ANNUAL
REPORT
2009
Notice of 2010 Annual Meeting and Proxy Statement
TO OUR SHAREHOLDERS
2009 was a good year for Bridgford Foods Corporation. The Company
realized the 4th highest level of net income in its history. Lower costs for
grains, meats and petroleum products combined with strategic changes
implemented in the 2008 fiscal year to produce dramatically improved
financial results. Sales during our 2009 fiscal year were $122,665,000,
an increase of 1.4% from sales of $120,990,000 in 2008. The Company
recorded a net profit of $6,787,000 in 2009, equal to $.72 per share,
versus a loss of $12,447,000, or $1.30 per share in 2008. A one-time
cash dividend of $.10 per share was declared by the Board of Directors
on November 9, 2009.
SSALES AND MARKETING HIGHLIGHTS
Bridgford Monkey Bread, manufactured at our Superior Foods plant in
Dallas under the direction of Division President Blaine Bridgford, continues
to be a great success with a 16% sales increase in 2009. During the year,
we developed a catering-style version of this product called Monkey Bites,
which has received a favorable reaction in initial market tests.
Our Chicago based direct route sales distribution system for dry sausage
products, managed by Vice President Chris Cole, continued its reorgan-
ization to achieve higher sales per route per week, with an emphasis on
products manufactured by the Company. During 2009, Bridgford Foods
expanded its agreements with Snyder’s of Hanover and other regional
distributors to sell the Company’s dry sausage and meat snack products
to geographic areas that do not have the population density or customer
base to support Company-operated routes.
In our North Carolina plant, several new shelf-stable bakery items were
introduced, and others are currently in development to expand this
exciting product line. We also developed a line of shelf-stable meal kits
intended for emergency preparedness and disaster relief.
OPERATIONS
Commodity costs during 2009 were favorable when compared with
those experienced in 2008, with generally lower expenses for bakery
flour, meat, gasoline and diesel fuel. The Company continued its emphasis
on the sale of manufactured, rather than purchased, items on our
Chicago based direct store distribution routes, and we currently produce
more than 90% of the products sold on these routes.
Our unique beef jerky production system approached full utilization during
2009. Under the direction of Baron R.H. Bridgford, President of Bridgford
Foods of Illinois, we continued to bring items which we had previously
purchased from outside suppliers in-house.
All of the Company’s manufacturing facilities passed multiple food safety
inspections during the fiscal year, conducted by various private third-
parties, military and government agencies. In the frozen food division,
new products introduced during the year include Old South Sweet
Dough, Sponge Cake, Sopapilla Sheet Dough and Sopapilla Bites.
Under the direction of Plant Manager Monty Griffith, we completed the
construction of a meat-processing operation at our Statesville, North
Carolina plant in 2009. This enabled us to bring most of our shelf-stable
sandwich manufacturing processes under one roof, and to pursue the
European and global markets for future business as this facility has
received EU approval. Our Vice President of Manufacturing, Joe deAlcuaz,
is responsible for the progress we have achieved this year in developing
processing lines and improving operating efficiency in Dallas, Chicago
and Statesville.
FINANCIAL MATTERS
Our working capital totaled $26,799,000 at October 30, 2009,
$6,359,000 (31.1%) higher than at the beginning of the fiscal year and
our working capital ratio increased to 3.0 to 1 at October 30, 2009,
compared to 2.8 to 1 at October 31, 2008. The increase in working
capital and improvement in working capital ratio resulted from net
income of $6,787,000 and lower levels of capital spending and share
repurchases during the fiscal year. We repurchased 80,000 shares of the
Company’s common stock in the amount of $638,000 ($7.98 average
cost per share) during 2009. Projected contributions of $2,394,000 were
recorded as a current liability related to our frozen defined benefit
pension plan at October 30, 2009, and we contributed $989,000
towards the plan during the 2009 fiscal year. The Company has been
free of interest bearing debt for twenty-three consecutive years and we
remain in compliance with all covenants related to our unused $2 million
line of credit with Bank of America.
Shareholders’ equity totaled $32,423,000, a decrease of $112,000 (0.3%)
compared to the end of the prior year. Net income increased shareholders’
equity by $6,787,000; however, this increase was off-set by a significant
charge to shareholders equity in the amount of $6,247,000 due to an
increase in the unfunded status of our defined benefit pension plan. This
change was a result of a decrease in the interest rate being applied to
compute future pension benefit obligations recommended by our
actuary. The Citigroup Pension Liability Index discount rate decreased from
8% at October 31, 2008 to 5.75% at October 30, 2009. This loss was
recorded in shareholder’s equity under “Accumulated other comprehensive
income (loss)” without an off-setting tax benefit since the Company
currently carries a full reserve against its deferred tax assets. No cash
dividends were paid during the 2009 fiscal year although the Board of
Directors declared a one-time cash dividend in November 2009 in
recognition of the positive operating results achieved during the fiscal year.
Approximately 382,000 shares remain available for repurchase under the
2 million share repurchase plan previously authorized by the Board of
Directors. Shareholders’ equity per share was $3.45 at October 30, 2009
compared to $3.40 at October 31, 2008.
We completed a successful transition to our new outside accounting
firm, Squar, Milner, Peterson, Miranda and Williamson, LLP in fiscal year
2009. This change generated significant audit fee savings in 2009 and
should reduce this cost in the near future.
The Company successfully completed the second year of its Sarbanes-
Oxley Section 404a compliance program during the fiscal year thanks to
the diligent work of accounting, information systems and operational
departments. Management assessed the effectiveness of the Company’s
internal control over financial reporting as of October 30, 2009 and
believes our control systems are effective. Management’s Report on
Internal Controls over Financial Reporting is included in this 10-K report.
No significant weaknesses in internal accounting control, to the extent
identified, were unresolved at the conclusion of the 2009 fiscal year.
SUMMARY
Many of the factors that negatively affected our 2008 results, such as
reduced market value of our pension assets, turned in the Company’s
favor during the 2009 fiscal year. We will continue to strive for improvement
in every facet of the business in the years ahead. Your Company will
always make business decisions considering the best long-term interests
of all of its stakeholders, and will never compromise the quality of our
products or the service we provide to our customers. We appreciate the
loyalty and hard work of our associates, and are gratified to see that great
effort produce such positive results in the 2009 fiscal year.
We have added additional packaging capacity in Dallas and Chicago in
anticipation of increased sales volume. The Anaheim deli operation absorbed the
production of our Dallas sandwich facility during the year to increase efficiency.
On behalf of all of our directors and officers, we thank our shareholders,
customers and suppliers for their support during 2009, and we look
forward to reporting positive results in 2010.
Respectfully submitted,
January 28, 2010
William L. Bridgford
Chairman
John V. Simmons
President
Raymond F. Lancy
Chief Financial Officer
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 30, 2009
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)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $1.00 per share, the NASDAQ Stock
Market LLC.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes (cid:2) No (cid:3)
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes (cid:2) No (cid:3)
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:3) No (cid:2)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files. Yes (cid:2) 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. (cid:3)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer (cid:2)
Accelerated filer (cid:2)
Non-accelerated filer (cid:2) (Do not check if a smaller reporting
company)
Smaller reporting company (cid:3)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes (cid:2) No (cid:3)
The aggregate market value of voting stock held by non-affiliates of the registrant on April 17, 2009 was $7,315,000.
As of January 15, 2010, there were 9,338,840 shares of common stock outstanding.
Portions of the registrant’s Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held March 17, 2010 are
incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K.
INDEX TO FORM 10K
PART I.............................................................................................................................................................................
Item 1. Business...............................................................................................................................................................
Item 1A. Risk Factors ......................................................................................................................................................
Item 1B. Unresolved Staff Comments .............................................................................................................................
Item 2. Properties.............................................................................................................................................................
Item 3. Legal Proceedings ...............................................................................................................................................
Item 4. Submission of Matters to a Vote of Security Holders .........................................................................................
PART II ...........................................................................................................................................................................
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities .........................................................................................................................................................................
Item 6. Selected Financial Data .......................................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ..............................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ...........................................................................
Item 8. Consolidated Financial Statements and Supplementary Data..............................................................................
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..............................
Item 9A. Controls and Procedures ...................................................................................................................................
Item 9B. Other Information .............................................................................................................................................
PART III ..........................................................................................................................................................................
Item 10. Directors, Executive Officers and Corporate Governance.................................................................................
Item 11. Executive Compensation ...................................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..........
Item 13. Certain Relationships and Related Transactions, and Director Independence...................................................
Item 14. Principal Accountant Fees and Services............................................................................................................
PART IV..........................................................................................................................................................................
Item 15. Exhibits and Financial Statement Schedules .....................................................................................................
SIGNATURES ................................................................................................................................................................
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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 Bridgford Foods Corporation intends
that such forward-looking statements be subject to the safe harbors created thereby. Readers are cautioned that such
statements, which may be identified by words including ‘‘anticipates,’’ ‘‘believes,’’ ‘‘intends,’’ ‘‘estimates,’’ ‘‘expects,’’ and
similar expressions, are only predictions or estimations and are subject to known and unknown risks and uncertainties. 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 our 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 our control. Although we believe 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 us or any other person that
the objectives or plans of our company will be achieved. The forward-looking statements contained herein speak as of the
date of this Report and we undertake no obligation to update such statements after the date hereof.
Background of Business
Bridgford Foods Corporation (collectively with its subsidiaries, “Bridgford”, the “Company”, “We”, “Our”), a
California corporation was organized in 1952. We originally began 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 we and our 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. We have not
been involved in any bankruptcy, receivership, or similar proceedings since inception nor have we 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 our
assets have been acquired in the ordinary course of business. We have had no significant change in the type of products
produced or distributed, nor in the markets we serve. Independent distributors now serve approximately 2,400 stores of all
types in areas impractical to serve by our Company-owned vehicles.
Description of Business
Bridgford Foods Corporation operates in two business segments - the processing and distribution of frozen products
and the processing and distribution of refrigerated and snack food products. For information regarding the separate financial
performance of the business segments refer to Note 7 of the Notes to the Consolidated Financial Statements included in this
Annual Report on Form 10-K.
The following table shows sales, as a percentage of consolidated sales, for each of these segments for each of the last
two fiscal years:
Frozen Food Products ..............................................................................
Refrigerated and Snack Food Products....................................................
2009
2008
45 %
55 %
100 %
44 %
56 %
100 %
3
We manufacture and distribute an extensive line of food products, including biscuits, bread dough items, roll dough
items, dry sausage products, beef jerky, and a variety of sandwiches and sliced luncheon meats. The products we purchase for
resale include a variety of jerky, cheeses, salads, party dips, Mexican foods, nuts, and other delicatessen type food products.
Products manufactured, processed or packaged by Bridgford ................
Products manufactured or processed by third parties for distribution......
2009
2008
83 %
17 %
100 %
82 %
18 %
100 %
Although we have recently introduced several new products, most of these products have not contributed significantly
to our revenue growth for the fiscal year. Our sales are not subject to material seasonal variations. Historically we have been
able to respond quickly to the receipt of orders and, accordingly, do not maintain a significant sales backlog. Bridgford Foods
Corporation and its industry generally have no unusual demands or restrictions on working capital items. During the last
fiscal year we did not enter into any new markets or any significant contractual or other material relationships.
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 our business.
Availability of SEC Filings and Code of Conduct on Internet Website
We maintain an Internet website at http://www.bridgford.com. Available on this website, free of charge, are annual
reports on Form 10-K, quarterly reports on Form 10-Q, and reports filed under Section 16 of the Securities Exchange Act of
1934 which we file with the Securities and Exchange Commission. Our Code of Conduct is also available on the website.
Major Product Classes
Frozen Food Products
Our frozen food division serves both food service and retail customers. We sell approximately 170 unique frozen food
products through wholesalers, cooperatives, and distributors to approximately 21,000 retail outlets and 22,000 restaurants and
institutions.
Frozen Food Products – Food Service
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 we provide. 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.
We supply our food service customers generally through distributors that take title to the product and resell it. Among
our customers are many of the country’s largest broadline and specialty food service distributors. These and other large end
purchasers occasionally go through extensive qualification procedures and their manufacturing capabilities are subjected to
thorough review by the end purchasers prior to our 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. We believe that
manufacturing flexibility, national presence, and long-standing customer relationships should allow us to compete effectively
with other manufacturers seeking to provide similar products to our current large food service end purchasers, although no
assurances can be given.
Frozen Food Products – Retail Customers
The majority of our 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
4
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. We
believe we have been successful in establishing and maintaining supply relationships with certain selected leading retailers in
this market.
Frozen Food Products – Sales and Marketing
Our frozen food business covers the United States and Canada. In addition to regional sales managers, we maintain 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. We believe that our 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 us, including identifying and developing new business opportunities and providing
customer service and support to our distributors and end purchasers through the effective use of our broker network.
Our annual advertising expenditures are directed towards retail and institutional customers. These customers participate
in various special promotional and marketing programs and direct advertising allowances we sponsor. We also invest in
general consumer advertising in various newspapers and periodicals including free standing inserts and coupons to advertise
in major markets. We direct advertising toward food service customers with campaigns in major industry publications and
through our participation in trade shows throughout the United States.
Refrigerated and Snack Food Products – Customers
Our refrigerated and snack food products division sells approximately 240 different items through a direct store
delivery network serving approximately 31,000 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 our business is
highly competitive. Proper placement of our product lines is critical to selling success since most items could be considered
“impulse” items which are often consumed shortly after purchase. Our 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
Our direct store delivery network consists of two separate divisions, refrigerated and non-refrigerated snack food
products. Refrigerated snack food products are distributed through six different regions located in the southwest, primarily
operating in California, Arizona, and Nevada. Non-refrigerated snack food products are distributed across the United States
and Canada. The regional sales managers perform several significant functions for us including identifying and developing
new business opportunities and providing customer service and support to our customers. We also utilize the services of
brokers, where appropriate, to support efficient product distribution and customer satisfaction. Independent distributors now
serve approximately 2,400 customers of all types in areas impractical to serve by our Company-owned vehicles.
Product Planning and Research and Development
We continually monitor the consumer acceptance of each product within our extensive product line. Individual
products are regularly added to and deleted from the our product line. The addition or deletion of any individual product has
not had a material effect on our operations in the current fiscal year. We believe that a key factor in the success of our
products is our system of carefully targeted research and testing of our 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. We are constantly searching to develop new products to complement our existing product line and
improved processing techniques and formulas for our existing product line. We utilize in-house test kitchen to research and
experiment and consultants with unique food preparation methods, improve quality control and analyze new ingredient
mixtures.
Competition
Our products are sold under highly competitive conditions. All food products can be considered competitive with other
food products, but we consider our principal competitors to include national, regional and local producers and distributors of
refrigerated, frozen and snack food products. Several of our competitors include large companies with substantially greater
financial and marketing resources than ours. Existing competitors may broaden their product lines and potential competitors
5
may enter or increase their focus on our market, resulting in greater competition for us. We believe that our products compete
favorably with those of our competitors. Such competitors’ products compete against ours for retail shelf space, institutional
distribution and customer preference.
Effect of Government Regulations
Our operations 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 we manufacture, produce and
process. Our processing facilities and products are subject to continuous inspection by the USDA and/or other federal, state,
and local authorities. The USDA has issued strict policies concerning the control of listeria monocytogenes in ready-to-eat
meat and poultry products and contamination by food borne pathogens such as E. coli 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. We believe that we are currently in compliance with governmental laws and regulations and that we maintain
the necessary permits and licenses relating to our meat operations.
Importance of Key Customers
Sales to Wal-Mart® comprised 11.4% and 10.2% of revenues for fiscal years 2009 and 2008, respectively. Accounts
receivable from Wal-Mart® was 13.3% and 14.2% of total accounts receivable at October 30, 2009 and October 31, 2008,
respectively.
Sources and Availability of Raw Materials
We purchase large quantities of pork, beef, and flour. These ingredients are generally available from a number of
different suppliers although the availability of these ingredients is subject to seasonal variation. We build ingredient
inventories to take advantage of downward trends in seasonal prices or anticipated supply limitations.
Employees
We had 586 employees at October 30, 2009, approximately 43% of whose employment relationship is governed by
collective bargaining agreements. Most agreements expire between January 2011 and March 2012. A contract with
Teamsters Locals 87, 150, 386 and 431, covering 16 employees, expired on March 31, 2007. As of January 2010, a new
agreement is in the process of ratification. We believe that our relationship with all of our employees is favorable.
Executive Officers of the Registrant
The names, ages, and positions of all our executive officers as of January 1, 2010 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 our company, except for
Allan L. Bridgford, who works 60% of full-time effective March, 2005.
Age
Name
Allan L. Bridgford ................... 74
Hugh Wm. Bridgford............... 78
William L. Bridgford ............... 55
John V. Simmons..................... 54
56
Raymond F. Lancy...................
Position(s) with our company
Senior Chairman and member of the Executive Committee
Vice President and Chairman of the Executive Committee
Chairman and member of the Executive Committee
President and member of the Executive Committee
Chief Financial Officer, Executive Vice President, Treasurer and member of the
Executive Committee
Item 1A.
Risk Factors
In addition to the other matters set forth in this Annual Report on Form 10-K, the continuing operations and the price of
our common stock are subject to the following risks, each of which could materially adversely affect our business, financial
condition, and results of operations. The risks described below are not the only risks faced by us. The risks described below
are only the risks that we currently believe are material to our business. However, additional risks not presently known, or
risks that are currently believed to be immaterial, may also impair our business operations.
6
We are subject to general risks in the food industry, including risks relating to changes in consumer preference
and economic conditions, any of which risks, if realized, could negatively impact our operating results and financial
position.
The food industry, and the markets within the food industry in which we compete, are subject to various risks,
including the following: 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 are subject to 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 industry to withdraw contaminated or mislabeled products from the market.
Additionally, the failure to identify and react appropriately to changes in consumer trends, demands and preferences could
lead to, among other things, reduced demand and price reduction for our products. Further, we may be adversely affected by
changes in domestic or foreign economic conditions, including inflation or deflation, interest rates, availability of capital
markets, consumer spending rates, and energy availability and costs (including fuel surcharges). These and other general
risks related to the food industry, if realized by us, could have a significant adverse affect on demand for our products, as
well as the costs and availability of raw materials, ingredients and packaging materials, thereby negatively affecting our
operating results and financial position.
Fluctuations in the prices that we pay for raw materials could negatively impact our financial results.
We purchase large quantities of commodity pork, beef, and flour. Historically, market prices for products we process
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.
Our operating results are heavily dependent upon the prices paid for raw materials. The marketing of our 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. While fluctuations in significant cost structure components, such
as ingredient commodities and fuel prices, have had a significant impact on profitability over the last two years, the impact of
general price inflation on our financial position and results of operations has not been significant. Future volatility of general
price inflation or deflation and raw material cost and availability could adversely affect our financial results.
We are subject to extensive government regulations and a failure to comply with such regulations could
negatively impact our financial results.
Our operations 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 us. Our processing facilities and products are subject to continuous inspection by the USDA and/or other
federal, state, and local authorities. The USDA has issued strict policies concerning the control of listeria monocytogenes in
ready-to-eat meat and poultry products and contamination by food borne pathogens such as E. coli 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. We believe that we are currently in compliance with governmental laws and regulations and that
we maintain necessary permits and licenses relating to our meat operations.
A failure to obtain or a loss of necessary permits and licenses could delay or prevent us from meeting current product
demand and could adversely affect our operating performance. Furthermore, we are routinely subject to new or modified
laws, regulations and accounting standards. If found to be out of compliance with applicable laws and regulations in these or
other areas, we could be subject to civil remedies, including fines, injunctions, recalls, or asset seizures, as well as potential
criminal sanctions, any of which could have a significant adverse effect on our financial results.
We depend on our key management, the loss of which could negatively impact our operations.
Our executive officers and certain other key employees have been primarily responsible for the development and
expansion of our business, and the loss of the services of one or more of these individuals could adversely effect us. Our
success will be dependent in part upon our continued ability to recruit, motivate, and retain qualified personnel. We can not
assure you that we will be successful in this regard. We have no employment or non-competition agreements with key
personnel.
7
We depend on our major customers and any loss of such customers could have a negative impact on our
profitability.
We could suffer significant reductions in revenues and operating income if we lost one or more of our largest
customers, including, for example, Wal-Mart®, which accounted for 11.4% of revenues in fiscal year 2009. Many of our
customers, such as supermarkets, warehouse clubs, and food distributors have consolidated in recent years. Such
consolidation has produced large, sophisticated customers with increased buying power who are more capable of operating
with reduced inventories while demanding lower pricing and increased promotional programs. These customers also may use
their shelf space for their own private label products. Failure to respond to these trends could reduce our volume and cause
us to lower prices or increase promotional spending for our product lines which could adversely affect our profitability.
With more than 80% concentration of beneficial ownership of our stock held by the Bridgford family, there are
risks that they can exert significant influence or control over our corporate matters.
Members of the Bridgford family beneficially own, in the aggregate, approximately 81% of our outstanding stock. In
addition, three members of the Bridgford family serve on the Board of Directors. As a result, members of the Bridgford
family have the ability to exert substantial influence or actual control over our management and affairs and over substantially
all matters requiring action by our shareholders, including amendments to by-laws, election and removal of directors, any
proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. This
concentration of ownership may also delay or prevent a change in control otherwise favored by our other shareholders and
could depress our stock price. Additionally, as a result of the Bridgford family’s significant ownership of the outstanding
voting stock, we have relied on the “controlled company” exemption from certain corporate governance requirements of the
NASDAQ stock market; therefore, we have elected not to implement the rule that provides for a nominating committee to
identify and recommend nominees to the Board of Directors. Pursuant to this exemption, our compensation committee,
which is made up of independent directors, does not have sole authority to determine the compensation of our executive
officers, including our Chairman of the Board.
Item 1B.
Unresolved Staff Comments
Not applicable.
Item 2.
Properties
We own the following properties:
Property Location
Anaheim, California ***..........................................................................
Modesto, California ** ............................................................................
Dallas, Texas *.........................................................................................
Dallas, Texas *.........................................................................................
Dallas, Texas *.........................................................................................
Dallas, Texas *.........................................................................................
Statesville, North Carolina * ....................................................................
Chicago, Illinois ** ..................................................................................
* - property used by Frozen Food Products Segment
** - property used by Refrigerated and Snack Food Segment
Building
Square
Footage
Acreage
100,000
0
94,000
30,000
16,000
3,200
42,000
156,000
5.0
0.3
4.0
2.0
1.0
1.5
8.0
1.5
***- property used by both Frozen Food Products and Refrigerated and Snack Food Segments
We generally fully utilize the foregoing properties for processing, warehousing, distributing and administrative
purposes. We also lease warehouse and/or office facilities throughout the United States and Canada. We believe that our
properties are generally adequate to satisfy our foreseeable needs. Additional properties may be acquired and/or plants
expanded if favorable opportunities and conditions arise.
8
Item 3.
Legal Proceedings
No material legal proceedings were pending against us at October 30, 2009 or as of the date of filing of this Annual
Report on Form 10-K. We are likely to be subject to claims arising from time to time in the ordinary course of our 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 us. Any adverse litigation trends and outcomes could significantly and negatively affect our financial
results.
Item 4.
Submission of Matters to a Vote of Security Holders
Annual Meeting of Shareholders
The 2010 Annual Meeting of Shareholders will be held at the offices of Bridgford Foods Corporation, 1308 North Patt
Street, Anaheim, California at 10:00 a.m. on Wednesday, March 17, 2010.
No matters were submitted to our shareholders during the fourth quarter of the fiscal year ended October 30, 2009.
9
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock and Dividend Data
Our common stock is traded in the national over-the-counter market and is authorized for quotation on the Nasdaq Global
Market under the symbol “BRID”. The following table reflects the high and low closing sale prices reported by Nasdaq as
well as cash dividends paid for each of the last eight fiscal quarters.
Fiscal Year 2009
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year 2008
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
$ 4.88
$ 4.55
$ 9.32
$ 9.79
High
$7.45
$6.94
$6.77
$6.43
Low
$3.71
$2.53
$4.31
$6.91
Low
$6.07
$5.32
$5.40
$4.26
Cash
Dividends
Paid
$0.00
$0.00
$0.00
$0.00
Cash
Dividends
Paid
$0.00
$0.00
$0.00
$0.00
On November 12, 2009, Bridgford Foods Corporation issued a press release announcing that its Board of Directors had
approved a cash dividend of $0.10 per share of common stock to be distributed on January 4, 2010 to shareholders of record
on December 8, 2009.
On January 15, 2010, the closing sale price for our common stock on the Nasdaq Global Market was $11.41 per share. As of
January 15, 2010, there were 303 shareholders of record of our common stock.
The payment of any future dividends will be at the discretion of our Board of Directors and will depend upon future
earnings, financial requirements, and other factors.
Unregistered Sales of Equity Securities
During the period covered by this Report we did not sell or issue any equity securities that were not registered under
the Securities Act of 1933, as amended.
Repurchases of Equity Securities by the Issuer
During fiscal year 2009, we repurchased an aggregate of 79,713 shares of our common stock for $637,955 pursuant to
our repurchase plan previously authorized by the Board of Directors. The following table provides information regarding our
repurchases of common stock in each of the four periods comprising the fourth quarter of fiscal year 2009.
10
Period (1)
July 11, 2009 - August 7, 2009
Total Number of
Shares
Purchased
Average Price Paid
Per Share
Total Number of
Shares Purchased
As Part of Publicly
Announced Plans
or
Programs (2)
Maximum Number of
Shares that May Yet
Be Purchased
Under the Plans
or
Programs (2)
(4 weeks)........................................
August 8, 2009 - September 4,
2009 (4 weeks)..............................
September 5, 2009 - October 2,
2009 (4 weeks)..............................
October 3, 2009 - October 30,
2009 (4 weeks)...............................
Total...................................................
15,345 $
8,522 $
9,123 $
7,883 $
40,873 $
$8.94
$9.01
$8.91
$9.23
$9.00
15,345
8,522
9,123
7,883
40,873
423,573
415,051
405,928
398,045
(1)
(2)
The periods shown are our fiscal periods during the sixteen-week quarter ended October 30, 2009.
All repurchases reflected in the foregoing table were made on the open market. Our stock repurchase program was
approved by the Board of Directors in November 1999 (1,500,000 shares authorized, disclosed in a Form 10-K filed
on January 26, 2000) and was expanded in June 2005 (500,000 additional shares authorized, disclosed in a press
release and Form 8-K filed on June 17, 2005). Under the stock repurchase program, we are authorized, at the
discretion of management and the Board of Directors, to purchase up to an aggregate of 2,000,000 shares of the our
common stock on the open market. Our Stock Purchase Plan (“Purchase Plan”) is administered by Citigroup Global
Markets Inc. (“CGM”) for purchase of shares of common stock (“Stock”) issued by us in compliance with the
requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 (“Exchange Act”). Commencing on
October 14, 2009 and continuing through and including October 13, 2010, CGM shall act as our exclusive agent to
purchase Stock under the Purchase Plan. This Purchase Plan supplements any purchases of stock by us “outside” of
the Purchase Plan, which may occur from time to time, in open market transactions pursuant to Rule 10b-18 of the
Exchange Act. The daily purchase quantity is defined as a number of shares up to, but not to exceed, each day’s
applicable Rule 10b-18 maximum volume limit (i.e. 25% of the prior four calendar weeks’ average daily trading
volume); however, once per week a block of stock may be purchased that exceeds the Rule 10b-18 average daily
trading volume condition, provided that no other Purchase Plan purchases are made on any day on which such a
block is purchased. As of October 30, 2009, the total maximum number of shares that may be purchased under the
Purchase Plan is 398,045 at a purchase price not to exceed $10.00 per share for a total maximum aggregate price
(exclusive of commission) of $3,980,450.
Item 6.
Selected Financial Data
Not applicable to smaller reporting company.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
For a complete understanding, this Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial
Statements contained in this Report.
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
11
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.
Results of Operations (in thousands except percentages)
Fiscal Year Ended October 30, 2009 (52 weeks) Compared to Fiscal Year Ended October 31, 2008 (52 weeks)
Net Sales-Consolidated
Net sales in fiscal 2009 increased $1,675 (1.4%) when compared to the prior year. The primary reason for the increase
was higher unit volume. The impact of selling price changes was insignificant. Promotional allowances as a percentage of
consolidated sales decreased 0.1%.
Net Sales-Frozen Food Products Segment
Net sales in the Frozen Food Products segment in fiscal 2009 increased $1,872 (3.5%) compared to the prior year. A
unit volume decrease of 5.1% was offset by price increases of 8.6% contributing to the change. Promotional allowances were
unchanged compared to the prior year.
Net Sales-Refrigerated and Snack Food Products Segment
Net sales in the Refrigerated and Snack Food Products segment in fiscal 2009 decreased $197 (0.3%) compared to the
prior year. Unit volume increases of 3.9% in fiscal 2009 were more than off-set by selling price decreases.
Cost of Products Sold-Consolidated
Cost of products sold in fiscal 2009 decreased $9,153 (11.4%) compared to the prior year primarily due to lower flour
and meat commodity costs. Utilities, employee benefit costs and operating supplies decreased significantly compared to the
prior fiscal year. Favorable changes in product mix also contributed to the decline in cost of sales.
Cost of Products Sold–Frozen Food Products Segment
Cost of products sold in the Frozen Food Products segment in fiscal 2009 decreased $3,911 (11.2%) compared to the
prior year. Lower flour commodity costs in fiscal 2009 were the primary contributing factor causing this decrease. Utilities
and employee benefit costs decreased significantly compared to the prior fiscal year. Favorable changes in product mix also
contributed to the decline in cost of sales.
Cost of Products Sold–Refrigerated and Snack Food Products Segment
Cost of products sold in the Refrigerated and Snack Food Products segment in fiscal 2009 decreased $5,827 (12.4%)
compared to the prior year. Lower meat commodity costs and producing products previously purchased from outside
suppliers in fiscal 2009 were the primary factors causing this change. Utilities, employee benefit costs, property taxes and
operating supplies decreased significantly compared to the prior fiscal year.
Gross Margin-Consolidated
The gross margin before depreciation increased from 33.6% to 42.0%, in fiscal 2009, primarily due to lower flour and
meat commodity costs when compared to the prior fiscal year. Promotional allowances declined 0.1% as a percentage of
consolidated sales and had no measurable impact on the gross margin.
Gross Margin–Frozen Food Products Segment
The gross margin before depreciation in the Frozen Food Products segment in fiscal 2009 increased from 33.8% to
43.2%, in fiscal 2009, primarily due to lower flour commodity costs when compared to the prior fiscal year. Lower
promotional allowances also increased net selling prices contributing to the gross margin increase. Favorable changes in
product mix also contributed to the improvement in gross margin.
12
Gross Margin–Refrigerated and Snack Food Products Segment
The gross margin before depreciation in the Refrigerated and Snack Food Products segment in fiscal 2009 increased
from 31.3% to 39.6%, in fiscal 2009, primarily due to lower meat commodity costs and lower delivery costs when compared
to the prior fiscal year. Increased in-sourcing of major product lines reduced overhead costs per unit. Cost decreases related
to utilities, employee benefits, property taxes and operating supplies also favorably impacted our gross margin in this
segment.
Selling, General and Administrative Expenses-Consolidated
Selling, general and administrative expenses in fiscal 2009 decreased $1,532 (3.5%) when compared to the prior year. The
decrease in this category did not directly correspond to the change in sales.
The table below summarizes the primary expense variances:
Fuel
Cash surrender value (gain) / loss
Wages and bonus
Benefits-health/life
Benefits-workers compensation
Bad debt provision (recovery)
Interest income
Other
Total
52 Weeks Ended
October 30, 2009 October 31,2008
$4,158
928
16,070
2,895
1,073
(194)
(272)
18,594
$43,252
$2,369
(323)
17,369
1,997
700
78
(32)
19,562
$41,720
Expense/Loss
Increase (Decrease)
$(1,789)
(1,251)
1,299
(898)
(373)
272
240
968
$(1,532)
Selling, General and Administrative Expenses-Frozen Food Products Segment
Selling, general and administrative expenses in the Frozen Food Products segment in fiscal 2009 increased by $1,007
(6.4%) compared to the prior year. This category increased primarily as a result of increased profit sharing expenses as a
result of higher segment profitability. The allocation of corporate support changes also increased due to higher segment
revenues. Expenses related to advertising also increased compared to the prior year.
Selling, General and Administrative Expenses-Refrigerated and Snack Food Products Segment
Selling, general and administrative expenses in the Refrigerated and Snack Food segment in fiscal 2009 decreased
$2,539 (9.2%) compared to the prior year. This decrease was primarily caused by lower fuel, healthcare and workers’
compensation expenses. Outside storage expense also declined compared to the prior fiscal year.
Depreciation Expense-Consolidated
Depreciation expense in fiscal 2009 decreased by $550 (16.8%) compared to the prior year. The decrease in
depreciation expense reflects lower capital expenditure levels in recent years and certain significant assets becoming fully
depreciated in the 2009 fiscal year.
Depreciation Expense-Frozen Food Products Segment
Depreciation expense in the Frozen Food Products segment in fiscal 2009 decreased by $80 (10.2%) compared to the
prior year. The decrease in depreciation expense reflects lower capital expenditure levels in recent years and certain
significant assets becoming fully depreciated in the 2009 fiscal year.
Depreciation Expense- Refrigerated and Snack Food Products Segment
Depreciation expense in the Refrigerated and Snack Food segment in fiscal 2009 decreased by $333 (15.2%) compared
to the prior year. This decline reflects lower capital expenditure levels in recent years.
13
Income Taxes
The effective income tax rate was 3.6% and (112.1)% in fiscal years 2009 and 2008, respectively. In fiscal year 2009,
the effective income tax rate differed from the applicable mixed statutory rate of approximately 38% primarily due to
recording a full valuation allowance on our deferred tax assets of $8,443 in fiscal year 2008 (Refer to Note 4). The 2009
provision for taxes on income of $255 consists of minimum federal and state income taxes. In fiscal year 2008 the effective
income tax rate differed from the applicable mixed statutory rate of approximately 38% primarily due to recording a full
valuation allowance on our deferred tax assets of $8,615 (Refer to Note 4) and our current year claim for research and
development tax credits and non-taxable life insurance.
Liquidity and Capital Resources (in thousands except share amounts)
Our need for operations growth, capital expenses and share repurchases are expected to be met with cash flows provided by
operating activities.
Cash flows from operating activities:
2009
2008
Net income (loss).......................................................................
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation.......................................................................
Provision (recovery) on losses on accounts receivable......
(Gain) on sale of property, plant and equipment................
Loss on sale of equity securities ........................................
Deferred income taxes, net ................................................
Tax valuation allowance ....................................................
Changes in operating working capital........................................
Net cash provided by (used in) operating activities ...................
$
6,787 $
(12,447 )
2,733
78
(11 )
159
171
(171 )
(310 )
9,436 $
3,283
(194 )
(27 )
—
(2,107 )
8,615
2,483
(394 )
$
For fiscal year 2009, net cash provided by operating activities was $9,436, which enabled us to fund additions to property,
plant and equipment in the amount of $1,303 and share repurchases of $638. The available cash balance increased by $7,819
during the fiscal year. In November 2009, we declared a one-time cash dividend of $0.10 per share of common stock for
shareholders of record on December 8, 2009, payable on January 4, 2010, based on operations for fiscal year 2009. For
fiscal year 2008, net cash used in operating activities was $394. We funded additions to property, plant and equipment in the
amount of $1,880 and share repurchases of $3,039 from cash balances.
Significant changes in operating working capital are as follows:
2009 – Operating cash flows increased primarily due to net income of $6,787 and non-cash depreciation expense of $2,733.
Operating cash flows was increased by a reduction in inventories, increase in accounts payable and the current portion of
non-current liabilities. Significant increases in accounts receivable and other non-current assets and decreases in accrued
payroll, advertising and other expenses offset the cash flow increases during 2009. During the 2009 fiscal year we funded
$989 toward our defined benefit pension plan.
2008 – Operating cash flows decreased primarily due to reductions in other non-current assets and the current portion of non-
current liabilities offset by decreases in inventories, prepaid expenses and accrued payroll, advertising and other expenses.
During the year we funded $2,467 toward our defined benefit pension plan.
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 .....................
$
$
2009
2008
56 $
268
(1,303 )
(979 ) $
69
—
(1,880 )
(1,811 )
14
Expenditures for property, plant and equipment include the acquisition of new equipment, upgrading of facilities to
maintain operating efficiency and investments in cost effective technologies to lower costs. Overall capital spending has
declined in recent years as we carefully scrutinize capital investments for short term pay-back of our investments.
Cash used in financing activities:
Shares repurchased .......................................................
Net cash used in financing activities.....................
$
$
(638 ) $
(638 ) $
(3,039 )
(3,039 )
2009
2008
During fiscal year 2009, we repurchased an aggregate of 79,713 shares of our common stock for $637,955 pursuant to
our repurchase plan previously authorized by the Board of Directors.
We have remained free of interest-bearing debt for twenty-three consecutive years. We maintain a line of credit with
Bank of America that expires April 30, 2010. Under the terms of this line of credit, we may borrow up to $2,000 at an interest
rate equal to the bank’s Prime rate, unless we elect an optional interest rate. The borrowing agreement contains various
covenants, the more significant of which require us to maintain certain levels of shareholders’ equity and working capital.
We are currently in compliance with all provisions of the agreement. There were no borrowings under this line of credit
during the 2009 fiscal year. Management believes that our strong financial position and our capital resources are sufficient to
provide for our operating needs and capital expenditures for fiscal 2010.
Impact of Inflation
Our operating results are heavily dependent upon the prices paid for raw materials. The marketing of our 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. While fluctuations in significant cost structure components, such
as ingredient commodities and fuel prices, have had a significant impact on profitability over the last two fiscal years, the
impact of general price inflation on our financial position and results of operations has not been significant. However, future
volatility of general price inflation or deflation and raw material cost and availability could adversely affect our financial
results.
Off-Balance Sheet Arrangements
We do not currently have any off balance sheet arrangements within the meaning of Item 303(a)(4) of Regulation S-K.
Contractual Obligations (in thousands)
We have remained free of interest bearing debt for twenty-three consecutive years and had no other debt or other
contractual obligations except for leases existing at October 30, 2009. We lease certain transportation equipment under
operating leases through 2011.
Future minimum lease payments are approximately (in thousands):
Net Lease Commitments..............................
$
425 $
425
2010
2011
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. We record promotional
and returns allowances and bad debt allowances based on recent and historical trends. Management believes its current
estimates are reasonable and based on the best information available at the time.
15
Disclosure concerning our policies on credit risk, revenue recognition, cash surrender or contract value for life
insurance policies, deferred income tax and the recoverability of our long-lived assets are provided in Notes 1 and 4 to the
Consolidated Financial Statements.
Recently Issued Accounting Pronouncements and Regulations
Various accounting standard-setting bodies have been active in soliciting comments and issuing statements,
interpretations and exposure drafts. For information on new accounting pronouncements and the impact, if any, on our
financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Not applicable for smaller reporting company.
Item 8.
Consolidated Financial Statements and Supplementary Data
Not applicable for smaller reporting company.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On January 22, 2009, our Audit Committee of the Board of Directors of the Company dismissed Haskell & White LLP
as our independent registered public accounting firm. Haskell & White LLP completed the audit of our financial statements
for the year ended October 31, 2008 on January 28, 2009 completely terminating Haskell & White LLP's appointment as our
independent registered public accounting firm for the Company. The decision to change principal accountants was approved
by our Audit Committee and our Board of Directors.
The reports of Haskell & White LLP on the consolidated financial statements of Bridgford Foods Corporation for the
years ended October 31, 2008 and November 2, 2007, 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 years ended October 31, 2008 and November 2, 2007, and through the subsequent interim period ended
January 28, 2009, there were no disagreements with Haskell & White 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 Haskell & White LLP, would have caused it to make reference thereto in its reports on the financial statements
for such years.
During the years ended October 31, 2008, and November 2, 2007, and through the subsequent interim period ended
January 28, 2009, there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).
On January 22, 2009, our Audit Committee and our Board of Directors appointed Squar, Milner, Peterson, Miranda &
Williamson, LLP as its new independent registered public accounting firm as of January 22, 2009 for the fiscal year
beginning November 1, 2008 and ending October 30, 2009.
During the Company’s two most recent fiscal years ended October 31, 2008 and November 2, 2007, and through the
subsequent interim period ended January 28, 2010, neither the Company nor anyone on its behalf consulted Squar, Milner,
Peterson, Miranda & Williamson, 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
Evaluation of disclosure controls and procedures
Our management, with the participation and under the supervision of our Chairman and Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the
end of the period covered by this Report. Based on this evaluation the Chairman and Chief Financial Officer have concluded
that our disclosure controls and procedures are effective as of the end of the period covered by this Report in their design and
operation to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is accumulated and communicated to management and recorded, processed, summarized and
reported within the time periods specified by the Securities and Exchange Commission’s rules and forms.
16
Our management, including our Chairman and Chief Financial Officer, does not expect that our disclosure controls and
internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error
or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the control.
The design of any system of controls is also based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future
conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with
the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
We maintain and evaluate a system of internal accounting controls, and a program of internal auditing designed to
provide reasonable assurance that our 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 registered public
accounting firm and internal auditor. We have established a code of conduct. Our management believes that the accounting
and internal control systems provide reasonable assurance that assets are safeguarded and financial information is reliable.
The Audit Committee of the Board of Directors meets regularly with our financial management and counsel, and with
the independent registered public accounting firm engaged by us. 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. 114 (Communication with Audit
Committees). In addition, the Audit Committee and the independent registered public account firm have discussed the
independent registered public accounting firm’s independence from our Company and its management, including the matters
in the written disclosures required by Public Company Accounting Oversight Board Rule 3526 “Communicating with Audit
Committees Concerning Independence”.
Section 404 of the Sarbanes-Oxley Act of 2002
In order to comply with the Sarbanes-Oxley Act of 2002 (the “Act”), we have undertaken and continue a
comprehensive effort, which includes the documentation and review of our internal controls. In order to comply with the Act,
we centralized most accounting and many administrative functions at our corporate headquarters in an effort to control the
cost of maintaining our control systems.
The Securities and Exchange Commission, on December 15, 2006, adopted new measures to grant relief to smaller
public companies by extending the date of compliance with Section 404 of the Act. Under these new measures, we will be
required to comply with the Act in two phases. The first phase was completed by us commencing with the fiscal year ending
October 31, 2008 and requires us to issue a management report on internal control over financial reporting with each Annual
Report on Form 10-K thereafter. The second phase will require us to provide an auditor’s attestation report on our internal
control over financial reporting beginning with our fiscal year ending October 30, 2010.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Management conducted an evaluation of the effectiveness of the internal controls over financial reporting based on
the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect
to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
17
Management assessed the effectiveness of our internal control over financial reporting for our fiscal year ended
October 30, 2009. Based on management’s assessment and those criteria, management believes that the internal control over
financial reporting for our fiscal year ending October 30, 2009 was effective.
This Report does not include an attestation report of our independent registered public accounting firm regarding
internal control over financial reporting. Management’s internal control report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that
permit us to provide only management’s report in this Report.
There has been no change in our internal control over financial reporting during the last fiscal quarter covered by
this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information
Not applicable.
Item 10.
Directors, Executive Officers and Corporate Governance
PART III
Information set forth in the sections entitled “Proposal 1 – Election of Directors” and “Section 16(a) Beneficial
Ownership Reporting Compliance” contained in our definitive proxy statement for the 2010 Annual Meeting of Shareholders
to be held on March 17, 2010 is incorporated herein by reference. Information concerning our executive officers is set forth
in Part I, Item 1, hereof under the heading “Executive Officers of the Registrant”.
Item 11.
Executive Compensation
Information set forth in the sections entitled “Proposal 1 – Election of Directors” and “Compensation of Executive
Officers” contained in our definitive proxy statement for the 2010 Annual Meeting of Shareholders to be held on March 17,
2010 is incorporated herein by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information set forth in the sections entitled “Principal Shareholders and Management” and “Proposal 1 – Election of
Directors” contained in our definitive proxy statement for the 2010 Annual Meeting of Shareholders to be held on March 17,
2010 is incorporated herein by reference.
Equity Compensation Plan Information
Our only shareholder approved equity compensation plan expired by its terms on April 29, 2009. No further stock
options or rights are available for grant under this plan and all previously outstanding options and rights have also expired by
their terms. No stock options, warrants or rights were granted during the fiscal years ended October 30, 2009 and October
31, 2008 and none were outstanding as of October 30, 2009.
Item 13.
Certain Relationships and Related Transactions, and Director Independence (not in thousands)
Information set forth in the sections entitled “Proposal 1 – Election of Directors” and “Certain Relationships and
Related Party Transactions” contained in our definitive proxy statement for the 2010 Annual Meeting of Shareholders to be
held on March 17, 2010 is incorporated herein by reference.
We are considered a “controlled company” within the meaning of Rule 5615(c)(1) of the National Association of
Securities Dealers (“NASD”) based on the approximate 80% beneficial ownership of our outstanding common stock by
Bridgford Industries Incorporated and are therefore exempted from various NASD rules pertaining to certain “independence”
requirements of our directors. Nevertheless, the Board of Directors has determined that Messrs. Andrews, Foster, Schulze,
Scott and Zippwald, who together comprise the Audit Committee, are all “independent directors” within the meaning of Rule
5605 of the Nasdaq Marketplace Rules.
18
Our general legal counsel is the son of the senior chairman of the board of directors. For these services, he currently is
paid a fee of $1.35 for each meeting attended. Total fees paid under this arrangement for fiscal year 2009 were $16.2 In
addition, legal services are performed on our behalf and billed by a firm in which he is a partner. Total fees billed under this
arrangement for fiscal year 2009 were approximately $70.
Item 14.
Principal Accountant Fees and Services
Information set forth in the sections entitled “Principal Accountant Fees and Services” and “Policy on Audit
Committee Pre-Approval of Audit Services And Permissible Non-Audit Services of Independent Accountants” contained in
our definitive proxy statement for the 2010 Annual Meeting of Shareholders to be held on March 17, 2010 is incorporated
herein by reference.
Item 15.
Exhibits and Financial Statement Schedules
(a)(1) Financial Statements. The following documents are filed as a part of this report:
PART IV
Management’s Report on Internal Control Over Financial Reporting.............................................................................
Reports of Independent Registered Public Accounting Firms .........................................................................................
Consolidated Balance Sheets as of October 30, 2009 and October 31, 2008 ..................................................................
Consolidated Statements of Operations for years ended October 30, 2009 and October 31, 2008..................................
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for years October 30, 2009 and
October 31, 2008 .........................................................................................................................................................
Consolidated Statements of Cash Flows for years ended October 30, 2009 and October 31, 2008 ................................
Notes to Consolidated Financial Statements....................................................................................................................
Page
17
22-23
24
25
25
26
27
(2) Financial Statement Schedule
The following financial statement is filed herewith:
Schedule II - Valuation and Qualifying Accounts ...........................................................................................................
39
19
(3) Exhibits
(a) The exhibits below are filed or incorporated herein by reference.
Exhibit
Number
3.5
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).
Description
3.6
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).
3.7
By-laws, as amended (filed as Exhibit 2 to Form 10-K on January 28,1993 and incorporated herein by reference).
3.8
Certificate of Amendment to By-laws (filed as Exhibit 99.1 to Form 8-K on October 10, 2007 and incorporated
herein by reference).
10.1
10.2
10.3
10.4
Bridgford Foods Corporation Defined Benefit Pension Plan (filed as Exhibit 10.1 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).*
21.1
Subsidiaries of the Registrant.
24.1
Power of Attorney (included as part of the signature page)
31.1
Certification of Principal Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
32.2
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).
* Each of these Exhibits constitutes a management contract, compensatory plan or arrangement.
20
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/ WILLIAM L. BRIDGFORD
William L. Bridgford
Chairman
Date: January 28, 2010
POWER OF ATTORNEY
We, the undersigned directors and officers of Bridgford Foods Corporation, do hereby constitute and appoint William 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.
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
Signature
Title
Date
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford
Chairman
(Principal Executive Officer)
January 28, 2010
/s/ ALLAN L. BRIDGFORD
Allan L. Bridgford
/s/ BRUCE H. BRIDGFORD
Bruce H. Bridgford
/s/ JOHN V. SIMMONS
John V. Simmons
/s/ RAYMOND F. LANCY
Raymond F. Lancy
/s/ TODD C. ANDREWS
Todd C. Andrews
/s/ RICHARD A. FOSTER
Richard A. Foster
/s/ ROBERT E. SCHULZE
Robert E. Schulze
/s/ D. GREGORY SCOTT
D. Gregory Scott
/s/ PAUL R. ZIPPWALD
Paul R. Zippwald
Senior Chairman
January 28, 2010
Director
January 28, 2010
President
January 28, 2010
Chief Financial Officer
(Principal Financial Officer)
January 28, 2010
Director
January 28, 2010
Director
January 28, 2010
Director
January 28, 2010
Director
January 28, 2010
Director
January 28, 2010
21
Report Of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Bridgford Foods Corporation
We have audited the accompanying consolidated balance sheet of Bridgford Foods Corporation (the Company) as of October
30, 2009 and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss) and
cash flows for the year then ended. Our audit also included the financial statement Schedule II of the Company. These
financial statements and financial statement schedule are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on
our audit.
We conducted our audit 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. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Bridgford Foods Corporation and the results of its consolidated operations and its cash flows for the year
then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
We were not engaged to examine management’s assessment of the effectiveness of Bridgford Foods Corporation’s internal
control over financial reporting as of October 30, 2009 included in the accompanying Management’s Annual Report on
Internal Control Over Financial Reporting under Item 9A and, accordingly, we do not express an opinion thereon.
/s/ Squar, Milner, Peterson, Miranda & Williamson, LLP
Newport Beach, California
January 27, 2010
22
Report Of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Bridgford Foods Corporation
We have audited the accompanying consolidated balance sheet of Bridgford Foods Corporation (the “Company”) as of
October 31, 2008 and the related consolidated statements of operations, shareholders’ equity and comprehensive income and
cash flows for the fiscal year then ended. In connection with our audit of the consolidated financial statements, we also have
audited the supplementary information included in Schedule II. These consolidated financial statements and the financial
statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements and the financial statement schedule based on our audit.
We conducted our audit 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
consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provided a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company as of October 31, 2008, and the consolidated results of its operations and its cash flows for
the fiscal year then ended, in conformity with accounting principles generally accepted in the United States of America. Also
in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information set forth therein.
/s/ Haskell & White LLP
Irvine, California
January 28, 2009
23
BRIDGFORD FOODS CORPORATION
CONSOLIDATED BALANCE SHEETS
October 30, 2009 and October 31, 2008
(in thousands, except per share amounts)
Current assets:
ASSETS
Cash and cash equivalents ......................................................................................
Accounts receivable, less allowance for doubtful accounts of $404 and $397,
respectively and promotional allowances of $1,962 and $2,015, respectively ...
Inventories ..............................................................................................................
Prepaid expenses.....................................................................................................
Refundable income taxes ........................................................................................
Deferred income taxes, less valuation allowance of $1,852 and $2,422,
respectively .........................................................................................................
Total current assets .........................................................................................................
Property, plant and equipment, net of accumulated depreciation of $55,362 and
$53,740, respectively ..................................................................................................
Other non-current assets .................................................................................................
Deferred income taxes, less valuation allowance of $6,592 and $6,193, respectively ...
Total assets .....................................................................................................................
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable....................................................................................................
Accrued payroll, advertising and other expenses....................................................
Current portion of non-current liabilities ................................................................
Total current liabilities........................................................................................
Non-current liabilities .....................................................................................................
Total liabilities ................................................................................................................
Contingencies and commitments (Notes 3, 5 and 6).......................................................
Shareholders’ equity:
Preferred stock, without par value
Authorized - 1,000 shares; issued and outstanding – none .................................
Common stock, $1.00 par value .............................................................................
Authorized - 20,000 shares; issued and outstanding – 9,355 and 9,435 in
2009 and 2008, respectively ...............................................................................
Capital in excess of par value .................................................................................
Retained earnings....................................................................................................
Accumulated other comprehensive loss..................................................................
Total shareholders’ equity ..............................................................................................
2009
2008
$
13,911 $
6,092
9,718
15,595
621
168
—
40,013
8,300
10,586
—
58,899 $
4,227 $
5,320
3,667
13,214
13,262
26,476
—
—
9,412
10,646
21,085
(8,720 )
32,423
58,899 $
8,867
16,052
442
464
—
31,917
9,775
10,263
—
51,955
3,072
6,850
1,555
11,477
7,943
19,420
—
—
9,492
11,204
14,298
(2,459 )
32,535
51,955
$
$
$
See accompanying notes to consolidated financial statements.
24
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended October 30, 2009 and October 31, 2008
(in thousands, except share and per share amounts)
Net sales....................................................................................................................
Cost of products sold, excluding depreciation ..........................................................
Selling, general and administrative expenses ...........................................................
Depreciation..............................................................................................................
Income (loss) before taxes ........................................................................................
Provision for income taxes .......................................................................................
Net income (loss)......................................................................................................
Basic earnings (loss) per share..................................................................................
Shares used to compute basic earnings (loss) per common share.............................
Diluted earnings (loss) per share...............................................................................
Shares used to compute diluted earnings (loss) per common share ..........................
$
$
$
$
2009
2008
122,665 $
71,170
41,720
2,733
115,623
7,042
255
6,787 $
0.72 $
9,411,181
0.72 $
9,411,181
120,990
80,323
43,252
3,283
126,858
(5,868 )
6,579
(12,447 )
(1.30 )
9,577,286
(1.30 )
9,577,286
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME (LOSS)
For the years ended October 30, 2009 and October 31, 2008
(in thousands)
Shares
Amount
Capital in
excess of
par value
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total
shareholders’
equity
9,889 $
9,946 $
13,789 $
26,837 $
(603 ) $
49,969
(454 )
(454 )
(2,585 )
(92 )
(12,447 )
(92 )
(3,039 )
(12,447 )
(106 )
(106 )
(2,093 )
(2,093 )
343
9,435
9,492
11,204
14,298
(2,459 )
(80 )
(80 )
(558 )
6,787
343
(14,303 )
32,535
(638 )
6,787
Balance, November 2, 2007..........
Adoption of ASC 740-10
(Note 4) ............................
Shares repurchased and
retired................................
Net loss .................................
Other comprehensive net
income (loss):
Unrealized loss on
investment (Note 1) ..........
Net change in defined
benefit plans......................
Net change in other benefit
plans..................................
Comprehensive loss ......................
Balance, October 31, 2008............
Shares repurchased and
retired................................
Net income............................
Other comprehensive net
income (loss):
Unrealized gain on
investment (Note 1) ..........
Net change in defined
benefit plans......................
Net change in other benefit
plans..................................
Comprehensive income.................
Balance, October 30, 2009............
9,412 $
See accompanying notes to consolidated financial statements.
10,646 $
9,355 $
21,085 $
25
180
180
(6,247 )
(6,247 )
(194)
(8,720 ) $
(194)
526
32,423
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 30, 2009 and October 31, 2008
(in thousands)
Cash flows from operating activities:
Net income (loss) ............................................................................................................ $
6,787 $
(12,447 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
2009
2008
activities:
Depreciation....................................................................................................................
Provision (recovery) on losses on accounts receivable...................................................
(Gain) on sale of property, plant and equipment.............................................................
Loss on sale of equity securities .....................................................................................
Deferred income taxes, net .............................................................................................
Tax valuation allowance .................................................................................................
Changes in operating assets and liabilities:
Accounts receivable........................................................................................................
Inventories ......................................................................................................................
Prepaid expenses.............................................................................................................
Refundable income taxes ................................................................................................
Other non-current assets .................................................................................................
Accounts payable............................................................................................................
Accrued payroll, advertising and other expenses............................................................
Current portion of non-current liabilities ........................................................................
Non-current liabilities .....................................................................................................
Net cash provided by (used in) operating activities ....................................................
Cash used in investing activities:
Proceeds from sale of equity securities...........................................................................
Proceeds from sale of property, plant and equipment.....................................................
Additions to property, plant and equipment....................................................................
Net cash used in investing activities ...........................................................................
Cash used in financing activities:
Shares repurchased .........................................................................................................
Net cash used in financing activities...........................................................................
Net increase (decrease) in cash and cash equivalents .............................................................
2,733
78
(11 )
159
171
(171 )
(929 )
457
1
296
(750 )
1,154
(1,525 )
2,071
(1,085 )
9,436
268
56
(1,303 )
(979 )
(638 )
(638 )
7,819
3,283
(194 )
(27 )
—
(2,107 )
8,615
(111 )
2,281
524
33
928
96
1,504
(2,116 )
(656 )
(394 )
—
69
(1,880 )
(1,811 )
(3,039 )
(3,039 )
(5,244 )
Cash and cash equivalents at beginning of year .....................................................................
Cash and cash equivalents at end of year................................................................................ $
6,092
13,911 $
11,336
6,092
Supplemental disclosure of cash flow information:
Cash paid for income taxes..................................................................................................... $
See accompanying notes to consolidated financial statements.
318 $
—
26
BRIDGFORD FOODS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands except share amounts, per share amounts, time periods and percentages)
NOTE 1- The Company and Summary of Significant Accounting Policies:
The consolidated financial statements include the accounts of our company and its subsidiaries, all of which are
wholly-owned. All inter-company 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 and impairment of deferred
tax assets are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts
which may vary from current estimates. Other areas with underlying estimates include cash surrender or contract value for
life insurance policies, promotional allowances and the allowance for doubtful accounts. Management believes its current
estimates are reasonable and based on the best information available at the time.
We are required to test long-lived assets for recoverability whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. If an impairment is indicated, we must measure the fair value of assets to
determine if and when adjustments are to be recorded.
Subsequent events
We have evaluated the effects of subsequent events through January 27, 2010 that may cause the financial statements to be
misleading. Based on our review, no material events were identified that require adjustment to the financial statements or
additional disclosure. On November 12, 2009, we issued a press release announcing that our Board of Directors approved a
cash dividend of $0.10 per share on common stock which was distributed on January 4, 2010 to shareholders of record on
December 8, 2009.
Concentrations of credit risk
Our credit risk is diversified across a broad range of customers and geographic regions. Losses due to credit risk have
recently been immaterial. 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. We maintain cash balances at
financial institutions, which may at times exceed the amounts insured by the Federal Deposit Insurance Corporation of $250
per institution through December 31, 2013. However, management does not believe there is significant credit risk associated
with these financial institutions. The provision for doubtful accounts receivable is based on historical trends and current
collectibility risk. We have significant amounts receivable with a few large, well known customers which, although
historically secure, could be subject to material risk should these customers’ operations suddenly deteriorate. Sales to Wal-
Mart® comprised 11.4% of revenues in fiscal year 2009 and 13.3% of accounts receivable was due from Wal-Mart® at
October 30, 2009. Sales to Wal-Mart® comprised 10.2% of revenues in fiscal year 2008 and 14.2% of accounts receivable
was due from Wal-Mart® at October 31, 2008.
Business segments
Our 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. See Note 7 to the financial statements for further
information.
Fiscal year
We maintain our accounting records on a 52-53 week fiscal basis. Fiscal years 2009 and 2008 included 52 weeks.
27
Revenues
Revenues are recognized upon passage of title to the customer, typically upon product pick-up, shipment or delivery to
customers. Products are delivered to customers primarily through our own long-haul fleet or through a Company owned
direct store delivery system. These delivery costs, $5,248 and $6,915 for 2009 and 2008, respectively, are included in selling,
general and administrative expenses in the accompanying consolidated financial statements. We record promotional and
returns allowances based on recent and historical trends. Revenue is recognized as the net amount estimated to be received
after deducting estimated amounts for discounts, trade allowances and product terms. Promotional allowances, including
customer incentive and trade promotion activities, are recorded as a reduction to sales based on amounts estimated being due
to customers, based primarily on historical utilization and redemption rates. Promotional allowances deducted from sales for
fiscal years 2009 and 2008 were $7,147 and $6,909, respectively.
Advertising expenses
Advertising and other promotional expenses are recorded as selling, general and administrative expenses. Advertising
expenses for fiscal years 2009 and 2008 were $3,602 and $3,508, respectively.
Cash equivalents
We consider all investments with original maturities of three months or less to be cash equivalents. Cash equivalents
include money market funds and treasury bills. We had cash equivalents of $13,911 at October 30, 2009 and $6,092 at
October 31, 2008.
Investments
We routinely classify certain equity securities as available for sale and measure them at market value (fair value). All
equity securities were sold in October 2009. Equity securities received from customers as part of bankruptcy settlements are
classified as available for sale and deemed Level 1 as described below under “Fair value measurements”. Changes in
unrealized gains or losses are recorded in other comprehensive income as a component of stockholders' equity.
Available for sale securities as of October 31, 2008:
Market value of investment in securities .................................................
Acquisition value of investments in securities ........................................
Unrealized (loss) on investment
$
$
250
430
(180 )
Fair value measurements:
Effective November 1, 2008, we adopted guidance from the Financial Accounting Standards Board (“FASB”). The purpose
of this guidance is to define fair value, establish a framework for measuring fair value and enhance disclosures about fair
value measurements. The standard describes three levels of inputs that may be used to measure fair value:
(cid:2) Level 1 inputs: Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are
accessible at the measurement date.
(cid:2) Level 2 inputs: Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly.
(cid:2) Level 3 inputs: Level 3 inputs are unobservable and should be used to measure fair value to the extent that observable
inputs are not available.
The hierarchy noted above requires us to minimize the use of unobservable inputs and to use observable market data, if
available, when determining fair value.
Financial assets carried at fair value as of October 30, 2009 are classified below:
2009
Money market funds ................................... $
Total........................................................ $
Level 1
Level 2
Level 3
Total
6,038 $
6,038 $
— $
— $
— $
— $
6,038
6,038
28
Inventories
Inventories are valued at the lower of cost (which approximates actual cost on a first-in, first-out basis) or market.
Costs related to warehousing, transportation and distribution to customers are considered when computing market value.
Inventories include the cost of raw materials, labor and manufacturing overhead. We regularly review inventory quantities
on hand and write down any excess or obsolete inventories to net realizable value. An inventory reserve is created when
potentially slow-moving or obsolete inventories are identified in order to reflect the appropriate inventory value. Changes in
economic conditions, production requirements, and lower than expected customer demand could result in additional obsolete
or slow-moving inventory that cannot be sold or must be sold at reduced prices and could result in additional reserve
provisions.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation. Major renewals and improvements 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 a 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.
Insurance policies
We record the cash surrender value or contract value for life insurance policies as an adjustment of premiums paid in
determining the expense or income to be recognized under the contract for the period.
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.
We provide tax reserves for federal, state, local and international exposures relating to audit results, tax planning
initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential
outcomes and timing. (See Note 4 to the financial statements). Although the outcome of these tax audits is uncertain, in
management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these
reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our results of
operations.
Stock-based compensation
We measure and recognize compensation expense for all share-based payments to employees, including grants of
employee stock options, in the financial statements based on the fair value at the date of the grant. We have not issued,
awarded, granted or entered into any stock-based payment agreements since April 29, 1999.
Basic and diluted earnings per share
Basic earnings per share is calculated based on the weighted average number of common shares outstanding for all
periods presented. Diluted earnings per share is calculated based on the weighted average number of common shares
outstanding plus shares issuable on conversion or exercise of all potentially dilutive securities (stock options). There were
no potentially dilutive securities during the fiscal years ended October 30, 2009 and October 31, 2008.
Foreign currency transactions
Our foreign branch located in Canada enters into transactions that are denominated in a foreign currency. The related
transaction gains and losses arising from changes in exchange rates are not material and are included in selling, general and
administrative expenses in the consolidated statement of operations in the period the transaction occurred.
29
Comprehensive income (loss)
Comprehensive income (loss) is defined as the change in equity (net assets) of a business enterprise during the period
from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) consists of net
income (loss), additional minimum pension liability adjustments and unrealized gains and losses on equity securities.
Recently issued accounting pronouncements and regulations
In December 2007, the FASB issued guidance establishing principles and requirements for how an acquirer in a
business combination: 1) recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed,
and any noncontrolling interest in the acquiree; 2) recognizes and measures goodwill acquired in a business combination or a
gain from a bargain purchase; and 3) determines what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of a business combination. This guidance is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15,
2008. Therefore, we expect to adopt this guidance for any business combinations entered into beginning in fiscal 2010, if
any.
In December 2008, the FASB issued additional guidance on an employers' disclosures about plan assets of a defined
benefit pension or other postretirement plan. This interpretation is effective for financial statements issued for fiscal years
ending after December 15, 2009. We plan to adopt this interpretation in fiscal 2010. The adoption of this interpretation will
increase the disclosures in the financial statements related to the assets of our defined benefit pension plans.
In April 2009, the FASB issued guidance about disclosures about Fair Value of Financial Instruments, to require
disclosure of the carrying amount and the fair value of all financial instruments for interim reporting periods and annual
financial statements of publicly traded companies (even if the financial instrument is not recognized in the balance sheet),
including the methods and significant assumptions used to estimate the fair values and any changes in such methods and
assumptions. This guidance requires disclosures in summarized financial information at interim reporting periods. The
guidance is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods
ended after March 15, 2009. The adoption of this standard did not have a significant impact on our consolidated financial
statements.
In April 2009, the FASB also issued guidance which generally applies to all assets and liabilities within the scope of
any accounting pronouncements that require or permit fair value measurements. This guidance does not change previously
issued guidance regarding Level 1 inputs, requires the entity to (i) evaluate certain factors to determine whether there has
been a significant decrease in the volume and level of activity for the asset or liability when compared with normal market
activity, (ii) consider whether the preceding indicates that transactions or quoted prices are not determinative of fair value
and, if so, whether a significant adjustment thereof is necessary to estimate fair value, and (iii) ignore the intent to hold the
asset or liability when estimating fair value. Guidance was also provided to consider in determining whether a transaction is
orderly (or not orderly) when there has been a significant decrease in the volume and level of activity for the asset or liability,
based on the weight of available evidence. This guidance is effective for interim and annual reporting periods ending after
June 15, 2009, and shall be applied prospectively. The adoption of this standard did not have a significant impact on our
consolidated financial statements.
In June 2009, the FASB issued SFAS guidance on “The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles.” This guidance designates the FASB Accounting Standards Codification,
officially launched July 1, 2009, as the authoritative source of generally accepted accounting principles in the United States.
Rules and interpretive releases of the Securities and Exchange Commission (the “SEC”) under federal securities laws are also
sources of authoritative GAAP for SEC registrants. This guidance is effective for financial statements issued for interim and
annual periods ending after September 15, 2009. Adoption of this guidance did not have a material impact on our
consolidated financial position, results of operations or cash flows.
30
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 ............................................................................................................
Transportation equipment ...............................................................................................
Construction in process...................................................................................................
Accumulated depreciation ..............................................................................................
Other non-current assets:
Cash surrender value benefits .........................................................................................
Intangible asset ...............................................................................................................
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 ..................................................................................................
Defined benefit retirement plan ......................................................................................
Other accrued retirement plans .......................................................................................
Post retirement healthcare...............................................................................................
Non-current liabilities:
Incentive compensation ..................................................................................................
Defined benefit retirement plan ......................................................................................
Other accrued retirement plans .......................................................................................
Post retirement healthcare...............................................................................................
2009
2008
4,488 $
1,647
9,460
15,595
$
1,807 $
13,476
41,412
(176 )
6,931
212
63,662
(55,362 )
8,300
$
4,086
2,322
9,644
16,052
1,840
13,440
40,796
(176 )
7,368
247
63,515
(53,740 )
9,775
10,576 $
10
10,586
$
10,253
10
10,263
3,596 $
1,012
372
340
5,320
$
661 $
2,394
544
68
3,667
$
1,224 $
7,647
3,394
997
13,262 $
4,793
1,031
356
670
6,850
129
916
510
—
1,555
241
3,354
3,542
806
7,943
$
$
$
$
$
$
$
$
$
$
$
$
NOTE 3- Retirement and Other Benefit Plans:
Noncontributory-Trusteed Defined Benefit Retirement Plans for Sales, Administrative, Supervisory and Certain
Other Employees
We have noncontributory-trusteed defined benefit retirement plans for sales, administrative, supervisory and certain
other employees. In the third quarter of fiscal 2006, we froze future benefit accruals under this plan for employees classified
within the administrative, sales or supervisory job classifications or within any non-bargaining class. The benefits under these
plans are primarily based on years of service and compensation levels. The funding policy of the plan is to make
contributions which are at least equal to the minimum required contributions needed to avoid a funding deficiency. The
measurement date for the plan is our fiscal year end.
31
Net pension cost consisted of the following:
Service cost..............................................................................................
Interest cost..............................................................................................
Expected return on plan assets.................................................................
Amortization of unrecognized loss ..........................................................
Amortization of unrecognized prior service costs ...................................
Net pension cost (income) ......................................................................
$
$
Years Ended
2009
2008
102 $
2,023
(1,702 )
89
1
513 $
148
1,948
(2,300 )
—
1
(203 )
Net pension cost and benefit obligation are determined using assumptions as of the beginning of each fiscal year.
Weighted average assumptions for the fiscal years are as follows:
Discount rate.......................................................................................................
Rate of increase in salary levels..........................................................................
Expected return on plan assets............................................................................
2009
2008
5.75 %
N/A
8.00 %
8.00 %
N/A
8.00 %
The benefit obligation, plan assets, and funded status of these plans as of the fiscal years ended are as follows:
2009
2008
Change in benefit obligations:
Benefit obligations - beginning of year ............................................
Service cost ......................................................................................
Interest cost ......................................................................................
Actuarial (gain) loss .........................................................................
Benefits paid.....................................................................................
Benefit obligations - end of year ......................................................
$
25,819 $
102
2,023
8,062
(964 )
35,042
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................................................................
Accrued pension cost ...............................................................................
21,548
989
3,428
(964 )
25,001
(10,041 )
7
10,202
$
168 $
31,371
148
1,948
(6,807 )
(841 )
25,819
27,806
2,467
(7,884 )
(841 )
21,548
(4,271 )
8
3,954
(309 )
Current accounting principles require that an internal rate of return analysis be included in the discount rate selection
process. The discount rates were based on Citigroup Pension Liability Index as of October 30, 2009 and October 31, 2008.
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 of
asset categories, taking into consideration inflation rate forecasts. Our expected employer contribution to the plan in fiscal
year 2010 is $2,394.
32
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 .....................................................
International (including Non-U.S. Fixed Income) ......
Fixed Income ..............................................................
Other (Government/Corporate, Bonds) ......................
Cash ............................................................................
Total............................................................................
Target
Asset
Allocation
40.0 %
10.0 %
5.0 %
20.0 %
0.0 %
25.0 %
0.0 %
100.0 %
2009
32.7 %
6.7 %
4.2 %
18.3 %
30.0 %
0.0 %
8.1 %
100.0 %
Target
Asset
Allocation
40.0 %
10.0 %
5.0 %
20.0 %
0.0 %
25.0 %
0.0 %
100.0 %
2008
34.7 %
6.5 %
3.8 %
10.8 %
6.2 %
29.0 %
9.0 %
100.0 %
Expected payments for the pension benefits are as follows:
Fiscal Years
2010...................................................................................................................................
2011...................................................................................................................................
2012...................................................................................................................................
2013...................................................................................................................................
2014...................................................................................................................................
2015-2019 .........................................................................................................................
$
$
$
$
$
$
Pension
Benefits
1,187
1,275
1,419
1,538
1,661
9,924
Non-Qualified Supplemental Retirement Plan for Certain Key Employees
In fiscal year 1991, we 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 our defined
benefit pension plan and amounts available through Social Security. Effective January 1, 1991 we 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. We contribute 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. No benefit expense was recorded under these plans for fiscal years 2009 and 2008. Benefits
payable related to these plans and included in other non-current liabilities in the accompanying financial statements were
$3,394 and $3,541 at October 30, 2009 and October 31, 2008, respectively. In connection with this arrangement we are the
beneficiary of life insurance policies on the lives of certain key employees and retirees. The aggregate cash surrender value of
these policies, included in non-current assets, was $10,576 and $10,254 at October 30, 2009 and October 31, 2008,
respectively.
Expected payments for other postretirement benefits are as follows:
Fiscal Years
2010......................................................................................................................................
2011......................................................................................................................................
2012......................................................................................................................................
2013......................................................................................................................................
2014......................................................................................................................................
2015-2019 ............................................................................................................................
Other
Postretirement
Benefits
$
$
$
$
$
$
512
511
511
511
521
1,178
33
Incentive Compensation Plan for Certain Key Executives
We provide an incentive compensation plan for certain key executives, which is based upon our pretax income. The
payment of these amounts is generally deferred over three or five-year periods. The total amount payable related to this
arrangement was $1,885 and $369 at October 30, 2009 and October 31, 2008, respectively. Future payments are
approximately $661, $642, $470, $64 and $48 for fiscal years 2010 through 2014, respectively.
Postretirement Healthcare Benefits for Selected Executive Employees
We provide postretirement health care benefits for selected executive employees. Net periodic postretirement
healthcare cost is determined using assumptions as of the beginning of each fiscal year, except for the total actual benefit
payments and the discount rate used to develop the net periodic postretirement benefit expense.
Net periodic postretirement healthcare cost consisted of the following:
Years Ended
2009
2008
Service cost ..............................................................................................................
Interest cost ..............................................................................................................
Amortization of prior service cost............................................................................
Amortization of actuarial loss ..................................................................................
Net periodic postretirement healthcare cost .............................................................
$
$
11 $
62
75
(23 )
125 $
15
72
75
2
164
Weighted average assumptions for the fiscal years ended October 30, 2009 and October 31, 2008 are as follows:
Discount rate ............................................................................................................
Medical trend rate next year.....................................................................................
Ultimate trend rate....................................................................................................
Year ultimate trend rate is achieved .........................................................................
2009
2008
5.75 %
8.50 %
5.00 %
2016
8.00 %
9.00 %
5.00 %
2016
The table below shows the estimated effect of a 1% increase in healthcare cost trend rate on the following:
Interest cost plus service cost ...................................................................................
Accumulated postretirement healthcare obligation ..................................................
$
$
7 $
106 $
10
67
2009
2008
The table below shows the estimated effect of a 1% decrease in healthcare cost trend rate on the following:
Interest cost plus service cost ...................................................................................
Accumulated postretirement healthcare obligation ..................................................
$
$
(6 ) $
(89 ) $
(8 )
(57 )
The healthcare obligation and funded status of this plan as of the fiscal years ended are as follows:
2009
2008
Change in accumulated postretirement healthcare obligation:
Healthcare obligations - beginning of year.............................................................
Service cost.............................................................................................................
Interest cost.............................................................................................................
Actuarial loss (gain)................................................................................................
Benefits paid ...........................................................................................................
Healthcare obligations - end of year .......................................................................
Funded status of the plans ..............................................................................................
Unrecognized prior service costs....................................................................................
Unrecognized net actuarial loss ......................................................................................
Accrued postretirement healthcare cost..........................................................................
Unrecognized amounts recorded in other comprehensive income ................................
Postretirement healthcare liability ..................................................................................
$
$
$
2009
2008
806 $
11
63
216
(30 )
1,066 $
1,066
(149 )
84
N/A
65
1,066 $
1,196
15
72
(465 )
(12 )
806
806
(224 )
324
N/A
(100 )
806
34
Expected payments for the postretirement benefits are as follows:
Fiscal Years
2010 ................................................................................................................ $
2011 ................................................................................................................ $
2012 ................................................................................................................ $
2013 ................................................................................................................ $
2014 ................................................................................................................ $
2015-2019 ....................................................................................................... $
Postretirement
l
Hea thcare
Benefits
68
68
68
67
66
351
Stock Incentive Plan
Our sole stock option plan expired by its terms on April 29, 2009 and no further stock options or rights are available
for grant under the plan. We had 250,000 employee stock options outstanding during the year ended October 31, 2008 and
until April 29, 2009, when all outstanding options under the plan terminated as well. The effect of the employee stock options
outstanding for the years ended October 30, 2009 and October 31, 2008 were not included in the calculation of diluted shares
and diluted earnings per share as to do so would be anti-dilutive. No stock options or rights were granted during the years
ended October 30, 2009 and October 31, 2008. As of April 29, 2009, there were no stock options or rights to purchase shares
of our common stock outstanding.
401(K) Plan for Sales, Administrative, Supervisory and Certain Other Employees
During the fiscal year ended November 3, 2006, we implemented a qualified 401(K) retirement plan (the “Plan”) for
our sales, administrative, supervisory and certain other employees. During fiscal years 2009 and 2008, we made total
contributions to the Plan in the amounts of $409 and $414, respectively.
NOTE 4- Income Taxes:
The provision (benefit) for taxes on income includes the following:
Current:
Federal ..................................................................................................................
State ......................................................................................................................
Deferred:
Federal ..................................................................................................................
State ......................................................................................................................
2009
2008
$
25 $
230
255
1
70
71
—
—
—
5,557
951
6,508
255 $ 6,579
$
The total tax provision (benefit) differs from the amount computed by applying the statutory federal income tax rate to
income (loss) before income taxes as follows:
Provision (benefit) for federal income taxes at the applicable statutory rate ................
(Decrease) increase in provision resulting from state income taxes, net of federal
income
tax benefit .................................................................................................................
Research & development tax credit ..............................................................................
Non-taxable life insurance gain ....................................................................................
Change in valuation allowance .....................................................................................
Other, net ......................................................................................................................
2009
2008
$
2,394 $ (1,995 )
(372 )
521
(15 )
(16 )
315
(110 )
8,615
(2,551 )
17
31
255 $ 6,579
$
35
Deferred income taxes result from differences in the bases of assets and liabilities for tax and accounting purposes.
Receivables allowance......................................................................................................................
Returns allowance.............................................................................................................................
Inventory packaging reserve.............................................................................................................
Inventory capitalization ....................................................................................................................
Incentive compensation ....................................................................................................................
State taxes .........................................................................................................................................
Employee benefits ............................................................................................................................
Other .................................................................................................................................................
Valuation allowance .........................................................................................................................
Current tax assets, net ...............................................................................................................
2009
161 $
189
26
236
39
78
1,045
78
(1,852 )
— $
2008
158
202
209
242
45
24
1,479
63
(2,422)
—
$
$
Incentive compensation ....................................................................................................................
Pension and health care benefits .......................................................................................................
Depreciation......................................................................................................................................
Net operating loss carry-forward ......................................................................................................
Valuation allowance .........................................................................................................................
Non-current tax assets, net........................................................................................................
$
489 $
4,598
47
1,458
(6,592 )
$
— $
96
2,983
(125 )
3,239
(6,193 )
—
Management is required to evaluate whether a valuation allowance should be established against its deferred tax assets
based on the consideration of all available evidence using a "more likely than not" standard. Realization of deferred tax assets
is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and
reversals of existing taxable temporary differences. Forming a conclusion that a valuation allowance is not needed is difficult
when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. At the end
of 2008, poor economic conditions included decreases in building and real estate values and a sharp decline in the stock
market. Management concluded at the end of 2008 that it was more likely than not that deferred tax assets would not be
realized and recorded a full valuation allowance on all deferred tax assets during the fourth quarter of fiscal 2008.
Management reevaluated the need for a full valuation allowance at the end of 2009. Management evaluated both
positive and negative evidence. Although operating results improved significantly compared to the prior year, the weight of
negative factors and level of economic uncertainty in our current business continued to support the conclusion that the
realization of its deferred tax assets does not meet the more likely than not standard. Therefore, a full valuation allowance
will remain against the net deferred tax assets.
As of October 30, 2009, we had net operating loss carryforwards of approximately $3,347 and $2,624 for federal and
state purposes, respectively. These loss carryforwards will expire at various dates from 2012 through 2028.
In July 2006, the FASB issued guidance to clarify the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements. This interpretation prescribed a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance
also discussed derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
The cumulative effect, if any, of applying this guidance is to be reported as an adjustment to the opening balance of retained
earnings in the year of adoption. The provisions of this guidance have been incorporated into ASC 740-10.
As of October 30, 2009, we have provided a liability of $103 for unrecognized tax benefits related to various federal
and state income tax matters. This entire amount would generally reduce our effective income tax rate if recognized in future
reporting periods. However, due to the valuation allowance against its deferred tax assets, the unrecognized tax benefit
would not have an effect on the Company’s effective income tax rate if recognized in future periods. We have not identified
any new unrecognized tax benefits.
As of October 31, 2008, we have provided a liability of $97 for unrecognized tax benefits related to various federal and
state income tax matters. This entire amount would reduce our effective income tax rate if the asset is recognized in future
reporting periods. We have not identified any new unrecognized tax benefits.
36
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
Balance at beginning of year
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Balance at end of year
2009
$97
5
1
$103
2008
92
—
5
$97
We recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax expense. As
of October 30, 2009, we had approximately $5 in accrued interest and penalties which is included as a component of the $103
unrecognized tax benefit noted above.
We are subject to U.S. federal income tax, and are currently under audit by the Internal Revenue Service for the fiscal
years ended November 1, 2002 and October 31, 2003 and November 3, 2006 and November 2, 2007. Our federal income tax
returns are open to audit under the statute of limitations for the years ended October 31, 2006 through 2009. Our statute of
limitations for our fiscal years ended November 1, 2002 and October 31, 2003 have been extended to October 31, 2010. We
believe the appropriate provisions for all outstanding issues have been made for all years under audit.
We are subject to income tax in California and various other state taxing jurisdictions. Our state income tax returns are
open to audit under the statute of limitations for the fiscal years ended October 31, 2005 through 2009.
We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months.
NOTE 5- Line of Credit:
Under the terms of a revolving line of credit with Bank of America, we may borrow up to $2,000 through April 30,
2010. The interest rate is at the bank’s reference rate unless we elect an optional interest rate. The borrowing agreement
contains various covenants, the more significant of which require us to maintain certain levels of shareholders’ equity and
working capital. We are currently in compliance with all provisions of the agreement. There were no borrowings under this
line of credit during the years ended October 30, 2009 or October 31, 2008.
NOTE 6- Contingencies and Commitments:
We lease certain transportation under operating leases through 2011. The terms of the transportation leases provide for
annual renewal options and contingent rental payments based upon mileage and adjustments of rental payments based on the
Consumer Price Index. Minimum rental payments were $425 in fiscal year 2009 and $425 in fiscal year 2008. Contingent
payments were approximately $56 in fiscal year 2009 and $124 in fiscal year 2008. Future minimum lease payments are
approximately $425 in the each of the years 2010 through 2011.
NOTE 7- Segment Information:
We have two reportable operating segments, Frozen Food Products (the processing and distribution of frozen
products), and Refrigerated and Snack Food Products (the processing and distribution of refrigerated meat and other
convenience foods).
We evaluate each segment’s performance based on revenues and operating income. Selling and general administrative
expenses include corporate accounting, information systems, human resource and marketing management at the corporate
level. These activities are allocated to each operating segment based on revenues and/or actual usage.
37
The following segment information is for the years ended October 30, 2009 and October 31, 2008:
2009
Sales............................................................ $
Intersegment sales.......................................
Net sales......................................................
Cost of products sold, excluding
Frozen Food
Products
Refrigerated
and Snack Food
Products
54,740 $
54,740
67,925 $
902
68,827
Other
Elimination
$
$
(902 )
(902 )
Totals
122,665
—
122,665
depreciation ............................................
31,079
40,993
(902 )
71,170
Selling, general and administrative
expenses..................................................
Depreciation................................................
Income (loss) before taxes ......................
Provision for taxes on income ....................
Net income (loss).................................... $
16,727
704
48,510
6,230
224
6,006 $
24,993
1,859
67,845
982
31
951 $
170
170
(170 )
(902 )
(170 ) $
$
41,720
2,733
115,623
7,042
255
6,787
Total assets ............................................. $
11,416 $
22,520 $
24,963 $
— $
58,899
Additions to property, plant and
equipment ............................................... $
730 $
283 $
290 $
— $
1,303
2008
Sales............................................................ $
Intersegment sales.......................................
Net sales......................................................
Cost of products sold, excluding
Frozen Food
Products
Refrigerated
and Snack Food
Products
Other
Elimination
Totals
52,868 $
—
52,868
68,122 $
1,487
69,609
— $
—
—
— $
(1,487 )
(1,487 )
120,990
—
120,990
depreciation ............................................
34,990
46,820
—
(1,487 )
80,323
Selling, general and administrative
expenses..................................................
Depreciation................................................
Income (loss) before taxes ......................
Provision (benefit) for taxes on income......
Net income (loss).................................... $
15,720
784
51,494
1,374
141
1,233 $
27,532
2,192
76,544
(6,935 )
(1,319 )
(5,616 ) $
—
307
307
(307 )
7,757
(8,064 ) $
—
—
(1,487 )
—
—
— $
43,252
3,283
126,858
(5,868 )
6,579
(12,447 )
Total assets ............................................. $
11,657 $
23,400 $
16,898 $
— $
51,955
Additions to property, plant and
equipment ............................................... $
255 $
1,505 $
120 $
— $
1,880
NOTE 8- Unaudited Interim Financial Information
Not applicable to smaller reporting company.
38
BRIDGFORD FOODS CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Allowance for Doubtful Accounts
Balance at
Beginning
of year
Changes in/
Provisions for
Doubtful Accounts
Receivable
Accounts
Written Off Less
Recoveries
Balance
at Close of
Period
Year ended October 30, 2009 ...................................
Year ended October 31, 2008 ...................................
$
$
397 $
482 $
78 $
(194 )$
71 $
(109 ) $
404
397
Year ended October 30, 2009 ...................................
Year ended October 31, 2008 ...................................
$
$
2,015 $
1,980 $
7,147 $
6,909 $
7,200 $
6,874 $
1,962
2,015
Balance at
Beginning
of year
Promotional Allowances
Allowance
for Accruals
Promotions
Incurred
Balance
at Close of
Period
Year ended October 30, 2009 ...................................
Year ended October 31, 2008 ...................................
$
$
8,615 $
— $
— $
8,615 $
171 $
— $
8,444
8,615
Balance at
Beginning
of year
Tax Valuation Allowance
Valuation
Valuation
Allowance
Allowance
Provision
Reversal
Balance
at Close of
Period
39
BRIDGFORD FOODS CORPORATION
SUBSIDIARIES OF REGISTRANT
Exhibit 21.1
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.*............................................................................
Bert Packing Company (inactive)...........................................................................
Moriarty Meat Company (inactive) ........................................................................
State in which Incorporated
California
California
California
Texas
California
Delaware
Delaware
Illinois
Illinois
* - No shares have been issued.
** - Limited Partnership.
Exhibit 31.1
I, William 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)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
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 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 28, 2010
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford, Chairman
(Principal Executive Officer)
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)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
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 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 28, 2010
/s/ RAYMOND F. LANCY
Raymond F. Lancy
(Principal Financial and Accounting Officer)
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1
I, William 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 30, 2009 (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 28, 2010
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford,
Chairman of the Board
(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
Exhibit 32.2
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 30, 2009 (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 28, 2010
/s/ RAYMOND F. LANCY
Raymond F. Lancy
Chief Financial Officer, Vice President
Treasurer and Assistant Secretary
(Principal Financial and Accounting Officer)
BRIDGFORD FOODS CORPORATION
_________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 17, 2010
_________________________________
To the Shareholders of
BRIDGFORD FOODS CORPORATION:
The annual meeting of the shareholders of Bridgford Foods Corporation, a California corporation, will be held at the offices
of Bridgford Foods Corporation, 1308 North Patt Street, Anaheim, California, on Wednesday, March 17, 2010 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 Squar, Milner, Peterson, Miranda & Williamson, LLP as our independent public
accountants for the fiscal year ending on October 29, 2010.
(3) To transact such other business as may properly come before the meeting, or any postponements or adjournments
thereof.
Our Board of Directors recommends that you vote in favor of the foregoing items of business, which are more fully described
in the proxy statement accompanying this notice.
Only shareholders of record at the close of business on February 5, 2010 are entitled to notice of and to vote at the meeting or
any adjournment thereof.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held
on March 17, 2010.
Pursuant to recent rules promulgated by the Securities and Exchange Commission, or the SEC, we have elected to provide
access to our proxy materials both by sending you this full set of proxy materials, including a notice of annual meeting, proxy card and
2009 Annual Report to Shareholders, and by notifying you of the availability of our proxy materials on the Internet. The notice of
annual meeting, proxy statement, proxy card and 2009 Annual Report to Shareholders are available at
http://materials.proxyvote.com/108763. In accordance with SEC rules, the materials on the site are searchable, readable and
printable and the site does not have “cookies” or other tracking devices which identify visitors.
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. Shareholders
attending the meeting whose shares are held in the name of a broker or other nominee who desire to vote their shares at the
meeting should bring with them a proxy or letter from that firm confirming their ownership of shares. The meeting is located
at Bridgford Foods Corporation, 1308 North Patt Street, at the intersection of Lemon St. and the 91 Freeway in the city of
Anaheim, California. Additional driving directions may be obtained upon request by contacting the office manager at (714)
526-5533.
By order of the Board of Directors
/s/ Cindy Matthews-Morales
Cindy Matthews-Morales
Secretary
Anaheim, California
February 12, 2010
(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 17, 2010
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 offices of
Bridgford Foods Corporation, 1308 North Patt Street, Anaheim, California, on Wednesday, March 17, 2010 at 10:00 a.m., and at any
adjournment thereof. All shareholders of record at the close of business on February 5, 2010 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 12, 2010.
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 Squar, Milner, Peterson, Miranda & Williamson, 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, facsimile or electronic mail. 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.
On February 5, 2010, there were 9,336,627 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, upon prior notice, 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.
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. Each of these individuals has served as 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 February 5, 2010 appears under the caption
“PRINCIPAL SHAREHOLDERS AND MANAGEMENT” below.
Name
Age
Current Position at the Company
Allan L. Bridgford
William L. Bridgford
Bruce H. Bridgford
Robert E. Schulze
Todd C. Andrews
D. Gregory Scott
Richard A. Foster
Paul R. Zippwald
Senior Chairman of the Board and Member of the Executive Committee (1)(4)
Chairman of the Board and Member of the Executive Committee (1)(4)
74
55
57 Director (1)(4)
75 Director (2)(3)(4)
44 Director (2)(3)(4)
53 Director, Audit Committee and Compensation Committee Chairman (2)(3)(4)
74 Director (2)(3)(4)
72 Director (2)(3)(4)
(1) William L. Bridgford and Bruce H. Bridgford are cousins and are also each nephews of Allan L. Bridgford.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
(4) Member of the Nominating Committee.
Directors
Year First
Became
Director
1952
2004
2009
1980
2004
2006
2001
1992
Allan L. Bridgford has served as Senior Chairman of the Board since March of 2006. From March of 1995 through March of
2006, Mr. Bridgford served as Chairman of the Board. He has been an employee of the Company since 1957, and reduced his work
schedule to 80% in March of 2000 and 60% in March of 2005. Mr. Bridgford’s base compensation was reduced by the same
percentage as his work schedule reduction. Mr. Bridgford has also served as a member of the Executive Committee since 1972. He is
a graduate of Stanford University with a Bachelors degree in Economics.
William L. Bridgford has served as Chairman of the Board since March of 2006. He previously served as President of the
Company from June of 2004 until March of 2006, and Secretary of the Company for more than five years. Mr. Bridgford has been a
full-time employee of the Company since 1981. Mr. Bridgford has also served as a member of the Executive Committee since 2004.
Mr. Bridgford is a graduate of California State University of Fullerton in Business Management.
Bruce H. Bridgford has served as President of Bridgford Foods of California, a division of the Company, since March of
1999. Mr. Bridgford has been a full time employee of the Company since 1977 and is a graduate of the University of Southern
California.
Robert E. Schulze is a Certified Public Accountant and previously served the Company in several capacities including
President, Executive Vice President, Principal Financial Officer, Secretary and Treasurer. Mr. Schulze retired as an employee
effective as of June 30, 2004. He attended Saint Louis University, University of California, Los Angeles and holds a BS in
Accounting from California State University, Long Beach.
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 has been employed by Public Storage, Inc. for more than the past five years.
Mr. Andrews, a resident of Valencia, California, is a graduate of California State University, Northridge.
D. Gregory Scott is a Certified Public Accountant and currently serves as the Managing Director of Peak Holdings, LLC, an
investment management company, based in Beverly Hills, California. Mr. Scott has been with Peak Holdings, LLC for more than the
past five years. Peak Holdings, LLC and its affiliates own and manage in excess of three million square feet of office, retail and
warehouse space throughout the United States.
Richard A. Foster holds a BS from Stanford University and an MS from the University of California, Los Angeles, and 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. He is a
graduate of Dartmouth College's Tuck School of Business, and also holds a graduate degree from the American Institute of Banking.
The Company is considered a “controlled company” within the meaning of Rule 5615(c)(1) of the NASDAQ Marketplace
Rules based on the approximate 75% ownership of the Company by Bridgford Industries Incorporated and is therefore exempted from
various rules pertaining to certain “independence” requirements of its directors. Nevertheless, the Board of Directors has determined
that Messrs. Andrews, Foster, Schulze, Scott and Zippwald are all “independent directors” within the meaning of Rule 5605 of the
NASDAQ Marketplace Rules.
During fiscal year 2009 the Company’s Board of Directors held twelve regular monthly meetings. Each of the nominees
holding office during this period attended at least 75% of the aggregate of the number of monthly meetings of the Board of Directors
and meetings of committees upon which he served. Non-employee directors were paid $1,350 for each Board of Directors meeting
attended. Employee directors received no additional compensation for their services.
Board Committees
The Board of Directors maintains three committees, the Compensation Committee, the Audit Committee and the Nominating
Committee.
Compensation Committee
The Compensation Committee for fiscal year 2009 and as of the date of mailing of this proxy statement consists of Messrs.
Andrews, Foster, Schulze, Scott and Zippwald. Each of the members of the Compensation Committee is a non-employee director and
is independent as defined in Rule 4200(a) (15) of the NASDAQ Marketplace Rules. The Compensation Committee is responsible for
establishing and administering the Company’s compensation arrangements for all executive officers and directors.
The Compensation Committee meets no less frequently than annually as circumstances dictate to discuss and determine
executive officer and director compensation. The Compensation Committee does not generally retain the services of any
compensation consultants; however, from time to time it utilizes the competitive compensation data from public and private sources in
connection with its annual review. The Compensation Committee has the power to form and delegate authority to subcommittees
when appropriate, provided that such subcommittees are composed entirety of directors who would qualify for membership on the
Compensation Committee. See “Compensation Discussion and Analysis” and “Director Compensation.”
The Compensation Committee held one (2) meetings during fiscal 2009, which were attended by all committee members. No
additional compensation is paid for participation on the Compensation Committee. The Compensation Committee does not operate
under a written charter.
Audit Committee
The Audit Committee for fiscal year 2009 and as of the date of mailing of this proxy statement consists of Messrs. Andrews,
Foster, Schulze, Scott and Zippwald, each of whom received $200 to $500 per meeting, depending on length of meeting attended. The
Audit Committee has been established in accordance with SEC rules and regulations, and each of the members of the Audit
Committee is a non-employee director and is independent as defined in Rule 5605(c)(2) of the NASDAQ Marketplace Rules. The
Board of Directors has determined that Messrs. Andrews, Schulze and Scott qualify as “financial experts” as such term is used in the
rules and regulations of the Securities and Exchange Commission (the “SEC”).
The Audit Committee meets periodically with the Company’s independent registered public accountants and reviews the
Company’s accounting policies and internal controls. It also reviews the scope and adequacy of the independent registered public
accountants’ examination of the Company’s annual financial statements. In addition, the Audit Committee selects the firm of
independent registered public accountants to be retained by the Company, subject to shareholder approval, pre-approves services
rendered by its independent registered public accountants and pre-approves all related-party transactions . The Audit Committee held
eleven (11) meetings during fiscal 2009. In addition, the Audit Committee holds a pre-earnings release conference with the
Company’s independent registered public accountants on a quarterly basis. The Audit Committee operates under an Amended and
Restated Charter dated August 14, 2006, a copy of which was filed as Exhibit A to the Company’s proxy statement for its 2008
Annual Meeting of Shareholders.
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 the Company’s 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, as defined by the NASDAQ Marketplace Rules.
The Board last met in its role as nominating committee in August 2008 to approve the appointment of one new director. The
nominating committee does not act pursuant to a written charter. Members reconfirm their interest annually to continue participation
on the Board of Directors.
The Director Nominating Process
In identifying new Board candidates, the Board will seek recommendations from existing members and executive officers. In
addition, the Board will 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 in its capacity as nominating
committee does not evaluate nominees recommended by shareholders differently from its evaluation of other director nominees. 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 than 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 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 SEC; 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. No director nominations by
shareholders have been received as of the filing of this Proxy Statement.
Code of Ethics
The Company adopted a code of ethics that is applicable to, among other individuals, 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 http://www.bridgford.com (and designated therein as the Code of Conduct). Any amendment or waiver to the
Company’s code of ethics that applies to its directors or executive officers will be posted on its website or in a report filed with the
SEC on Form 8-K.
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
The Company does not currently have a specific policy regarding director attendance at annual shareholder meetings.
However, directors are strongly encouraged to attend annual shareholder meetings. All eight (8) directors attended the 2009 annual
meeting of the Company’s shareholders.
Executive Officers
Members of the Company’s Executive Committee, comprised of the five (5) executive officers named below, act in the
capacity of Chief Executive Officer of the Company. The following five executive officers are elected annually to serve at the
pleasure of the Board of Directors:
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Senior Chairman of the Board and Member of the Executive Committee (1)
Vice President and Chairman of the Executive Committee (1)
Chairman of the Board and Member of the Executive Committee (1)
President and Member of the Executive Committee
Chief Financial Officer, Vice President, Treasurer and Member of the Executive Committee
(1) William L. Bridgford is the son of Hugh Wm. Bridgford, the nephew of Allan L. Bridgford and the cousin of Bruce H.
Bridgford. Hugh Wm. Bridgford and Allan L. Bridgford are brothers.
A biographical summary regarding Messrs. Allan L. Bridgford and William L. Bridgford is set forth above under the caption
“Directors.” Biographical information with respect to the Company’s other executive officers is set forth below:
Hugh Wm. Bridgford, age 78, has served as Vice President of the Company and Chairman of the Executive Committee since
March of 1995. He 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.
John V. Simmons, age 54, has served as President of the Company and member of the Executive Committee since 2006. He
previously served as Vice President of the Company for more than the five years.
Raymond F. Lancy, age 56, has served as Treasurer of the Company for more than the past five years. He has also served as
a member of the Executive Committee since 2001, Vice President since 2001 and Chief Financial Officer since 2003.
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 February 5, 2010 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. The information as to each person or entity has been
furnished by such person or group.
Amount and Nature of Shares Beneficially Owned
Name and Address
of Beneficial Owner (1)
Sole Voting and
Investment Power
Shared Voting and
Investment Power (2)
Total Beneficially
Owned (3)
Percentage of
Outstanding
Shares
Beneficially
Owned (3)
76.6
77.2
78.3
76.7
76.7
1.8
76.7
*
*
*
*
*
7,156,396
—
7,156,396
47,917
155,882
7,986
1,654
167,870
6,175
363
200
2,234
8,550
1,452
7,156,396
7,156,396
7,156,396
7,156,396
—
7,156,396
—
—
—
7,204,313
7,312,278
7,164,382
7,158,050
167,870
7,162,571
363
200
2,234
8,550
1,452
7,556,679
7,156,396
7,556,679
80.9
Bridgford Industries Incorporated
1707 Good-Latimer Expressway
Dallas, TX 75226
Hugh Wm. Bridgford
1707 Good-Latimer Expressway
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
John V. Simmons
1707 Good-Latimer Expressway
Dallas, TX 75226
Todd C. Andrews
Richard A. Foster
D. Gregory Scott
Paul R. Zippwald
All directors and officers as a group
(12 persons)
*
Less than one percent (1%).
(1) Unless otherwise indicated, the address of such beneficial owner is the Company’s principal executive offices, 1308 North Patt
Street, Anaheim, California 92801.
(2) 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, Bruce H.
Bridgford and Baron R.H. Bridgford presently own 16.06%, 10.54%, 7.48%, 10.29% and 9.54%, 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%, 0.58%, 0.63% and 1.75%, 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.
(3) Applicable percentage of ownership as of February 5, 2010 is based upon 9,336,627 shares of common stock outstanding.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with
respect to shares shown as beneficially owned. Except as otherwise indicated, and subject to community property laws where
applicable, to the knowledge of the Company the persons listed above have sole voting and investment power with respect to
all shares shown as beneficially owned by them.
The Company is not aware of any arrangements that may at a subsequent date result in a change of control of the Company.
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 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 30, 2009, all of the Company’s officers, directors and 10% shareholders complied with all applicable Section 16(a) filing
requirements.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Compensation Overview
This Compensation Discussion and Analysis provides information regarding the compensation paid to the Company’s
“named executive officers” or “NEOs,” all of whom are members of the Executive Committee. Historically, the Company has been
and continues to be principally managed by the Executive Committee. The Executive Committee, as a unit, serves as the Company’s
“Chief Executive Officer.” The Executive Committee currently consists of the following five members:
• Hugh Wm. Bridgford, Vice President and Chairman of the Executive Committee
• Allan L. Bridgford, Senior Chairman of the Board
• William L. Bridgford, Chairman of the Board and Principal Executive Officer
•
John V. Simmons, President
• Raymond F. Lancy, Chief Financial Officer, Vice President, Treasurer and Principal Financial Officer
The Company’s executive compensation program is overseen by the Compensation Committee, or the Committee, which is
comprised of certain non-employee members of the Company’s Board of Directors. The basic responsibility of the Committee is to
review the performance of the officers and key employees toward achieving the Company’s strategic goals and to help ensure that the
Company is able to attract and retain individuals who can lead the Company to achieve those goals.
One of the Company’s primary strategic goals is to improve shareholder value while meeting its objectives for customer
satisfaction, improved sales and financial performance, sound corporate governance, and competitive advantage. The Company’s
current emphases on controlling costs and improving profit margins on a consistent basis are also important factors which affect the
Company’s compensation decisions. The Committee’s goal is to work with management to balance the Company’s financial goals
and circumstances with the need to attract, motivate and retain the fully qualified and capable individuals the Company needs to meet
and surpass its customers’ and shareholders’ expectations in a highly-competitive industry.
Compensation Philosophy and Objectives
The core of the Company’s executive compensation philosophy is to pay for performance. To that end, incentive bonus
targets are set each year to reward excellent executive performance based upon the achievement of profit objectives by business unit
and the Company’s overall profitability based on pretax income, thus stimulating all executives to assume broad responsibility for the
Company’s overall financial welfare and performance.
The Compensation Committee’s guiding principles are as follows:
• Work with management to provide a compensation program that recognizes individual contributions as well as the
Company’s overall business results;
• Provide reasonable levels of total compensation which will enable the Company to attract and retain qualified and
capable executive talent within its industry while also considering the Company’s current goals of controlling costs and
effecting consistent improvements in its overall financial condition;
• Motivate executive officers to deliver optimum individual and departmental performance;
• Develop and reward a leadership team that is capable of successfully operating and growing an increasingly competitive
and complex business in a rapidly changing industry;
• Ensure that executive compensation-related disclosures are made to the public on a timely basis.
Role of the Compensation Committee
The Compensation Committee sets and approves the NEO’s total compensation. The compensation of all NEO’s is
recommended by the Executive Committee and, after review and analysis, approved by the Compensation Committee. The
Compensation Committee met one time during fiscal year 2009. The responsibilities of the Compensation Committee are as follows:
• Review and approve the compensation structure and compensation for the Executive Committee, including base salary,
benefits, bonus, incentive and equity compensation (if any). The full Board of Directors evaluation of the Executive
Committee’s performance is considered in setting incentives. The Committee seeks to maintain an appropriate balance,
in light of overall Company performance and profitability, between the compensation of the Executive Committee and
the compensation of other officers and employees generally.
• Review and approve on an annual basis the compensation structure and compensation for the Company’s Executive
Committee including base salary, incentive bonuses and equity compensation, if any. The Committee may also make
any interim adjustments in any such compensation or plan as the Committee may deem appropriate, or as may be
requested by the full Board of Directors or by senior management.
• Provide consultation and oversight of senior management’s decisions concerning the compensation of management,
including evaluation procedures for Company officers and other executives deemed eligible for performance incentives
(bonuses) or equity compensation.
• Review and approve compensation packages for new executives and, as needed, termination packages for departing
officers or other executives.
• Review and, as deemed necessary or desirable, oversee the administration of the Company’s stock incentive and stock
purchase plans, if any.
• Assist the Board of Directors and management in developing and evaluating potential candidates for executive positions.
• Advise the Board of Directors in its succession-planning initiatives for the Company’s executive officers and other
senior officers.
• Oversee preparation of a report on executive compensation as required for inclusion in the Company’s annual proxy
statement.
Role of Management in the Compensation Determination Process
The Company’s senior management team, primarily the Senior Chairman and the Chairman of the Executive Committee,
support the Committee in the executive compensation decision-making process. At the request of the Compensation Committee, the
Senior Chairman presents his performance assessment and recommendations to the Committee regarding base salaries, incentive
targets and profitability ranges, incentive plan structure and other compensation-related matters of the Company’s executives (other
than with respect to his own compensation).
Role of Compensation Consultant
The Compensation Committee has decided not to utilize the services of a paid compensation consultant after concluding that
such a consultant would provide insufficient value for the cost thereof.
Total Compensation for Executive Officers
The compensation packages offered to the Company’s executive officers are comprised of one or more of the following
elements:
• Base salary;
• Annual cash bonus incentives;
• Post retirement healthcare and pension benefits.
The Company does not have any formal policies which dictate the amount to be paid with respect to each element, nor does it
have any policies which dictate the relative proportion of the various elements. The Company also does not have any formal policies
for allocating between cash and non-cash compensation or short-term and long-term compensation. Instead, the Company relies on
the judgment of the Compensation Committee and input and feedback from the management team, including in particular the Senior
Chairman of the Board and the Chairman of the Executive Committee. The Committee has no plans to adopt any such formulas,
ratios or other such targets that might artificially dilute the Company’s effectiveness in achieving its overall profit objectives. In fact,
all of the Company’s compensation policy decisions are made in the context of its current financial position and are subordinated to
the Company’s current goal of achieving overall profitability on an annual basis. Each of the compensation components is described
in more detail below.
Base Salary
The Company provides executive officers and other employees with base salary to compensate them for services rendered
during the fiscal year. The purpose of base salary is to reward effective fulfillment of the assigned job responsibilities, and to reflect
the position’s relative value to the Company and competitiveness of the executive job market. Base salaries for executive officers are
determined based on the nature and responsibility of the position, salary norms (if any) for comparable positions, the expertise and
effectiveness of the individual executive, and the competitiveness of the market for the executive officer’s services.
The Company has successfully held most base salaries at the low end of the competitive range in order to reduce its overall
cost structure and to achieve systematic improvement in the financial performance of the business without incurring a large turnover
in executive talent and leadership.
Any “merit increases” for the Company’s executive officers are subject to the same budgetary constraints as apply to all other
employees and operating departments. Executive officer salaries are evaluated as part of the Company’s annual review process and
may be adjusted where justified in the context of the Company’s current focus on profitability and controlling expenses.
For fiscal year 2009, the Compensation Committee set a base salary of $4,345 per week for each Executive Committee
member, reduced on a pro-rata basis for any member working less than a full time schedule. This change represented an approximate
3% increase in the base salary compared to fiscal year 2008.
Annual Cash Bonus Incentives
The Company’s policy is to make a portion of each executive’s compensation contingent upon the Company’s basic financial
performance as well as upon his own level of performance and contribution to the business or segment of the Company’s operations.
The achievement of specific strategic and individual goals is intended to correlate with the creation of quarterly and longer-term
shareholder value. Profit-related annual bonus incentives allow the Company to offer a reasonably competitive total compensation
package despite relatively lower base salaries, while directly aligning each executive’s performance with the Company’s overall
financial performance. Annual bonus incentives and ranges are analyzed by the Executive Committee with oversight and approval of
the Compensation Committee. For the fiscal year ended October 30, 2009, discretionary bonuses were accrued to members of the
Company’s Executive Committee in the amounts set forth in the column titled “Bonus” in the caption “Summary Compensation
Table” below. The bonus amounts reflected for fiscal 2009 were calculated based on 3% of the Company’s net income before taxes
as pro-rated for part-time employment.
Long-Term Equity-Based Incentive Compensation
The Compensation Committee has concluded that long-term stock-related compensation has very limited if any value as an
employee incentive or retention tool. Historically the Company’s equity-based incentive awards have proved to have little or no value
to the recipient.
Beginning in 2005, U.S. accounting rules required the Company to expense any stock option awards according to a formula
which could impose a costly charge on the Company’s income statements, thereby burdening or erasing its profit margins. Because of
these factors, the Company has not granted stock options and awards to avoid the adverse effects of such expenses.
The Company aims to align its executive officers’ interests with those of its shareholders by enhancing the link between the
creation of sustainable profits and, in turn, improved shareholder value through the profit-related executive incentive compensation
plan described above. The Compensation Committee believes that by increasing profit margins on a continuing basis the Company
can derive long-term growth in shareholder value as reflected in the Company’s market price per share.
Stock Options. In fiscal 2009, the Company did not award any stock options to the named executive officers or any of its
other employees or directors. Historically, the number of stock options granted to an executive officer is based upon the executive
officer’s position and level of responsibility. The Company does not issue discounted stock options or permit the re-pricing or reissue
of previously issued options.
Restricted Stock. In fiscal 2009, the Company did not award any shares of restricted common stock to the named executive
officers or to any of its other employees or directors. As with stock options, the number of shares of restricted stock that may be
awarded to a named executive officer in the future, if any, will be based upon the executive’s position and level of responsibility.
The Company’s 1999 Stock Incentive Plan expired by its own terms on April 29, 2009 and no additional stock options or
restricted stock may be granted thereunder.
Non-Qualified Deferred Compensation
Effective January 1, 1991 the Company adopted a deferred compensation savings plan for certain key employees. Under this
arrangement, selected employees contributed a portion of their annual compensation to the plan. The Company contributed an amount
to each participant’s account by computing an investment return equal to Moody’s Average Seasoned Bond Rate plus 2%. The
purpose of the plan was to provide tax planning and supplemental funds upon retirement or death of certain selected employees and to
aid in retaining and attracting employees of exceptional ability. Separate accounts are maintained for each participant to properly
reflect his or her total vested account balance.
Pension and Retirement Benefits
Retirement Plan for Employees of Bridgford Foods Corporation for Administrative and Sales Employees. The Company has
a defined benefit plan (“Primary Benefit Plan”) for certain of its employees not covered by collective bargaining agreements. The
Primary Benefit 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. Effective May 12, 2006,
future benefit accruals under the Primary Benefit Plan were frozen.
Supplemental Executive Retirement Plan. Retirement benefits otherwise available to certain key executives under the
Primary Benefit 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 (the “Supplemental Executive Retirement Plan”). Benefits will be provided under the
Supplemental Executive Retirement Plan in an amount 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 benefits are capped at $120,000 per
year for Allan L. Bridgford 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.
Bridgford Foods Retirement Savings 401(k) Plan. The Company implemented a 401(k) plan effective May 13, 2006. The
Company makes a matching contribution to each employee’s account based on pretax contributions in an amount equal to 100% of the
first 3% of compensation and 50% of the next 2% of compensation contributed to the Plan. No amounts are contributed by the
Company unless the employee elects to make a pretax contribution to the plan.
Perquisites and Other Benefits
The Company provides its executive officers with various health and welfare programs and other employee benefits which
are generally available on the same cost-sharing basis to all of its employees. However, in keeping with the Company’s policy of
controlling costs in connection with its profitability objectives, it does not provide any significant perquisites or other special benefits
to its executive officers including, but not limited to, payment of club memberships, fees associated with financial planning, executive
dining rooms or special transportation rights. The Company does not own an airplane and does not provide aircraft for executives for
business or personal purposes.
The Company provides post-retirement healthcare for certain executives and their spouses (who are within fifteen years of
age of the employee) who have reached normal retirement age. This coverage is secondary to Medicare. Coverage for spouses
continues upon the death of the employee. The maximum benefit under the plan is $100,000 per year per retiree. The plan is subject
to annual renewal by the Board of Directors and may be discontinued at the Board’s discretion. The plan was renewed for one year at
the Board of Directors meeting held in January 2010. The combined cost of this plan during the fiscal year ended October 30, 2009
was $124,000 for all active and retired participants.
The Company pays life and disability insurance premiums on policies under which the Company President is the named
owner and beneficiary.
Employment Agreements
The Company currently does not have any employment, severance, change of control or similar agreements with any of its
NEOs. Refer to the compensation discussion below for information on pension, deferred compensation, and benefit-related payments
payable in the event of a qualifying event such as employment termination, disability, death, or sale/merger/acquisition.
Tax and Accounting Implications
The Compensation Committee is responsible for considering the deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code, which provides that it may not deduct non-performance-based compensation of more
than $1,000,000 that is paid to its executive officers. The Company believes that the compensation paid under the current
management incentive programs is fully deductible for federal income tax purposes. In certain situations, the Committee may approve
compensation that will not meet the requirements for deductibility in order to ensure competitive levels of compensation for its
executives and to meet its obligations under the terms of various incentive programs. However, the issue of deductibility has not
come before the Committee in recent years and is not expected to be a concern for the foreseeable future.
Compensation Committee Report
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy
Statement.
The Compensation Committee of the Board of Directors
D. Gregory Scott, Chairman
Todd C. Andrews
Richard A. Foster
Robert E. Schulze
Paul R. Zippwald
The foregoing Compensation Committee Report is not soliciting material, is not deemed filed with the Securities and
Exchange Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
Summary Compensation Table
The table below provides summary information concerning cash and certain other compensation paid to or accrued for the
Company’s NEOs during fiscal years 2007, 2008 and 2009, respectively. Each of the NEOs named below are also members of the
Company’s Executive Committee which acts in the capacity of Chief Executive Officer of the Company. See “Compensation
Discussion and Analysis” for further discussion of compensation arrangements pursuant to which the amounts listed in the table below
were paid or awarded and the criteria for such payment or award.
Name and Principal Position
Year
Base Salary
Allan L. Bridgford
Senior Chairman of the Board
Hugh Wm. Bridgford
Vice President and Chairman of
the Executive Committee
William L. Bridgford
Chairman of the Board
John V. Simmons
President
Raymond F. Lancy
Chief Financial Officer,
Vice President and Treasurer
2009
2008
2007
2009
2008
2007
2009
2008
2007
2009
2008
2007
2009
2008
2007
$131,609
126,547
121,680
$219,348
210,912
202,800
$219,348
210,912
202,800
$219,348
210,912
202,800
$219,348
210,912
202,800
Bonus
(1)
$147,042
—
—
$245,070
—
—
$245,070
—
—
$245,070
—
—
$245,070
—
—
Stock
Awards
(2)
Option
Awards
(3)
Non-Equity
Incentive Plan
Compensation
(4)
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
$—
—
—
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
(5)
$ (20,322)
137,271
97,921
$ (18,663)
142,529
91,355
$162,676
12,357
32,302
$ 96,549
12,357
535
$131,463
(36)
32,898
All Other
Compensation
(6)
$19,082
1,713
654
$25,442
11,275
193
$36,814
8,545
13,316
$61,875
7,454
11,775
$33,830
8,436
13,058
Total
$276,565
265,531
220,255
$469,787
364,716
294,348
$662,498
231,814
248,418
$621,432
230,723
215,110
$628,301
219,312
248,756
(1)
Each NEO is eligible to receive a discretionary cash bonus based on the Company’s and the individual’s performance during a
given fiscal year. Bonuses earned for the 2009 fiscal year will be paid in three equal annual installments beginning in January
2010.
(2)
The Company did not grant any stock awards to any of the NEOs during fiscal years 2007, 2008 and 2009.
(3)
The Company did not grant any option awards to any of the NEOs during fiscal years 2007, 2008 and 2009.
(4)
(5)
(6)
The Company does not currently sponsor any formal non-equity based compensation plans on behalf of its NEOs. All non-
equity incentive based bonuses, if any, are paid as discretionary bonuses and reflected under the “Bonus” column.
Includes the change in present value of each of the non-qualified deferred compensation plan and pension and retirement
benefits described in the Compensation Discussion and Analysis above. The assumed discount rates used for fiscal years 2007,
2008 and 2009 were 6.25%, 8.00% and 5.75%, respectively for the defined benefit plan and 7.00% for all covered fiscal years
for the Supplemental Executive Retirement Plan and Non-Qualified Deferred Compensation Plan.
Includes matching contributions to the Bridgford Foods Retirement Savings 401(k) plan and change in present value of post-
retirement healthcare benefits. The amount for Mr. Simmons also includes life and disability insurance premiums paid by the
Company.
Narrative to Summary Compensation Table
See “Compensation Discussion and Analysis” for further discussion of compensation arrangements pursuant to which the
amounts listed under the Summary Compensation Table were paid or awarded and the criteria for such payment or award.
Grants of Plan-Based Awards
There were no stock options, restricted stock, restricted stock units or equity or non-equity-based performance awards
granted to the Company’s NEOs during the fiscal years ended October 30, 2009, October 31, 2008 or November 2, 2007.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding option or stock awards held by any NEO as of October 30, 2009.
Option Exercises and Stock Vested
There were no shares acquired upon the exercise of stock options or vesting of stock awards during fiscal years 2007, 2008
and 2009 by any NEO.
Pension Benefits
The tables below provide information concerning retirement plan benefits for each NEO and payments due upon certain
termination scenarios.
Retirement Plan for Employees of Bridgford Foods Corporation for Administrative and Sales Employees
Normal Retirement: Benefits commence upon reaching the” Normal Retirement Date”, which is the first day of the month on
or after attainment of age 65. Pension benefit payments begin at normal retirement date and continue until death.
Early Retirement: A participant may choose to retire up to ten years before the normal retirement date. If a participant retires
early, the accrued pension will be reduced by a percentage to reflect the longer period over which pension benefits will be received. If
a participant is married for at least one year and dies before retirement, a pension benefit will be payable to the surviving spouse for
his or her life; provided certain eligibility requirements have been met.
Death Benefits: Payments to a surviving spouse will begin on the first day of the month following a participant’s death but
not sooner than the earliest date a participant could have elected to retire.
Disability Benefits: A disability benefit is the accrued pension credited to a participant as of the date of disability. A
disability is defined as a physical or mental condition which has existed continually for not less than six months and which renders a
participant incapable of any employment and which does not result from military service, any felonious activity, use of narcotics,
habitual drunkenness, or is intentionally inflicted.
The years of credited service, present value of accumulated plan benefits and payments made during the fiscal year were as
follows:
For the Fiscal Year ended October 30, 2009:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of Years
Credited Service
Present Value of
Accumulated Benefit (1)
Payments During
Fiscal Year
51
53
36
30
17
$835,956
$713,754
$358,735
$284,647
$260,146
$ 71,989
$ 51,808
$ —
$ —
$ —
(1)
The assumed discount rate used was 5.75% to compute the present value of the accumulated benefit. The RP-2000 Combined
Mortality Table was used and an expected return on assets of 8.00% was assumed.
For the Fiscal Year ended October 30, 2008:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of Years
Credited Service
Present Value of
Accumulated Benefit (1)
Payments During
Fiscal Year
50
52
35
29
16
$777,405
$647,922
$241,188
$188,098
$173,912
$ 69,342
$ 49,909
$ —
$ —
$ —
(1)
Annuity Mortality Table was used and an expected return on assets of 8.00% was assumed.
The assumed discount rate used was 8.00% to compute the present value of the accumulated benefit. The 1983 Group
For the Fiscal Year Ended November 2, 2007:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of Years
Credited Service
Present Value of
Accumulated Benefit (1)
Payments During
Fiscal Year
49
51
34
28
15
$701,911
$570,929
$222,637
$175,741
$159,737
$ 67,761
$ 48,771
$ —
$ —
$ —
(1)
The assumed discount rate used was 6.25% to compute the present value of the accumulated benefit. The 1983 Group Annuity
Mortality Table was used and an expected return on assets of 8.00% was assumed.
Supplemental Executive Retirement Plan (SERP)
Payment of Retirement Benefit: All retirement, disability and death benefits shall be paid in monthly installments beginning
on the Commencement Date following the participant’s retirement, disability or death and shall continue for a period of fifteen years.
Normal Retirement: Benefits commence upon reaching the” Normal Retirement Date”, which means the date on which the
participant has both attained age 65 and completed at least ten years of participation. SERP benefit payments begin at normal
retirement date and continue until death.
Early Retirement: A participant may choose to retire up to ten years before the normal retirement date if the participant has
completed at least five years of participation. If a participant retires early, the SERP benefit will be determined based on the vested
percentage attained as the time of retirement.
Death Benefits: If a participant dies prior to having commenced receipt of benefits and is eligible for benefits hereunder, the
participant’s beneficiary shall be entitled to receive an annual death benefit equal to the Normal Retirement Benefit determined as if
the participant attained Normal Retirement Age on the date of his death, or, if after the Participant’s Normal Retirement Date, equal to
the Late Retirement Benefit. If a participant dies after having commenced receipt of benefits, benefits shall continue to be paid but to
the Participant’s Beneficiary at the same time and in the same form as the benefits would have been payable to the participant. No
benefit will be payable to a participant’s beneficiary if the participant terminates employment with the Company before he is eligible
for a retirement benefit and thereafter dies.
Disability Benefits: A disability benefit is the vested percentage of SERP benefit credited to a participant as of the date of
disability. A disability is defined as a physical or mental condition which has existed continually for not less than twelve months and
which renders a participant incapable of any employment and which does not result from military service, any felonious activity, use
of narcotics, habitual drunkenness, or is intentionally inflicted.
For the Fiscal Year ended October 30, 2009:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Present Value of
Accumulated Benefit (1)
Payments During
Last Fiscal Year
$ 277,293
$ 328,692
$ 997,093
$
—
$ 997,093
$ 51,528
$ 61,080
$ —
$ —
$ —
(1)
A 7.00% discount rate was used to compute the present values.
For the Fiscal Year ended October 31, 2008:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Present Value of
Accumulated Benefit (1)
Payments During
Last Fiscal Year
$ 306,820
$ 363,840
$ 951,864
—
$
$ 951,864
$ 51,528
$ 61,080
$ —
$ —
$ —
(1)
A 7.00% discount rate was used to compute the present values.
For the Fiscal Year Ended November 2, 2007:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Present Value of
Accumulated Benefit (1)
Payments During
Last Fiscal Year
$ 338,865
$ 401,678
$ 655,300
—
$
$ 674,203
$ 51,528
$ 61,080
$ —
$ —
$ —
(1)
A 7.00% discount rate was used to compute the present values.
The following table estimates the present value of SERP benefits under different employment termination scenarios as of
October 30, 2009:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford (2)
John V. Simmons
Raymond F. Lancy (2)
Present Value of
Benefits Upon Voluntary
Termination of
Employment
(1)
Present Value of
Benefits if Disabled
(1)
Present Value of
Benefit Upon Death
(1)
Present Value of
Involuntary Termination
of Employment Due to
Sale/Merger/Acquisition
(1)
$ 277,293
$ 328,692
$ 267,464
$
—
$ 299,815
$ 277,293
$ 328,692
$ 997,093
$
—
$ 997,093
$ 277,293
$ 328,692
$ 997,093
$
—
$ 997,093
$ 277,293
$ 328,692
$ 997,093
$
—
$ 997,093
(1)
In each scenario above, the benefit amount shown is calculated at October 30, 2009. A 7.00% discount rate was used to
compute the present values. In the case of a voluntary termination, the participant shall be entitled to the vested portion of any
such early retirement benefit but shall not commence receipt of such early retirement benefit until the commencement date
following the date the participant would have attained the early retirement date had the participant remained employed by the
Company. Upon a finding that the participant (or, after the participant’s death, a beneficiary) has suffered an unforeseeable
emergency, the Committee may at the request of the participant or beneficiary, and subject to compliance with Internal
Revenue Code Section 409A, accelerate distribution of benefits under the SERP in the amount reasonably necessary to alleviate
such unforeseeable emergency.
(2) Death benefits for William L. Bridgford and Raymond F. Lancy are payable as a lump sum payment. All other benefits are
paid in the form of a monthly annuity. The actual payment amount for William L. Bridgford and Raymond F. Lancy would be
determined using a discount rate similar to the rate required for qualified plans. The rate assumed for these estimates is 7.00%.
The following table estimates future SERP payments under different termination scenarios as of October 30, 2009:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Payment Upon Voluntary
Termination of Employment
Continues to receive
$4,294 for another
80 months
Continues to receive
$5,090 for another
80 months
$3,077 per month for
180 months beginning
on 11/2/2009
—
Payment if Disabled (1)
Continues to receive
$4,294 for another
80 months
Continues to receive
$5,090 for another
80 months
$8,793 per month for 180
months commencing after
disability
—
Death Benefit
from Plan (2)
Continues to receive
$4,294 for another
80 months
Continues to receive
$5,090 for another
80 months
$8,793 per month for
180 months beginning
just after death
—
Involuntary Termination of
Employment Due to
Sale/Merger/Acquisition
Continues to receive
$4,294 for another
80 months
Continues to receive
$5,090 for another
80 months
Lump Sum payment due
at termination of
$997,093
—
$3,077 per month for
180 months beginning
on 11/2/2009
$8,793 per month for 180
months commencing after
disability
$8,793 per month for
180 months beginning
just after death
Lump Sum payment due
at termination of
$997,093
(1) Disability amount is decreased by any Company paid disability insurance policies, Social Security disability benefits, or other
Federal or State disability programs. In the case of a voluntary termination, the participant shall be entitled to the vested
portion of any such early retirement benefit but shall not commence receipt of such early retirement benefit until the
commencement date following the date the participant would have attained the early retirement date had the participant
remained employed by the Company. Upon a finding that the participant (or, after the participant’s death, a beneficiary) has
suffered an unforeseeable emergency, the Committee may at the request of the participant or beneficiary, and subject to
compliance with Internal Revenue Code Section 409A, accelerate distribution of benefits under the SERP in the amount
reasonably necessary to alleviate such unforeseeable emergency.
(2) Assumes death on October 30, 2009. The discount rate used to calculate the lump sum amount is 7.00%.
See “Compensation Discussion and Analysis – Total Compensation for Executive Officers -- Pension and Retirement
Benefits” for further discussion of the pension benefits contained in the tables above.
Non-Qualified Deferred Compensation
The table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year
ended October 30, 2009.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Executive
Contributions in
Fiscal Year
Company
Contributions in
Fiscal Year
Aggregate Earnings in
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at Fiscal
Year End
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ 77,081
$ 77,081
$ —
$ —
$ —
$ 398,696
$ 398,696
—
$
—
$
—
$
The table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year
ended October 31, 2008.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Executive
Contributions in
Fiscal Year
Company
Contributions in
Fiscal Year
Aggregate Earnings in
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at Fiscal
Year End
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ 76,632
$ 76,632
$ —
$ —
$ —
$ 448,043
$ 448,043
—
$
—
$
—
$
The table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year
ended November 2, 2007.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Executive
Contributions in
Fiscal Year
Company
Contributions in
Fiscal Year
Aggregate Earnings in
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at Fiscal
Year End
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ 76,141
$ 76,141
$ —
$ —
$ —
$ 482,381
$ 482,381
—
$
—
$
—
$
The following table estimates the present value of benefits under different employment termination scenarios as of
October 30, 2009:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Present Value of Benefit
at Termination of
Employment
Present Value of
Benefit in the Event of
Disability,
Present Value of
Benefit Upon Death
Present Value of Benefit
Upon Involuntary
Termination of
Employment Due to
Sale/Merger/Acquisition
$ 398,696
$ 398,696
$ —
$ —
$ —
$ 398,696
$ 398,696
$ —
$ —
$ —
$ 398,696
$ 398,696
$ —
$ —
$ —
$ 398,696
$ 398,696
$ —
$ —
$ —
Allan L. Bridgford and Hugh Wm. Bridgford each currently receive a monthly deferred compensation payment of $6,430.
As of October 30, 2009, eighty (80) such monthly payments are remaining for each recipient.
The deferred compensation amounts are calculated using a crediting rate equal to Moody’s Average Seasoned Bond Rate,
plus 2%. This rate is subject to fluctuation. Upon death, the deferred compensation benefits are paid in a lump sum equal to the
individual’s remaining account balance.
See “Compensation Discussion and Analysis – Total Compensation for Executive Officers – Non-Qualified Deferred
Compensation” for further discussion of the non-qualified deferred compensation benefits contained in the tables above.
Director Compensation
The table below summarizes the total compensation paid by the Company to directors who were not NEOs during fiscal year
2009. Directors who were NEOs did not receive any additional compensation for their services as directors.
Name
Richard A. Foster
Robert E. Schulze
Paul R. Zippwald
Todd C. Andrews
D. Gregory Scott
Fees Earned
or Paid Cash
Stock
awards
Option
awards
Non-Equity
Incentive Plan
Compensation
$ 21,000
$ 20,600
$ 20,500
$ 21,000
$ 16,350
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
—
$
$ 13,789 (1)
$
$
$
—
—
—
All Other
Compensation
Total
$ —
$229,396 (2)
$ —
$ —
$ —
$ 21,000
$ 243,185
$ 20,500
$ 21,000
$ 16,350
(1)
The amount reflected above includes the change in present value of the defined benefit pension plan, assuming a discount rate
of 5.75%, and the SERP and Non-Qualified Deferred Compensation Plan, assuming a discount rate of 7.00%. Mr. Schulze
received contributions to such plans as an employee of the Company prior to his retirement on June 30, 2004.
(2) Mr. Schulze receives pension benefits under the Company’s defined benefit pension plan, SERP plan and Non-Qualified
Deferred Compensation Plan. The amount reflected above includes aggregate payments to Mr. Schulze during fiscal 2009 of
$74,889 under the defined benefit plan, $77,160 under the Non-Qualified Deferred Compensation Plan, $56,000 under the
SERP and $5,774 for healthcare benefits. The amount reflected above also includes an increase in the present value of post-
retirement healthcare benefits in the amount of $15,573.
The Company uses cash compensation to attract and retain qualified candidates to serve on its Board of Directors. In setting
director compensation, the Company considers the demands that have been placed and will continue to be placed on the directors and
the skill-level required by its directors. In addition, as with the Company’s executive officers, compensation decisions for directors
are made in the context of the Company’s focus on controlling costs and increased profitability. Non-employee directors were paid
$1,350 for each Board of Directors meeting attended during fiscal year ended October 30, 2009 and approximately $300 for each
Audit Committee meeting depending on the length of the meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company’s Compensation Committee at October 30, 2009 consisted of D. Gregory Scott, Chairman,
Todd C. Andrews, Richard A. Foster, Robert E. Schulze and Paul R. Zippwald. Other than Robert E. Schulze, who retired June 30,
2004, no member of the Compensation Committee was a former or current officer or employee of the Company or any of its
subsidiaries at October 30, 2009. The Company is not aware of any “compensation committee interlocks” that existed during fiscal
2009.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company's general legal counsel is the son of the Senior Chairman of the Board of Directors. For these services, he
currently is paid a fee of $1,350 for each Board of Directors meeting attended. Total fees paid under this arrangement for fiscal year
2009 were $16,200. In addition, legal services are performed on behalf of the Company and billed by a firm in which he is a partner.
Total fees billed under this arrangement for fiscal year 2009 were approximately $70,000.
Other than the relationship noted above, the Company is not aware of any related party transactions that would require
disclosure. The Company’s executive officers, directors, nominees for directors and principal shareholders, including their immediate
family members and affiliates, are prohibited from entering into a related party transaction with the Company that would be reportable
under Item 404 of Regulation S-K without the prior approval of its Audit Committee (or other independent committee of the Board of
Directors in cases where it is inappropriate for the Audit Committee to review such transaction due to a conflict of interest). Any
request for the Company to enter into a transaction with an executive officer, director, or nominee for director, principal stockholder
or any of such persons’ immediate family members or affiliates that would be reportable under Item 404 of Regulation S-K must first
be presented to the Audit Committee for review, consideration and approval. In approving or rejecting the proposed agreement, the
Audit Committee will consider the relevant facts and circumstances available and deemed relevant, including but not limited to, the
risks, costs, and benefits to the Company, the terms of the transactions, the availability of other sources for comparable services or
products, and, if applicable, the impact on director independence. The Audit Committee shall only approve those agreements that, in
light of known circumstances, are in or are not inconsistent with, the Company’s best interests, as determined in good faith by the
Audit Committee. The requirement for the Audit Committee to review related-party transactions is set forth in its Amended and
Restated Charter dated August 14, 2006.
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
PROPOSAL 2
The Audit Committee of the Board of Directors has, subject to ratification by the shareholders, appointed Squar, Milner,
Peterson, Miranda & Williamson, LLP as its independent registered public accounting firm for the fiscal year ending October 29,
2010.
The Company’s Board of Directors recommends that you vote FOR the ratification of the appointment of Squar, Milner,
Peterson, Miranda & Williamson, LLP as the Company’s independent accountants for fiscal year 2010. Proxies received in response
to this solicitation will be voted FOR 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 Squar, Milner,
Peterson, Miranda & Williamson, LLP will be present at the meeting and available for questions. They will have the opportunity to
make a statement if they so desire.
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Concurrent with the filing of the 10-K on January 28, 2009, the Audit Committee of the Board of Directors of the Company
dismissed Haskell & White LLP as the Company's independent registered public accounting firm. Haskell & White LLP completed
the audit of the Company's financial statements for the year ended October 31, 2008 on January 28, 2009. Haskell & White LLP's
appointment as the independent registered public accounting firm for the Company was completely terminated upon completion of the
audit of the Company's financial statements for the year ended October 31, 2008. The decision to change principal accountants was
approved by the Audit Committee and the Board of Directors of the Company.
The reports of Haskell & White LLP on the consolidated financial statements of the Company for the years ended
October 31, 2008 and November 2, 2007, 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 years ended October 31, 2008 and November 2, 2007, and through the subsequent interim period ended
January 28, 2009, there were no disagreements with Haskell & White 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 Haskell &
White LLP, would have caused it to make reference thereto in its reports on the financial statements for such years.
During the years ended October 31, 2008, and November 2, 2007, and through the subsequent interim period ended
January 28, 2009, there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).
During the Company's fiscal years ended October 31, 2008 and November 2, 2007, and through the subsequent interim
period ended January 28, 2009, neither the Company nor anyone on its behalf consulted Squar, Milner, Peterson, Miranda &
Williamson, LLP regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
Audit Fees
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP for the audit and review of the Company’s annual
financial statements and quarterly reports on Form 10-Q for the 2009 fiscal year totaled $148,000. Fees billed by Haskell & White
LLP for the audit and review of the Company’s annual financial statements and quarterly reports on Form 10-Q for the 2008 fiscal
year totaled $213,400.
Audit-Related Fees
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 the Company’s 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. There were no audit-related fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP for the fiscal
year ended October 30, 2009. Audit-related fees billed by Haskell & White LLP for the fiscal year ended October 31, 2008 totaled
$19,179.
Tax Fees
Tax fees are comprised of services that include assistance related to state tax compliance services and consultations regarding
federal and state research and development tax credits. There were no tax fees billed by Squar, Milner, Peterson, Miranda &
Williamson, LLP or Haskell & White LLP during the fiscal years ended October 30, 2009 or October 31, 2008.
All Other Fees
The Company did not incur any other fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP during the fiscal
year ended October 30, 2009. However, the Company did incur fees (not yet billed) to Haskell & White LLP related to fiscal year
2009 for review and consents relating to the preparation and filing of the Company’s Form 10-K. The Company did not incur any
other fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP or Haskell & White LLP during the fiscal year ended
October 31, 2008.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT SERVICES AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT ACCOUNTANTS
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services performed by the independent
accountants. These services may include audit services, audit-related services, tax services and other services. During fiscal years
2009 and 2008, the Audit Committee approved all such services rendered by its independent accountants. For audit services, the
independent accountant provides the Audit Committee with an audit plan including proposed fees in advance of the annual audit. The
Audit Committee approves the plan and fees for the audit.
For non-audit services, the Company’s senior management will submit from time to time to the Audit Committee for
approval non-audit services that it recommends the Audit Committee engage the independent accountant to provide during the fiscal
year. The Company’s senior management and the independent accountant will each confirm to the Audit Committee that each non-
audit service is permissible under all applicable legal requirements. A budget, estimating non-audit service spending for the fiscal
year, will be provided to the Audit Committee along with the request. The Audit Committee must approve both permissible non-audit
services and the budget for such services.
REPORT OF THE AUDIT COMMITTEE
Pursuant to a meeting of the Audit Committee on January 21, 2010, the Audit Committee reports that it has: (i) reviewed and
discussed the Company’s audited financial statements with management; (ii) discussed with the independent registered public
accountants 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 Squar, Milner, Peterson, Miranda &
Williamson, LLP that it is independent and written disclosures regarding such independence as required by Public Company
Accounting Oversight Board Rule 3526, and discussed with the independent registered public accountants the accountants’
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 30, 2009.
AUDIT COMMITTEE
D. Gregory Scott, Chairman
Todd C. Andrews
Richard A. Foster
D. Gregory Scott
Robert Schulze
Paul R. Zippwald
The foregoing Audit Committee Report is not soliciting material, is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2011 Annual Meeting of Shareholders must be received at the
Company’s principal office no later than October 15, 2010 in order to be considered for inclusion in the proxy statement and form of
proxy relating to that meeting. Matters pertaining to such proposals, including the number and length thereof, eligibility of persons
entitled to have such proposals included and other aspects are regulated by the Securities Exchange Act of 1934, Rules and
Regulations of the Securities and Exchange Commission and other laws and regulations to which interested persons should refer.
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 29, 2010, 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.
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 Squar, Milner, Peterson, Miranda & Williamson, 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 30, 2009 accompanies this Proxy Statement but is not a
FINANCIAL STATEMENTS
part of the proxy solicitation material.
By order of the Board of Directors
/s/ Cindy Matthews-Morales
Cindy Matthews-Morales
Secretary
February 12, 2010
FORM 10-K
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 30, 2009, as filed with the Securities
and Exchange Commission (the “SEC”), including financial statements and associated schedules. Such report was filed with the
Securities and Exchange Commission on January 28, 2010 and is available on the SEC’s website, www.sec.gov, as well as the
Company’s website, http:// www.bridgford.com. Requests for copies of such report should be directed to the Chief Financial Officer,
Bridgford Foods Corporation, P.O. Box 3773, Anaheim, California 92803.
(This page intentionally left blank.)
SALES AND MARKETING HIGHLIGHTS
OPERATIONS
FINANCIAL MATTERS
SUMMARY
DIRECTORS
OFFICERS
DIVISION MANAGERS
Allan L. Bridgford
Senior Chairman
Bruce H. Bridgford
President Bridgford Foods
of California
William L. Bridgford
Chairman
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.
D. Gregory Scott
Managing Director,
Peak Holdings, LLC
N e w !
Jeffrey D. Robinson
Bakery Manager
Anaheim- Bread Division
Bruce H. Bridgford
Chairman & President,
Bridgford Foods of California
Anaheim- Deli Division
Baron R. H. Bridgford
President, Bridgford Processing
Company of Illinois
Bridgford Foods of Illinois
Joseph deAlcuaz
Vice President
Dallas- Frozen-Rite Division
Blaine K. Bridgford
President
Dallas- Superior Foods Division
Monty Griffith
Vice President
Bridgford Foods of North Carolina
Allan L. Bridgford
Senior Chairman, Board of Directors
and member of
the Executive Committee
Hugh Wm. Bridgford
Chairman, Executive Committee
and Vice President
William L. Bridgford
Chairman, and member
of the Executive Committee
Raymond F. Lancy
Executive Vice President,
Chief Financial Officer,
Treasurer, and member of
the Executive Committee
John V. Simmons
President and member of
the Executive Committee
Joe deAlcuaz
Vice President Manufacturing
Daniel R. Yost
Senior Vice President
Chris Cole
Vice President
Bob Delong
Vice President,
Information Technologies
Cindy Matthews–Morales
Corporate Secretary and Controller
Michael Bridgford
Assistant Secretary
Monkey Bites
Monkey Bites
Cinnamon Pull-Apart
Bridgford Foods Corporation
1308 North Patt Street
P.O. Box 3773
Anaheim, California 92803
Phone (714) 526-5533
www.bridgford.com
Major Operating Facilities
Chicago, Illinois
Dallas, Texas
Statesville, North Carolina
Transfer Agent and Registrar
Continental Stock Transfer & Trust Company
17 Battery Place, 8th Floor
New York, NY 10004
1-800-509-5586
Independent Accountants
Squar, Milner, Peterson, Miranda & Williamson, LLP
Newport Beach, California
©2010 Bridgford Foods. YW 048-940