified personnel. There can be no assurance that the Company will be successful in this regard.
The Company has no employment or non-competition agreements with key personnel.
5
Executive Officers of the Registrant
The names, ages and positions of all the executive officers of the Company as of January 1, 2005 are listed below.
Messrs. Hugh Wm. Bridgford and Allan L. Bridgford are brothers. William L. Bridgford is the son of Hugh Wm. Bridgford
and the nephew of Allan L. Bridgford. Officers are normally appointed annually by the board of directors at their meeting
immediately following the annual meeting of shareholders. All executive officers are full-time employees of the Company,
except for Allan L. Bridgford, who worked 80% of full-time.
Name
Age
Allan L. Bridgford ................................................................
Hugh Wm. Bridgford............................................................
William L. Bridgford ............................................................
Raymond F. Lancy ...............................................................
Position(s) with the Company
69 Chairman and member of the Executive Committee
73 Vice President and Chairman of the Executive Committee
50 President, Secretary and member of the Executive Committee
51 Chief Financial Officer, Executive Vice President, Treasurer and member of
Item 2.
Properties
The Company owns the following facilities:
the Executive Committee
Property Location
Anaheim, California .......................................................................................................
Modesto, California ........................................................................................................
Dallas, Texas ..................................................................................................................
Dallas, Texas ..................................................................................................................
Dallas, Texas ..................................................................................................................
Dallas, Texas ..................................................................................................................
Statesville, North Carolina..............................................................................................
Chicago, Illinois..............................................................................................................
Building
Square
Footage
100,000
2,500
94,000
30,000
16,000
3,200
42,000
156,000
Acreage
5.0
0.3
4.0
2.0
1.0
1.5
8.0
1.5
The foregoing plants are, in general, fully utilized by the Company for processing, warehousing, distributing and
administrative purposes. The Company also leases warehouse and/or office facilities throughout the United States and
Canada. The Company believes that its properties are generally adequate to satisfy its foreseeable needs. Additional
properties may be acquired and/or plants expanded if favorable opportunities and conditions arise.
Item 3.
Legal Proceedings
No material legal proceedings were pending at October 29, 2004 against the Company. The Company is likely to be
subject to claims arising from time to time in the ordinary course of its business. In certain of such actions, plaintiffs may
request punitive or other damages that may not be covered by insurance and, accordingly, no assurance can be given with
respect to the ultimate outcome of any such possible future claims or litigation or their effect on the Company.
Item 4.
Submission of Matters to a Vote of Security Holders
Annual Meeting of Shareholders
The 2005 annual meeting of shareholders will be held at the Four Points Sheraton, 1500 South Raymond Avenue,
Fullerton, California at 10:00 a.m. on Wednesday, March 16, 2005.
No matters were submitted by the Company’s shareholders during the fourth quarter of the fiscal year ended October
29, 2004.
6
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity
Securities
Common Stock and Dividend Data
The common stock of the Company is traded in the national over-the-counter market and is authorized for quotation on
The Nasdaq National Market under the symbol “BRID”. The following table reflects the high and low closing prices and cash
dividends paid as quoted by Nasdaq for each of the last eight fiscal quarters.
Fiscal Year 2003
High
Low
Cash
Dividends
Paid
First Quarter.......................................................................................................................... $ 12.30 $ 7.50 $
Second Quarter ..................................................................................................................... $ 11.37 $ 6.80 $
Third Quarter ........................................................................................................................ $
8.50 $ 6.45 $
Fourth Quarter ...................................................................................................................... $
8.34 $ 6.85 $
0.05
0.05
0.03
0.03
Fiscal Year 2004
High
Low
Cash
Dividends
Paid
First Quarter.......................................................................................................................... $
Second Quarter ..................................................................................................................... $
Third Quarter ........................................................................................................................ $
Fourth Quarter ...................................................................................................................... $
9.50 $ 7.39 $
8.82 $ 7.06 $
8.49 $ 7.07 $
8.89 $ 7.52 $
0.03
0.02
0.00
0.00
The payment of any future dividends will be at the discretion of the Company’s Board of Directors and will depend
upon future earnings, financial requirements and other factors. The Company repurchased 274,000 shares of common stock
in the amount of $2,108,000 in fiscal year 2004 under the 1.5 million share repurchase plan previously authorized by the
Board of Directors.
Oct. 31
2003
$ 136,251
Nov. 1
2002
$ 139,202
Nov. 2
2001(A)
$ 152,464
36.7%
1,210
0.12
45,686
12,489
33,197
17,735
75,927
52,333
0.16
36.5%
1,138
0.11
46,413
11,800
34,613
19,030
77,182
54,390
0.26
Nov. 3
2000(A)(B)
$ 152,764
37.4%
8,766
0.80
53,100
14,631
38,469
36.5%
6,244
0.59
50,677
12,652
38,025
19,471
81,238
57,335
0.28
18,964
82,681
56,196
0.28
Item 6.
Selected Financial Data
Oct. 29
2004
Net Sales .......................................................... $ 137,865
Gross Margin Percent ......................................
Net Income ......................................................
Basic Earnings Per Share.................................
Current Assets..................................................
Current Liabilities ............................................
Working Capital...............................................
Property, Plant and
34.5%
24
—
44,401
12,665
31,736
Equipment, Net ...........................................
Total Assets .....................................................
Shareholders’ Equity .......................................
Cash Dividends Per Share................................
16,755
74,942
48,664
0.05
(In thousands, except percent and per share amounts)
(A) Reclassified to give effect to EITF 01-09.
(B) 53 weeks
7
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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. 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 report.
The Company’s operating results are heavily dependent upon the prices paid for raw materials. The marketing of the
Company’s value-added products does not lend itself to instantaneous changes in selling prices. Changes in selling prices are
relatively infrequent and do not compare with the volatility of commodity markets. The impact of general price inflation on
the Company’s financial position and results of operations has not been significant during the last three years.
Results of Operations (in thousands)
Fiscal Year Ended October 29, 2004 Compared to Fiscal Year Ended October 31, 2003
Sales
Sales in fiscal 2004 increased $1,614 (1.2%) when compared to the prior year. Sales in the Company’s frozen food
segment declined 3.3%, as a result of lower unit volume partially offset by increased average unit selling prices. Promotional
spending as a percentage of sales increased to 8.6% compared to 7.2% in the prior year contributing to the sales decline in the
frozen food division. Sales in the Company’s refrigerated and snack food products segment increased 3.5% primarily as a
result of higher unit selling prices on level unit volumes.
Gross Margin
The gross margin declined to 34.5% compared the prior year at 36.7%. Increased meat ingredient costs were the
principal reason for this decline. When combining all divisions, net-selling prices increased approximately 5% on a unit
volume decline of approximately 1.1 % compared to the prior fiscal year.
Selling, General, and Administrative
Selling, general and administrative expenses decreased $48 (0.1%) when compared to the prior year. Rising payroll,
workers’ compensation insurance, fuel and finished goods storage costs were offset by a significant reduction in the provision
for doubtful accounts receivable and the combined impact of aggressive cost control programs instituted by management.
The Company recorded an asset impairment reserve against the net book value of machinery and equipment of $54 in fiscal
year 2004 and no asset impairment reserve in the prior year. The effective income tax rate was 38% in 2004, consistent with
the prior year.
Gain on Sale of Equity Securities
The Company sold 14,014 shares of stock received as a result of the bankruptcy of a significant customer on July 26,
2004. This transaction resulted in a pre-tax gain of $553.
Fiscal Year ended October 31, 2003 compared to Fiscal Year Ended November 1, 2002
Sales
Sales in fiscal 2003 declined $2,951 (2.1%) when compared to the prior year. Sales in the Company’s frozen food
segment declined 6.9%, as a result of continued weak demand and aggressive competition. Sales in the Company’s
refrigerated and snack food products segment increase 0.5% primarily as a result of higher unit volumes.
8
Gross Margin
The gross margin remained relatively consistent with the prior year at 36.7%. Increased ingredient costs during the year
were offset by lower unit overhead due to improved volume on items processed by the Company. Overall, net selling prices
remained relatively consistent with the prior fiscal year.
Selling, General, and Administrative
Selling, general and administrative expenses decreased $487 (1.1%). A reduction in the provision for doubtful accounts
receivable from fiscal years 2002 to 2003 contributed to this decrease. Rising costs for employee healthcare, workers’
compensation, property and liability insurance, transportation costs, product displays and pension expense mitigated the
effect of the reduction in the provision for doubtful accounts receivable. The Company benefited from an effective income
tax rate of 38% in 2003 compared to 49.9% in 2002. The rate in the prior year was abnormally high due to the revaluation of
deferred tax assets due to a lower than expected state tax rate.
Fiscal Year ended November 1, 2002 compared to Fiscal Year Ended November 2, 2001
Sales
Sales in fiscal 2002 declined $13,262 (8.7%) when compared to the prior year. All segments of the Company’s
business were adversely affected by the recession. Sales in the Company’s frozen food division declined 7.3%, as a result of
continued weak demand and aggressive competition. Sales in the Company’s direct store delivery non-refrigerated meat
snack division declined 10.8%, primarily as a result of the weak economy and the bankruptcy of a significant customer. Sales
in the Company’s direct store delivery Deli division also declined 5.9% due to similar factors already noted above.
Gross Margin
The gross margin remained relatively consistent with the prior year at 36.5%. Higher unit costs resulting from lower
production volumes were offset by more favorable pork commodity prices. Flour prices increased during the year offsetting
lower pork commodity prices.
Selling, General, and Administrative
Selling, general and administrative expenses increased $2,637 (6.3%) when compared to the prior year. The provision
for doubtful accounts receivable was increased by $3,750 due to the bankruptcy of a significant customer and collectibility
issues related to other significant accounts. In addition, the Company expensed approximately $658 in non-recurring costs
associated with the implementation of the Company’s new information systems during the fiscal year. After considering
these factors, selling, general and administrative expenses decreased 4.3% due to lower sales offset by other factors adversely
affecting this category including rising costs for employee healthcare, worker’s compensation, property and liability
insurance, transportation costs and pension expense. The Company expects to continue the growth and modernization of
facilities and equipment used in the business. Income before taxes declined 77.5% as a result of the loss of gross margin in
the amount of $4,834 and the significant factors noted above. The effective tax rate increased to 49.9%, primarily as the
result of the revaluation of deferred tax assets due to a lower than expected state tax rate.
Liquidity and Capital Resources (in thousands except per share amounts)
Net cash provided by operating activities was $908 and $7,929 in fiscal years 2004 and 2003, respectively. Gross
accounts receivable balances decreased $1,346 in 2004 and increased $622 in 2003. The balance in 2004 decreased due to
lower overall sales levels in the fourth quarter and improved collection trends compared to the prior year. The balance in
2003 increased as a result of strong fourth quarter sales compared to the prior year. Inventories increased $4,445 in fiscal year
2004 due to significant beef ingredient inventories being stored in anticipation of the start up of a new production line in the
first half of fiscal year 2005 and higher valuations due to commodity cost increases. In fiscal year 2003, inventories increased
$471 due to higher unit quantities needed to support increased sales activity beginning in the last quarter of the fiscal year.
Accounts payable decreased $968 in 2004 primarily due to an increase in the rate of processing payments. The balance of
accounts payable is consistent with the current business cycle. Accrued payroll, advertising and other expenses increased
$930 in 2004 primarily as a result of higher workers’ compensation liability due to outstanding claims and the funding
pattern of self-insured claims and an increase in accrued property taxes due to significant increases in property valuations.
The current portion of non-current liabilities decreased $699 and $329 in 2004 and 2003, respectively, due to lower incentive
compensation accruals as a result of lower profitability levels and slightly lower contribution requirements for the Company’s
defined benefits pension plan. Included in the current portion of non-current liabilities is $991 related to the anticipated
contribution required in fiscal 2005. The minimum pension liability related to the Company’s defined benefit pension plan
increased to $4,509 at October 29, 2004 compared to $2,780 at October 31, 2003. The increase results from the application of
9
a lower discount rate being applied to the accumulated pension benefit obligation and less favorable investment results in
recent years. The net tax effected amount of this liability is included in shareholders’ equity as an “accumulated
comprehensive loss” in the Statement of Shareholders’ Equity and Other Comprehensive Income (Loss).
The Company’s capital improvement expenditures increased $352 in 2004 and decreased $675 in 2003 compared to the
prior year. Significant projects in process of $1,795 at October 29, 2004 included equipment to expand processing
capabilities at the Chicago facility ($1,777). Cash and cash equivalents decreased $4,224 in 2004 and increased $1,891 in
2003. Net cash flow decreased in 2004 primarily as a result of lower operating results, higher investments in ingredient
inventories and increased capital spending. Improved collections on accounts receivable and delayed funding of the
Company’s self-insured workers’ compensation program helped off-set these decreases. Net cash flow improved in 2003
primarily as a result of lower income tax payments and collection of amounts refundable.
Working capital decreased $1,461 in 2004 and $1,416 in 2003. Working capital decreased in 2004 primarily due to the
repurchase of 274,000 shares of common stock in the amount of $2,108, and a slight increase in capital expenditures and
payments related incentive compensation and employee benefit plans. Off-setting these decreases were lower cash dividend
payments compared to 2003. Working capital decreased in 2003 primarily due to the repurchase of 172,000 shares of
common stock in the aggregate amount of $1,307. The Company has remained free of interest-bearing debt for eighteen
consecutive years. The Company maintains a line of credit with Bank of America that expires April 30, 2006. Under the
terms of this line of credit, the Company may borrow up to $2,000 at an interest rate equal to the bank’s reference rate, unless
the Company elects an optional interest rate. The borrowing agreement contains various covenants, the more significant of
which require the Company to maintain certain levels of shareholders’ equity and working capital. The Company was in
compliance with all provisions of the agreement during the 2004 fiscal year and there were no borrowings under this line of
credit during such period. Management is of the opinion that the Company’s strong financial position and its capital
resources are sufficient to provide for its operating needs and capital expenditures for fiscal 2005.
Contractual Obligations (in thousands)
The Company remained free of interest bearing long-term debt for the eighteenth consecutive year and had no other
long-term debt or other contractual obligations except for leases. The Company leases certain transportation and computer
equipment under operating leases expiring in 2006. Future minimum lease payments are approximately (in thousands):
Net Lease Commitments.......................................................................................................... $
304 $
28
2005
2006
Critical Accounting Policies
The preparation of financial statements in conformity with generally accepted accounting principles 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 not originally estimated. Management believes
its current estimates are reasonable and based on the best information available at the time.
The Company’s credit risk is diversified across a broad range of customers and geographic regions. Losses due to
credit risk have historically been immaterial although losses in fiscal year 2002 were significant due to a bankruptcy of a
significant customer. The provision for doubtful accounts receivable is based on historical trends and current collectibility
risk. The Company has 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. The Company monitors
these customers closely to minimize the risk of loss. One customer comprised 14.6% of revenues in fiscal years 2004 and
2003.
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 its own long-haul fleet or through a company owned direct
store delivery system.
Amounts estimated related to liabilities for pension benefits are especially subject to inherent uncertainties and these
estimated liabilities may ultimately settle at amounts not originally estimated. Management believes its current estimates are
reasonable and based on the best information available at the time.
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.
10
The Company assesses the recoverability of its 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, the Company recognizes an impairment to reduce the carrying value of the applicable long-lived
assets to their estimated fair value.
Recently Issued Accounting Pronouncements
SFAS No. 149, “Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities”
In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement No. 133 on Derivative Instruments and
Hedging Activities.” The statement is effective for contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. This statement amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. This
statement amends Statement 133 for decisions made as part of the Derivatives Impletion Group process that effectively
required amendments to Statement 133, in connection with other Board projects dealing with financial instruments and in
connection with implementation issues raised in relation to the application of the definition of a derivative. The adoption of
SAFS 149 did not have a material impact on the Company’s financial condition and results of operations.
SFAS No. 150, “Certain Financial Instruments with Characteristics of Both Liabilities and Equity”
In May 2003, the FASB issued SFAS No. 150, “Certain Financial Instruments with Characteristics of Both Liabilities
and Equity.” The statement establishes standards for how a company clarifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that a company classify such instruments as liabilities, whereas they
previously may have been classified as equity. The standard is effective for all financial instruments entered into or modified
after May 31, 2003, and otherwise is effective July 1, 2003. The adoption of SFAS 150 did not have a material impact on the
Company’s financial condition and results of operations.
FIN 46, “Consolidation of Variable Interest Entities - an interpretation of ARB No. 51”
In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities - an interpretation of ARB No.
51.” Fin 46 addresses consolidation by business enterprises of variable interest entities, which have one or both of the
following characteristics: 1) the equity investment at risk is not sufficient to permit the entity to finance its activities without
additional subordinated financial support from other parties, which is provided through other interests that will absorb some
or all of the expected losses of the entity, and 2) the equity investors lack an essential characteristic of a controlling financial
interest. FIN 46 applies to variable interest entities established after December 31, 2002. The adoption of FIN 46 did not have
a significant impact on the Company’s financial position and results of operations.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
The Company did not have significant overall currency exposure at October 29, 2004. The Company’s financial
instruments consist of cash and cash equivalents and life insurance policies at October 29, 2004 and the carrying value of the
Company’s financial instruments approximated their fair market values based on current market prices and rates. It is not the
Company’s policy to enter into derivative financial instruments. The Company does not currently have any significant
foreign currency exposure. The Company does not engage in buying or selling spot or futures commodity contracts. The
Company’s investment portfolio is not subject to significant market risk or interest rate fluctuations.
Item 8.
Consolidated Financial Statements and Supplementary Data
Unaudited Interim Financial Information (in thousands, except per share amounts)
2004
Net sales................................................................................................ $
Income (loss) before taxes ....................................................................
Net income (loss) ..................................................................................
Basic earnings (loss) per share.............................................................. $
11
January 23
(12 weeks)
April 16
(12 weeks)
July 9
(12 weeks)
35,322 $
(222)
(138)
(0.01) $
30,541 $
(336)
(209)
(0.02) $
29,756 $
(1,005)
(623)
(0.06) $
October 29
(16 weeks)
42,246
1,602
994
0.10
Net sales................................................................................................ $
Income (loss) before taxes ....................................................................
Net income (loss) ..................................................................................
Basic earnings (loss) per share.............................................................. $
2003
January 24
(12 weeks)
April 18
(12 weeks)
July 11
(12 weeks)
32,445 $
(246)
(153)
(0.01) $
29,074 $
174
108
0.01 $
29,977 $
665
412
0.04 $
October 31
(16 weeks)
44,755
1,358
843
0.08
See Item 15(a) below and the index therein for a listing of the consolidated financial statements and supplementary data
filed as a part of this report
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
the Audit Committee of
On December 13, 2004,
the Company dismissed
PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. PricewaterhouseCoopers
LLP completed the audit of the Company’s financial statements for the year ended October 29, 2004 on January 27, 2005
completely terminating PricewaterhouseCoopers LLP’s appointment as the independent registered public accounting firm for
the Company. The decision to change principal accountants was approved by the Audit Committee and the Board of
Directors of the Company.
the Board of Directors of
The reports of PricewaterhouseCoopers LLP on the consolidated financial statements of Bridgford Foods Corporation
for the years ended October 29, 2004 and October 31, 2003, did not contain an adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope, or accounting principle.
During the year ended October 29, 2004, and through January 27, 2005, there were no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have
caused it to make reference thereto in its reports on the financial statements for such years.
During the years ended October 29, 2004, and October 31, 2003, and through January 27, 2005, there have been no
reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
On December 14, 2004, the Audit Committee of the Board of Directors of the Company appointed Haskell & White
LLP as its new independent registered public accounting firm as of December 13, 2004 for the fiscal year beginning October
30, 2004 and ending October 28, 2005.
During the Company’s two most recent fiscal years ended October 29, 2004 and October 31, 2003, and through the
subsequent interim period ended January 27, 2005, neither the Company nor anyone on its behalf consulted Haskell & White
LLP regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
Item 9A.
Controls and Procedures
An evaluation as of the end of the period covered by this annual report was carried out under the supervision and with
the participation of the Company’s management, including the Company’s Chairman and Chief Financial Officer, of the
effectiveness of the design and operation of the Company’s “disclosure controls and procedures”, as such term is defined
under Rules 13a-15(e) and 15d -15(e) promulgated under the Securities Exchange Act of 1934. Management is responsible
for establishing and maintaining adequate internal controls over financial reporting. Based upon that evaluation, the
Company’s Chairman and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were
effective.
The Company’s management, including the Company’s Chairman and Chief Financial Officer, has evaluated any
changes in the Company’s internal control over financial reporting that occurred during the quarterly period ended October
29, 2004, and has concluded that there was no change during the Company’s fourth quarter of its 2004 fiscal year that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company maintains and evaluates a system of internal accounting controls, and a program of internal auditing
designed to provide reasonable assurance that the Company’s assets are protected and that transactions are performed in
accordance with proper authorization, and are properly recorded. This system of internal accounting controls is continually
reviewed and modified in response to evolving business conditions and operations and to recommendations made by the
independent auditors and internal auditor. The Company has established a code of conduct and employs an experienced full
time internal auditor. The management of the Company believes that the accounting and internal control systems provide
reasonable assurance that assets are safeguarded and financial information is reliable.
12
The Audit Committee of the Board of Directors meets regularly with the Company’s financial management and
counsel, with the Company’s internal auditor and with the independent registered public accounting firm engaged by the
Company. Internal accounting controls and the quality of financial reporting are discussed during these meetings. The Audit
Committee has discussed with the independent registered public accounting firm matters required to be discussed by
Statement of Auditing Standards No. 61 (Communication with Audit Committees). In addition, the independent registered
public accounting firm’s independence from the Company and its management, including the matters in the written
disclosures required by the Independence Standards Board Standards No. 1 (Independence Discussions with Audit
Committees), has been discussed by the Committee and the independent registered public accounting firm.
13
Item 10.
Directors and Executive Officers of the Registrant
PART III
Information set forth in the sections entitled “Election of Directors” and “Section 16(a) Beneficial Ownership
Reporting Compliance” contained in the Company’s definitive proxy statement for the Annual Meeting of Shareholders to be
held on March 16, 2005 is incorporated herein by reference. Information concerning the executive officers of the Company is
set forth in Part I hereof under the heading “Executive Officers of the Registrant”.
The Company adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 during the first
quarter of 2004, which applies to the Company’s principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions and other designated officers and employees. The Code of
Ethics appears on the Company’s website at www.bridgford.com.
The Company is considered a “controlled company” within the meaning of Rule 4350(c)(5) of the National Association
of Securities Dealers (NASD) and is therefore exempted from various NASD rules pertaining to certain “independence”
requirements of its directors. Nevertheless, the Board of Directors has determined that Messrs. Andrews, Gilbert, Foster and
Zippwald are all “independent directors” within the meaning of Rule 4200 of the National Association of Securities Dealers.
The Audit Committee has been established in accordance with SEC rules and regulations, and each of the members of the
Audit Committee are independent directors as defined under the NASD’s listing standards. The Board of Directors believes
that Mr. Andrews qualifies as a “financial expert” as such term is used in the rules and regulations of the SEC.
Item 11.
Executive Compensation
Information set forth in the section entitled “Compensation of Executive Officers” contained in the Company’s
definitive proxy statement for the 2005 Annual Meeting of Shareholders to be held on March 16, 2005 is incorporated herein
by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management
Information set forth in the section entitled “Principal Shareholders and Management” contained in the Company’s
definitive proxy statement for the 2005 Annual Meeting of Shareholders to be held on March 16, 2005 is incorporated herein
by reference.
Equity Compensation Plan Information
The following table sets forth information regarding outstanding options, warrants and rights and shares reserved for
future issuance under the Company’s existing compensation plans as of October 29, 2004. The Company’s sole shareholder
approved equity compensation plan is the 1999 Stock Incentive Plan. The Company does not have any non-stockholder
approved equity compensation plans.
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
Number of securities to
be issued upon exercise of
outstanding options,
warrants and rights as of
October 29, 2004
(a)
Weighted-average exercise
price of outstanding
options, warrants and rights
(b)
Number of securities remaining
available for future issuance under
equity compensation plans as of
October 29, 2004 (excluding securities
reflected in column (a))
(c)
250,000 $
—
250,000 $
10.00
—
10.00
650,000
—
650,000
Item 13. Certain Relationships and Related Transactions
Information set forth in the section entitled “Related Party Transactions” contained in the Company’s definitive proxy
statement for the 2005 Annual Meeting of Shareholders to be held on March 16, 2005 is incorporated herein by reference.
Item 14.
Principal Accounting Fees and Services
Information set forth in the section entitled “Proposal 2- Audit Fees” contained in the Company’s definitive proxy
statement for the Annual Meeting of Shareholders to be held on March 16, 2005 is incorporated herein by reference.
14
Item 15.
Exhibits and Financial Statement Schedules
(a)(1) Financial Statements. The following documents are filed as a part of this report:
PART IV
Report of Independent Registered Public Accounting Firm ...............................................................................................................
Consolidated Balance Sheets as of October 29, 2004 and October 31, 2003......................................................................................
Consolidated Statements of Income....................................................................................................................................................
Consolidated Statements of Shareholder’s Equity and Comprehensive Income.................................................................................
Consolidated Statement of Cash Flows ..............................................................................................................................................
Notes to Consolidated Financial Statements.......................................................................................................................................
Page
17
18
19
19
20
21
(2) Financial Statement Schedule
The following financial statement is filed herewith.
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule ..........................................................
Schedule II - Valuation and Qualifying Accounts ..............................................................................................................................
32
33
(3) Exhibits
The exhibits listed under Item 14(c) are filed or incorporated by reference herein.
(b) The exhibits below are filed or incorporated herein by reference.
Exhibit
Number
3.5
3.6
3.7
10.1
10.2
10.3
10.4
Exhibit
Number
21.1
23.1
24.1
31.1
31.2
32.1
32.2
Description
Restated Articles of Incorporation, dated December 29, 1989 (filed as Exhibit 3.5 to Form 10-K on January 28, 1993 and
incorporated herein by reference).
Amendment to Articles of Incorporation, dated July 27, 1990 (filed as Exhibit 3.6 to Form 10-K on January 28, 1993 and
incorporated herein by reference).
By-laws, as amended (filed as Exhibit 2 to Form 10-K on January 28,1993 and incorporated herein by reference).
Bridgford Foods Corporation Defined Benefit Pension Plan (filed as Exhibit10.1 to Form 10-K on January 28, 1993 and
incorporated herein by reference).
Bridgford Foods Corporation Supplemental Executive Retirement Plan (filed as Exhibit 10.2 to Form 10-K on January 28,
1993 and incorporated herein by reference).
Bridgford Foods Corporation Deferred Compensation Savings Plan (filed as Exhibit 10.3 to Form 10-K on January 28, 1993
and incorporated herein by reference).
Bridgford Foods Corporation 1999 Stock Incentive Plan and Form of Stock Option Agreement (filed as Exhibit 4.1 to Form
S-8 on May 28, 1999 and incorporated herein by reference).
Description
Subsidiaries of the Registrant.
Consent of Independent Registered Public Accounting Firm.
Power of Attorney (included as part of the signature page)
Certification of Principal Executive Officer.
Certification Pursuant to Principal Financial Officer.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Principal Executive Officer).
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (Principal Financial Officer).
15
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
BRIDGFORD FOODS CORPORATION
Registrant
By:
/s/ ALLAN L. BRIDGFORD
Allan L. Bridgford
Chairman
Date: January 27, 2005
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated
We, the undersigned directors and officers of Bridgford Foods Corporation do hereby constitute and appoint Allan L.
Bridgford and Raymond F. Lancy, or either of them, with full power of substitution and resubstitution, our true and lawful
attorneys and agents, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or
either of them, or their substitutes, may deem necessary or advisable to enable said corporation to comply with the Securities
Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission
in connection with this Annual Report on Form 10-K, including specifically, but without limitation, power and authority to
sign for us or any of us in our names and in the capacities indicated below, any and all amendments; and we do hereby ratify
and confirm all that the said attorneys and agents, or either of them, shall do or cause to be done by virtue hereof.
Signature
Title
Date
/s/ ALLAN L. BRIDGFORD
Allan L. Bridgford
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford
/s/ HUGH WM. BRIDGFORD
Hugh Wm. Bridgford
/s/ RAYMOND F. LANCY
Raymond F. Lancy
/s/ PAUL A. GILBERT
Paul A. Gilbert
/s/ RICHARD A. FOSTER
Richard A. Foster
/s/ ROBERT E. SCHULZE
Robert E. Schulze
/s/ PAUL R. ZIPPWALD
Paul R. Zippwald
/s/ TODD C. ANDREWS
Todd C. Andrews
Chairman
(Principal Executive Officer)
January 27, 2005
President
January 27, 2005
Vice President and Director
January 27, 2005
Chief Financial Officer
(Principal Financial Officer)
Director
Director
Director
Director
Director
16
January 27, 2005
January 27, 2005
January 27, 2005
January 27, 2005
January 27, 2005
January 27, 2005
Report of Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
To the Board of Directors and Shareholders of Bridgford Foods Corporation
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,
shareholders’ equity and comprehensive income and cash flows present fairly, in all material respects, the financial position
of Bridgford Foods Corporation and its subsidiaries (the “Company”) at October 29, 2004 and October 31, 2003, and the
results of their operations and their cash flows for each of the three years in the period ended October 29, 2004, in conformity
with accounting principles generally accepted in the United States of America. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Orange County, California
January 27, 2005
17
BRIDGFORD FOODS CORPORATION
CONSOLIDATED BALANCE SHEETS
October 29, 2004, and October 31, 2003
(in thousands, except per share amounts)
ASSETS
Current assets
Cash and cash equivalents......................................................................................................... $
Accounts receivable, less allowance for doubtful accounts of $1,118 and $1,429, respectively
and promotional allowances of $2,368 and $1,847, respectively .........................................
Inventories.................................................................................................................................
Prepaid expenses .......................................................................................................................
Refundable income taxes ..........................................................................................................
Deferred income taxes...............................................................................................................
Total current assets .............................................................................................................................
2004
2003
7,972 $ 12,196
11,173
22,478
449
—
2,329
44,401
12,273
18,033
216
732
2,236
45,686
Property, plant and equipment, net of accumulated depreciation of $47,120 and $43,084,
17,735
respectively ....................................................................................................................................
9,775
Other non-current assets .....................................................................................................................
Deferred income taxes ........................................................................................................................
2,731
Total assets ......................................................................................................................................... $ 74,942 $ 75,927
16,755
9,890
3,896
Current liabilities:
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable ...................................................................................................................... $
Accrued payroll, advertising and other expenses ......................................................................
Income taxes payable ................................................................................................................
Current portion of non-current liabilities ..................................................................................
Total current liabilities.....................................................................................................
Non-current liabilities .........................................................................................................................
Contingencies and 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 - 10,002 in 2004 and 10,276 in 2003..........................................
Capital in excess of par value....................................................................................................
Retained earnings ......................................................................................................................
Accumulated other comprehensive loss ....................................................................................
Total shareholders’ equity ...............................................................................................
3,737 $
5,847
913
2,168
12,665
13,613
4,705
4,917
—
2,867
12,489
11,105
—
—
10,059
14,506
26,832
(2,733)
48,664
10,333
16,340
27,321
(1,661)
52,333
$ 74,942 $ 75,927
See accompanying notes to consolidated financial statements.
18
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the years ended October 29, 2004, October 31, 2003, and November 1, 2002
(in thousands, except share and per share amounts)
2004
2003
2002
Net sales .................................................................................................................. $
137,865 $
136,251 $
139,202
Cost of products sold, excluding depreciation .........................................................
Selling, general and administrative expenses...........................................................
Depreciation ............................................................................................................
Gain on sale of equity securities ..............................................................................
90,306
43,728
4,345
(553)
86,211
43,776
4,313
—
88,460
44,263
4,208
—
Income before taxes.................................................................................................
Provision for taxes on income .................................................................................
Net income............................................................................................................... $
Basic earnings per share .......................................................................................... $
137,826
134,300
136,931
39
15
24 $
— $
1,951
741
1,210 $
0.12 $
2,271
1,133
1,138
0.11
Shares used to compute basic earnings per share.....................................................
10,131,570
10,381,477
10,448,271
Diluted earnings per share ....................................................................................... $
— $
0.12 $
0.11
Shares used to compute diluted earnings per share..................................................
10,131,570
10,381,477
10,488,683
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
For the years ended October 29, 2004, October 31, 2003, and November 1, 2002
(in thousands, except per share amounts)
Balance, November 2, 2001.........................
Cash dividends paid ($.26 per share)
Net income ........................................
Other comprehensive (loss):
Minimum pension liability ................
Comprehensive loss .....................................
Balance, November 1, 2002.........................
Shares repurchased and retired..........
Cash dividends paid ($.16 per share)
Net income ........................................
Other comprehensive (loss):
Minimum pension liability ................
Comprehensive income ...............................
Balance, October 31, 2003...........................
Shares repurchased and retired..........
Cash dividends paid ($.05 per share)
Net income ........................................
Other comprehensive income (loss):
Unrealized gain on investment ..........
Minimum pension liability ................
Comprehensive loss .....................................
Shares
10,448 $
Amount
Capital in
excess of
par value
10,505 $
17,475 $
10,448
(172)
10,505
(172)
17,475
(1,135)
Retained
earnings
29,355
(2,717)
1,138
27,776
(1,665)
1,210
Accumulated
other
comprehensive
income (loss)
Total
shareholders’
equity
$
$
(1,366)
(1,366)
(295)
10,276
(274)
10,333
(274)
16,340
(1,834)
27,321
(1,661)
(513)
24
25
(1,097)
57,335
(2,717)
1,138
(1,366)
(228)
54,390
(1,307)
(1,665)
1,210
(295)
915
52,333
(2,108)
(513)
24
25
(1,097)
(1,048)
48,664
Balance, October 29, 2004...........................
10,002 $
10,059 $
14,506 $
26,832 $
(2,733) $
See accompanying notes to consolidated financial statements.
19
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 29, 2004, October 31, 2003, and November 1, 2002
(in thousands)
Cash flows from operating activities:
Net income ............................................................................................................ $
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation ..........................................................................................................
Provision for doubtful accounts receivable ...........................................................
(Gain) loss on sale of property, plant and equipment............................................
(Gain) on sale of equity securities .........................................................................
Provision for asset impairment..............................................................................
Deferred income taxes, net....................................................................................
Changes in operating assets and liabilities:
Accounts receivable ..............................................................................................
Inventories.............................................................................................................
Prepaid expenses ...................................................................................................
Income taxes receivable ........................................................................................
Other non-current assets........................................................................................
Accounts payable ..................................................................................................
Accrued payroll, advertising and other expenses ..................................................
Income taxes payable ............................................................................................
Current portion of non-current liabilities ..............................................................
Non-current liabilities ...........................................................................................
Net cash provided by operating activities ....................................................
Cash used in investing activities:
Proceeds from sale of property, plant and equipment ...........................................
Proceeds from sale of equity securities .................................................................
Additions to property, plant and equipment ..........................................................
Net cash used in investing activities ............................................................
Cash used in financing activities:
Shares repurchased ......................................................................................
Cash dividends paid.....................................................................................
Cash used in financing activities ........................................................
Net (decrease) increase in cash and cash equivalents .....................................................
Cash and cash equivalents at beginning of year .............................................................
Cash and cash equivalents at end of year........................................................................ $
Cash paid for income taxes ............................................................................................. $
2004
2003
2002
24 $
1,210 $
1,138
4,345
(246)
(11)
(553)
54
(601)
1,346
(4,445)
(619)
732
(74)
(968)
930
913
(699)
780
908
35
898
(3,444)
(2,511)
(2,108)
(513)
(2,621)
(4,224)
4,313
915
48
—
—
1,970
(622)
(471)
28
1,005
(1,075)
749
269
—
(329)
(81)
7,929
26
—
(3,092)
(3,066)
(1,307)
(1,665)
(2,972)
1,891
4,208
3,750
(3)
—
—
(1,548)
(3,134)
1,603
620
304
570
(1,766)
(552)
—
1,466
(2,844)
3,812
3
—
(3,767)
(3,764)
—
(2,717)
(2,717)
(2,669)
12,196
12,974
10,305
7,972 $ 12,196 $ 10,305
1,789
39 $
3 $
See accompanying notes to consolidated financial statements.
20
BRIDGFORD FOODS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands except per share amounts)
NOTE 1- The Company and Summary of Significant Accounting Policies:
The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly
owned. All intercompany transactions have been eliminated.
Use of estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles 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, as well as 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 not originally estimated. Management
believes its current estimates are reasonable and based on the best information available at the time.
Concentrations of credit risk
The Company’s credit risk is diversified across a broad range of customers and geographic regions. Losses due to
credit risk have historically been immaterial, although losses in fiscal year 2002 were significant. The carrying amount of
cash equivalents, accounts and other receivables, accounts payable and accrued liabilities approximate fair market value due
to the short maturity of these instruments. The provision for doubtful accounts receivable is based on historical trends and
current collectibility risk. The Company has 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. The
Company monitors these customers closely to minimize the risk of loss. One customer in the Company’s Refrigerated and
Snack Food Products segment comprised 14.6% of revenues in fiscal year 2004.
Business segments
The Company and its subsidiaries operate in two business segments - the processing and distribution of frozen foods,
and the processing and distribution of refrigerated and snack food products.
Fiscal year
The Company maintains its accounting records on a 52-53 week fiscal basis. Fiscal years 2002, 2003 and 2004 include
52 weeks each.
Revenues
Revenues are recognized upon passage of title to the customer typically upon product pick-up, shipment or delivery to
customers. Products are primarily delivered to customers through the Company’s own fleet or through a Company owned
direct store delivery system. These costs, $6,514, $6,877 and $6,755 for 2004, 2003 and 2002, respectively, are included in
selling, general and administrative expenses in the accompanying statements. The Company records promotional and returns
allowances based on recent and historical trends.
Cash equivalents
The Company considers all investments with original maturities of three months or less to be cash equivalents. Cash
equivalents include treasury bills of $7,215 at October 29, 2004 and $10,193 at October 31, 2003.
21
Inventories
Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation. Major renewals and betterments are
charged to the asset accounts while the cost of maintenance and repairs is charged to expense as incurred. When assets are
sold or otherwise disposed of, the cost and accumulated depreciation are removed from the respective accounts and the
resulting gain or loss is credited or charged to income. Depreciation is computed on the straight-line basis over 10 to 20 years
for buildings and improvements, 5 to 10 years for machinery and equipment and 3 to 5 years for transportation equipment.
The Company assesses the recoverability of its 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, the Company recognizes an impairment to reduce the carrying value of the applicable long-lived
assets to their estimated fair value. The Company recorded an asset impairment reserve against the net book value of
machinery and equipment of $54 in fiscal year 2004. This specialized machinery and equipment is related to the Refrigerated
and Snack Food segment and cannot be used by another segment. As a result, the asset was written off in cost of sales related
to the Refrigerated and Snack Food segment.
Income taxes
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.
Stock-based compensation
Statement of Financial Accounting Standards (SFAS No. 123), “Accounting for Stock-Based Compensation,”
encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans
based on the fair market value of options granted. The Company has chosen to account for stock based compensation using
the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees,” and related interpretations. Accordingly, compensation for stock options is measured as the excess, if any, of the
fair market value of the Company’s stock price at the date of grant as determined by the Board of Directors over the amount
an employee must pay to acquire the stock. No grants, exercises, forfeitures or expirations have occurred during fiscal years
2004, 2003 and 2002.
The following balances are reflected as of November 1, 2002:
Options Outstanding
Exercise price
$
Shares
10 250,000 6.5
Weighted average
Remaining life (years)
Options Exercisable
Weighted average
exercise price
10
$
Shares
187,500 $
10
Weighted average exercise price
The following balances are reflected as of October 31, 2003:
Options Exercisable
Options Outstanding
Weighted average
exercise price
Exercise price
10
$
$
Weighted average
remaining life (years)
10 250,000 5.5
Shares
The following balances are reflected as of October 29, 2004:
Options Outstanding
Exercise price
$
Shares
10 250,000 4.5
Weighted average
remaining life (years)
Options Exercisable
Weighted average
exercise price
10
$
Shares
250,000 $
Weighted average exercise price
Shares
250,000 $
Weighted average exercise price
10
10
The Company adopted the disclosure requirements of Statement of Financial Accounting Standards No. 123 (“FAS
123”). As permitted by FAS 123, the Company measures compensation cost in accordance with APB 25. Had compensation
cost for the Company’s Stock Option Plan been determined based on the fair value of the options consistent with FAS 123,
the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:
22
October 29,
2004
For the year ended
October 31,
2003
Net income as reported ............................................................................... $
Deduct: Pro forma compensation expense, net of tax.................................
Pro forma net income.................................................................................. $
Basic and diluted earnings per share as reported ........................................ $
Pro forma basic and diluted earning per share ............................................ $
Weighted average shares outstanding, basic...............................................
Weighted average shares outstanding, diluted ............................................
24 $
—
24 $
— $
— $
1,210 $
74
1,136 $
0.12 $
0.11 $
10,131,570
10,131,570
10,381,477
10,381,477
November 1,
2002
1,138
147
991
0.11
0.09
10,448,271
10,488,683
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...................................................................................................
Expected years until exercise.......................................................................................
Expected stock volatility..............................................................................................
Expected dividends ......................................................................................................
5.34%
6.0 years
40.00%
2.20%
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 subsidiary 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 income in the period the transaction occurred.
Comprehensive income (loss)
Comprehensive income 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 consists of net income, 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 2004, 2003, and 2002 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 this transaction in the statement of cash flows. During fiscal year 2004, comprehensive income, net of tax, of
$25 was recorded for an unrealized gain on investment. During fiscal year 2004, comprehensive loss, net of tax, of $1,097
was recorded for the minimum pension liability.
23
Critical accounting policies
The preparation of financial statements in conformity with generally accepted accounting principles 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 not originally estimated. Management believes
its current estimates are reasonable and based on the best information available at the time.
The Company’s credit risk is diversified across a broad range of customers and geographic regions. Losses due to
credit risk have historically been immaterial although losses in fiscal year 2002 were significant. The provision for doubtful
accounts receivable is based on historical trends and current collectibility risk. The Company has 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. The Company monitors these customers closely to minimize the risk
of loss. One customer comprised 14.6% of revenues in fiscal year 2004.
Revenues are recognized upon passage of title to the customer typically upon product shipment or delivery to
customers. Products are delivered to customers primarily through its own fleet or through a company owned direct store
delivery system.
24
NOTE 2- Composition of Certain Financial Statement Captions:
Inventories:
Meat, ingredients and supplies.................................................................................. $
Work in process ........................................................................................................
Finished goods ..........................................................................................................
$
Property, plant and equipment:
Land .......................................................................................................................... $
Buildings and improvements ....................................................................................
Machinery and equipment ........................................................................................
Asset impairment reserve..........................................................................................
Transportation equipment .........................................................................................
Construction in process.............................................................................................
Accumulated depreciation ........................................................................................
$
Other non-current assets:
Cash surrender value benefits ................................................................................... $
Intangible asset .........................................................................................................
Others........................................................................................................................
$
Accrued payroll, advertising and other expenses:
Payroll, vacation, payroll taxes and employee benefits ............................................ $
Accrued advertising and broker commissions ..........................................................
Property taxes ...........................................................................................................
Others........................................................................................................................
$
Current portion of non-current liabilities:
Incentive compensation ............................................................................................ $
Accrued pension .......................................................................................................
Other accrued retirement plans .................................................................................
Others........................................................................................................................
$
Non-current liabilities:
Incentive compensation ............................................................................................ $
Accrued pension .......................................................................................................
Other accrued retirement plans .................................................................................
Post retirement healthcare.........................................................................................
$
2004
2003
7,232 $
1,902
13,344
22,478 $
1,840 $
13,128
36,890
(54)
10,276
1,795
63,875
(47,120)
16,755 $
3,229
1,850
12,954
18,033
1,840
13,065
35,324
—
9,744
846
60,819
(43,084)
17,735
9,772 $
118
—
9,890 $
4,164 $
635
500
548
5,847 $
696 $
991
475
6
2,168 $
9,316
159
300
9,775
3,225
673
382
637
4,917
1,212
1,136
516
3
2,867
711 $
8,346
4,246
310
13,613 $
1,256
5,203
4,326
320
11,105
25
NOTE 3- 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 plan is the Company’s fiscal year end.
Net pension cost consisted of the following:
2004
2003
2002
Service cost........................................................................................................................ $ 1,435 $ 1,177 $ 1,055
1,312
Interest cost........................................................................................................................
(1,159)
Expected return on plan assets...........................................................................................
8
Amortization of unrecognized (gain) loss..........................................................................
(76)
Amortization of transition asset (15.2 years) .....................................................................
41
Amortization of unrecognized prior service costs .............................................................
Net pension cost................................................................................................................. $ 2,117 $ 1,783 $ 1,181
226
(76)
41
300
(68)
41
1,523
(1,108)
1,704
(1,295)
Net pension cost is determined using assumptions as of the beginning of each fiscal year. Weighted average
assumptions for the fiscal years are as follows:
Discount rate.................................................................................................................................... 6.25% 6.75% 7.00%
Rate of increase in salary levels....................................................................................................... 3.75% 3.75% 4.00%
Expected return on plan assets......................................................................................................... 8.00% 8.00% 8.00%
The 1987 transition asset was fully amortized using the straight-line method over the average remaining service period
of active plan participants at October 29, 2004.
The benefit obligation, plan assets, and funded status of these plans as of the fiscal years ended are as follows:
2004
2003
2002
Change in benefit obligations:
Benefit Obligations - beginning of year ................................................................
Service Cost ..........................................................................................................
Interest Cost ..........................................................................................................
Actuarial Loss .......................................................................................................
Benefits Paid .........................................................................................................
Benefit Obligations - end of year ..........................................................................
Change in plan assets:
Fair value of plan assets - beginning of year .........................................................
Employer Contributions ........................................................................................
Actual return on plan assets ..................................................................................
Benefits Paid .........................................................................................................
Fair value of plan assets - end of year ...................................................................
Funded Status of the plans ..............................................................................................
Unrecognized prior service costs ....................................................................................
Unrecognized net actuarial loss ......................................................................................
Unrecognized net transition asset ...................................................................................
Additional accrued minimum liability ............................................................................
Accrued pension cost ......................................................................................................
2004
2003
27,489
1,434
1,705
2,971
(448)
33,151
16,296
848
1,025
(448)
17,721
(15,430)
118
10,484
—
(4,509)
(9,337)
22,025
1,177
1,523
3,135
(370)
27,490
13,898
1,000
1,768
(370)
16,296
(11,194)
159
7,544
(68)
(2,780)
(6,339)
The accumulated benefit obligation is $27,058 and $22,635 at October 29, 2004 and October 31, 2003, respectively.
26
The benefit obligation is determined using assumptions as of the end of each fiscal year. Weighted average
assumptions as of the fiscal years ended are as follows:
Discount rate.........................................................................................................................
Rate of increase in salary levels............................................................................................
2004
5.75%
3.75%
2003
6.25%
3.75%
Adverse investment results have been experienced in recent years. In addition, the discount rate used to value the
projected benefit obligation was lowered to 5.75% compared to 6.25% in the prior fiscal year. These factors resulted in an
additional minimum liability that has been recorded as a reduction of shareholders’ equity in the accompanying balance
sheet.
Plan assets are primarily invested in marketable equity securities, corporate and government debt securities and are
administered by an investment management company. The plans’ long-term return on assets is based on the weighted-
average of the plans’ investment allocation as of the measurement date and the published historical returns for those types
asset categories, taking into consideration inflation rate forecasts. The compensation increase assumption is based upon
historical patterns of salary increases and management’s expectation of future salary increases for plan participants.
The actual allocations as of the fiscal years ended and target allocation for plan assets are as follows:
Asset Class
Large Cap Equities ............................................................................................................
Mid Cap Equities ...............................................................................................................
Small Cap Equities ............................................................................................................
Aetna General Account......................................................................................................
Fixed Income .....................................................................................................................
Cash ...................................................................................................................................
2004
63.8%
0.0%
0.0%
0.0%
29.9%
6.3%
2003
64.6%
0.0%
0.0%
0.0%
33.1%
2.3%
Target
Asset
Allocation
55.0%
5.0%
5.0%
5.0%
30.0%
0.0%
Total................................................................................................................................... 100.0% 100.0%
100.0%
Expected payments for the pension benefits are as follows:
Pension
Benefits
Other
Postretirement
Benefits
Fiscal 2005................................................................................................................ $
Fiscal 2006................................................................................................................ $
Fiscal 2007................................................................................................................ $
Fiscal 2008................................................................................................................ $
Fiscal 2009................................................................................................................ $
Fiscal 2010-2014 ...................................................................................................... $
690 $
774 $
815 $
861 $
1,047 $
7,048 $
475
512
512
512
512
12,183
Expected Company contributions for fiscal year 2005 are $690.
Net amounts recognized as of the end of each fiscal year are as follows:
Accrued benefit cost ....................................................................................................... $
Intangible asset ...............................................................................................................
Accumulated other comprehensive income ....................................................................
$
2004
(9,337) $
118
4,390
(4,829) $
2003
(6,339)
91
2,689
(3,559)
In fiscal year 1991, the Company adopted a non-qualified supplemental retirement plan for certain key employees.
Benefits provided under the plan are equal to 60% of the employee’s final average earnings, less amounts provided by the
Company’s defined benefit pension plan and amounts available through Social Security. Effective January 1, 1991 the
Company adopted a deferred compensation savings plan for certain key employees. Under this arrangement, selected
employees contribute a portion of their annual compensation to the plan. The Company contributes an amount to each
participant’s account by computing an investment return equal to Moody’s Average Seasoned Bond Rate plus 2%.
Employees receive vested amounts upon death, termination or attainment of retirement age. Total benefit expense recorded
27
under these plans for fiscal years 2004, 2003 and 2002 were $0, $71, and $377, respectively. Benefits payable related to these
plans and included in other non-current liabilities in the accompanying financial statements were $4,246 and $4,326 at
October 29, 2004 and October 31, 2003, respectively. In connection with this arrangement the Company is the beneficiary of
life insurance policies on the lives of certain key employees. The aggregate cash surrender value of these policies, included in
non-current assets, was $9,772 and $9,316 at October 29, 2004 and October 31, 2003, respectively.
The Company provides an incentive compensation plan for certain key executives, which is based upon the Company’s
pretax income and return on shareholders’ equity. The payment of these amounts is generally deferred over a five-year
period. The total amount payable related to this arrangement was $1,407 and $2,468 at October 29, 2004 and October 31,
2003, respectively. Future payments are approximately $696, $395, $165, $121 and $30 for fiscal years 2005 through 2008,
respectively.
Postretirement health care benefits in the approximate amount of $310 and $320 are included in non-current liabilities
at October 29, 2004 and October 31, 2003, respectively.
The Company’s 1999 Stock Incentive Plan (“the Plan”) was approved by the Board of Directors on January 11, 1999
and 275,000 options were granted on April 29, 1999. During fiscal year 2000, 25,000 options were canceled Under the Plan,
the maximum aggregate number of shares which may be optioned and sold is 900,000 shares of common stock, subject to
adjustment upon changes in capitalization or merger. Generally, options granted under the plan vest in annual installments
over four years following the date of grant (as determined by the Board of Directors) subject to the optionee’s continuous
service. Options expire ten years from the date of grant with the exception of an incentive stock option granted to an optionee
who owns stock representing more than 10% of the voting power of all classes of stock of the Company, in which case the
term of the option is five years. Options generally terminate three months after termination of employment or one year after
termination due to permanent disability or death. Options are generally granted at a fair market value determined by the
Board of Directors subject to the following:
a.) With respect to options granted to an employee or service provider who, at the time of grant owns stock
representing more than 10% of the voting power of all classes of stock of the Company; the per share exercise
price shall be no less than 110% of the fair market value on the date of grant.
b.) With respect to options granted to an employee or service provider other than described in the preceding
paragraph, the exercise price shall be no less than 100% for incentive stock options and 85% for non-statutory
stock options of the fair market value on the date of grant.
No options have been granted, exercised, canceled or forfeited for the last three fiscal years.
As of October 29, 2004, 250,000 options were outstanding at an exercise price of $10.00 per share.
28
NOTE 4- Income Taxes:
The provision for taxes on income includes the following:
2004
2003
2002
Current:
Federal.........................................................................................................................$ 1,174 $
99
State.............................................................................................................................
1,273
Deferred:
Federal.........................................................................................................................
State.............................................................................................................................
(1,358)
100
(1,258)
$
15 $
(1,137) $ 1,073
145
1,218
(1,229)
(92)
1,930
40
1,970
(398)
313
(85)
741 $ 1,133
The total tax provision differs from the amount computed by applying the statutory
federal income tax rate to income before income taxes as follows:
Provision for federal income taxes at the applicable statutory rate.......................................$
Increase in provision resulting from state income taxes, net of federal income tax
benefit ..............................................................................................................................
Effect of change in state statutory rate..................................................................................
Other, net ..............................................................................................................................
$
2004
2003
2002
13 $
663 $
772
1
—
1
15 $
60
52
270
—
26
31
741 $ 1,133
Deferred income taxes result from differences in the bases of assets and liabilities for
tax and accounting purposes.
Receivables allowance..........................................................................................................
Inventory capitalization ........................................................................................................
Incentive compensation ........................................................................................................
Franchise tax.........................................................................................................................
Employee benefits ................................................................................................................
Other .....................................................................................................................................
Current tax assets, net................................................................................................
Incentive compensation ........................................................................................................
Pension and health care benefits ...........................................................................................
Depreciation..........................................................................................................................
Asset impairment reserve......................................................................................................
Non-current tax assets, net ..........................................................................................
2004
2003
$
425 $
359
263
2
1,401
(121)
543
388
436
(7)
929
(53)
$ 2,329 $ 2,236
477
3,683
(1,429)
—
$ 3,896 $ 2,731
270 $
4,798
(1,193)
21
$
No valuation allowance was provided against deferred tax assets in the accompanying statements.
NOTE 5- Line of Credit:
Under the terms of a revolving line of credit with Bank of America, the Company may borrow up to $2,000 through
April 30, 2006. The interest rate is at the bank’s reference rate unless the Company elects an optional interest rate. The
borrowing agreement contains various covenants, the more significant of which require the Company to maintain certain
levels of shareholders’ equity and working capital. The Company was in compliance with all provisions of the agreement
during the year. There were no borrowings under this line of credit during the year.
29
NOTE 6- Contingencies and Commitments:
The Company leases certain transportation and computer equipment under operating leases expiring in 2006. The terms
of the transportation lease provide for annual renewal options and contingent rental payments based upon mileage and
adjustments of rental payments based on the Consumer Price Index. Minimum rental payments were $379 in fiscal year 2004,
$400 in fiscal year 2003, and $358 in fiscal year 2002. Contingent payments were $153 in fiscal year 2004, $168 in fiscal
year 2003, and $130 in fiscal year 2002. Future minimum lease payments are approximately $304 in the years 2005 and $28
in 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 implemented a new information system in fiscal 2004. Refinements to that system have
been made as of fiscal year end 2004 that allow segment information to be provided to the chief operating decision maker.
Therefore, this information is presented for the fiscal year 2004. The prior periods have been reclassified to conform to the
reportable segments presented.
The Company evaluates each segment’s performance based on revenues and operating income. Selling and general
administrative expense includes 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 for the years ended October 29, 2004, October 31, 2003, and November 1, 2002:
2004
Frozen Food
Products
Refrigerated
and
Snack Food
Products
Other
Elimination
Totals
(3,943)
(3,943)
(3,943)
—
—
—
— $ 137,865
—
137,865
90,306
43,728
(553)
4,345
137,826
39
15
24
74,942
3,444
—
—
— $
— $
— $
(3,943)
Sales.......................................................................... $
Intersegment sales.....................................................
Net sales....................................................................
Cost of products sold, excluding depreciation ..........
Selling, general and administrative expenses ...........
Gain on sale of equity securities ...............................
Depreciation..............................................................
Income before taxes ..................................................
Provision for taxes on income ..................................
Net income (loss) ...................................................... $
Total assets ............................................................... $
Additions to property, plant and equipment.............. $
44,240 $
—
44,240
25,644
13,541
—
1,967
41,152
3,088
1,173
93,625 $
3,943
97,568
68,605
30,187
(553)
2,378
100,617
(3,049)
(1,158)
— $
—
—
—
—
—
—
—
—
—
1,915 $
12,943 $
211 $
(1,891) $
— $
36,433 $ 25,566 $
3,149 $
84 $
30
2003
Frozen Food
Products
Refrigerated
and
Snack Food
Products
Other
Elimination
Totals
Sales.......................................................................... $
Intersegment sales.....................................................
Net sales....................................................................
Cost of products sold, excluding depreciation ..........
Selling, general and administrative expenses ...........
Gain on sale of equity securities ...............................
Depreciation..............................................................
Income before taxes ..................................................
Provision for taxes on income ..................................
Net income (loss) ...................................................... $
Total assets ............................................................... $
Additions to property, plant and equipment.............. $
45,765 $
—
45,765
25,901
13,606
—
1,995
41,502
4,263
1,620
90,486 $
4,815
95,301
65,125
30,170
—
2,318
97,613
(2,312)
(879)
— $
—
—
—
—
—
—
—
—
—
2,643 $
14,514 $
634 $
(1,433) $
— $
32,599 $ 28,814 $
2,351 $
107 $
(4,815)
(4,815)
(4,815)
—
—
—
— $ 136,251
—
136,251
86,211
43,776
—
4,313
134,300
1,951
741
1,210
75,927
3,092
—
—
— $
— $
— $
(4,815)
2002
Frozen Food
Products
Refrigerated
and
Snack Food
Products
Sales.......................................................................... $
Intersegment sales.....................................................
Net sales....................................................................
Cost of products sold, excluding depreciation ..........
Selling, general and administrative expenses ...........
Gain on sale of equity securities ...............................
Depreciation..............................................................
Income before taxes ..................................................
Provision for taxes on income ..................................
Net income (loss) ...................................................... $
Total assets ............................................................... $
Additions to property, plant and equipment.............. $
Other
Elimination
Totals
— $
—
— $ 139,202
—
(3,944)
(3,944)
139,202
(3,944)
—
—
—
88,460
44,263
—
4,208
(3,944)
136,931
—
—
— $
— $
— $
2,271
1,133
1,138
77,182
3,767
49,138 $
—
49,138
28,647
13,826
—
1,950
44,423
4,715
2,353
90,064 $
3,944
94,008
63,757
30,437
—
2,258
96,452
(2,444)
(1,220)
—
—
—
—
—
—
—
—
2,362 $
17,258 $
1,765 $
(1,224) $
— $
30,301 $ 29,623 $
1,894 $
108 $
31
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
Bridgford Foods Corporation
Our audits of the consolidated financial statements referred to in our report dated January 27, 2005 also included an
audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
Orange County, California
January 27, 2005
32
BRIDGFORD FOODS CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Allowance for Doubtful Accounts
Changes in
Provisions for
Doubtful Accounts
Receivable
Accounts
Written Off Less
Recoveries
Balance
at Close of
Period
Balance at
Beginning
of year
Year ended November 1, 2002 ............................................ $
Year ended October 31, 2003 .............................................. $
Year ended October 29, 2004 .............................................. $
779 $
3,419 $
1,429 $
3,750 $
915 $
(246) $
1,110 $
2,905 $
65 $
3,419
1,429
1,118
Year ended November 1, 2002 ............................................ $
Year ended October 31, 2003 .............................................. $
Year ended October 29, 2004 .............................................. $
385 $
1,186 $
1,847 $
5,935 $
6,136 $
6,140 $
5,134 $
5,475 $
5,619 $
1,186
1,847
2,368
Promotional Allowances
Balance at
Beginning
of year
Allowance
for Accruals
Promotions
Incurred
Balance
at Close of
Period
33
BRIDGFORD FOODS CORPORATION
SUBSIDIARIES OF REGISTRANT
Name of Subsidiary
Bridgford Marketing Company
Bridgford Meat Company
Bridgford Food Processing Corporation
Bridgford Food Processing of Texas, L.P.**
A.S.I. Corporation
Bridgford Distributing Company of Delaware (inactive)
American Ham Processors, Inc.* (inactive)
Bert Packing Company (inactive)
Moriarty Meat Company (inactive)
* - No shares have been issued.
** - Limited Partnership.
Exhibit 21.1
State in which Incorporated
California
California
California
Texas
California
Delaware
Delaware
Illinois
Illinois
34
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-79547) of
Bridgford Foods Corporation of our report dated January 27, 2005 relating to the consolidated financial statements, which
appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to
the incorporation by reference of our report dated January 27, 2005 relating to the consolidated financial statement schedule,
which appears in this Form 10-K.
Exhibit 23.1
/s/ PricewaterhouseCoopers LLP
Orange County, California
January 27, 2005
35
Exhibit 31.1
I, Allan L. Bridgford, certify that:
1. I have reviewed this annual report on Form 10-K of Bridgford Foods Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this annual report; and
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report.
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
[Paragraph omitted pursuant to SEC Release Nos 33-8238 and 34-47986];
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Dated: January 27, 2005
/s/ ALLAN L. BRIDGFORD
Allan L. Bridgford, Chairman
(Principal Executive Officer)
36
Exhibit 31.2
I, Raymond F. Lancy, certify that:
1. I have reviewed this annual report on Form 10-K of Bridgford Foods Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this annual report; and
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report.
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
[Paragraph omitted pursuant to SEC Release Nos 33-8238 and 34-47986];
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Dated: January 27, 2005
/s/ RAYMOND F. LANCY
Raymond F. Lancy
(Principal Financial and Accounting Officer)
37
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Allan L. Bridgford, Chairman of the Board of Bridgford Foods Corporation (the “Company”), certify, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)
the Annual Report on Form 10-K of the Company for the fiscal year ended October 29, 2004 (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m
or 780(d)); and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: January 27, 2005
/s/ ALLAN L. BRIDGFORD
Allan L. Bridgford,
Chairman of the Board
(Principal Executive Officer)
38
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Raymond F. Lancy, Chief Financial Officer, Vice President, Treasurer and Assistant Secretary of Bridgford Foods
Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350,
that:
(1)
the Annual Report on Form 10-K of the Company for the fiscal year ended October 29, 2004 (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m
or 780(d)); and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: January 27, 2005
/s/ RAYMOND F. LANCY
Raymond F. Lancy
Chief Financial Officer, Vice President
Treasurer and Assistant Secretary
(Principal Financial and Accounting Officer)
39
(This page intentionally left blank.)
BRIDGFORD FOODS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 16, 2005
To the Shareholders of
BRIDGFORD FOODS CORPORATION:
The annual meeting of the shareholders of Bridgford Foods Corporation, a California corporation (the
"Company"), will be held at the Four Points Sheraton,1500 South Raymond Avenue, Fullerton, California, on
Wednesday, March 16, 2005 at 10:00 a.m., for the following purposes:
(1) To elect eight directors to hold office for one year or until their successors are elected and
qualified.
(2) To ratify the appointment of Haskell & White LLP as independent public accountants of the
Company for the fiscal year commencing October 30, 2004.
(3) To transact such other business as may properly come before the meeting or any adjournment
thereof.
Shareholders of record at the close of business on January 28, 2005 are entitled to notice of and to vote at
said meeting or any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person. HOWEVER, TO ASSURE YOUR
REPRESENTATION AT THE MEETING, THE BOARD OF DIRECTORS RESPECTFULLY URGES YOU TO SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD
IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. If you attend the meeting in person, you may withdraw your proxy and vote
your own shares.
By order of the Board of Directors
William L. Bridgford
President and Secretary
/s/
Anaheim, California
February 7, 2005
(This page intentionally left blank.)
BRIDGFORD FOODS CORPORATION
1308 North Patt Street, Anaheim, California 92801
PROXY STATEMENT
Annual Meeting of Shareholders to be held March 16, 2005
The enclosed proxy is solicited by the Board of Directors of Bridgford Foods Corporation, a California
corporation (the "Company"), for use at the annual meeting of shareholders of the Company (the "Annual
Meeting") to be held at the Four Points Sheraton, 1500 South Raymond Avenue, Fullerton, California, on
Wednesday, March 16, 2005 at 10:00 a.m., and at any adjournment thereof. All shareholders of record at the
close of business on January 28, 2005 are entitled to notice of and to vote at such meeting. This Proxy Statement
and the accompanying proxy are being mailed on or about February 7, 2005.
The persons named as proxies were designated by the Board of Directors and are officers and directors
of the Company. Any proxy may be revoked or superseded by executing a later proxy or by giving notice of
revocation in writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting, withdrawing the proxy
and voting in person. Attendance at the Annual Meeting will not in and of itself constitute revocation of the proxy.
All proxies, which are properly completed, signed and returned to the Company prior to the Annual Meeting, and
not revoked, will be voted in accordance with the instructions given in the proxy. If a choice is not specified in the
proxy, the proxy will be voted FOR election of the director nominees proposed by the Board of Directors and FOR
ratification of the Company's appointment of Haskell & White LLP as independent public accountants for the
Company. Management does not know of any matters which will be brought before the Annual Meeting other
than those specifically set forth in the notice hereof. However, if any other matter properly comes before the
Annual Meeting, it is intended that the proxies, or their substitutes, will vote on such matters in accordance with
their best judgment.
Solicitation of proxies will be primarily by mail, although some of the officers, directors and employees of
the Company may solicit proxies personally or by telephone. All expenses incurred in connection with this
solicitation will be borne by the Company. The Company will reimburse brokers and others who incur costs to
send proxy materials to beneficial owners of stock in a broker or nominee name.
At the close of business on January 28, 2005, there were 9,999,361 shares of common stock of the
Company outstanding. The presence at the meeting of a majority of the outstanding shares, in person or by proxy
relating to any matter to be acted upon at the meeting, is necessary to constitute a quorum for the meeting. Each
share of common stock entitles the holder thereof to one vote on each matter to be voted upon by such
shareholders and to cumulate votes for the election of directors. For purposes of the quorum and the discussion
below regarding the vote necessary to take shareholder action, shareholders of record who are present at the
meeting in person or by proxy and who abstain or withhold their vote, including brokers holding customers' shares
of record who cause abstentions to be recorded at the meeting, are considered shareholders who are present
and entitled to vote and count toward the quorum. Brokers holding shares of record for customers generally are
not entitled to vote on certain matters unless they receive voting instructions from their customers. As used
herein, "uninstructed shares" means shares held by a broker who has not received instructions from its customers
on such matters and the broker has so notified the Company on a proxy form in accordance with industry practice
or has otherwise advised the Company that it lacks voting authority. As used herein, "broker non-vote" means the
votes that could have been cast on the matter in question by brokers with respect to uninstructed shares if the
brokers had received their customers' instructions. The effect of proxies marked "withheld" as to any director
nominee or "abstain" as to a particular proposal and broker non-votes on proposals Nos. 1 and 2 is discussed
under each respective proposal.
(cid:1)
(cid:1)
(cid:1)
(cid:2)(cid:1)
PROPOSAL 1
ELECTION OF DIRECTORS
The directors of the Company are elected annually to serve until the next annual meeting of the
shareholders or until their respective successors are elected. At the Annual Meeting, eight directors are to be
elected. The election of directors shall be by the affirmative vote of the holders of a plurality of the shares voting
in person or by proxy at the annual meeting. Every shareholder, or his proxy, entitled to vote upon the election of
directors may cumulate his or her votes and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which his or her shares are entitled, or distribute his or
her votes on the same principle among as many candidates as he or she thinks fit. No shareholder or proxy,
however, shall be entitled to cumulate votes unless such candidate or candidates have been nominated prior to
the voting and the shareholder has given notice at the meeting, prior to the voting, of the shareholder's intention to
cumulate such shareholder's votes. If any one shareholder gives such notice, all shareholders may cumulate
their votes for candidates in nomination. Except for Messer’s. William L. Bridgford and Todd Andrews, each of
these individuals has served as a director since the last annual meeting. All current directorships are being filled.
The Company's Board of Directors recommends that you vote FOR the election of each of the nominees
named below. Unless otherwise instructed, shares represented by the proxies will be voted for the election of the
nominees listed below. Broker non-votes and proxies marked "withheld" as to one or more of the nominees will
result in the respective nominees receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action. Each nominee has indicated that he is willing and able to serve as
director if elected. In the event that any of such nominees shall become unavailable for any reason, an event
which management does not anticipate, it is intended that proxies will be voted for substitute nominees
designated by management.
The following table and biographical summaries set forth, with respect to each nominee for director, his
age, the positions he holds in the Company and the year in which he first became a director of the Company.
Data with respect to the number of shares of the Company's Common Stock beneficially owned by each of such
directors as of January 28, 2005 appears on page 6 of this Proxy Statement.
Name
Allan L. Bridgford
Age
70
Hugh Wm. Bridgford
73
William L. Bridgford
50
Robert E. Schulze
Todd C. Andrews
Paul A. Gilbert
Richard A. Foster
Paul R. Zippwald
70
39
62
69
67
Current Position at the Company(1)
Chairman of the Board and Member of the
Executive Committee
Chairman of the Executive Committee,
Vice President and Director
President and Director and member of the
Executive Committee
Director
Director
Director
Director
Director, Audit Committee Chairman
Year
First Became
Director
1952
1952
2004
1980
2004
1993
2001
1992
(1) Robert E. Schulze was President of the Company until he retired June 30, 2004. Hugh Wm. Bridgford and
Allan L. Bridgford are brothers. William L. Bridgford was elected to the Board of Directors on August 9,
2004 and he is the son of Hugh Wm. Bridgford and the nephew of Allan L. Bridgford.
Directors
Allan L. Bridgford, elected Chairman of the Board in March of 1995, served previously as President of the
Company for more than five years and has been a full-time employee of the Company since 1957. Mr. Bridgford
has served as a member of the Executive Committee since 1972. Allan L. Bridgford reduced his work schedule
to 80% since March of the 2000 fiscal year and his compensation was reduced as well.
(cid:1)
(cid:1)
(cid:1)
(cid:3)(cid:1)
Hugh Wm. Bridgford, elected Chairman of the Executive Committee and elected Vice President in March of
1995, previously served as Chairman of the Board of Directors of the Company for more than five years and has
been a full time employee of the Company since 1955 and has served as a member of the Executive Committee
since 1972.
Todd C. Andrews is a Certified Public Accountant and currently serves as Vice President and Controller of
Public Storage, Inc. headquartered in Glendale, California. Mr. Andrews, a resident of Valencia, California, is a
graduate of California State University, Northridge.
William L. Bridgford, elected President June of 2004, served previously as Secretary of the Company for
more than the past five years and was elected as an Executive Officer in 2001 and has been a full-time employee
of the Company since 1987.
Robert E. Schulze was elected President in March of 1995 and served previously as Executive Vice
President, Secretary and Treasurer of the Company for more than five years. Mr. Schulze retired effective June
30, 2004.
Paul A. Gilbert is a Senior Vice President at SmithBarney citigroup for more than ten years and was formerly
with Kidder, Peabody & Co. Incorporated, an investment banking firm.
Richard A. Foster was President of Interstate Electronics Corporation, a wholly owned subsidiary of Figgie
International, Inc., from 1979 until his retirement in 1991. Mr. Foster also served as Vice President of Figgie
International, Inc. from 1986 to 1991.
Paul R. Zippwald was Regional Vice President and Head of Commercial Banking for Bank of America
NT&SA, North Orange County, California, for more than five years prior to his retirement in July 1992. Mr.
Zippwald is currently retired.
The Company is considered a “controlled company” within the meaning of Rule 4350(c)(5) of the National
Association of Securities Dealers (NASD) and is therefore exempted from various NASD rules pertaining to
certain “independence” requirements of its directors. Nevertheless, the Board of Directors has determined that
Messrs. Andrews, Gilbert, Foster and Zippwald are all “independent directors” within the meaning of Rule 4200 of
the National Association of Securities Dealers
During fiscal year 2004 the Company's Board of Directors held 12 regular monthly meetings. Each of the
nominees holding office during this period attended at least 75% of the monthly meetings. Non-employee
directors were paid $1,050 for each meeting attended. Employee directors received no additional compensation
for their services.
Board Committees
During fiscal year 2004, Norman V. Wagner II resigned from the Board of Directors and Todd C. Andrews
was elected to fill this vacancy. Steven H. Price died in July 2004 and William L. Bridgford was elected to fill this
vacancy.
The Board of Directors maintains three committees, the Compensation Committee, the Nominating
Committee and the Audit Committee. The Compensation Committee consisted of Messrs. Andrews, Gilbert,
Foster, and Zippwald at the close of the Company’s fiscal year. Each member served without additional
compensation. Each of the members of the Compensation Committee are non-employee directors and
independent as defined under the NASD’s listing standards. The Compensation Committee is responsible for
establishing and administering the Company's compensation arrangements for all executive officers. The
Compensation Committee held two formal meetings during fiscal 2004, each of which was attended by all
committee members.
The Audit Committee consists of Messrs. Andrews, Gilbert, Foster and Zippwald, each of whom receive
$300 or $500 per meeting, depending on length of meeting attended. The Audit Committee has been established
(cid:1)
(cid:1)
(cid:1)
(cid:4)(cid:1)
in accordance with SEC rules and regulations, and each of the members of the Audit Committee are independent
directors as defined under the NASD’s listing standards. The Board of Directors believes that Mr. Andrews
qualifies as a “financial expert” as such term is used in the rules and regulations of the SEC. The Audit Committee
meets periodically with the Company's independent public accountants and reviews the Company's accounting
policies and internal controls. It also reviews the scope and adequacy of the independent public accountants'
examination of the Company's annual financial statements. In addition, the Audit Committee recommends the
firm of independent public accountants to be retained by the Company and pre-approves services rendered by its
independent public accountants. The Audit Committee held monthly formal meetings during fiscal 2004. All Audit
Committee members attended the twelve monthly meetings, except one director who missed three meetings. In
addition, the Audit Committee holds a pre-earnings release conference with the Company’s independent public
accountants on a quarterly basis. The Audit Committee adopted a written Audit Committee Charter on May 8,
2000 and amended the charter on August 11, 2003
Nominating Committee
The Board of Directors has decided that the full Board should perform the functions of a nominating
committee for the Company. It made that decision because the Board believes that selecting new Board
nominees is one of the most important responsibilities the Board members have to our shareholders and, for that
reason, all of the members of the Board should have the right and responsibility to participate in the selection
process. In its role as nominating committee, the Board identifies and screens new candidates for Board
membership. Nevertheless, actions of the Board, in its role as nominating committee, can be taken only with the
affirmative vote of a majority of the independent directors on the Board. Our Board of Directors intends to adopt a
charter setting forth the responsibilities of the Board when acting as a nominating committee and will post a copy
of this charter on its website at www.bridgford.com upon adoption. The Board met in May and also in August
during fiscal 2004 to ratify the appointment of two new directors in its role as nominating committee.
The Director Nominating Process. In identifying new Board candidates, the Board will seek
recommendations from existing board members and executive officers. In addition, the Board intends to consider
any candidates that may have been recommended by any of the Company’s shareholders who have chosen to
make those recommendations in accordance with the procedures described below. The Board also has the
authority to engage an executive search firm and other advisors as it deems appropriate to assist in identifying
qualified candidates for the Board.
In assessing and selecting Board candidates, the Board will consider such factors, among others, as the
candidate’s independence, experience, knowledge, skills and expertise, as demonstrated by past employment
and board experience; the candidate’s reputation for integrity; and the candidate’s participation in local community
and local, state, regional or national charitable organizations. When selecting a nominee from among candidates
considered by the Board, it will conduct background inquiries of and interviews with the candidates the Board
members believe are best qualified to serve as directors. The Board members will consider a number of factors in
making their selection of a nominee from among those candidates, including, among others, whether the
candidate has the ability, willingness and enthusiasm to devote the time and effort required of members of the
Board; whether the candidate has any conflicts of interest or commitments that would interfere with the
candidate’s ability to fulfill the responsibilities of directors of the Company, including membership on Board
committees; whether the candidate’s skills and experience would add to the overall competencies of the Board;
and whether the candidate has any special background or experience relevant to the Company’s business.
Shareholder Recommendation of Board Candidates. Any shareholder desiring to submit a
recommendation for consideration by the Board of a candidate that the shareholder believes is qualified to be a
Board nominee at any upcoming shareholders meeting may do so by submitting that recommendation in writing to
the Board not later 120 days prior to the first anniversary of the date on which the proxy materials for the prior
year’s annual meeting were first sent to shareholders. However, if the date of the upcoming annual meeting has
been changed by more than 30 days from the date of the prior year’s meeting, the recommendation must be
received within a reasonable time before the Company begins to print and mail its proxy materials for the
upcoming annual meeting. In addition, the recommendation should be accompanied by the following information:
(i) the name and address of the nominating shareholder and of the person or persons being recommended for
consideration as a candidate for Board membership; (ii) the number of shares of voting stock of the Company that
are owned by the nominating shareholder, his or her recommended candidate and any other shareholders known
by the nominating shareholder to be supporting the candidate’s nomination; (iii) a description of any arrangements
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(cid:1)
(cid:1)
(cid:5)(cid:1)
or understandings, that relate to the election of directors of the Company, between the nominating shareholder, or
any person that (directly or indirectly through one or more intermediaries) controls, or is controlled by, or is under
common control with, such shareholder and any other person or persons (naming such other person or persons);
(iv) such other information regarding each such recommended candidate as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (v) the written
consent of each such recommended candidate to be named as a nominee and, if nominated and elected, to
serve as a director.
Code of Ethics
(cid:1)
The Company adopted a Code of Ethics that is applicable to, among others, its principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions, and
posted the Code of Ethics on its website at www.bridgford.com.
Communications with the Board
Shareholders may communicate with the Board or any of the directors by sending written communications
addressed to the Board or any of the directors, c/o Corporate Secretary, Bridgford Foods Corporation, 1308 North
Patt Street, Anaheim, California 92801. All communications are compiled by the Corporate Secretary and
forwarded to the Board or the individual director(s) accordingly.
Director Attendance at Annual Meetings
Directors are strongly encouraged to attend annual meetings of the Company’s shareholders. [All eight (8)
directors attended the 2004 annual meeting of the Company’s shareholders.]
Executive Officers
The Company has four executive officers elected on an annual basis to serve at the pleasure of the Board
of Directors:
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
Raymond F. Lancy
Chairman(1)
Vice President(1)
President and Secretary (1) (2)
Chief Financial Officer, Treasurer and Executive Vice
President (1)
(1) Members of the Company's Executive Committee that acts in the capacity of Chief Executive Officer of
the Company.
(2) William L. Bridgford is the son of Hugh Wm. Bridgford and the nephew of Allan L. Bridgford.
A biographical summary regarding Messrs. Allan L. Bridgford, William L. Bridgford and Hugh Wm.
Bridgford is set forth above under the caption "Directors." Biographical information with respect to the Company's
other executive officers is set forth below:
Raymond F. Lancy, age 51, has served as Treasurer of the Company for more than the past five years,
was elected Chief Financial Officer in 2003 and was elected as an Executive Officer in 2001.
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PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information known to the Company with respect to the beneficial
ownership of the Company's Common Stock as of January 28, 2005 by each shareholder known by the Company
to be the beneficial owner of more than 5% of the Company's Common Stock, by each director, and nominee for
director by each executive officer named in the Summary Compensation Table and by all officers and directors as
a group.
Amount and Nature of Shares Beneficially Owned
Sole
Voting and
Investment Power
Shared
Voting and
Investment Power(3)
Total
Beneficially Owned(2)
7,156,396
--
7,156,396
47,917
7,156,396
7,204,313
155,882
7,986
1,654
167,870
31,175
25,000
200
605
2,234
1,452
7,156,396
7,156,396
7,156,396
--
7,156,396
--
--
--
--
7,312,278
7,164,382
7,158,050
(4)
(5)
167,870
7,187,571
25,000
200
605
2,234
1,452
Name and Address
of Beneficial Owner(1)
Bridgford Industries
Incorporated
1707 Good-Latimer Expy.
Dallas, TX 75226
Hugh Wm. Bridgford
1707 Good-Latimer Expy.
Dallas, TX 75226
Allan L. Bridgford
Bruce H. Bridgford
Baron R.H. Bridgford
170 North Green St.
Chicago, IL 60607
Robert E. Schulze
William L. Bridgford
Raymond F. Lancy
Todd C. Andrews
Paul A. Gilbert
Richard A. Foster
Paul R. Zippwald
Percentage
of
Outstanding
Shares
Beneficially Owned(2)
71.6
72.0
73.1
71.6
71.6
1.7
71.9
*
*
*
*
All directors and officers
as a group (12 persons)
* Less than one percent (1%).
7,598,371
7,156,396
7,598,371
(6)
76.0
(1) Unless otherwise indicated, the address of such beneficial owner is the Company’s principal executive offices, 1308 N. Patt Street, Anaheim,
California 92801.
(2) Applicable percentage of ownership at January 28, 2005 is based upon 9,999,361 shares of common stock outstanding. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to
shares shown as beneficially owned. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of
January 28, 2005 are deemed outstanding for computing the shares and percentage ownership of the person holding such options or warrants, but
are not deemed outstanding for computing the percentage ownership of any other person or entity.
(3) Represents shares beneficially owned by Bridgford Industries Incorporated, a Delaware corporation ("BII"), which presently has no other
significant business or assets. Allan L. Bridgford, Hugh Wm. Bridgford, William L. Bridgford, Baron R.H. Bridgford and Bruce H. Bridgford presently
own 16.06%, 10.54%, 7.48%, 9.54% and 10.29%, respectively, of the outstanding voting capital stock of BII and each has the right to vote as
trustee or custodian for other shareholders of BII representing 0%, 0%, .58%, 1.75% and .63%, respectively, of such outstanding voting capital
stock. The remaining percentage of BII stock is owned of record, or beneficially, by 32 additional members of the Bridgford family. The officers of
BII jointly vote all shares.
(4) Includes 25,000 shares that may be purchased upon exercise of options within 60 days of January 28, 2005.
(5) Consists of 25,000 shares that may be purchased upon exercise of options within 60 days of January 28, 2005.
(6) Includes 50,000 shares that may be purchased upon exercise of options within 60 days of January 28, 2005.
The Company is not aware of any arrangements that may at a subsequent date result in a change of
control of the Company.
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(cid:1)
(cid:1)
(cid:7)(cid:1)
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors,
executive officers, and holders of more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of Common
Stock of the Company. Officers, directors and 10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on the review of
copies of such reports furnished to the Company and written representations that no other reports were required,
during the fiscal year ended October 29, 2004, all of the Company's officers, directors and 10% shareholders
complied with all applicable Section 16(a) filing requirements.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth summary information concerning compensation paid or accrued by the
Company for services rendered during the three fiscal years ended 2004, 2003, and 2002 to the Company's chief
executive officer and the four remaining most highly paid executive officers whose salary and bonus exceeded
$100,000 (the “Named Executive Officers”).
Summary Compensation Table
Annual Compensation
Name and Principal Position
Allan L. Bridgford
Chairman of the
Board(1)
Robert E. Schulze
President(1)(4)
Hugh Wm. Bridgford
Vice President and
Chairman of the
Executive Committee(1)
William L. Bridgford
President and Secretary (1)
Raymond F. Lancy (1)
Chief Financial Officer,
Vice President and Treasurer
Year
2004
2003
2002
2004
2003
2002
2004
2003
2002
2004
2003
2002
2004
2003
2002
Salary($)
230,512
213,252
277,509
Bonus($)
_
24,000(2)
36,000(2)
190,978
237,536 30,000(2)
45,000(2)
267,683
_
239,458
210,392
257,077
86,660
77,480
76,480
150,600
145,400
140,000
_
30,000(2)
45,000(2)
98,720
83,261
86,981
35,000
40,000
49,000
All
Other
Compen-
sation($)
73,907(3)
159,000(3)
-
-
(1) Hugh Wm. Bridgford, Allan L. Bridgford, William L. Bridgford and Raymond F. Lancy are members of the Company's Executive Committee
which acts in the capacity of Chief Executive Officer of the Company.
(2) Represents deferred contingent compensation payable over periods of five years pursuant to bonuses granted by the Company's
Compensation Committee.
(3) Represents premiums paid by the Company in connection with split-dollar insurance policies.
(4) Robert Schulze retired as President on June 30, 2004 and William L. Bridgford was elected to serve as President.
(cid:1)
(cid:1)
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(cid:8)(cid:1)
None of the Named Executive Officers exercised options during the fiscal year ended October 29, 2004. The
following table sets forth certain information concerning the number of shares covered by both exercisable and
unexercisable stock options as of October 29, 2004. Also reported are the values for “in the money” options which
represent the positive spread between the exercise prices of any such existing stock options and $8.40, the closing price
of Common Stock on October 29, 2004, as reported by The Nasdaq National Market.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value Realized($)
(market price
at exercise
less exercise
price)
Shares Acquired
on Exercise(#)
Number of Securities
Underlying Unexercised
Options at FY-End(#)
Exercisable Unexercisable
Value of Unexercised
In-the-Money
Options at FY-End($)
Exercisable
Unexercisable
0
0
0
0
0
$
0
0
0
0
0
0
0
0
25,000
25,000
0
0
0
0
0
$
0 $
0
0
0
0
0
0
0
0
0
Name
Allan L. Bridgford
Robert E. Schulze
Hugh Wm. Bridgford
William L. Bridgford
Raymond F. Lancy
(cid:1)
RETIREMENT PLAN
The Company has a defined benefit plan ("Plan") for those of its employees not covered by collective
bargaining agreements. The Plan, administered by a major life insurance company, presently provides that
participants receive an annual benefit on retirement equal to 1.5% of their total compensation from the Company
during their period of participation from 1958. Benefits are not reduced by Social Security payments or by payments
from other sources and are payable in the form of fully-insured monthly lifetime annuity contracts commencing at age
65 or the participant's date of retirement, whichever is later. Based on projections used for computing benefits under
the Plan, the estimated annual benefits at normal or current retirement would be as follows:
Allan L. Bridgford
Robert E. Schulze
Hugh Wm. Bridgford
William L. Bridgford
Raymond F. Lancy
$ 63,416
59,591
63,356
75,481
68,151
All officers
$329,995
(cid:1)
(cid:1)
(cid:1)
(cid:9)(cid:1)
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Retirement benefits otherwise available to key executives under the Company's Plan have been limited by
the effects of the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") and the Tax Reform Act of 1986
("TRA"). To offset the loss of retirement benefits associated with TEFRA and TRA, the Company has adopted a
non-qualified "makeup" benefit plan (Supplemental Executive Retirement Plan). Benefits will be provided under this
plan for members of the Executive Committee equal to 60% of their final average earnings minus any pension
benefits and primary insurance amounts available to them under Social Security. However, in all cases the combined
benefits are capped at $120,000 per year for Messer’s. Allan L. Bridgford, Robert E. Schulze and Hugh Wm.
Bridgford. Benefits provided under this plan for William L. Bridgford and Raymond F. Lancy are calculated at 50% of
final average earnings, capped at $200,000 per year, without offsets for other pension or Social Security benefits.
Eligibility is determined by the Board of Directors of the Company and the projected annual benefits to be paid at
normal or current retirement date to those presently selected are as follows:
Allan L. Bridgford
Robert E. Schulze
Hugh Wm. Bridgford
William L. Bridgford
Raymond F. Lancy
$ 51,528
56,100
61,080
159,350
158,596
All officers
$ 486,654
(cid:1)
(cid:1)
(cid:1)
(cid:10)(cid:1)
Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate
future filings, including this Proxy Statement, in whole or in part, the following reports of the Compensation Committee
and the Audit Committee and the Performance Graph on page 12 shall not be incorporated by reference into such
filings.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company consists of the outside members of the Board of Directors.
As of October 29, 2004, the Compensation Committee consisted of Messrs. Andrews, Gilbert, Foster and Zippwald.
The Company's executive compensation policy's aim is to attract, retain and motivate key employees while making
sure that a relationship exists between executive compensation and the Company’s performance. Accordingly, the
Company policy of compensation for its executive officers is to combine annual base salaries with bonuses based
upon corporate performance.
Historically, the Company has been principally managed by an Executive Committee consisting of senior
executive officers of the Company. The Executive Committee, as a unit, serves as the Company's "Chief Executive
Officer". The Executive Committee currently consists of four members. The current members are Hugh Wm.
Bridgford, Chairman of the Executive Committee, Allan L. Bridgford, Chairman of the Board of Directors, William L.
Bridgford, President and Raymond F. Lancy, Chief Financial Officer, Vice President and Treasurer. For the last
several years, the Compensation Committee has determined that Messers. Allan L. Bridgford, Hugh Wm. Bridgford
and Robert E. Schulze (retired June 30, 2004) should be compensated on an equal basis with pro-rata adjustments
for reduced work schedules.
The current compensation plan for Messer’s Allan L. Bridgford and Hugh Wm. Bridgford sets forth a
minimum base salary of $2,000 per week plus incentive amounts that may be earned as additional future salary
and/or as deferred contingent compensation ("bonuses"). The Compensation Committee deems continuity of
management to be an important consideration for the long-term success of the business and, therefore, payments of
bonuses are currently deferred over a five year period. No interest is paid or accrued on the earned but unpaid
bonuses. Consistent with the compensation policy for all of the Company's corporate officers, as discussed below,
the principal factor used by the Compensation Committee to determine the bonuses to be paid the members of the
Executive Committee is the measure of the Company's performance which is based upon the Company's pretax
income and return on shareholders' equity for the current fiscal year. For fiscal 2004, the base salary for Allan L.
Bridgford was $83,200 and previously deferred salary was $147,312. For Hugh Wm. Bridgford the base salary was
$104,000 and previously deferred salary totaled $135,458. For Robert E. Schulze who retired June 30, 2004, the
base salary was $68,000 and the previously deferred salary was $122,978. The substantial reductions in bonuses
earned this year compared to the prior year relate primarily to the decrease in pretax income for the same periods.
The Compensation Committee has elected not to provide incentive compensation to Messer’s. Allan L.
Bridgford, Hugh Wm. Bridgford and Robert E. Schulze in the form of stock options, stock appreciation rights,
restricted stock or other similar plans. The Compensation Committee also directs that perquisite compensation be
minimal for members of the Executive Committee. Members of the Executive Committee are not to be provided with
country club memberships or other similar perquisites.
Compensation for other executive officers is recommended to the Compensation Committee by Messer’s.
Allan L. Bridgford, and Hugh Wm. Bridgford who regularly report to the Board of Directors and the Compensation
Committee on compensation matters relating to other corporate officers. All corporate officers, top-level managers
and many midlevel managers receive compensation determined by performance-based criteria, including both
individual and team accomplishments.
COMPENSATION COMMITTEE
Todd C. Andrews
Richard A. Foster
Paul A. Gilbert
Paul R. Zippwald, Chairman
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(cid:1)
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(cid:2)(cid:11)(cid:1)
REPORT OF THE AUDIT COMMITTEE
Pursuant to a meeting of the Audit Committee on January 26, 2005, the Audit Committee reports that it has:
(i) reviewed and discussed the Company’s audited financial statements with management; (ii) discussed with the
independent auditors the matters (such as the quality of the Company’s accounting principles and internal controls)
required to be discussed by Statement on Auditing Standards No. 61; and (iii) received written confirmation from
PricewaterhouseCoopers LLP that it is independent and written disclosures regarding such independence as
required by Independence Standards Board No. 1, and discussed with the auditors the auditors’ independence.
Based on the review and discussions referred to in items (i) through (iii) above, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in the Company’s annual report for the
Company’s fiscal year ended October 29, 2004.
AUDIT COMMITTEE
Todd C. Andrews
Richard A. Foster
Paul A. Gilbert
Paul R. Zippwald, Chairman
(cid:1)
(cid:1)
(cid:1)
(cid:2)(cid:2)(cid:1)
PERFORMANCE GRAPH
The comparative stock performance graph shown below compares the yearly change in cumulative value of
Bridgford Foods Corporation's common stock with certain index values for the five-year periods ended October 29,
2004. The graph sets the beginning value of Bridgford common stock and the indexes at $100. All calculations
assume reinvestment of dividends on a monthly basis. The peer group consists of nine companies, including the
companies that comprised the Meat Industry Group of Media General Financial Services. The group includes Bob
Evans Farms, Inc.; Cagle’s, Inc.; Hormel Foods Corporation; Pilgrims Pride Corporation; Sanderson Farms Inc.;
Seaboard Corp; Tyson Foods, Inc.; and United Heritage Corporation. The peer group index return consists of the
weighted returns of each component issuer according to such issuer’s respective stock market capitalization at the
beginning of each period for which a return is indicated.
NOTE: The stock price performance shown on the following graph is not necessarily indicative of future price performance.
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG BRIDGFORD FOODS CORP., THE S & P 500 INDEX
AND A PEER GROUP
D
O
L
L
A
R
S
180
160
140
120
100
80
60
40
20
0
10/29/99
11/3/00
11/2/01
11/1/02
10/31/03
10/29/04
BRIDGFORD FOODS CORP.
S & P 500
PEER GROUP
* $100 invested on 10/29/99 in stock or index-including reinvestment of dividends.
Copyright © 2002, Standard & Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm
(cid:1)
(cid:2)(cid:3)(cid:1)
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
AGREEMENTS
The Company has no employment contracts, severance agreements or change in control agreements.
As discussed in the Section entitled “Compensation of Executive Officers,” the Company has established a
defined benefit plan and a non-qualified “makeup” benefit plan for the payment of retirement benefits to its executive
officers and key employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company’s Compensation Committee at October 29, 2004 consisted of Todd C.
Andrews, Paul A. Gilbert, Richard A. Foster and Paul R. Zippwald. No member of the Compensation Committee is a
former or current officer or employee of the Company or any of its subsidiaries. The Company is not aware of any
transaction involving any member of the Compensation Committee that would require disclosure for "Compensation
Committee Interlocks and Insider Participation".
RELATED PARTY TRANSACTIONS
The Company is not aware of any related party transactions that would require disclosure.
(cid:1)
(cid:1)
(cid:1)
(cid:2)(cid:4)(cid:1)
PROPOSAL 2
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has, subject to ratification by the shareholders,
appointed Haskell & White LLP as independent public accountants for the Company for the fiscal year
commencing October 30, 2004. PricewaterhouseCoopers LLP was the Company’s independent public
accountant since 1958. In determining whether the proposal has been approved, abstentions will be counted
as votes against the proposal and broker non-votes will not be counted as votes for or against the proposal or
as votes present and voting on the proposal.
Proxies received in response to this solicitation will be voted in favor of the approval of such firm
unless otherwise specified in the proxy. In the event of a negative vote on such ratification, the Audit
Committee of the Board of Directors will reconsider its selection. Representatives of PricewaterhouseCoopers
LLP and Haskell & White LLP will be present at the meeting and available for questions and will have the
opportunity to make a statement if they so desire.
FEES BILLED BY PRICEWATERHOUSECOOPERS LLP DURING THE FISCAL YEARS ENDED
OCTOBER 29, 2004 AND OCTOBER 31, 2003
Audit Fees:
Audit fees billed by PricewaterhouseCoopers LLP for the audit of the 2004 annual financial statements
and the review of the financial statements included in our quarterly reports on Form 10-Q in fiscal 2004 totaled
$163,000.
Audit fees billed by PricewaterhouseCoopers LLP for the audit of our 2003 annual financial statements
and the review of the financial statements included in our quarterly reports on Form 10-Q in fiscal 2003 totaled
$140,000.
Audit-Related Fees:
We did not incur any audit-related fees billed by PricewaterhouseCoopers LLP during the fiscal years
ended October 29, 2004 and October 31, 2003. Such audit-related fees typically consist of fees billed for
assurance and related services that are reasonably related to the performance of the audit or review of our
consolidated financial statements and are not reported under “Audit Fees.” These services may include
consultations related to the Sarbanes-Oxley Act and consultations concerning financial accounting and
reporting standards.
Tax Fees:
Fees billed by PricewaterhouseCoopers LLP for professional services for tax compliance, tax advice
and tax planning during the fiscal year ended October 29, 2004 totaled $4,000.
Fees billed by PricewaterhouseCoopers LLP for professional services for tax compliance, tax advice
and tax planning during the fiscal year ended October 31, 2003 totaled $77,000.
The fees disclosed under this category are comprised by services that include assistance related to
state tax compliance services.
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All Other Fees:
We did not incur any other fees billed by PricewaterhouseCoopers LLP during the fiscal year ended
October 29, 2004 or during the fiscal year ended October 31, 2003.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2006 Annual Meeting of Shareholders must
be received at the Company's principal office no later than October 9, 2005 in order to be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
Additionally, if the Company is not provided notice of a shareholder proposal, which the
shareholder has not previously sought to include in the Company’s proxy statement, by December 23,
2005, the Company will be allowed to use its discretionary voting authority when the proposal is raised at
the meeting, without any discussion of the matter in the proxy statement.
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OTHER MATTERS
The Board of Directors is not aware of any matters to be acted upon at the meeting other than the
election of directors and the ratification of the appointment of Haskell & White LLP. If, however, any other
matter shall properly come before the meeting, the persons named in the proxy accompanying this statement
will have discretionary authority to vote all proxies with respect thereto in accordance with their best judgment.
The annual report of the Company for the fiscal year ended October 29, 2004 accompanies this Proxy
Statement but is not a part of the proxy solicitation material.
FINANCIAL STATEMENTS
By order of the Board of Directors
William L. Bridgford
President and Secretary
February 7, 2005
The Corporation will furnish without charge to each person whose proxy is being solicited, upon request of any such
person, a copy of the Annual Report of the Corporation on Form 10-K for the fiscal year ended October 29, 2004, as filed
with the Securities and Exchange Commission, including financial statements and schedules thereto. Such report was
filed with the Securities and Exchange Commission on January 27, 2005. Requests for copies of such report should be
directed to the Treasurer, Bridgford Foods Corporation, P.O. Box 3773, Anaheim, California 92803.
FORM 10-K
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Directors
Allan L. Bridgford
Chairman
Hugh Wm. Bridgford
Vice President
William L. Bridgford
President
Paul A. Gilbert
Senior Vice President,
Smith Barney Citigroup
Richard A. Foster
Retired (formerly
President, Interstate
Electronics Corporation)
Robert E. Schulze
Retired (formerly President
and member of the Executive Committee,
Bridgford Foods Corporation)
Paul R. Zippwald
Retired (formerly Regional Vice President,
Bank of America)
Todd C. Andrews
Vice President and Controller,
Public Storage, Inc.
Officers
Allan L. Bridgford
Chairman, Board of Directors and member
of the Executive Committee
Hugh Wm. Bridgford
Chairman, Executive Committee
and Vice President
William L. Bridgford
President, Secretary, and member
of the Executive Committee
Bruce Bridgford
President, Bridgford Foods of California
Raymond F. Lancy
Executive Vice President, Chief Financial Officer,
Treasurer, and member of the Executive Committee
John V. Simmons
Vice President, President Frozen Food Division
Daniel R. Yost
Senior Vice President, Frozen Food Division
Chris Cole
Vice President
Cindy Matthews
Assistant Secretary