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A N N U A L R E P O R T 2 0 I 4
Notice of
20I5 Annual Meeting
and Proxy Statement
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S 2014 was a year of challenges and change for Bridgford Foods Corporation. Soaring commodity
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costs severely hampered our profitability, but despite our disappointing financial results we made
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significant progress in areas that leave us poised for success in the future. We discontinued two
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poorly performing divisions during the year that were not showing promise of a return to
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profitability. We achieved remarkable sales gains and price increases in our dry sausage and
meat snack division that will enable us to take advantage of the inevitable return of reasonable
raw material costs. Sales during our 2014 fiscal year were $133,401,000, an increase of 3.4%
from sales of $129,003,000 in 2013. The Company recorded a net loss of $4,344,000 in
2014, which included a $3,202,000 loss in our Western Refrigerated Deli Operations and
Canadian Operations combined.
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SALES AND MARKETING HIGHLIGHTS
For the third consecutive year, our Chicago dry sausage and meat snack division achieved
double digit sales growth, with a 15.9% increase over 2013 sales. We have an outstanding sales
team, from the route level on up through supervision, business development managers, and top
management. Corporate Vice President Chris Cole and Division Vice President Baron Bridgford II
spearhead the sales effort, with guidance from Consultant Allan Bridgford Jr. Thanks to Allan’s
efforts, the company’s representation on the FLW tour, a series of professional bass fishing
tournaments, has grown significantly, and there are currently four top professional anglers
competing under the Bridgford banner.
New retailers serviced during 2014 include Albertson’s, Safeway, Meijer and Walgreen’s. Our
unprofitable Canadian route division ceased operations during the year. Our dedication to
producing only the highest quality products possible allows us to continue to promote Bridgford
Pepperoni, Summer Sausage, Beef Jerky and other products as “The Premium Brand”. Our Direct
Store Delivery (DSD) distribution system achieved a 3.1% increase in its weekly sales average
per route in 2014. Our presence in Walmart, the world’s largest retailer, continues to grow, and
we are now servicing their stores on a DSD basis nationwide. New products introduced during
the year included Bridgford Sweet Baby Ray’s (BSBR) Beef Strips and Sauce, BSBR Chicken Strips
and Sauce, Bacon Summer Sausage, and Bacon Snack Sticks, all of which have
experienced good initial sales leading to increased distribution.
In our bread division, we continue to increase our presence in K-12 school feeding programs,
following the USDA guidelines for nutritious bread products with our “Better For You” product
line. We have further expanded our offerings of products made with White Whole Wheat Flour,
enabling us to offer our customers a good tasting, whole grain alternative to our traditional offerings.
We have also increased our emphasis on selling products for In-Store Bake, which are primarily
sold through retail deli and bakery departments. Our Superior Foods plant in Dallas regularly
introduces innovative new products, many of which are customer specific and somewhat
proprietary. In the retail arena, we have upgraded the graphics on our retail frozen dough
packages, providing better visibility and shelf presence. Sysco Foods recently designated Bridg-
ford as their preferred vendor for frozen dough products.
The packaging for our retail Shelf-Stable Sandwich Twin-Packs received a major facelift, and
currently one major outdoor retailer is offering these unique items with two more coming on board
in 2015. Our shelf-stable sandwich business with EU customers remains steady. U.S. military
business has lagged for several years due to the wind-down of our deployment in the Middle East.
OPERATIONS
The cost of meat during our 2014 fiscal year was over $7,800,000 higher than it was during
2013, while the cost of flour, fuel and other significant commodities was level. While somewhat
higher meat prices were anticipated going into the year, the record high costs we experienced were
unprecedented. Despite achieving selling price increases from virtually all of our customers during
the year (and in some cases, more than one increase), we were not able to pass on the total
impact of these higher meat costs.
Under the direction of Baron R.H. Bridgford, President of Bridgford Foods of Illinois, we installed
four new state-of-the-art smokehouses in our Chicago plant that have improved the consistency
and quality of all of the products produced in our Chicago division, and have enhanced our
production capacity. Improvements in our ability to accurately portion raw materials have
resulted in yield improvements as well as labor savings on several of our meat snack items.
In our frozen food division, we continue to develop innovative products designed to meet our
customers’ unique requirements. Our managers, Monty Griffith in Statesville, Jeff Robinson in
Anaheim, Blaine Bridgford at Superior Foods in Dallas, and Joe deAlcuaz at Frozen-Rite, have
overseen cost-cutting measures in the last year that include lighting retrofits and waste reduction.
Similarly, Director Bruce Bridgford has led our effort to reduce our freight expenses, resulting in
reduced delivery costs, and we have plans for significant changes in the coming year to increase
those savings.
The decision to curtail our Western Deli operations was not an easy one, as we had been in that
business for well over 60 years. However, it became increasingly apparent that there was no
foreseeable return to profitability on these routes, and that the right path for the long term
success of the Company was to focus our efforts in other areas. We stopped selling to customers
in late August, and have accounted for the cost of exiting this business in our 2014 financials.
Several factors contributed to the extraordinarily high costs of our principal ingredients in 2014.
A serious drought engulfed the central United States in 2007 and 2008, resulting in reduced
supplies of food grains, animal foodstuffs, and native pasture lands. Consequently, we had large
losses in animal herds, particularly beef cattle. Political actions simultaneously caused reductions
in imports of feeder cattle from Mexico and finished beef supplies from Canada that continue
today. A severe virus epidemic spread through the live pork industry beginning in the spring of
2013, substantially reducing the new animal population in 2014.
FINANCIAL MATTERS
Our working capital totaled $17,860,000 at October 31, 2014, $6,900,000 (27.9%) lower
than at the beginning of the fiscal year, and our working capital ratio decreased to 2.2 to 1 at
October 31, 2014, compared to 2.6 to 1 at November 1, 2013. The decrease in working
capital resulted from payments for meat commodities at record high prices as well as investments
in capital assets and share repurchases. We repurchased 21,000 shares of the Company’s
common stock in the amount of $184,000 ($8.76 average price paid per share) during 2014.
Projected contributions totaling $1,127,000 were recorded as a current liability related to our
defined benefit pension plan at October 31, 2014, and we contributed a total of $1,587,000
toward this plan during the 2014 fiscal year. The defined benefit plan was frozen in the 3rd
quarter of 2006 and replaced with a 401(k) defined contribution plan. The Company recorded
an estimated pension expense and corresponding non-current liability of $798,000 related to
the Company’s withdrawal from the Western Conference of Teamsters Pension Plan. The ultimate
amount paid may differ from this estimate. We maintain a line of credit with Wells Fargo Bank
in the amount of $6,500,000 which expires March 1, 2015. The Company temporarily borrowed
under this line of credit during the fourth quarter of fiscal 2014 and had no borrowings
outstanding as of October 31, 2014. We converted our line of credit to a borrowing based line
collateralized by accounts receivable during fiscal 2014.
Shareholders’ equity totaled $25,250,000, a decrease of $8,205,000 (24.5%) compared to
the end of the prior year. Actuarial losses related to our defined benefit plans in the amount of
$3,454,000 were the most significant component of this change. This loss resulted from a
decrease in the Citigroup Pension Liability Index from a discount rate of 4.65% in fiscal year 2013
to 4.05% in fiscal year 2014. This rate is used to compute the present value of our pension
obligations. Fiscal 2014 net loss decreased shareholders’ equity by $4,344,000. Approximately
158,000 shares remain available for repurchase under the 2 million share repurchase plan
previously authorized by the Board of Directors. Shareholders’ equity per share was $2.77 at
October 31, 2014 compared to $3.66 at November 1, 2013.
Management assessed the effectiveness of the Company’s internal control over financial
reporting for the fiscal year ended October 31, 2014. We believe our control systems are
effective. Management’s Report on Internal Controls over Financial Reporting is included in the
Form 10-K report. No significant weaknesses in internal accounting control, to the extent
identified, were unresolved at the conclusion of the 2014 fiscal year.
SUMMARY
As we begin 2015, several factors are turning in the Company’s favor. The recent drop in the
cost of oil will certainly provide some cost relief that hasn’t been attainable for a while, not only
on vehicle fuel costs but on other petroleum-based products that we buy, including packaging film
and plastic trays. Pork prices have dropped dramatically in the last few months as well, though beef
remains very strong. The near-term outlook for grain products is steady to lower. The elimination of
some of our operations during 2014, as detailed above, allowed us to re-evaluate our
administrative staffing needs, and cuts have been made where appropriate, leaving us very lean
in this area. Tough times bring out the best in tough organizations, and that is our objective:
to be resilient, to be the best, to be profitable, and to enjoy doing it. We appreciate the efforts
of our employees, the loyalty of our customers, and the support of our suppliers, partners and
other associates as we battled our way through the 2014 year. We remain excited about the
future, and look forward to reporting greatly improved results in 2015.
Respectfully,
January 16, 2015
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 31, 2014
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 ☐ No ☒
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 ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes ☒ No ☐
Indicate by check mark 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. ☒
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 ☐
Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)
Smaller reporting company ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes ☐ No ☒
The aggregate market value of voting stock held by non-affiliates of the registrant on April 18, 2014 was $17,183,000.
As of January 13, 2015, there were 9,112,165 shares of common stock outstanding.
Portions of the registrant’s Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held March 18,
2015 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. Mine Safety Disclosures
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. Bridgford Foods Corporation has 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.
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
2014
2013
38%
62%
100%
40%
60%
100%
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 cheeses, salads, party dips, Mexican foods, pastries, and other delicatessen type food
products.
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Products manufactured, processed or packaged by Bridgford
Products manufactured or processed by third parties for distribution
2014
2013
96%
4%
100%
93%
7%
100%
Although we have recently introduced several new products, most of these products have not contributed
significantly to our revenue growth for the 2014 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.
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.
Product Distribution Methods
Our products are delivered to customers using several distinct distribution channels. The distribution channel
utilized is dependent upon the needs of our customers, the most efficient proximity to the delivery point, trade customs,
operating segment as well as product type, life and stability. 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 our 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 our 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.
The factors that contribute to higher or lower margins generated from each method of distribution depend upon the
accepted selling price, level of involvement by our employees in setting up and maintaining displays, distance traveled and
fuel consumed by our company-owned fleet as well as freight and shipping costs depending on the distance the product
travels to the delivery point. Management is continually evaluating the profitability of product delivery methods, analyzing
alternate methods and weighing economic inputs to determine the most efficient and cost effective method of delivery to
fulfill the needs of our customers.
Major Product Classes
Frozen Food Products
Our frozen food products division serves both food service and retail customers. Approximately 160 unique frozen
food products are sold through wholesalers, cooperatives, and distributors to approximately 21,000 retail outlets and 24,000
restaurants and institutions.
Frozen Food Products – Food Service Customers
The food service industry is composed of establishments that serve food outside the home and includes restaurants,
the food operations of health care providers, schools, hotels, resorts, corporations, and other traditional and non-traditional
food service outlets. Growth in this industry has been driven by the increase in away-from-home meal preparation, which
has accompanied the expanding number of both dual income and single-parent households. Another trend within the food
service industry is the growth in the number of non-traditional food service outlets such as convenience stores, retail stores,
and supermarkets. These non-traditional locations often lack extensive cooking, storage, or preparation facilities resulting
in a need for pre-cooked and prepared foods similar to those 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.
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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
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. Products produced by the Frozen Food Products
segment are generally supplied to food service and retail distributors who take title to the product upon shipment receipt
through company leased long-haul vehicles. In addition to regional sales managers, we maintain a network of independent
food service and retail brokers covering most of the United States as well as Canada. Brokers are compensated on a
commission basis. We believe that our broker relationships, in close cooperation with our regional sales managers, are a
valuable asset providing significant new product and customer opportunities. 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
Through the end of fiscal 2014, our direct store delivery network consisted of two separate divisions, refrigerated and
non-refrigerated snack food products. Refrigerated snack food products were distributed through eight different regions
located in the southwest, primarily operating in California, Arizona, and Nevada. By the end of fiscal 2014, we ceased
refrigerated snack food product distribution because of continued net losses.
During fiscal 2014, our refrigerated and snack food products division sold approximately 220 different items through
customer owned distribution centers and a direct store delivery network serving approximately 18,000 supermarkets, mass
merchandise and convenience retail stores located in 49 states and Canada. By the end of fiscal 2014, we also ceased our
route distribution operations in Canada as a cost cutting measure to concentrate on our core route business in the United
States.
Products produced or distributed by the Refrigerated and Snack Food segment are supplied to customers through
either direct delivery to customer warehouses or direct-store-delivery to retail locations. We utilize customer managed
warehouse distribution centers to lower distribution cost. Product delivered to the customer’s warehouse is then distributed
to the store where it is resold to the end consumer. Our direct-store-delivery system focus emphasizes high quality service
of our premium branded product to our customers. We also provide the service of setting up and maintaining the display
and restocking our products.
Refrigerated and Snack Food Products — Customers
Our 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
Non-refrigerated snack food products are distributed across the United States. Regional sales managers perform
several significant functions 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.
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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 our product line. Historically, 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 lines
and improve processing techniques and formulas. We utilize an in-house test kitchen and consultants to research and
experiment 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 non-refrigerated 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 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 regulations 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 implemented a 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.
The U.S. Occupational Safety and Health Administration ("OSHA") oversees safety compliance and establishes
certain employer responsibilities to help "assure safe and healthful working conditions" and keep the workplace free of
recognized hazards or practices likely to cause death or serious injury. Failure to comply with regulations of OSHA could
adversely affect our results of operations. We resolved prior OSHA matters favorably and no unpaid OSHA penalties
are outstanding as of October 31, 2014.
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.
Importance of Key Customers
Sales to Wal-Mart® comprised 28.8% of revenues in fiscal 2014 and 31.8% of total accounts receivable was due
from Wal-Mart® at October 31, 2014. Sales to Wal-Mart® comprised 19.6% of revenues in fiscal 2013 and 17.0% of total
accounts receivable was due from Wal-Mart® at November 1, 2013. Sales to Dollar General® comprised 9.9% of revenues
for fiscal year 2013 and 20.7% of total accounts receivable was due from Dollar General at November 1, 2013.
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.
Most flour purchases are made at market price without contracts. The Company also purchases bulk flour under
short-term fixed price contracts at current market prices. The contracts are usually effective for a month or less and are not
material to our operations. These contracts are settled within a month’s time and no significant contracts remain open at
the close of the reporting period. We monitor and manage our ingredient costs to help negate volatile daily swings in
market prices when possible. The Company does not participate in the commodity futures market or hedging to limit
commodity exposure.
6
Employees
We had 487 employees at October 31, 2014, approximately 41% of whose employment relationship is governed by
collective bargaining agreements. These agreements currently expire between March 2014 and March 2017. We believe
that our relationship with all of our employees is favorable and contracts will be settled favorably. During the fourth quarter
of fiscal 2014, we closed the refrigerated snack food products division and withdrew from the Western Conference of
Teamsters Pension Plan, terminating approximately 44 employees.
Executive Officers of the Registrant
The names, ages, and positions of all our executive officers as of January 16, 2015 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. Three executive officers are full-time employees of our
company, Allan L. Bridgford and Hugh Wm Bridgford worked 60% of full time during fiscal 2014. Allan L. Bridgford
reduced his schedule to 50% of full time effective November 1, 2014.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Item 1A. Risk Factors
Position(s) with our company
Vice President 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
Age
79
83
60
59
61
Chief Financial Officer, Executive Vice President, Treasurer and member of
the Executive Committee
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 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.
We are subject to general risks in the food industry, including, among other things, risk relating to changes in
consumer preferences and product contamination as well as general 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
effect 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 three 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.
7
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 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 affect us. Our
success will be dependent in part upon our continued ability to recruit, motivate, and retain qualified personnel. We cannot
assure that we will be successful in this regard. We have no employment or non-competition agreements with key
personnel.
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 incomes if we lost one or more of our largest
customers, including Wal-Mart®, which accounted for 28.8% of sales in fiscal year 2014. 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, more than 80% of our outstanding stock. In
addition, three members of the Bridgford family currently 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, among other things, we have elected not to implement the rule that
provides for a nominating committee to identify and recommend nominees to the Board of Directors and have instead
elected to have the full Board of Directors perform such function. Additionally, 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.
8
We participate in Multiemployer Pension Plans which could negatively impact our operations and
profitability.
We participate in “multiemployer” pension plans administered by labor unions on behalf of their employees. We pay
union dues monthly, a portion of which is used to fund pension benefit obligations to plan participants. The contribution
amount may change depending upon the ability of participating companies to fund these pension liabilities as well as the
actual and expected returns on pension plan assets. Should we withdraw from the union and cease participation in a union
plan, federal law could impose a penalty for additional contributions to the plan. The penalty would be recorded as an
expense in the consolidated statement of operations. The ultimate amount of the withdrawal liability is dependent upon
several factors including the funded status of the plan and contributions made by other participating companies. During
fiscal 2014, we withdrew from the Western Conference of Teamsters Pension Plan and recorded an estimated pension
expense and a corresponding non-current liability of $798 related to this plan. The ultimate amount paid may differ from
this estimate due to the factors stated above. We continue to participate in other multiemployer union plans. In the event of
a full or partial withdrawal from these plans, the impact to our financial statements could be material.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
We own the following properties:
Property Location
Anaheim, California ***
Dallas, Texas *
Dallas, Texas *
Dallas, Texas *
Dallas, Texas *
Statesville, North Carolina *
Chicago, Illinois **
Building
Square
Footage
Acreage
100,000
94,000
30,000
16,000
3,200
42,000
156,000
5.0
4.0
2.0
1.0
1.5
8.0
1.5
* - property used by Frozen Food Products Segment
** - property used by Refrigerated and Snack Products Food Segment
***- property used by both Frozen Food Products and Refrigerated and Snack Food Products Segments.
We utilize the foregoing properties for processing, warehousing, distributing and administrative purposes. The
Company also leases warehouse and/or office facilities throughout the United States and Canada through month-to-month
rental agreements. 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.
Item 3. Legal Proceedings
No material legal proceedings were pending against us at October 31, 2014 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. Mine Safety Disclosures
Not applicable.
9
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
PART II
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 2014
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year 2013
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
$
$
$
$
Low
10.16 $
10.20 $
10.00 $
8.58 $
Cash
Dividends
Paid
9.36 $
9.55 $
7.79 $
7.77 $
0.00
0.00
0.00
0.00
High
$
$
$
$
Low
7.10 $
8.65 $
8.25 $
12.39 $
Cash
Dividends
Paid
6.46 $
6.50 $
7.04 $
7.31 $
0.05
0.00
0.00
0.00
On November 12, 2012, Bridgford Foods Corporation issued a press release announcing that its Board of Directors
had approved a one-time cash dividend of $0.05 per share of common stock which was distributed on December 24, 2012
to shareholders of record on November 27, 2012.
On January 13, 2015, the closing sale price for our common stock on the Nasdaq Global Market was $7.21 per share.
As of January 13, 2015, there were 839 shareholders of record in 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.
10
Repurchases of Equity Securities by the Issuer
During fiscal year 2014, we repurchased an aggregate of 19,688 shares of our common stock for $184,117 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 2014.
Total
Number of
Shares
Purchased
As Part of
Publicly
Announced
Plans or
Programs
(2)
Total
Number of
Shares
Purchased
Average Price
Paid Per
Share
0 $
3,120
1,670
620
5,410 $
0
8.09
8.06
8.52
8.13
0
3,120
1,670
620
5,410
Maximum
Number of
Shares
that May
Yet
Be
Purchased
Under the
Plans or
Programs
(2)
163,110
159,990
158,320
157,700
Period (1)
July 12, 2014 – August 8, 2014
August 9, 2014 – September 5, 2014
September 6, 2014 – October 3, 2014
October 4, 2014 – October 31, 2014
Total
(1)
The periods shown are our fiscal periods during the sixteen-week quarter ended October 31, 2014.
(2) 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 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 15, 2014 and continuing
through and including October 14, 2015, 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 31, 2014, the total maximum
number of shares that may be purchased under the Purchase Plan is 157,700 at a purchase price not to exceed $10.00 per
share for a total maximum aggregate price (exclusive of commission) of $1,577,000.
Item 6. Selected Financial Data
Not applicable to smaller reporting company.
11
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 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 31, 2014 (52 weeks) Compared to Fiscal Year Ended November 1, 2013 (52 weeks)
Net Sales-Consolidated
Net sales in fiscal 2014 increased $4,398 (3.4%) when compared to the prior year. The changes in net sales were
comprised as follows:
Impact on Net Sales - Consolidated
Selling price per pound
Unit volume in pounds
Returns activity
Promotional activity
Increase in net sales
-0.4% $
5.8%
-1.0%
-1.0%
3.4% $
(590)
8,255
(1,419)
(1,848)
4,398
Unit sales volume in pounds in fiscal 2014 increased significantly in the Refrigerated and Snack Food Products
segment. Overall, the decrease in selling price per pound in fiscal 2014 primarily relates to product mix changes as
discussed in the segment analysis below. Returns activity and promotional spending increased compared to the prior year
on a consolidated basis.
Net Sales-Frozen Food Products Segment
Net sales in the Frozen Food Products segment in fiscal 2014 decreased $709 (1.4%) compared to the prior year.
The changes in net sales were comprised as follows:
Impact on Net Sales - Frozen Food Products Segment
Selling price per pound
Unit volume in pounds
Returns activity
Promotional activity
Decrease in net sales
0.0% $
0.0%
0.1%
-1.5%
-1.4% $
(19)
(904)
35
179
(709)
The decrease in net sales for fiscal 2014 primarily relates to an unfavorable change in product mix. Returns were
slightly lower compared to the prior year. Higher promotional activity compared to fiscal 2013 added to the impact of
relatively no change in unit volume or selling price per pound within the Frozen Food Products segment.
12
Net Sales-Refrigerated and Snack Food Products Segment
Net sales, excluding intersegment sales, in the Refrigerated and Snack Food Products segment in fiscal 2014
increased $5,107 (6.6%) compared to the prior year. The changes in net sales were comprised as follows:
Impact on Net Sales - Refrigerated and Snack Food Products Segment
Selling price per pound
Unit volume in pounds
Returns activity
Promotional activity
Increase in net sales
-0.7% $
10.9%
-1.5%
-2.1%
6.6% $
(570)
9,159
(1,455)
(2,027)
5,107
The increase in net sales in fiscal 2014 was attributable to higher unit volume (in pounds) compared to the prior year.
The volume increase resulted from large seasonal programs that did not occur in the prior year. The combined selling price
per pound in fiscal 2014 decreased despite price increases instituted in the non-refrigerated snack food products division in
the last half of fiscal year 2014. Lower selling prices in the discontinued refrigerated snack food products division also
negatively affected per pound selling prices. Selling prices for large seasonal program items were significantly lower than
prices per pound obtained for other Company products. Higher promotional activity and returns related to these programs
partially offset the unit sales volume increases.
Cost of Products Sold and Gross Margin-Consolidated
Cost of products sold in fiscal 2014 increased $11,178 (13.4%) compared to the prior year. Changes in unit sales
volumes and record high meat commodity costs are described in the segment analysis below and were the primary
contributing factors to the increase in cost of products sold. The gross margin decreased to 29.0% in fiscal year 2014
compared to 35.2% in fiscal year 2013.
Cost of Products Sold and Gross Margin–Frozen Food Products Segment
Cost of products sold in the Frozen Food Products segment in fiscal 2014 decreased $647 (2.0%) compared to the
prior year primarily as result of lower sales volume and lower commodity costs. The cost of purchased flour decreased
approximately $78 in fiscal 2014 compared to the prior year. The gross margin in the Frozen Food Products segment
increased slightly from 37.0% in fiscal 2013 to 37.3% in fiscal 2014 due to lower commodity costs.
Cost of Products Sold and Gross Margin–Refrigerated and Snack Food Products Segment
Cost of products sold in the Refrigerated and Snack Food Products segment increased by $11,285 (21.7%) during the
2014 fiscal year compared to the prior year due to higher unit sales volume. The cost of significant meat commodities
increased approximately $5,504 during fiscal 2014 compared to the prior year. The gross margin earned in this segment
decreased from 34.1% to 23.8% due primarily to higher meat commodity costs and high volume low margin product sales.
Selling, General and Administrative Expenses-Consolidated
Selling, general and administrative expenses ("SG&A") in fiscal 2014 increased $737 (1.7%) when compared to the
prior year. The increase in this category did not directly correspond to the change in sales.
The table below summarizes the primary expense variances in this category:
52 weeks Ended
October 31,
2014
November 1,
2013
Expense/Loss
Increase
(Decrease)
Teamster pension withdrawal liability
Pension expense
Healthcare cost
Depreciation
Fuel
Cash surrender value gain
Wages and bonus
Insurance
Repairs and maintenance
Workers’ compensation
Outside consultants
Other SG&A
$
798 $
646
2,491
1,122
2,422
(514)
15,361
992
753
772
1,530
16,716
- $
1,373
2,121
754
2,763
(825)
15,661
721
1,025
1,040
1,380
16,339
Total
$
43,089 $
42,352 $
13
798
(727)
370
368
(341)
311
(300)
271
(272)
(268)
150
377
737
During the fourth quarter of fiscal 2014, we closed the refrigerated snack food products division (a division within
the Refrigerated and Snack Food Segment involving primarily deli products) and withdrew from the Western Conference
of Teamsters Pension Plan. According to the Multi-employer Pension Plan Act of 1980 we are subject to the Western
Conference of Teamsters Pension Trust Fund Withdrawal Liability. The decrease in pension expense (non-Teamster) was
caused by an increase in the pension liability discount rate. Healthcare costs have increased due to recent unfavorable claim
activity. The increase in depreciation expense was due to significant vehicle purchases in recent years. The decrease in fuel
expense was driven by lower cost per gallon as compared to the prior year. The cash surrender value gain on life insurance
policies decreased due to less favorable changes in the underlying equities that support them compared to fiscal 2013.
Lower profits and profit sharing accruals resulted in lower wages and bonus in fiscal year 2014 compared to the prior year
and the closing of our refrigerated snack food products division. Higher insurance expense relates to unfavorable trends in
renewal rates. Repairs and maintenance decreased due to replacement of vehicles in the Company’s fleet as well as closing
the delivery route business concentrated in California. The Company’s workers’ compensation expense decreased in fiscal
2014 as a result of favorable claim trends compared to the prior year. The increase in outside consultants related primarily
to legal fees and settlements with former employees. None of the changes individually or as a group of expenses in “Other
SG&A” were significant enough in value to merit separate disclosure. The major components comprising the decrease of
“Other SG&A” were higher outside storage and postage expenses.
Selling, General and Administrative Expenses-Frozen Food Products Segment
SG&A expenses in the Frozen Food Products segment decreased by $920 (5.5%) in fiscal year 2014 compared to the prior
fiscal year. The overall decrease in SG&A expenses was mainly due to lower product advertising and lower pension cost.
Selling, General and Administrative Expenses-Refrigerated and Snack Food Products Segment
SG&A expenses in the Refrigerated and Snack Food Products segment increased by $1,657 (6.4%) in fiscal year 2014
compared to the prior fiscal year. Higher payments under labor commissions and licensing agreements, higher property
and liability insurance, higher product advertising costs and depreciation for new vehicles led to the increase in SG&A
expenses compared to the prior year. The increase in SG&A expenses was also related to the increase in sales, increased
cost for healthcare and higher outside storage costs.
Income Taxes
The effective income tax rate was 2.0% and 5.5% in fiscal years 2014 and 2013, respectively. The 2014 tax benefit
of $88 relates to the reduction in the liability on unrecognized tax benefits related to research and development tax credits
being carried forward due to utilization of a net operating loss. In fiscal year 2014, the effective income tax rate differed
from the applicable mixed statutory rate of approximately 39.6% primarily due to recording a full valuation allowance of
$1,598 (refer to Note 4 of Notes to the Consolidated Financial Statements) on our deferred tax assets. The 2013 provision
for taxes on income of $169 consists of minimum federal and state income taxes.
The Company policy outlines measurable objective criteria that must be met before a release of the valuation
allowance will occur. The three criteria set forth in the policy must all be satisfied before the valuation allowance can be
reversed. The criteria are as follows: first, the Company’s available federal tax net operating loss ("NOL") must be zero;
second, the prior thirty-six month cumulative book basis pre-tax income (loss), after considering “one-time” events, is
positive; third, the Company considers its outlook of near term continued profitable operations and assesses any material
negative and positive trends or events on the immediate horizon. As of October 31, 2014, the Company (1) has a federal
tax NOL of $6,160, (2) has positive thirty-six month cumulative book income and (3) volatility and recent record highs in
commodity costs create uncertainty about the Company's ability to generate future earnings. Only the second criterion has
been satisfied, therefore, the Company will maintain a full valuation allowance against its deferred tax assets as of October
31, 2014.
Due to the degree of judgment involved, actual taxable income could differ materially from management's estimates,
or the timing of taxable income could be such that the net operating losses could expire prior to their utilization.
Management could determine in the future that the assets are realizable, materially increasing net income in one or many
periods. Following recognition, management could reinstate a full valuation allowance should operating performance
decline.
14
Liquidity and Capital Resources (in thousands except share amounts)
The principal source of our operating cash flow is cash receipts from the sale of our products, net of costs to
manufacture, store, market and deliver to customers. The Company temporarily borrowed on the line of credit during the
fourth quarter of fiscal 2014 to provide capital to pay for operating expenses including payments to meat suppliers with
seven or less day terms. The Company paid approximately $7.4 million more dollars for the same commodities in fiscal
2014 as compared to their cost in fiscal 2013. There were no borrowings outstanding under this line of credit as of October
31, 2014. The Company is currently in compliance with all provisions of the line of credit agreement. We typically fund
our operations from cash balances and cash flow generated from operations. We normally expect positive operating cash
flows in the first quarter of our fiscal year from the liquidation of inventory and accounts receivable balances related to
holiday season sales. We typically build inventories in the third quarter for anticipated holiday season sales that occur in
the fourth and first quarters. Anticipated commodity price trends may also affect cash balances. Certain commodities may
be purchased in advance of our immediate needs to lower the ultimate cost of processing.
Cash flows from operating activities:
Net (loss) income
Adjustments to reconcile net (loss) income to net cash (used in) provided by
operating activities:
Depreciation
Provision for losses on accounts receivable
Gain on sale of property, plant and equipment
Deferred income taxes, net
Tax valuation allowance
Changes in operating working capital
Net cash (used in) provided by operating activities
52 Weeks
2014
2013
$
(4,344) $
2,916
2,827
28
(152)
1,598
(1,598)
(2,380)
(4,021) $
2,236
23
(66)
(1,214)
1,214
(1,349)
3,760
$
For the fifty-two weeks ended October 31, 2014, net cash used in operating activities was $4,021, a decrease of
$7,781 compared to the fifty-two weeks ended November 1, 2013. The decrease is primarily related to an increase in
inventory in the Refrigerated and Snack Food Products segment as well as an increase in accrued payroll, advertising and
other expenses. During fiscal year 2014 we funded $1,587 towards our defined benefit pension plan. Plan funding
strategies may be adjusted depending upon economic conditions, investment options, tax deductibility, or recent legislative
changes in funding requirements.
Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables
outstanding) is relatively quick, and was equal to 57 days for the fifty-two weeks ended October 31, 2014 and 61 days for
the fifty-two weeks ended November 1, 2013. Compared with the prior year, the favorable impact on the 2014 cash
conversion cycle resulted from lower days of inventory, primarily due to a selloff of inventory in the Refrigerated and
Snack Food Products segment to provide a source of cash to cover payments to meat commodity suppliers at record high
prices.
For the fifty-two weeks ended November 1, 2013, net cash provided by our operating activities was $3,760. The
increase was primarily related to net income. During fiscal year 2013, we funded $1,922 towards our defined benefit
pension plan.
Cash used in investing activities:
Proceeds from sale of property, plant and equipment
Additions to property, plant and equipment
Net cash used in investing activities
52 Weeks
2014
2013
$
$
163 $
(3,877)
(3,714) $
72
(4,378)
(4,306)
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. In general, we capitalize the
cost of additions and improvements and expense the cost for repairs and maintenance. The Company may also capitalize
costs related to improvements that extend the life, increase the capacity, or improve the efficiency of existing machinery
and equipment. Specifically, capitalization of upgrades of facilities to maintain operating efficiency include acquisitions of
machinery and equipment used on packaging lines and refrigeration equipment used to process food products.
15
The table below highlights the additions to property, plant and equipment for the fifty-two weeks ended:
Temperature control
Processing equipment
Packaging lines
Office and building improvements
Vehicles for sales and/or delivery
Computer software and hardware
Forklifts
Decrease in projects in process
Additions to property, plant and equipment
Cash used in financing activities:
Shares repurchased
Payments of capital lease obligations
Dividends paid
Net cash used in financing activities
52 Weeks
October 31,
2014
November 1,
2013
10 $
2,228
250
438
963
6
51
(69)
3,877 $
38
1,516
763
142
1,712
264
-
(57)
4,378
52 Weeks
2014
2013
(184) $
(214)
-
(398) $
(209)
(206)
(458)
(873)
$
$
$
$
Our stock repurchase program was approved by the Board of Directors in November 1999 and was expanded in June
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 our common stock on the open market. As of the end of fiscal year
2014, 157,700 shares were still authorized for repurchase under the program. A one-time cash dividend of five cents per
share of common stock was approved on November 12, 2012 to shareholders of record on November 27, 2012, payable on
December 24, 2012.
We invested in transportation equipment during fiscal 2012 financed by a capital lease obligation in the amount of
$1,848. The term of the lease is six years. The total capital lease obligation remaining as of October 31, 2014 is
$1,345. The capital lease arrangement replaces the long-standing month-to-month leases of transportation equipment.
We maintain a line of credit with Wells Fargo Bank, N.A. that expires on March 1, 2015. During the fourth quarter
of fiscal 2014, we converted our line of credit to a borrowing base line collateralized by accounts receivable. Under the
terms of this line of credit, we may borrow up to $6,500 at an interest rate equal to the bank’s prime rate. The borrowing
agreement contains various covenants, the more significant of which require us to maintain a minimum tangible net worth
and a minimum net income after tax and total capital expenditures less than $3,000. The Company was in violation of the
capital expenditure covenant which was waived (letter dated December 17, 2013) at October 31, 2014. The Company was
also in violation of the tangible net worth and net income covenants which were waived (letter dated December 24, 2014)
at October 31, 2014. The Company temporarily borrowed on the line of credit during the fourth quarter of fiscal 2014 to
pay for working capital purposes. There were no borrowings under this line of credit as of October 31, 2014. Other than
noted above, the Company is currently in compliance with all provisions of the agreement.
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.
16
The impact of inflation on the Company’s financial position and results of operations has not been significant.
Management is of the opinion that the Company’s strong financial position and its capital resources are sufficient to
provide for its operating needs and capital expenditures for fiscal 2015.
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
We temporarily utilized interest bearing debt (excluding capital leases) during the fourth quarter of fiscal 2014 to
provide capital to pay for operating expenses including payments to meat suppliers with seven or less day terms. As of
October 31, 2014 we had no outstanding balance on the line of credit or any other debt or other contractual obligations.
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 and inventory allowances based on recent and historical trends.
Management believes its current estimates are reasonable and based on the best information available at the time.
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 of
Notes 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
The consolidated financial statements required by this Item are set forth under Item 15.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
17
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, including our principal
executive officer and principal financial officer, and recorded, processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission’s rules and forms to allow timely decisions regarding required
disclosures.
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 the 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 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 our independent registered public
accounting firm. 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
accounting 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”.
Changes in Internal Control over Financial Reports
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.
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 Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by the President on July 21,
2010, permanently exempts small public companies with less than $75 million in market capitalization, such as the
Company, from the requirement to obtain an external audit on the effectiveness of internal financial reporting controls
provided in Section 404(b) of the Sarbanes-Oxley Act. As a result, an attestation report on internal controls over financial
reporting by an independent registered public accounting firm has not been presented. Section 404(a) is still effective for
smaller public companies and requires the disclosure of management attestations on internal controls over financial
reporting.
18
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 (1992) issued by the Committee of Sponsoring Organizations of
the Treadway Commission and related COSO guidance. 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.
Management assessed the effectiveness of our internal control over financial reporting for our fiscal year ended
October 31, 2014. Based on management’s assessment and the above-referenced criteria, management believes that the
internal control over financial reporting for our fiscal year ended October 31, 2014 was effective.
Item 9B. Other Information
Not applicable.
19
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 2015 Annual Meeting of
Shareholders to be held on March 18, 2015 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 section entitled “Compensation of Executive Officers” contained in our definitive proxy
statement for the 2015 Annual Meeting of Shareholders to be held on March 18, 2015 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information set forth in the section entitled “Principal Shareholders and Management” contained in our definitive
proxy statement for the 2015 Annual Meeting of Shareholders to be held on March 18, 2015 is incorporated herein by
reference.
Equity Compensation Plan Information
Not applicable, as we do not have any compensation plans under which our equity securities are authorized for
issuance.
Item 13. Certain Relationships and Related Transactions, and Director Independence
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 2015 Annual Meeting of Shareholders to be
held on March 18, 2015 is incorporated herein by reference.
We are considered a “controlled company” within the meaning of Rule 5615(c)(1) of the NASDAQ Listing Rules
based on the more than 80% beneficial ownership of our outstanding common stock by Bridgford Industries Incorporated
and are therefore exempted from various NASDAQ Listing Rules pertaining to certain “independence” requirements of our
directors. Nevertheless, the Board of Directors has determined that Messrs. Andrews, Scott and Zippwald, who together
comprise the Audit Committee, are all “independent directors” within the meaning of Rule 5605 of the NASDAQ Listing
Rules.
Our general legal counsel is the son of the former senior chairman of the board of directors. As legal counsel to the
board, he currently is paid a fee of one thousand eight hundred dollars for each meeting attended. Total fees paid under this
arrangement for fiscal year 2014 were approximately twenty-one thousand dollars. 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 2014 were
approximately one thousand dollars.
Director Allan Bridgford Jr., son of the former senior chairman of the board of directors, is providing consulting
services to the Chicago plant and management. The contract on behalf of the Company with Allan Bridgford Jr. is for
consulting services at twelve hundred dollars per day. Total fees billed under this arrangement for fiscal year 2014 were
approximately $173,000. As a member of the board of directors, he was paid a fee of one thousand eight hundred
dollars for each meeting attended during fiscal 2014. Total fees paid under this arrangement for fiscal year 2014 were
$8,800. He was reappointed as Director as of January 12, 2015.
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 2015 Annual Meeting of Shareholders to be held on March 18, 2015 is
incorporated herein by reference.
20
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a)(1) Financial Statements . The following documents are filed as a part of this report:
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of October 31, 2014 and November 1, 2013
Consolidated Statements of Operations for years ended October 31, 2014 and November 1, 2013
Consolidated Statements of Comprehensive Income (Loss) for years ended October 31, 2014 and November 1, 2013
Consolidated Statements of Shareholders’ Equity for years ended October 31, 2014 and November 1, 2013
Consolidated Statements of Cash Flows for years ended October 31, 2014 and November 1, 2013
Notes to Consolidated Financial Statements
Page
19
23
24
25
26
26
27
28
(2) Financial Statement Schedules
Not applicable for smaller reporting company.
(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).
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).
Description
By-laws, as amended (filed as Exhibit 2 to Form 10-K on January 28, 1993 and incorporated herein by reference).
Certificate of Amendment to By-laws (filed as Exhibit 99.1 to Form 8-K on October 10, 2007 and incorporated
herein by reference).
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).*
Subsidiaries of the Registrant.
Power of Attorney (included as part of the signature page)
Certification of Principal Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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).
3.6
3.7
3.8
10.1
10.2
10.3
21.1
24.1
31.1
31.2
32.1
32.2
101.INS XBRL Instance Document.**
101.SCH XBRL Taxonomy Extension Schema Document.**
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.**
* Each of these Exhibits constitutes a management contract, compensatory plan or arrangement.
** The XBRL information is being furnished and not filed or a part of a registration statement or prospectus for
purposes of Section 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these Sections or otherwise
incorporated by reference.
21
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
/s/ WILLIAM L. BRIDGFORD
By:
William L. Bridgford
Chairman of the Board
Date: January 16, 2015
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 of the Board
(Principal Executive Officer)
January 16, 2015
/s/ BRUCE H. BRIDGFORD
Bruce H. Bridgford
/s/ JOHN V. SIMMONS
John V. Simmons
Director
January 16, 2015
President & Director
January 16, 2015
/s/ RAYMOND F. LANCY
Chief Financial Officer, Vice President,
January 16, 2015
Raymond F. Lancy
/s/ TODD C. ANDREWS
Todd C. Andrews
/s/ ALLAN BRIDGFORD JR.
Allan Bridgford Jr.
/s/ D. GREGORY SCOTT
D. Gregory Scott
/s/ PAUL R. ZIPPWALD
Paul R. Zippwald
Treasurer & Director
(Principal Financial and
Accounting Officer)
Director
Director
Director
Director
22
January 16, 2015
January 16, 2015
January 16, 2015
January 16, 2015
Report Of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Bridgford Foods Corporation
We have audited the accompanying consolidated balance sheets of Bridgford Foods Corporation (the "Company") as of
October 31, 2014 and November 1, 2013 and the related consolidated statements of operations, comprehensive income
(loss), shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the
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 audits 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 also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Bridgford Foods Corporation as of October 31, 2014 and November 1, 2013 and the results of its consolidated
operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
/s/ Squar, Milner, Peterson, Miranda & Williamson, LLP
Newport Beach, California
January 16, 2015
23
BRIDGFORD FOODS CORPORATION
CONSOLIDATED BALANCE SHEETS
October 31, 2014 and November 1, 2013
(in thousands, except per share amounts)
Current assets:
ASSETS
Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of $144 and $119,
respectively and promotional allowances of $5,810 and $3,156, respectively
Inventories, less reserves of $601 and $558, respectively
Prepaid expenses
Refundable income taxes
Deferred income taxes, less valuation allowance of $2,113 and $2,276, respectively
Total current assets
Property, plant and equipment, net of accumulated depreciation and amortization of
$58,450 and $57,352, respectively
Other non-current assets
Deferred income taxes, less valuation allowance of $8,486 and $5,671, 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 – 9,113 and 9,134
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
2014
2013
$
192 $
8,325
10,302
21,292
346
133
-
32,265
12,251
13,660
-
58,176 $
5,780 $
6,029
2,596
14,405
18,521
32,926
12,146
18,919
333
683
-
40,406
11,212
13,146
-
64,764
4,815
7,631
3,200
15,646
15,663
31,309
-
-
9,171
8,584
24,861
(17,366)
25,250
58,176 $
9,191
8,748
29,205
(13,689)
33,455
64,764
$
$
$
See accompanying notes to consolidated financial statements.
24
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal years ended October 31, 2014 and November 1, 2013
(in thousands, except share and per share amounts)
Net sales
Cost of products sold
Gross margin
Selling, general and administrative expenses
(Loss) income before taxes
(Benefit) provision for income taxes
Net (loss) income
Basic (loss) earnings per share
52 Weeks
2014
2013
$
133,401 $
129,003
94,744
83,566
38,657
45,437
43,089
42,352
(4,432)
3,085
(88)
169
(4,344) $
2,916
(0.48) $
0.32
$
$
Shares used to compute basic earnings per common share
9,123,593
9,151,939
See accompanying notes to consolidated financial statements
25
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the fiscal years ended October 31, 2014 and November 1, 2013
(in thousands)
Net (loss) income
Defined benefit pension plans:
Actuarial (loss) gain unrecognized
Prior service cost
Other comprehensive (loss) income from defined benefit plans
Other postretirement benefit plans:
Actuarial (loss) gain
Prior service cost
Other comprehensive (loss) income from other postretirement benefit plans
Other comprehensive (loss) income, before taxes
Tax (provision) benefit on other comprehensive loss
Valuation allowance on tax benefit from items of other comprehensive income
Change in other comprehensive (loss) income, net of tax
52 Weeks
2014
2013
$
(4,344) $
2,916
(3,454)
1
(3,453)
(321)
97
(224)
10,458
1
10,459
395
208
603
(3,677)
11,062
1,054
(1,054)
(4,204)
4,204
(3,677)
11,062
Comprehensive (loss) income
$
(8,021) $
13,978
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the fiscal years ended October 31, 2014 and November 1, 2013
(in thousands)
Balance, November 2, 2012
Shares repurchased and retired
Net income
Cash dividends paid
Net change in defined benefit
plans and other benefit plans
Balance, November 1, 2013
Shares repurchased and retired
Net loss
Net change in defined benefit
plans and other benefit plans
Shares
Amount
9,216 $
(25 )
9,159 $
(25)
Capital in
excess of
par value
8,932 $
(184)
Accumulated
other
comprehensive
loss
Retained
earnings
Total
shareholders’
equity
26,747 $
(24,751) $
9,134 $
(21)
9,191 $
(20 )
8,748 $
(164)
2,916
(458)
29,205 $
(4,344)
20,144
(209)
2,916
(458)
11,062
33,455
(184)
(4,344)
(3,677)
25,250
11,062
(13,689) $
(3,677)
(17,366) $
Balance, October 31, 2014
9,113 $
9,171 $
8,584 $
24,861 $
See accompanying notes to consolidated financial statements.
26
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal years ended October 31, 2014 and November 1, 2013
(in thousands)
Cash flows from operating activities:
Net (loss) income
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
activities:
52 Weeks
2014
2013
$
(4,344) $
2,916
Depreciation
Provision (recovery) for losses on accounts receivable
Gain on sale of property, plant and equipment
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 (used in) provided by operating activities
Cash used in investing activities:
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
Payment of capital lease obligations
Cash dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Cash paid for income taxes
2,827
28
(152)
1,598
(1,598)
1,816
(2,373)
(12)
549
(514)
965
(1,602)
(627)
(582)
(4,021)
163
(3,877)
(3,714)
(184)
(214)
-
(398)
(8,133)
8,325
192 $
2,236
23
(66)
(1,214)
1,214
(411)
(1,564)
176
104
(825)
401
1,169
(708)
309
3,760
72
(4,378)
(4,306)
(209)
(206)
(458)
(873)
(1,419)
9,744
8,325
- $
70
$
$
See accompanying notes to consolidated financial statements.
27
BRIDGFORD FOODS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share and per share amounts, time periods and percentages)
NOTE 1 - The Company and Summary of Significant Accounting Policies:
Bridgford Foods 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 had no significant change in the type of products produced or distributed, nor in the markets we
serve.
The consolidated financial statements include the accounts of the 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 pension benefits, self-insured workers’ compensation and employee healthcare benefits are 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 realization of deferred tax assets, cash surrender or contract value
of life insurance policies, promotional allowances and the allowance for doubtful accounts and inventory
reserves. Management believes its current estimates are reasonable and based on the best information available at the time.
We 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 measure the fair value of assets to determine if and when
adjustments are recorded.
Subsequent events
Management has evaluated events subsequent to October 31, 2014 through the date the accompanying consolidated
financial statements were filed with the Securities and Exchange Commission for transactions and other events that may
require adjustment of and/or disclosure in such financial statements. Based on its review, no material events were identified
that require adjustment to the financial statements or additional disclosure.
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. 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 collectability risk. We have significant
accounts 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 28.8% of revenues in
fiscal 2014 and 31.8% of total accounts receivable was due from Wal-Mart® at October 31, 2014. Sales to Wal-Mart®
comprised 19.6% of revenues in fiscal 2013 and 17.0% of total accounts receivable was due from Wal-Mart® at November
1, 2013. Sales to Dollar General® comprised 9.9% of revenues for fiscal year 2013 and 20.7% of total accounts receivable
was due from Dollar General at November 1, 2013.
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 Consolidated Financial
Statements for further information.
Fiscal year
We maintain our accounting records on a 52-53 week fiscal basis ending on the Friday closest to October 31. As part
of the regular accounting cycle, fiscal years 2014 and 2013 each included 52 weeks.
28
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, $5,045 and $5,214 for 2014 and 2013, 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
returns. 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 2014 and 2013 were $10,868 and $8,988, respectively.
Advertising expenses
Advertising and other promotional expenses are recorded as selling, general and administrative
expenses. Advertising expenses for fiscal years 2014 and 2013 were $3,093 and $3,325, respectively.
Cash and 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. Cash equivalents totaled $192 at October 31, 2014 and $8,325 at November
1, 2013. All cash and cash equivalents at October 31, 2014 were held at either BB&T or Citibank. All cash and cash
equivalents at November 1, 2013 were held at Wells Fargo Bank N.A.
Fair value measurements
We classify levels of inputs to measure the fair value of financial assets as follows:
● Level 1 inputs: Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are
accessible at the measurement date.
● Level 2 inputs: Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly.
● Level 3 inputs: Level 3 inputs are unobservable and should be used to measure fair value to the extent that observable
inputs are not available.
The hierarchy noted above requires us to minimize the use of unobservable inputs and to use observable market data,
if available, when determining fair value.
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.
29
Capital Leases
Leased property and equipment that meet capital lease criteria are capitalized at the lower of the present value of the
minimum payments required under the lease or the fair value of the asset at inception of the lease and are included within
Property, plant and equipment on the consolidated balance sheet. Obligations under capital leases are accounted for as
current and noncurrent liabilities on the consolidated balance sheet. Amortization is calculated on a straight-line method
based upon the shorter of the estimated useful life of the asset or the lease term.
Life 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. The cash surrender value is included
in other noncurrent assets in the accompanying consolidated balance sheets.
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. During
the fourth quarter of fiscal 2008, management recorded a full valuation allowance with respect to its deferred tax
assets. The determination as to whether or not a deferred tax asset can be fully realized is subject to a significant degree of
judgment, based at least partially upon a projection of future taxable income, which takes into consideration past and future
trends in profitability, customer demand, supply costs, and multiple other factors, none of which are predictable.
We provide tax accruals for federal, state, local and international exposures relating to audit results, tax planning
initiatives and compliance responsibilities. The development of these accruals requires judgments about tax issues,
potential outcomes and timing. (See Note 4 to the Consolidated 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.
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 statements of operations in the period the transaction occurred. Our Canadian
branch was closed at the end of fiscal year 2014.
Comprehensive income (loss)
Comprehensive income (loss) consists of net income and additional minimum pension liability adjustments.
Recently issued accounting pronouncements and regulations
In April 2014, the FASB issued ASU 2014-08 “Presentation of Financial Statements and Property, Plant, and
Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” The guidance
modified the definition of a discontinued operation to include disposals that qualify as a strategic shift that has or will
have a major effect on an entity’s operations and financial results. The guidance becomes effective for fiscal years and
interim reporting periods beginning on or after December 14, 2014, with early adoption permitted. The Company does
not expect this statement will have a material impact on its results of operations or financial position.
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” to supersede previous
revenue recognition guidance under current U.S. GAAP. The guidance presents steps for comprehensive revenue
recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The guidance becomes effective for annual reporting periods beginning after December 15, 2016, including
interim periods within that reporting period, with no early adoption permitted. The Company is currently evaluating this
statement and its impact on its results of operations or financial position.
30
NOTE 2 - Composition of Certain Financial Statement Captions:
2014
2013
$
$
$
$
$
$
$
$
$
$
$
$
4,716 $
1,447
15,129
21,292 $
1,802 $
14,254
47,352
(234)
1,848
5,522
157
70,701
(58,450)
12,251 $
13,654 $
6
13,660 $
4,007 $
1,278
327
417
6,029 $
1,127 $
467
718
241
43
2,596 $
10,830 $
4,227
1,104
640
798
922
18,521 $
4,291
1,290
13,338
18,919
1,807
13,845
44,832
(234)
1,848
6,246
220
68,564
(57,352)
11,212
13,140
6
13,146
5,400
1,246
326
659
7,631
1,693
509
724
231
43
3,200
8,337
4,012
1,328
1,149
-
837
15,663
Inventories:
Meat, ingredients and supplies
Work in process
Finished goods
Property, plant and equipment:
Land
Buildings and improvements
Machinery and equipment
Asset impairment
Capital leased trucks
Transportation equipment
Construction in process
Accumulated depreciation and amortization
Other non-current assets:
Cash surrender value benefits
Other
Accrued payroll, advertising and other expenses:
Payroll, vacation, payroll taxes and employee benefits
Accrued advertising and broker commissions
Property taxes
Other
Current portion of non-current liabilities (Note 3):
Defined benefit retirement plan
Executive retirement plans
Incentive compensation
Capital lease obligation
Postretirement healthcare
Non-current liabilities (Note 3):
Defined benefit retirement plan
Executive retirement plans
Capital lease obligation
Incentive compensation
Teamster pension withdrawal liability
Postretirement healthcare
31
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.
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
52 Weeks
2014
2013
$
$
135 $
2,226
(3,131)
830
1
61 $
174
2,019
(2,674)
1,688
1
1,208
Net pension costs and benefit obligations are determined using assumptions as of the beginning of each fiscal year.
Weighted average assumptions for each fiscal year are as follows:
Discount rate
Rate of increase in salary levels
Expected return on plan assets
2014
2013
4.05%
N/A
8.00%
4.65%
N/A
8.00%
The benefit obligation, plan assets, and funded status of these plans as of the fiscal years ended are as follows:
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
Change in benefit obligations:
Benefit obligations - beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Benefits paid
Benefit obligations - end of year
Funded status of the plans
Unrecognized prior service costs
Unrecognized net actuarial loss
Net amount recognized
52 Weeks
2014
2013
$
$
$
$
39,124 $
1,587
2,939
(1,330)
42,320 $
49,154 $
135
2,226
4,093
(1,331)
54,277
(11,957)
0
18,319
6,362 $
33,266
1,922
5,163
(1,227)
39,124
54,468
174
2,019
(6,280)
(1,227)
49,154
(10,030)
1
14,865
4,836
The Company performs an internal rate of return analysis when making the discount rate selection. The discount
rates were based on Citigroup Pension Liability Index as of October 31, 2014 and November 1, 2013 respectively.
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 2015 is $1,127.
32
The actual and target allocation for plan assets are as follows:
Target
Asset
Asset Class
Large Cap Equities
Mid Cap Equities
Small Cap Equities
International (equities only)
Fixed Income
Other (Government/Corporate, Bonds)
Cash
Total
2014
30.9%
0%
15.6%
18.4%
29.2%
2.8%
3.1%
100.0
Allocation
30.0%
0.0%
15.0%
20.0%
31.0%
2.0%
2.0%
100
2013
Target
Asset
Allocation
30.0%
0.0%
15.0%
20.0%
31.0%
2.0%
2.0%
100.0
33.6%
0%
13.8%
19.7%
28.1%
1.5%
3.3%
100.0
The fair value of our pension plan assets and the level under which fair values were determined, using the hierarchy
described in Note 1, is as follows:
Level 1
Level 2
Level 3
Total
Year Ended 2014
Total plan assets
$
42,320
-
- $
42,320
Expected payments for the pension benefits are as follows:
Fiscal Years
2015
2016
2014
2018
2019
2020-2024
Executive Retirement Plans
Non-Qualified Deferred Compensation
Pension
Benefits
1,762
1,838
1,997
2,105
2,234
13,653
$
$
$
$
$
$
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 2014 and 2013.
Supplemental Executive Retirement Plan
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.
Benefits payable related to these plans and included in the accompanying consolidated financial statements were
$4,694 and $4,521 at October 31, 2014 and November 1, 2013, 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 $13,654 and $13,140 at October 31, 2014 and November 1,
2013, respectively.
33
Expected payments for executive postretirement benefits are as follows:
Fiscal Years
2014
2015
2016
2017
2018
2019-2023
Executive
Postretirement
Benefits
$
$
$
$
$
$
470
274
69
111
287
2,518
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 $1,359 and $1,873 at October 31, 2014 and November 1, 2013, respectively. Future payments are
approximately $719, $395, $112, $79 and $42 for fiscal years 2015 through 2019, 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, which is determined at the
end of the fiscal year.
Net periodic postretirement healthcare cost consisted of the following:
Service cost
Interest cost
Amortization of prior service cost
Amortization of actuarial gain
Net periodic postretirement healthcare (benefit) cost
52 Weeks
2014
2013
$
$
18 $
37
-
(65)
(10) $
19
31
-
(55)
(5)
Weighted average assumptions for the fiscal years ended October 31, 2014 and November 1, 2013 are as follows:
Discount rate
Medical trend rate next year
Ultimate trend rate
Year ultimate trend rate is achieved
2014
2013
3.83%
8.50%
5.00%
2021
4.35%
8.50%
5.00%
2020
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
2014
2013
$
$
5 $
78 $
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
2014
2013
$
$
(4) $
(64) $
5
69
(4)
(58)
34
The healthcare obligation and funded status of this plan as of the fiscal years ended are as follows:
Change in accumulated postretirement healthcare obligation:
Healthcare obligation - beginning of year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Healthcare obligation – end of year
Funded status of the plans
Unrecognized prior service costs
Unrecognized net actuarial gain
Unrecognized amounts recorded in other comprehensive income
Postretirement healthcare liability
Expected payments for the postretirement benefits are as follows:
Fiscal Years
2015
2016
2017
2018
2019
2020-2024
2014
2013
$
$
$
880 $
18
37
52
(22)
965 $
965
-
(212)
212
965 $
909
19
31
(55)
(24)
880
880
-
(329)
329
880
Postretirement
Healthcare
Benefits
$
$
$
$
$
$
43
43
43
42
41
427
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 2014 and 2013, we made total
employer contributions to the Plan in the amounts of $500 and $452, respectively.
Teamster Pension Withdrawal Liability
During the fourth quarter of fiscal 2014, we closed the refrigerated snack food products division (a division within
the Refrigerated and Snack Food Segment involving primarily deli products) and withdrew from the Western Conference
of Teamsters Pension Plan. According to the Multi-employer Pension Plan Act of 1980 we are subject to the Western
Conference of Teamsters Pension Trust Fund Withdrawal Liability. We recorded a liability in the amount of $798 as of
October 31, 2014. This amount was recorded in other selling and administrative expenses for fiscal 2014. Such amount is
not expected to be paid in the near term.
35
NOTE 4 - Income Taxes:
The provision (benefit) for taxes on income includes the following:
Current:
Federal
State
Deferred:
Federal
State
52 Weeks
2014
2013
$
(91 ) $
3
(88 )
-
-
47
122
169
-
-
$
(88 ) $
169
The total tax provision differs from the expected amount computed by applying the statutory federal income tax rate
to income before income taxes as follows:
Provision (benefit) for federal income taxes at the applicable statutory rate
Increase in provision (benefit) 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
52 Weeks
2014
2013
$
(1,477) $
1,049
61
(25)
(175)
1,598
(70)
(88) $
488
(33)
(280)
(1,214)
159
169
$
Deferred income taxes result from differences in the bases of assets and liabilities for tax and accounting purposes.
2013
2014
Receivables allowance
Returns allowance
Inventory packaging reserve
Inventory overhead capitalization
Incentive compensation
State taxes
Employee benefits
Other
Valuation allowance
Current tax assets, net
State taxes
Incentive compensation
Pension and health care benefits
Depreciation
Net operating loss carry-forward and credits
Valuation allowance
Non-current tax assets, net
$
$
$
$
58 $
163
165
452
272
8
911
84
(2,113)
- $
263 $
257
6,366
(1,280)
2,880
(8,486)
- $
50
165
209
391
178
49
1,232
2
(2,276)
-
186
487
5,356
(1,623)
1,265
(5,671)
-
The Company policy outlines measurable objective criteria that must be met before a release of the valuation
allowance will occur. The three criteria set forth in the policy must all be satisfied before the valuation allowance can be
reversed. The criteria are as follows: first, the Company’s available federal tax net operating loss ("NOL") must be zero;
second, the prior thirty-six month cumulative book basis pre-tax income (loss), after considering “one-time” events, is
positive; third, the Company considers its outlook of near term continued profitable operations and assesses any material
negative and positive trends or events on the immediate horizon. As of October 31, 2014, the Company (1) has a federal
tax NOL of $6,160, (2) has positive thirty-six month cumulative book income and (3) volatility and recent record highs in
commodity costs create uncertainty about the Company's ability to generate future earnings. Only the second criterion has
been satisfied, therefore, the Company will maintain a full valuation allowance against its deferred tax assets as of October
31, 2014. The weight of negative factors and level of economic uncertainty in our current business continued to support the
conclusion that the realization of our 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.
36
As of October 31, 2014, the Company had federal and state net operating loss carryforwards of approximately
$6,160 and $4,006 respectively. These loss carryforwards will expire at various dates from 2018 through 2033.
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 provisions of this guidance have been incorporated into Accounting Standards Codification ("ASC") 740-
10.
As of October 31, 2014, we have provided a liability of $100 for unrecognized tax benefits related to various federal
and state income tax matters. A significant portion of this 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 November 1, 2014, we have provided a liability of $100 for unrecognized tax benefits related to various
federal and state income tax matters. A significant portion of this amount would generally reduce our effective income tax
rate if recognized in future reporting periods. We have not identified any new unrecognized tax benefits.
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
Reductions for tax positions of prior years
Settlements
Balance at end of year
52 Weeks
2014
2013
$
$
100 $
-
1
(1)
-
100 $
97
-
3
-
-
100
We recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax
expense. As of October 31, 2014, we had approximately $5 in accrued interest and penalties which is included as a
component of the $100 unrecognized tax benefit noted above.
Our federal income tax returns are open to audit under the statute of limitations for the years ended October 31, 2011
through 2013.
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, 2009 through 2012.
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:
We maintain a line of credit with Wells Fargo Bank, N.A. that expires on March 1, 2015. During the fourth quarter
of fiscal 2014, we converted our line of credit to a borrowing base line collateralized by accounts receivable. Under the
terms of this line of credit, we may borrow up to $6,500 at an interest rate equal to the bank’s prime rate. The borrowing
agreement contains various covenants, the more significant of which require us to maintain a minimum tangible net worth
and a minimum net income after tax and total capital expenditures less than $3,000. The Company was in violation of the
capital expenditure covenant which was waived (letter dated December 17, 2013) at October 31, 2014. The Company was
also in violation of the tangible net worth and net income covenants which were waived (letter dated December 24, 2014)
at October 31, 2014. The Company temporarily borrowed on the line of credit during the fourth quarter of fiscal 2014 to
pay for working capital purposes. There were no borrowings under this line of credit as of October 31, 2014. Other than
noted above, the Company is currently in compliance with all provisions of the agreement.
37
NOTE 6 - Contingencies and Commitments:
The Company leases warehouse and/or office facilities throughout the United States and Canada through month-to-
month rental agreements.
Leases for semi-truck trailers expire in 2015 and are classified as operating leases. Six year leases for semi-trucks
expire in 2018 and are classified as capital leases. Rental payments including prior leases were $574 in 2014 and $581 in
2013. Amortization of equipment under capital lease was $284 in 2014.
The following is a schedule by years of future minimum lease payments for transportation leases:
Fiscal Year
2015
2016
2017
2018
Total Minimum Lease Payments(a)
Less: Amount representing executory costs
Less: Amount representing interest(b)
Present value of future minimum lease payments(c)
Capital
Leases
Operating
Leases
Financing
Obligations
379
379
379
723
1,860 $
(380 )
(135 )
1,345
$
$
51
-
-
-
51 $
430
379
379
723
1,911
(a) Minimum payments exclude contingent rentals based on actual mileage and adjustments of rental payments based on
the Consumer Price Index. Contingent rentals amounted to $116 in 2014 and $127 in 2013 including prior lease
arrangements.
(b) Amount necessary to reduce net minimum lease payments to present value calculated at the Company’s incremental
borrowing rate at the inception of the leases.
(c) Reflected in the Note 2, as current and noncurrent obligations under capital leases of $241 and $1,104, respectively.
38
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, general and
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.
The following segment information is for the fiscal years ended October 31, 2014 (52 weeks) and November 1, 2013
(52 weeks):
Segment Information
Frozen
Food
Products
Refrigerated
and Snack
Food
Products
Other
Elimination Totals
Refrigerated
Products
Division*
$
50,740
50,740
31,790
18,950
15,715
3,235
82,661
446
83,107
63,400
19,707
27,374
(7,667)
-
-
-
-
-
-
-
- $
446
446
446
-
-
-
133,401
-
133,401
94,744
38,657
43,089
(4,432)
6,650
-
6,650
4,704
1,946
5,002
(3,056 )
2014
Sales
Intersegment sales
Net sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Total assets
Additions to PP&E
$
$
11,332
201
32,427
3,601
14,417
75
- $
- $
58,176
3,877
Segment Information
Frozen
Food
Products
Refrigerated
and Snack
Food
Products
Other
Elimination Totals
Refrigerated
Products
Division*
$
51,449
51,449
32,437
19,012
16,635
2,377
77,554
986
78,540
52,115
26,425
25,717
708
-
-
-
-
-
-
-
- $
986
986
986
-
-
-
129,003
-
129,003
83,566
45,437
42,352
3,085
11,527
-
11,527
6,790
4,737
6,154
(1,417)
2013
Sales
Intersegment sales
Net sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Total assets
Additions to PP&E
$
$
13,009
1,032
29,821
3,164
21,934
182
- $
- $
64,764
4,378
* = At the end of fiscal year 2014, the Company discontinued operation of the refrigerated snack food products division
which was reported under the Refrigerated and Snack Food Products segment involving primarily deli products.
NOTE 8- Unaudited Interim Financial Information:
Not applicable to smaller reporting company
39
Exhibit 21.1
BRIDGFORD FOODS CORPORATION
SUBSIDIARIES OF REGISTRANT
Name of Subsidiary
Bridgford Marketing Company
Bridgford Meat Company
Bridgford Food Processing Corporation
Bridgford Food Processing of Texas, L.P.**
A.S.I. Corporation
Bridgford Distributing Company of Delaware (inactive)
American Ham Processors, Inc.*
Bert Packing Company (inactive)
Moriarty Meat Company
* - No shares have been issued.
** - Limited Partnership.
State in which Incorporated
California
California
California
Texas
California
Delaware
Delaware
Illinois
Illinois
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;
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 16, 2015
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford, Chairman of the Board
(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;
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 16, 2015
/s/ RAYMOND F. LANCY
Raymond F. Lancy
Chief Financial Officer, Vice President,
Treasurer and Assistant Secretary
(Principal Financial and Accounting Officer)
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, 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 31, 2014 (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 16, 2015
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford
Chairman of the Board
(Principal Executive Officer)
This certification accompanies the Annual Report on Form 10-K pursuant to Section 13(a) and Section 15(d) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 and shall not be deemed filed by the Company for purposes
of Section 18 of the Securities Exchange Act of 1934.
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Raymond F. Lancy, Chief Financial Officer, Vice President, Treasurer and Assistant Secretary of Bridgford Foods
Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350,
that:
(1)
the Annual Report on Form 10-K of the Company for the fiscal year ended October 31, 2014 (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 16, 2015
/s/ RAYMOND F. LANCY
Raymond F. Lancy
Chief Financial Officer, Vice President
Treasurer and Assistant Secretary
(Principal Financial and Accounting Officer)
This certification accompanies the Annual Report on Form 10-K pursuant to Section 13(a) and Section 15(d) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 and shall not be deemed filed by the Company for purposes
of Section 18 of the Securities Exchange Act of 1934.
BRIDGFORD FOODS CORPORATION
_________________________________
NOTICE OF 2015 ANNUAL MEETING OF SHAREHOLDERS
March 18, 2015
10:00 a.m. Pacific Time
_________________________________
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 92801, on Wednesday, March 18, 2015 at 10:00 a.m. Pacific Time, 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 the Company's independent registered
public accountants for the fiscal year ending on October 30, 2015.
(3) To transact such other business as may properly come before the meeting, or any postponements or adjournments thereof.
The Board of Directors recommends that you vote “FOR” each of the eight director nominees referenced in Proposal 1 and “FOR” Proposal
2. Each of the Proposals is described in greater detail in the Proxy Statement accompanying this Notice of 2015 Annual Meeting of
Shareholders, or the Notice.
Only shareholders of record at the close of business on February 6, 2015 are entitled to notice of and to vote at the meeting or any
postponement or adjournment thereof.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on Wednesday,
March 18, 2015.
Pursuant to the rules of the Securities and Exchange Commission, or the SEC, the Company has elected to provide access to its proxy materials
both by sending you a full set of proxy materials, including this Notice, the accompanying Proxy Statement and Proxy Card, and the 2014
Annual Report to Shareholders, and by notifying you of the availability of the proxy materials on the Internet. The Notice, Proxy Statement,
Proxy Card and 2014 Annual Report to Shareholders are available at:
https://materials.proxyvote.com/108763
All shareholders are cordially invited to attend the annual meeting. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE
MEETING, THE BOARD OF DIRECTORS RESPECTFULLY URGES YOU TO SIGN, DATE AND 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 shares at the meeting. 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 letter or account statement
from that firm confirming their ownership of shares.
The meeting will be held at the principal offices of Bridgford Foods Corporation, which are located at 1308 North Patt Street,
Anaheim, California 92801, one block east of Lemon St. and just south of the 91 Freeway in the city of Anaheim, California. Driving
directions may be obtained by contacting the office manager at 714-526-5533.
Your vote is extremely important. Please vote as soon as possible to ensure that your vote is recorded promptly even if you plan to
attend the annual meeting.
By order of the Board of Directors
/s/ Cindy Matthews-Morales
Cindy Matthews-Morales
Secretary
Anaheim, California
February 23, 2015
(This page intentionally left blank.)
BRIDGFORD FOODS CORPORATION
1308 North Patt Street, Anaheim, California 92801
2015 ANNUAL MEETING OF SHAREHOLDERS
to be held March 18, 2015
_________________________________
PROXY STATEMENT
_________________________________
GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of Bridgford Foods Corporation, a California corporation, which we refer to as “the
Company,” “we,” “us,” or “our,” for use at the 2015 Annual Meeting of Shareholders of the Company, or the Annual Meeting, to be held at the
offices of the Company, which are located at 1308 North Patt Street, Anaheim, California 92801, on Wednesday, March 18, 2015 at 10:00 a.m.
Pacific Standard Time, and at any postponement or adjournment thereof. All shareholders of record at the close of business on February 6,
2015 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, 23, 2015.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
The following questions and answers are intended to briefly address potential questions that our shareholders may have regarding
this Proxy Statement and the Annual Meeting. They are also intended to provide our shareholders with certain information that is required to
be provided under the rules and regulations of the SEC. These questions and answers may not address all of the questions that are important
to you as a shareholder. If you have additional questions about the Proxy Statement or the Annual Meeting, please see "Whom should I
contact with other questions?” below.
1.
What is the purpose of the Annual Meeting?
At the Annual Meeting, our shareholders will be asked to consider and vote upon the matters described in this Proxy Statement and in
the accompanying Notice, and any other matters that properly come before the Annual Meeting.
2.
What is a proxy statement and what is a proxy?
A proxy statement is a document that the SEC regulations require us to give you when we ask you to sign a proxy designating
individuals to vote on your behalf. A proxy is your legal designation of another person to vote the stock you own. That other person
is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card.
3.
Why did I receive these proxy materials?
We are providing these proxy materials in connection with the solicitation by the Board of Directors of the Company of proxies to be
voted at the Annual Meeting, and at any postponement or adjournment thereof. This Proxy Statement contains important information
for you to consider when deciding how to vote on the matters brought before the Annual Meeting. You are invited to attend the
Annual Meeting in person to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual
Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy
Statement. Whether or not you expect to attend the Annual Meeting, please vote your shares as soon as possible in order to ensure
your representation at the Annual Meeting and to minimize the cost to the Company of proxy solicitation.
4.
What am I being asked to vote upon at the Annual Meeting?
At the Annual Meeting, you will be asked to:
• Vote on the election of eight director nominees to serve for one year or until their successors are elected and qualified
(Proposal 1);
• Ratify the appointment of Squar, Milner, Peterson, Miranda & Williamson, LLP as the Company's independent registered public
accountants for the fiscal year ending on October 30, 2015 (Proposal 2); and
•
Act upon such other matters as may properly come before the Annual Meeting or any postponement or adjournment thereof.
5.
Does the Board of Directors recommend voting in favor of the proposals?
Yes. The Board of Directors unanimously recommends that you vote your shares
•
•
“FOR” each of the eight director nominees; and
“FOR” the ratification of the appointment of Squar, Milner, Peterson, Miranda & Williamson, LLP as the Company's independent
registered public accountants for the fiscal year ending on October 30, 2015.
6.
Who can vote at the Annual Meeting?
Only our “shareholders of record” at the close of business on February 6, 2015, the Record Date, will be entitled to vote at the Annual
Meeting. On the Record Date, there were 9,108,354 shares of our common stock outstanding and entitled to vote. 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 as discussed in Proposal 1 below.
Beneficial Owners
If, on the Record Date, your shares were held in an account at a bank, broker, dealer, or other nominee, then you are the “beneficial
owner” of shares held in “street name” and this Proxy Statement is being forwarded to you by that nominee. The nominee holding
your account is considered the “shareholder of record” for purposes of voting at the Annual Meeting. As a beneficial owner, you have
the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting.
However, since you are not the “shareholder of record,” you may not vote your shares in person at the Annual Meeting unless you
request and obtain a valid proxy from your nominee. Please contact your nominee directly for additional information.
Brokers, banks or other nominees holding shares of record for their respective customers generally are not entitled to vote on the
election of directors unless they receive voting instructions from their customers. As used herein, “uninstructed shares” means shares
held by a nominee who has not received instructions from its customers on a particular matter. As used herein, “broker non-vote”
means the votes that could have been cast on the matter by nominees with respect to uninstructed shares if the nominees had received
instructions. The effect of proxies marked “withheld” as to any director nominee or “abstain” as to any other Proposal, and the effect
of broker non-votes on each of the Proposals, is discussed in each Proposal below.
7.
What are the voting requirements to approve the proposals?
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. Please see each Proposal below for voting requirements to approve the
Proposals.
8.
What happens if I do not vote?
Please see each Proposal below for the effect of not voting as well as the effect of withholdings, abstentions and broker non-votes.
9.
What is the quorum requirement for the Annual Meeting?
The presence at the Annual Meeting of a majority of the outstanding shares, in person or by proxy, relating to any matter to be acted
upon at the Annual Meeting, is necessary to constitute a quorum for the Annual Meeting. For purposes of the quorum, shareholders of
record who are present at the Annual Meeting in person or by proxy and who abstain or withhold their vote, including brokers, dealers
or other nominees holding shares of their respective customers of record who cause abstentions to be recorded at the Annual Meeting,
are considered shareholders who are present and entitled to vote and count toward the quorum. If a quorum is not present, the Annual
Meeting will be adjourned until a quorum is obtained.
10.
How can I vote my shares?
Shareholders of record can vote by proxy or by attending the Annual Meeting and voting in person. The persons named as proxies
were designated by the Board of Directors. If you vote by proxy, you can vote by mail as described below. If you are the beneficial
owner of shares held in “street name,” please refer to the information forwarded by your bank, broker, dealer or other nominee to see
which voting options are available to you.
•
Vote by Mail. You can vote by mail pursuant to the instructions provided on the Proxy Card. If you hold shares beneficially in
“street name,” you can vote by mail by following the voting instruction card provided to you by your broker, bank, trustee or
2
nominee. If you choose to vote by mail, simply mark, sign, date and return your Proxy Card in the enclosed postage-prepaid
envelope provided with this Proxy Statement.
•
Vote at the Annual Meeting. Voting by mail will not limit your right to vote at the Annual Meeting if you decide to attend in
person. Nevertheless, to ensure your representation at the Annual Meeting, the Board of Directors respectfully urges you to vote
by mail. If you attend the meeting in person, you may withdraw your proxy and vote your shares at the meeting. Shareholders
attending the meeting whose shares are held in “street name” by a bank, broker, dealer or other nominee who desire to vote their
shares at the meeting should bring with them a letter or account statement from that firm confirming their ownership of shares
prior to the Record Date.
All shares that have been properly voted and not revoked will be voted at the Annual Meeting. If you sign and return your Proxy Card
but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board of Directors (as
described in each Proposal below).
11.
How may I attend the Annual Meeting?
You are entitled to attend the Annual Meeting only if you were a shareholder as of the Record Date or hold a valid proxy for the
Annual Meeting. Since seating is limited, admission to the Annual Meeting will be on a first-come, first-served basis. You should be
prepared to present government-issued photo identification for admittance, such as a passport or driver's license. If your shares are
held in “street name,” you also will need proof of ownership as of the Record Date to be admitted to the Annual Meeting, such as a
letter or account statement from the bank, broker, dealer or other nominee confirming your ownership of shares prior to the Record
Date, a copy of the voting instruction card provided by your bank, broker, dealer or other nominee, or similar evidence of ownership.
If you do not comply with each of the foregoing requirements, you may not be admitted to the Annual Meeting.
The meeting will be held at the principal offices of the Company, which are located at 1308 North Patt Street, Anaheim, California
92801, one block east of Lemon St. and just south of the 91 Freeway in the city of Anaheim, California. Driving directions may be
obtained by contacting the office manager at 714-526-5533.
12. What can I do if I change my mind after I vote my shares?
Any proxy may be revoked or superseded by (i) executing a later proxy, (ii) giving notice of revocation in writing prior to, or at, the
Annual Meeting, or (iii) 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. If you have instructed your bank, broker, dealer or other nominee
to vote your shares, you must follow directions received from your nominee to change those instructions.
13.
Could other matters be decided at the Annual Meeting?
As of the date this Proxy Statement went to press, the Board of Directors did 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.
14. Who is paying for the cost of this proxy solicitation?
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 the name of a broker or nominee.
15.
How can shareholders nominate a candidate for election as a director?
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, or October 27, 2014 for the 2015 Annual Meeting. 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:
•
the name and address of the nominating shareholder and of the person or persons being recommended for consideration as a
candidate for Board membership;
3
•
•
•
•
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;
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);
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
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.
16.
I share an address with another shareholder, and we received only one paper copy of the proxy materials. How may I obtain
an additional copy of the proxy materials?
The SEC rules permit brokers and other persons who hold the Company's shares for beneficial owners, to participate in a practice
known as “householding,” which means that only one copy of the Proxy Statement and annual report will be sent to multiple
shareholders who share the same address unless other instructions are provided to the Company. Householding is designed to reduce
printing and postage costs and therefore results in cost savings for the Company. If you receive a household mailing this year and
would like to have additional copies of this Proxy Statement and/or the 2014 Annual Report mailed to you, or if you would like to opt
out of this practice for future mailings, please contact your broker or other nominee record holder, or submit your request to:
Bridgford Foods Corporation
1308 North Patt Street
Anaheim, California 92801
Attention: Corporate Secretary
Upon receipt of any such request, the Company agrees to promptly deliver a copy of this Proxy Statement and/or the 2014 Annual
Report to you. In addition, if you are currently a shareholder sharing an address with another shareholder and wish to receive only one
copy of future proxy materials for your household, please contact us using the contact information set forth above.
17. Where can I find voting results of the Annual Meeting?
We will announce preliminary voting results with respect to each proposal at the Annual Meeting. In accordance with SEC rules, final
voting results will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final
results are not known at that time in which case preliminary voting results will be published within four business days of the Annual
Meeting and final voting results will be published once they are known by the Company.
18. What is the deadline to submit shareholder proposals for the 2016 Annual Meeting?
Proposals of shareholders intended to be presented at the 2016 Annual Meeting of Shareholders must be received at the Company’s
principal office no later than October 27, 2015 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 and the rules and regulations
of the Securities and Exchange Commission.
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 January 10, 2016, 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.
4
19. Where can I find information about the Annual Report of the Company?
The Company 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 Company on Form 10-K for the fiscal year ended October 31, 2014, as such was filed with the SEC,
including financial statements and associated schedules. Such report was filed with the SEC on January 16, 2015 and is available on
the SEC’s website at www.sec.gov, as well as the Company’s website at http:// www.bridgford.com. Requests for copies of such
report should be directed to:
Bridgford Foods Corporation
1308 North Patt Street
Anaheim, California 92801
Attention: Corporate Secretary
20. Whom should I contact with other questions?
If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this
Proxy Statement, please contact:
Bridgford Foods Corporation
1308 North Patt Street
Anaheim, California 92801
Attention: Corporate Secretary
Phone: (714) 526-5533
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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 and duly qualified. At the Annual Meeting, eight directors have been nominated for election. 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 or
her 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 deems appropriate. 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 shareholder gives such notice, all shareholders may
cumulate their votes for candidates in nomination. Each of these individuals, other than Allan L. Bridgford, Jr., has served as a director since
the last annual meeting. Allan L. Bridgford Jr. was reappointed as a member of the Registrant's Board of Directors on January 12, 2015, after
having previously served on the Board of Directors from October 10, 2011 through his resignation on March 24, 2014. All current
directorships are being filled.
Unless otherwise instructed, shares represented by the proxies will be voted “FOR” the election of each 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 BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR
NOMINEES NAMED BELOW.
The following table and biographical summaries set forth, with respect to each nominee for director, his age, the positions he currently 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 6, 2015 appears under the caption “PRINCIPAL
SHAREHOLDERS AND MANAGEMENT” below.
Name
William L. Bridgford
Allan L. Bridgford, Jr.
Bruce H. Bridgford
John V. Simmons
Todd C. Andrews
D. Gregory Scott
Raymond F. Lancy
Paul R. Zippwald
Current Position at the Company
Age
60 Chairman of the Board and Member of the Executive Committee (1)(4)
55 Director (1)(4)
62 President of Bridgford Foods of California and Director (1)(4)
59 President, Director and Member of the Executive Committee (4)
49 Director (2)(3)(4)
58 Director, Audit Committee and Compensation Committee Chairman (2)(3)(4)
61 Chief Financial Officer, Vice President, Treasurer and Member of the Executive
Committee(4)
77 Director (2)(3)(4)
(1) William L. Bridgford, Allan L. Bridgford, Jr. and Bruce H. Bridgford are cousins.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
(4) Member of the Nominating Committee.
Directors
William L. Bridgford
Year First
Became
Director
2004
2011
2009
2011
2004
2006
2013
1992
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. He has also served as a member of the Executive Committee since 2004. Mr. Bridgford is a graduate of California State
University, Fullerton with a degree in Business Management.
Mr. Bridgford is one of the principal owners of Bridgford Industries Inc., the Company’s majority shareholder. He brings to the Board
extensive experience in the operations of the Company and provides strong leadership skills that provide strategic business guidance to the
Company. The Board believes his executive managerial experience and Company knowledge base combined with his understanding of
corporate values and culture qualify him to serve as a member of the Board.
B-1
Allan L. Bridgford, Jr.
Allan L. Bridgford Jr. served as President of Bridgford Foods of Illinois, a division of the Company, from January 1983 until his retirement in
October of 2002. Mr. Bridgford is a graduate of the University of Missouri with a degree in Economics.
Mr. Bridgford is one of the principal owners of Bridgford Industries Inc., the Company’s majority shareholder. He brings to the Board
extensive sales, marketing and distribution experience in the food industry. The Board believes these skills and experiences qualify him to
serve as a member of the Board. Mr. Bridgford is providing consulting services to the Chicago plant and management.
Bruce H. Bridgford
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 earned a B.S. degree in Business with a concentration in finance and marketing
from the University of Southern California.
Mr. Bridgford is one of the principal owners of Bridgford Industries Inc., the Company’s majority shareholder. He provides key insight into
the direct store delivery operations of the Company as well as strategic direction for the sales management and marketing functions of the
Company. The Board believes these skills and experiences qualify him to serve as a member of the Board.
John V. Simmons
John V. Simmons 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. Mr. Simmons earned a B.A. degree in Psychology from the University of Wisconsin.
Mr. Simmons has extensive knowledge and experience in the areas of marketing, product research and development, trade relations and
operations developed as an employee of the Company since 1979. The Board believes these skills and experiences qualify him to serve as a
member of the Board.
Todd C. Andrews
Todd C. Andrews is a Certified Public Accountant (inactive) and presently serves as Vice President and Controller of Public Storage, a member
of the S&P 500, headquartered in Glendale, California. Mr. Andrews has been employed by Public Storage since 1997. Mr. Andrews
graduated cum laude with a Bachelor of Science degree in Business Administration with an emphasis in accounting and finance from
California State University, Northridge.
Mr. Andrews has extensive experience in multiple accounting and finance roles over a period of more than 20 years. In particular, Mr.
Andrews is experienced in the areas of financial reporting and analysis, treasury management, SEC reporting, internal controls and procedures
and operational analysis. In addition, Mr. Andrews brings a diverse set of perspectives to the Board from serving in positions in multiple
industries, including public accounting, entertainment, and real estate. The Board believes these skills and experiences qualify him to serve as
a member of the Board. Mr. Andrews also qualifies as an audit committee financial expert and is financially sophisticated within the meaning
of the NASDAQ Listing Rules.
D. Gregory Scott
D. Gregory Scott is a Certified Public Accountant (inactive) 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.
Mr. Scott brings to the Board extensive financial and managerial experience, which qualifies him to serve as a member of the Board. Mr. Scott
also qualifies as an audit committee financial expert and has financial sophistication as described in the NASDAQ Listing Rules.
Raymond F. Lancy
Raymond F. Lancy 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. Mr. Lancy is a Certified Public Accountant
(inactive) and worked for ten years as an auditor at PricewaterhouseCoopers. He earned a Bachelor of Science degree with a major in
Administration with high honors from California State University, San Bernardino.
Mr. Lancy has extensive knowledge and experience in the areas of finance and management developed at PricewaterhouseCoopers and as an
employee of the Company since July of 1992 and as Chief Financial Officer since 2003. The Board believes these skills and experiences
qualify him to serve as a member of the Board.
Paul R. Zippwald
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 the Graduate
School of Credit and Financial Management at the Amos Tuck School of Business Administration of Dartmouth College and also holds a
graduate degree from the American Institute of Banking.
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Mr. Zippwald brings to the Board a background and expertise in banking and investment advisory services. He has provided many years of
service to the Company as a member of the Board. The Board believes that Mr. Zippwald is qualified to serve as a director of the Company
due to his business expertise and executive managerial experience.
Public Company Directorships
Except as indicated above, none of the directors have been a director of any other public company in the past five years.
Board Meetings
During fiscal year 2014, the Company’s Board of Directors held twelve regularly scheduled monthly meetings and no special meetings. Each
of the nominees holding office during this period attended at least 75% of the aggregate number of monthly meetings of the Board of Directors
and meetings of committees upon which he served with the exception of Allan L. Bridgford Jr. who resigned as director on March 24, 2014 and
was reappointed as director on January 12, 2015.
Arrangements or Understandings with Directors
There are no agreements or understandings pursuant to which any of the directors was elected to serve as a director.
Controlled Company Status
The Company is considered a “controlled company” within the meaning of Rule 5615(c)(1) of the NASDAQ Listing Rules based on the
approximate 78.4% ownership of the Company by Bridgford Industries Incorporated and is therefore exempted from various rules pertaining to
certain “independence” requirements of its directors and certain requirements with respect to the committees of the Board. Nevertheless, the
Board of Directors has determined that Messrs. Andrews, Scott and Zippwald are all “independent directors” within the meaning of Rule 5605
of the NASDAQ Listing Rules.
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 2014 consisted of Messrs. Andrews, Scott and Zippwald. As of the date of mailing of this Proxy
Statement, the Compensation Committee consists of Messrs. Andrews, Scott and Zippwald. Each of the members of the Compensation
Committee is a non-employee director, and notwithstanding that the Company is a “controlled company” within the meaning of the NASDAQ
Listing Rules, each member is independent as defined in Rule 5605(a)(2) of the NASDAQ Listing Rules. The Compensation Committee is
responsible for establishing and administering the Company’s compensation arrangements for all executive officers.
The Compensation Committee meets no less frequently than annually (and more frequently 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 compensation data from companies that the Compensation Committee deems to be
competitive with the Company in connection with its annual review of executive compensation. The Compensation Committee has the power
to form and delegate authority to subcommittees when appropriate, provided that such subcommittees are composed entirely of directors who
would qualify for membership on the Compensation Committee pursuant to applicable NASDAQ Listing Rules. See “Compensation
Discussion and Analysis” and “Director Compensation.”
The Compensation Committee held one meeting during fiscal year 2014. No additional compensation is paid to directors for participation on
the Compensation Committee. The Compensation Committee operates under a written charter, which was adopted on October 11, 2010 and
was attached as Exhibit A to the Proxy Statement for the 2014 Annual Meeting of Shareholders. The charter is not available on the Company’s
website.
Audit Committee
The Audit Committee for fiscal year 2014 consisted of Messrs. Andrews, Scott and Zippwald. As of the date of mailing of this Proxy
Statement, the Audit Committee consists of Messrs. Andrews, Scott and Zippwald. The Audit Committee has been established in accordance
with the rules and regulations of the SEC and each of the members of the Audit Committee is an “independent director” as defined in Rule
5605(c)(2) of the NASDAQ Listing Rules. In addition, the Board has determined that Messrs. Andrews and Scott qualify as “audit committee
financial experts” as such term is used in the rules and regulations of 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 seven meetings during fiscal year 2014. Each of the members of the Audit Committee receives $350 to $550 per
meeting depending on the length of each meeting attended. 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
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Audit Committee Charter, which was approved on November 8, 2010 and was attached as Exhibit B to the Proxy Statement for the 2014
Annual Meeting of Shareholders. The charter is not available on the Company’s website.
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. Because of its status as a “controlled company” within the meaning of Rule 5615(c)(1) of the NASDAQ Listing
Rules, the Company is not required to have a Nominating Committee comprised solely of independent directors.
In its role as Nominating Committee, the full 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 Listing Rules. The Board last met in its role as Nominating Committee in January 2015 to approve the
reappointment of Allan L. Bridgford Jr. to the Board of Directors. The Nominating Committee does not act pursuant to a written charter.
Director Nomination Process
In identifying new Board candidates, the Board will seek recommendations from existing Board 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 made those
recommendations in accordance with the shareholder nomination 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.
Board Consideration of Diversity
The Board believes that differences in experience, knowledge, skills and expertise enhance the performance of the Board. Accordingly, the
Board, in its capacity as Nominating Committee, considers such diversity in selecting and evaluating proposed Board nominees. However, the
Board has not implemented a formal policy with respect to the consideration of diversity for the composition of the Board.
Board Leadership Structure and the Role of the Board in Risk Management Oversight
Board Leadership Structure.
The Board is comprised of a total of eight directors. One of those directors, William L. Bridgford, serves as the Chairman of the Board. In this
capacity, he is principally charged with fulfilling the following duties:
Presiding as the Chairman of the meetings of the Board of Directors;
Serving as a conduit of information between the independent directors and members of management;
Approving Board of Directors meeting agendas and schedules;
Calling executive session meetings of the independent directors, as needed;
Reviewing information sent to the Board of Directors;
Working with the Chief Financial Officer and Corporate Secretary to ensure the Board has adequate resources to support its
decision-making obligations;
Meeting with shareholders as appropriate; and
Such other responsibilities and duties as the Board of Directors shall designate.
The Company has not appointed a Chief Executive Officer. Instead, the Company has historically utilized a five-member Executive
Committee to serve in the capacity of Chief Executive Officer. The Board believes that the Executive Committee structure is appropriate for
the Company because it requires a full committee of officers, each of whom bring their own experiences and perspectives to bear on their
decision making, to discuss and vote on important decisions affecting the Company. The Company has utilized an Executive Committee in
4
lieu of appointing a Chief Executive Officer for more than twenty years. See "Executive Officers" for further discussion about the role and
membership of the Executive Committee.
The Chairman of the Board serves on the Executive Committee. Thus, the roles of Chairman of the Board and Chief Executive Officer are
intertwined to some extent. However, the Chairman of the Board, the President, and the Chief Financial Officer represent only three of the five
members of the Executive Committee and no other directors currently serve on the Executive Committee. Accordingly, five of eight members
of the Board are not members of the Executive Committee. The Board believes that this structure properly maintains the independence of the
Board as a whole, and of the Chairman of the Board, from the Executive Committee.
The Board’s Role in Risk Oversight.
The responsibility for the day-to-day management of risk lies with the Executive Committee. Risk management is not viewed by the Executive
Committee as a separate function, but rather is viewed as part of the day-to-day process of running the Company. It is the Board’s
responsibility to oversee the Executive Committee with respect to its risk management function and to ensure that the Company’s risk
management system is well-functioning and consistent with the Company’s overall corporate strategy and financial goals. In fulfilling that
oversight role, the Board focuses on the adequacy of the Company's overall risk management system. The Board believes that an effective risk
management system will adequately identify the material risks to the Company’s business, monitor the effectiveness of the risk mitigating
policies and procedures, and provide the Executive Committee with input with respect to the risk management process.
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 of Directors
generally, or to any director(s), to Bridgford Foods Corporation, 1308 North Patt Street, Anaheim, California 92801, Attention: Corporate
Secretary. 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 directors (then serving as directors of the Company) except Allan L. Bridgford,
Jr. attended the Company’s 2014 Annual Meeting of Shareholders.
Executive Officers
Members of the Company’s Executive Committee, comprised of the five 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 on the Executive Committee at the
pleasure of the Board of Directors:
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Vice President 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 and the nephew of Allan L. Bridgford. Hugh Wm. Bridgford and Allan L.
Bridgford are brothers. Allan L. Bridgford is the father of Allan L. Bridgford, Jr., who serves on the Company’s Board of Directors.
A biographical summary regarding William L. Bridgford, Raymond F. Lancy and John V. Simmons is set forth above under the caption
“Directors.” Biographical information with respect to the Company’s other executive officers is set forth below:
Allan L. Bridgford
Allan L. Bridgford, age 79, previously served as Senior Chairman of the Board from March of 2006 to October of 2011. 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, 60% in March of 2005 and 50% in November 2014. Mr. Bridgford’s base compensation was
reduced by the same percentage as his regular 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 degree in Economics.
Hugh Wm. Bridgford
Hugh Wm. Bridgford, age 83, 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 was a full time employee of
the Company from 1955 through December 2010. Mr. Bridgford reduced his work schedule to 80% in January 2011 and 60% in November
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2012. He also served as a member of the Executive Committee since 1972. Mr. Bridgford is a graduate of Stanford University with a degree
in Economics and completed the Executive Program at the University of California at Los Angeles Graduate School of Business.
Agreements or Understandings with Officers
There are no agreements or understandings pursuant to which any of the executive officers was selected to serve as an executive officer.
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 6, 2015 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
executive officers and directors as a group. The information as to each person or entity has been furnished by such person or group.
Name and Address
of Beneficial Owner(1)
Bridgford Industries Incorporated
1707 Good-Latimer Expressway
Dallas, TX 75226
Hugh Wm. Bridgford
Allan L. Bridgford
Bruce H. Bridgford
Baron R.H. Bridgford
170 North Green St.
Chicago, IL 60607
William L. Bridgford
Allan L. Bridgford, Jr.
Raymond F. Lancy
John V. Simmons
1707 Good-Latimer Expressway
Dallas, TX 75226
Todd C. Andrews
D. Gregory Scott
Paul R. Zippwald
All directors and executive officers
as a group (11 persons)
Amount and Nature of Shares Beneficially Owned
Sole Voting and
Investment Power
Shared Voting and
Investment Power(2)
Total
Beneficially
Owned(3)
Percentage of
Outstanding Shares
Beneficially Owned(3)
7,156,396
48,917
155,882
3,448
1,654
6,175
20,000
—
363
200
8,550
1,452
—
7,157,396
7,156,396
7,156,396
7,156,396
7,156,396
7,156,396
—
—
—
—
—
7,156,396
7,205,313
7,312,278
7,159,844
7,158,050
7,162,571
7,176,396
—
363
200
8,550
1,452
78.6%
79.1%
80.3%
78.6%
78.6%
78.6%
78.8%
*
*
*
*
*
7,403,037
7,156,396
7,403,037
81.3%
* Represents ownership of less than one percent (1%) of the outstanding shares.
(1) Unless otherwise indicated, the address of such beneficial owner is the Company’s principal executive offices, which are located at 1308
North Patt Street, Anaheim, California 92801.
(2) Represents shares beneficially owned by Bridgford Industries Incorporated, a Delaware corporation (“BII”) as reported on Schedule 13D
filed with the SEC on April 5, 2010. Other than ownership of these shares, BII does not presently have any significant business or
assets. Allan L. Bridgford, Hugh Wm. Bridgford, William L. Bridgford, Bruce H. Bridgford, Baron R.H. Bridgford and Allan L.
Bridgford Jr. presently own 16.49%, 10.47%, 7.68%, 10.56%, 9.83% and 4.28%, respectively, of the outstanding voting capital stock of
BII. The remaining shares of BII capital stock are owned of record, or beneficially, by 32 additional members of the Bridgford
family. The officers of BII jointly vote all of the Company’s shares held by BII. With respect to Hugh Wm. Bridgford, such amount also
includes 1,000 shares held by his wife.
(3) Applicable percentage of ownership as of February 6, 2015 is based upon 9,108,354 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.
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
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and written representations that no other reports were required, during the fiscal year ended October 31, 2014, 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 section provides information regarding the compensation paid to the Company’s “named executive officers” or “NEOs,” all of whom are
members of the Executive Committee. The Company has historically 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, Vice President
• William L. Bridgford, Chairman of the Board (Principal Executive Officer)
•
• Raymond F. Lancy, Chief Financial Officer, Vice President and Treasurer (Principal Financial Officer)
John V. Simmons, President
The Company’s executive compensation program is overseen by the Compensation Committee of the Board (the “Committee”), which is
comprised of certain non-employee members of the Board. 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. Each member of the Committee is an independent director as defined in Rule
5605(a)(2) of the NASDAQ Listing Rules.
One of the Company’s primary strategic goals is to increase 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 financial performance.
The 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 business unit performance;
• Develop and retain 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 of all NEOs 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 2014. The responsibilities of the Compensation Committee are as
follows:
• Review and approve, on an annual basis, the total compensation and compensation structure for the Executive Committee,
including base salary, benefits, bonuses and equity compensation (if any). The Board’s 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. 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 Board or the Compensation Committee.
• Provide oversight of senior management’s decisions concerning the compensation of management, including evaluation
procedures for Company officers and other executives deemed eligible for bonuses or equity compensation.
• Review and approve compensation packages for new management personnel and, as needed, termination packages for departing
management personnel.
7
• 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 management
personnel.
• 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, particularly the Chairman of the Board and the Chairman of the Executive Committee, support the
Committee in the executive compensation decision-making process. At the request of the Compensation Committee, one or more members of
the Executive Committee may present a performance assessment and recommendations to the Committee regarding base salaries, bonus
payments, incentive plan structure and other compensation-related matters for the Company’s executives (other than with respect to their 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 compared to the cost.
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;
• Discretionary cash bonuses;
• 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 members 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 an executive’s 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 for comparable positions at similar companies, 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 that apply to all other
employees. 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 2014, the Compensation Committee set a base salary of $4,842.62 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 2013, which was derived from management’s assessment of the increase in the cost of living. The same percentage
increase was applied to all non-executive, non-union team members when evaluating salary changes.
Discretionary Cash Bonuses
The Company’s policy is to make a significant portion of each NEO’s total compensation contingent upon the Company’s financial
performance. The Compensation Committee believes that the payment of cash bonuses based on the Company’s financial success allows the
Company to offer a competitive total compensation package despite relatively lower base salaries, while aligning a significant portion of
executive compensation with the achievement of positive Company financial results. However, while the payment of these cash bonuses to the
NEOs is generally correlated with the achievement of positive Company financial results, there are no specific performance targets
communicated to the NEOs in advance, and the bonuses are ultimately paid at the discretion of the Compensation Committee after receiving
input from the Chairman of the Board. For the fiscal year ended October 31, 2014, no discretionary bonuses were accrued to members of the
Company’s Executive Committee.
8
Long-Term Equity-Based Incentive Compensation
The Compensation Committee has concluded that long-term stock-related compensation has very limited value as an employee incentive or
retention tool because the Company’s equity-based incentive awards have historically provided little or no value to the recipient. In addition,
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 or restricted stock awards for many years. Instead, the Compensation Committee aims to align the
interests of the NEOs with those of the Company's shareholders by creating a link between the payment of executive compensation and the
achievement of Company financial goals as described above. 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.
Pension and Retirement Benefits
Retirement Plan for Administrative and Sales Employees of Bridgford Foods Corporation. The Company has a defined benefit plan (the
“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 a monthly lifetime annuity 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.
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 for 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. No
contributions or salary deferrals have been made in the past ten years.
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
December 2014. The combined cost of this plan during fiscal year 2014 was $5,000 for all active and retired participants.
The Company pays life and disability insurance premiums on policies under which the Company’s 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.
9
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.
Shareholder Advisory Vote on Executive Compensation and Frequency of Advisory Vote
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Company held its first
advisory (non-binding) shareholder vote on the compensation of the Company’s named executive officers (commonly known as a “say-on-pay”
proposal), and its first shareholder vote on the frequency of such say-on-pay proposal, at its 2011 Annual Meeting of Shareholders. At such
meeting, the shareholders of the Company approved the overall compensation of the Company’s named executive officers and elected to hold a
say-on-pay vote every three years. The second “say-on-pay” proposal was approved at the 2014 Annual Meeting of Shareholders. The
Company’s next say-on-pay proposal and frequency of such say-on-pay proposal will be presented at the 2017 Annual Meeting of Shareholders
in the Proxy Statement.
10
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 2012, 2013 and 2014, respectively. Each of the NEOs named below are also members of the 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.
Base
Stock
Awards($)(2)
Salary($)(7)Bonus($)(1)
0
—
—
64,636
—
84,539
151,090
146,689
145,155
Option
Awards($)(3)
—
—
—
Non-Equity
Incentive Plan
Compensation($)(4)
—
—
—
Change in
Pension
Value and Non-
Qualified
All
Deferred
Other
Compensation
Compensation($)(6)
Earnings($)(5)
8,000
0
8,000
0
6,000
66,117
151,090
146,689
200,844
0
64,636
112,718
251,816
244,482
241,925
0
107,726
140,898
251,816
244,482
241,925
0
107,726
140,898
251,816
244,482
241,925
0
107,726
140,898
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0
0
79,835
355,662
137,742
530,363
62,037
0
90,964
333,625
138,017
497,693
18,400
18,200
16,000
18,400
18,200
16,000
42,776
42,576
40,376
18,400
18,200
16,000
Total($)
159,090
219,325
301,811
169,490
229,525
409,397
625,878
508,150
929,187
356,629
394,784
514,163
603,841
508,425
896,516
Name and Principal
Position
Allan L. Bridgford
Vice President Member of
the Executive Committee;
Former Senior Chairman of
the Board
Hugh Wm. Bridgford
Vice President and
Chairman of the Executive
Committee
William L. Bridgford
Chairman of the Board;
Member of the Executive
Committee (Principal
Executive Officer)
John V. Simmons
President; Member of the
Executive Committee
Raymond F. Lancy
Chief Financial Officer,
Vice President and
Treasurer (Principal
Financial Officer)
Year
2014
2013
2012
2014
2013
2012
2014
2013
2012
2014
2013
2012
2014
2013
2012
(1) There were no discretionary cash bonuses earned by each of the NEOs in fiscal year 2014.
(2) The Company did not grant any stock awards to any of the NEOs during fiscal years 2012, 2013 or 2014.
(3) The Company did not grant any option awards to any of the NEOs during fiscal years 2012, 2013 or 2014.
(4) The Company did not utilize any non-equity incentive plans in order to pay compensation to its NEOs in fiscal year 2014. While it is the
Company’s policy to provide each of the NEOs with an opportunity to earn cash bonuses that are correlated with the Company’s financial
performance, the payment of the bonuses are ultimately subject to the discretion of the Compensation Committee. See “Compensation
Discussion and Analysis – Total Compensation for Executive Officers – Discretionary Cash Bonuses.”
(5) This column includes the aggregate positive change in actuarial present value of each NEO’s accumulated benefit under all defined benefit
and supplemental pension plans. In accordance with SEC rules, to the extent the aggregate change in present value of all defined benefit
and supplemental pension plans for a particular fiscal year would have been a negative amount, the amount has instead been reported as $0
and the aggregate compensation for the NEO in the “Total” column has not been adjusted to reflect the negative amount. In addition, to
the extent that the change in present value of any particular defined benefit or supplemental pension plan for a particular year was a
negative amount, the negative amount has not been used to offset the positive change in present value associated with the other applicable
defined benefit or supplemental pension plans (as was the case in fiscal year 2012 for Allan L. Bridgford and Hugh Wm. Bridgford). The
aggregate negative change in the present value of the non-qualified deferred compensation plan and pension and retirement benefits for
certain NEOs in certain fiscal years was as follows: (i) fiscal year 2014 Allan L. Bridgford, ($108,940), Hugh Wm. Bridgford ($101,195),
(ii) fiscal year 2013 Allan L. Bridgford, ($212,235), Hugh Wm. Bridgford ($215,627), and John V. Simmons ($60,233), and (iii) fiscal
year 2012 Allan L. Bridgford, ($175,106) and Hugh Wm. Bridgford, ($183,687).
(6) Consists of matching contributions to the Bridgford Foods Retirement Savings 401(k) plan made by the Company on behalf of each of the
NEOs, except Allan L. Bridgford, and, for 2013 and 2014, an $8,000 payment to offset the negative impacts arising from the cancellation
of supplemental executive health benefits. In addition, the amount for Mr. Simmons includes premiums in the amount of $24,376 for life
and disability insurance policies issued for the benefit of Mr. Simmons and his designees.
(7) Years 2013 and 2014 were 52 weeks. Year 2012 was 53 weeks.
11
Narrative to Summary Compensation Table
See “Compensation Discussion and Analysis” for further discussion of compensation arrangements pursuant to which 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 fiscal years 2014, 2013 or 2012.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding options or stock awards held by any NEO as of October 31, 2014.
Option Exercises and Stock Vested
There were no shares acquired upon the exercise of stock options or vesting of stock awards by any NEO during fiscal years 2014, 2013
or 2012.
Pension Benefits
The tables below provide information concerning retirement plan benefits for each NEO and payments due upon certain termination scenarios.
Retirement Plan for Administrative and Sales Employees of Bridgford Foods Corporation
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 on the 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.
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 31, 2014:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of
Years
Credited
Service
56
58
41
35
22
Present Value
of
Accumulated
Benefit (1)
$
$
$
$
$
937,783 $
837,378 $
615,896 $
495,153 $
448,889 $
Payments
During
Fiscal Year
77,239
55,593
—
—
—
(1)
The assumed discount rate used was 4.05% to compute the present value of the accumulated benefit. The IRS 2013 Combined Static
Mortality table was used and an expected return on assets of 8.00% was assumed.
For the Fiscal Year ended November 1, 2013:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of
Years
Credited
Service
55
57
40
34
21
Present Value
of
Accumulated
Benefit (1)
$
$
$
$
$
935,909 $
819,155 $
541,251 $
433,116 $
396,281 $
Payments
During
Fiscal Year
76,350
54,953
—
—
—
(1) The assumed discount rate used was 4.65% 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.
12
For the Fiscal Year ended November 2, 2012:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of
Years
Credited
Service
54
56
39
33
20
Present Value
of
Accumulated
Benefit (1)
$
$
$
$
$
1,034,220 $
912,888 $
608,364 $
491,106 $
441,456 $
Payments
During
Fiscal Year
74,617
53,706
—
—
—
(1) The assumed discount rate used was 3.70% 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.
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 the 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.
The present value of accumulated plan benefits and payments made during the fiscal year were as follows:
For the Fiscal Year ended October 31, 2014:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
(1) A 4.05% discount rate was used to compute the present values.
Present Value
of
Accumulated
Benefit (1)
Payments
During
Last Fiscal
Year
$
$
$
$
$
83,238 $
98,668 $
2,059,689 $
--- $
2,059,689 $
51,528
61,080
---
---
---
13
For the Fiscal Year ended November 1, 2013:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
(1) A 4.65% discount rate was used to compute the present values.
For the Fiscal Year ended November 2, 2012:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
(1) A 3.70% discount rate was used to compute the present values.
Present Value
of
Accumulated
Benefit (1)
Payments
During
Last Fiscal
Year
$
$
$
$
$
129,653 $
153,687 $
1,778,672 $
--- $
1,778,672 $
51,528
61,080
---
---
---
Present Value
of
Accumulated
Benefit (1)
Payments
During
Last Fiscal
Year
$
$
$
$
$
177,160 $
210,001 $
1,640,929 $
— $
1,640,929 $
51,528
61,080
—
—
—
The following table estimates the present value of SERP benefits under different employment termination scenarios as of October 31, 2014:
Present Value
of Benefit
Upon Voluntary
Termination
of Employment
(1)
Present Value
of Benefit
if Disabled
(1)
Present Value
of Benefit
Upon Death
(1)
Present Value
of Benefit
Upon Involuntary
Termination of
Employment due to
Sale/Merger/
Acquisition
(1)
$
$
$
$
$
83,238 $
98,668 $
1,509,478 $
— $
1,509,478 $
83,238 $
98,668 $
2,059,689 $
— $
2,059,689 $
83,238 $
98,668 $
2,059,689 $
— $
2,059,689 $
83,238
98,668
2,059,689
—
2,059,689
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford (2)
John V. Simmons
Raymond F. Lancy (2)
(1) In each scenario above, the benefit amount shown is calculated at October 31, 2014. A 4.05% 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 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 4.05%.
14
The following table estimates future SERP payments under different termination scenarios as of October 31, 2014:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
Payment Upon
Voluntary Termination
of Employment
Payment if
Disabled (1)
Death Benefit
from Plan (2)
Continues to receive
$4,294 for another
20 months
Continues to receive
$5,090 for another
20 months
Continues to receive
$4,294 for another
20 months
Continues to receive
$5,090 for another
20 months
Continues to receive
$4,294 for another
20 months
Continues to receive
$5,090 for another
20 months
William L. Bridgford
$11,111 per month for
$15,161 per month for
180 months beginning on
10/31/14
180 months commencing
after disability
$15,161 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
20 months
Continues to receive
$5,090 for another
20 months
Lump Sum payment due at
termination of $2,059,689
John V. Simmons
—
—
—
—
Raymond F. Lancy
$11,111 per month for
$15,161 per month for
180 months beginning on
10/31/14
180 months commencing
after disability
$15,161 per month for
180 months beginning
just after death
Lump Sum payment due at
termination of $2,059,689
(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 31, 2014. The discount rate used to calculate the lump sum amount is 4.05%.
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 31, 2014.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Executive
Contributions
in
Company
Contributions
in
Fiscal Year
Fiscal Year
Aggregate
Earnings in
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at
Fiscal Year
End
$
$
$
$
$
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
73,908 $
73,908 $
— $
— $
— $
117,105
117,105
—
—
—
The table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year ended
November 1, 2013.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Executive
Contributions
in
Company
Contributions
in
Fiscal Year
Fiscal Year
Aggregate
Earnings in
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at
Fiscal Year
End
$
$
$
$
$
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
73,530 $
73,530 $
— $
— $
— $
181,505
181,505
—
—
—
15
The table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year ended
November 2, 2012.
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Executive
Contributions
in
Company
Contributions
in
Fiscal Year
Fiscal Year
Aggregate
Earnings in
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at
Fiscal Year
End
$
$
$
$
$
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
74,318 $
74,318 $
— $
— $
— $
242,399
242,399
—
—
—
The following table estimates the present value of non-qualified deferred compensation benefits under different employment termination
scenarios as of October 31, 2014:
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 if
Disabled
Present Value
of Benefit Upon
Involuntary
Termination of
Employment Due to
Sale/Merger/
Acquisition
Present Value
of Benefit
Upon Death
$
$
$
$
$
117,105 $
117,105 $
— $
— $
— $
117,105 $
117,105 $
— $
— $
— $
117,105 $
117,105 $
— $
— $
— $
117,105
117,105
—
—
—
Effective January 1, 2015, Allan L. Bridgford and Hugh Wm. Bridgford each receive a monthly deferred compensation payment of $6,147, as
compared to $6,168 prior to such date. As of October 31, 2014, twenty (20) such monthly payments remained for these recipients.
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 2014. Directors
who were NEOs did not receive any additional compensation for their services as directors.
Fees Earned
or Paid Cash
Stock
awards
Option
awards
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
Non-Equity
Incentive Plan
Compensation
All Other
Compensation
Total
$
$
$
$
22,800 $
5,200 $
22,950 $
25,400 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
22,800
5,200
22,950
25,400
Name
Todd C. Andrews
Allan L. Bridgford, Jr.
D. Gregory Scott
Paul R. Zippwald
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 increasing profitability.
The directors are not paid an annual retainer for their service on the Board. Instead, each non-employee director was paid $1,700 for each of
the first two Board meetings attended during fiscal year 2014 and $1,800 for each subsequent Board meeting attended in fiscal year
2014. Members of the Audit Committee were paid $350 to $550 for each Audit Committee meeting attended depending on the length of the
meeting. The members of the Compensation Committee were not paid any additional compensation for their service. In addition, the directors
were not paid any additional compensation for their service on the Nominating Committee.
16
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company's general legal counsel is the son of Allan L. Bridgford. For his legal counsel, he currently is paid a fee of $1,700 to $1,800 for
each Board of Directors meeting attended. Total fees paid under this arrangement were $19,600 in fiscal year 2014 and $20,200 in fiscal year
2013. 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 each of fiscal years 2014 and 2013 were approximately $1,000 and $6,000, respectively.
Director Allan L. Bridgford Jr., son of the former senior chairman of the board of directors, is providing consulting services to the Chicago
plant and management. The contract on behalf of the Company with Allan L. Bridgford Jr. currently provides for consulting services at $1,200
per day. Total fees billed under this arrangement were approximately $173,000 in fiscal year 2014 and $139,200 in fiscal year 2013.
Other than the relationships noted above, the Company is not aware of any related party transactions that would require disclosure as a related
party transaction under SEC rules.
The Company’s executive officers, directors, nominees for directors and principal shareholders, including their immediate family members and
affiliates, are prohibited from entering into related party transactions 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 shareholder 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 (or other independent committee, as applicable). The requirement for the
Audit Committee to review related-party transactions (defined as those transactions required to be disclosed under Item 404 of Regulation S-K)
is set forth in the Amended and Restated Audit Committee Charter, which was approved on November 8, 2010 and was attached as Exhibit B
to the Proxy Statement for the 2014 Annual Meeting of Shareholders.
17
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 the Company’s independent registered public accounting firm for the fiscal year ending October 30, 2015.
The affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter is
required to ratify the appointment of Squar, Milner, Peterson, Miranda and Williamson, LLP. Abstentions will have the same effect as votes
“AGAINST” the Proposal. Brokers have discretion to vote uninstructed shares with respect to this Proposal. Accordingly, broker non-votes
will not occur with respect to this Proposal.
Proxies received in response to this solicitation will be voted “FOR” the approval of Squar, Milner, Peterson, Miranda & Williamson, LLP
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
to respond to questions. They will have the opportunity to make a statement if they so desire.
THE 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 THE FISCAL YEAR ENDING OCTOBER 30, 2015.
Audit Fees
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees billed by Squar, Milner, Peterson, Miranda & Williamson, LLP for the audit of the Company’s annual financial statements and the review
of the financial statements included in the Company’s quarterly reports on Form 10-Q for fiscal year 2014 totaled $116,313. Fees billed by
Squar, Milner, Peterson, Miranda & Williamson, LLP for the audit of the Company’s annual financial statements and the review of the
financial statements included in the Company’s quarterly reports on Form 10-Q for fiscal year 2013 totaled $142,233.
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 fiscal year 2014 or fiscal year 2013.
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 for fiscal year
2014 or fiscal year 2013.
All Other Fees
All other fees are comprised of fees for initial planning for certification of internal controls over financial reporting. No such fees were billed
by Squar, Milner, Peterson, Miranda & Williamson, LLP for fiscal year 2014 or fiscal year 2013.
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 registered public
accountants. These services may include audit services, audit-related services, tax services and other services. During fiscal years 2014 and
2013, the Audit Committee approved all such services rendered by its independent registered public accountants. For audit services, the
independent registered public accountants provide 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 registered public accountants to provide during the fiscal year. The
Company’s senior management and the independent registered public accountants 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.
18
REPORT OF THE AUDIT COMMITTEE
Pursuant to a meeting of the Audit Committee on January 12, 2015, 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 the Statement on Auditing Standards
No. 61, amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in
Rule 3200T; and (iii) received the written disclosures and the letter from Squar, Milner, Peterson, Miranda & Williamson, LLP regarding its
communications with the audit committee concerning independence, and has discussed with them their independence. Based on the review and
discussions referred to in items (i) through (iii) above, the Audit Committee recommended to the Board that the audited financial statements be
included in the Company’s annual report for the Company’s fiscal year ended October 31, 2014.
AUDIT COMMITTEE
Todd C. Andrews, Chairman
D. Gregory Scott
Paul R. Zippwald
The foregoing Audit Committee Report shall not be deemed soliciting material, shall not be deemed filed with the SEC and shall 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.
19
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276966_048-1261 Annual Report 01_Layout 1 2/11/15 3:22 PM Page 4
S
R
O
T
C
E
R
D
I
Todd C. Andrews
Vice President and Controller,
Public Storage, Inc.
Allan L. Bridgford, Jr.
Consultant
(Formerly President of
Bridgford Foods of Illinois)
Bruce H. Bridgford
Vice President
William L. Bridgford
Chairman
Raymond F. Lancy
Executive Vice President,
Chief Financial Officer,
Treasurer and member of
the Executive Committee
D. Gregory Scott
Managing Director,
Peak Holdings, LLC
John Simmons
President
Paul R. Zippwald
Retired
(formerly Regional Vice President,
Bank of America)
S
R
E
C
I
F
F
O
Allan L. Bridgford
Vice President
and member of
the Executive Committee
Bruce H. Bridgford
Vice President
Hugh Wm. Bridgford
Chairman of the
Executive Committee
and Vice President
Michael Bridgford
Assistant Secretary
William L. Bridgford
Chairman and member of
the Executive Committee
Chris Cole
Vice President
Joe deAlcuaz
Vice President Manufacturing
Bob Delong
Vice President,
Information Technologies
Raymond F. Lancy
Executive Vice President,
Chief Financial Officer,
Treasurer and member of
the Executive Committee
Cindy Matthews–Morales
Corporate Secretary
and Controller
John V. Simmons
President and member of
the Executive Committee
Daniel R. Yost
Senior Vice President
S
R
E
G
A
N
A
M
N
O
S
I
I
I
V
D
Baron R. H. Bridgford
President, Bridgford Processing
Company of Illinois
Bridgford Foods of Illinois
Blaine K. Bridgford
President
Dallas- Superior Foods Division
Bruce H. Bridgford
Chairman & President,
Bridgford Foods of California
Joseph deAlcuaz
Vice President
Dallas- Frozen-Rite Division
Monty Griffith
Vice President
Bridgford Foods of North Carolina
Jeffrey D. Robinson
Bakery Manager
Anaheim- Bread Division
276966_048-1261 Annual Report 01_Layout 1 2/11/15 3:21 PM Page 1
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
©2014 Bridgford Foods. YW 048-1224