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A N N U A L R E P O R T 2 0 I 5
Notice of 20I6 Annual Meeting and Proxy Statement
Bridgford Foods Corporation
1308 North Patt Street
P.O. Box 3773
Anaheim, California 92803
Phone (714) 526-5533
www.bridgford.com
Transfer Agent and Registrar
Continental Stock Transfer
& Trust Company
17 Battery Place, 8th Floor
New York, NY 10004
1-800-509-5586
Major Operating Facilities
Independent Accountants
Chicago, Illinois
Dallas, Texas
Statesville, North Carolina
Squar Milner LLP
Newport Beach, California
©2016 Bridgford Foods Corp. YW 048-1277
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S Bridgford Foods is pleased to report greatly improved financial results during our 2015
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fiscal year. The challenges we faced during 2014 led us to re-evaluate our operations and
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make some difficult but important changes, and those adjustments were rewarded with the
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4th best year in the Company’s 83-year history. As the year progressed, we benefited from
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declining costs in many aspects of our business, and those lower costs plus the elimination
of operations that had been a drain on our finances in prior years produced great results.
Sales during our 2015 fiscal year were $130,448,000, a decrease of 2.2% from sales of
$133,401,000 in 2014. Sales on continuing operations in 2015 were $130,448,000, an
increase of 3.7% from sales of $125,747,000 on those same operations in 2014. The
Company recorded a net profit before taxes of $8,118,000 on operations in 2015, equal
to $0.89 per share. These positive results, combined with a favorable outlook for our future
performance, resulted in a reversal of the tax valuation allowance imposed in 2008 in the
amount of $10,848,000, combined with a tax provision of -$3,524,000, resulting in total
net income for the year of $15,442,000.
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SALES AND MARKETING HIGHLIGHTS
In our foodservice bread division, led by Senior Vice President Dan Yost, school feeding
continues to be an important part of our marketing efforts. Our “Better For You” line of
products enables schools to serve healthier, better tasting bread products to their students,
as we strive to help Food Service Directors across the country meet the guidelines mandated
by the United States Department of Agriculture while providing meals that kids will actually
eat! We introduced both Maple- and Blueberry-Flavored White Whole Wheat Biscuits during
the year, and have high hopes for their future success. A major fast food chain is testing our
4-ounce Single Serve Monkey Bites in their breakfast program, and the initial response has
been very positive.
In the retail arena, Walmart has been testing a twin-pack of our Monkey Bites in over 700
of their stores, and the success it has enjoyed has us optimistic that the distribution will be
expanded in the future. Super Target recently authorized Bridgford Ready-Dough, Bridgford
Parkerhouse Rolls, and Bridgford Monkey Bread for sale in their western division beginning
in the Spring of 2016. We have also been supplying the biscuit component of entrees
produced by Fra’Mani Handcrafted Foods for sale in Costco.
Our retail Shelf-Stable Sandwich Twin-Packs achieved greatly increased distribution during
the year. Some or all varieties are currently offered in all Cabela’s and Dick’s Sporting Goods
outlets, and in over 2,200 Walmarts. Our shelf-stable sandwich business with European
Union customers also improved in 2015, and while business with the U.S. military remained
weak, we continue to work on the development of new items with military researchers at
Natick Laboratories.
Our Chicago Dry Sausage and Meat Snack Division continued to make solid inroads in the
grocery segment of our business. Our Direct Store Delivery (DSD) route system is an
important factor in that growth, due to the service and value it allows us to provide to our
customers. New products introduced during the year included Summer Sausage & Crackers,
Bridgford Sweet Baby Ray’s Honey Barbecue Beef Jerky, and Bridgford Bacon Jerky. The
management of our marketing efforts is in very stable hands, with Corporate Vice President
Chris Cole and Division Vice President Baron Bridgford II leading the team. The Company’s
presence in the world of professional bass fishing increased significantly during the year.
We are now represented by five premier anglers: Randy Blaukat, Matt Stefan, Luke Clausen,
Joe Uribe Jr., and Chad Randles, all of whom compete primarily in FLW (Fishing League
Worldwide) events. In addition to their success on the water, these gentlemen are all first-
class guys and great representatives for our brand and our products, and we are proud to
have them on the Bridgford Foods team.
OPERATIONS
Though the 2015 fiscal year began with very high commodity costs, prices for meat, flour
and fuel declined for the most part as the year progressed. Under the direction of Baron
R.H. Bridgford, President of Bridgford Foods of Illinois, our Dry Sausage and Meat Snacks
Division made great improvements to the processes we employ to produce our beef jerky,
and we truly believe that we are currently making the most tender, consistent and flavorful
jerky in the world. Our Pepperoni, Summer Sausage and other dry sausage products also
proudly carry our designation as “The Premium Brand”, and command a higher price in the
marketplace than our competition.
Our team of managers in the frozen food division, Monty Griffith in Statesville, Jeff Robinson
in Anaheim, Blaine Bridgford at Superior Foods in Dallas, and Joe deAlcuaz at Frozen-Rite, are
simply the best. As a result of the success of our various Monkey Bread products, we are
evaluating options to increase our production capacity in this area. We are eliminating some
low-margin items at our Superior plant to provide more production hours, but we are also
studying ways to add Monkey Bread production at our other locations. Director Bruce Bridgford
has done a stellar job of leading our efforts to reduce our freight expenses, and the savings
we have achieved in this area since he took on that role two years ago are significant.
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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)
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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
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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
Bridgford Pro Angling Team
Discontinuing our Western Deli processing and distribution operations at the close of the
2014 fiscal year left us with an underutilized plant in Anaheim, and we decided to offer
storage space to other businesses to generate additional income. It took most of the 2015
year to find suitable, compatible tenants, but we are now approaching capacity and bringing
in steady revenues to complement our continuing bakery operations.
In today’s constantly changing technology-driven world, staying up-to-date is a never-ending
challenge, and we’d like to recognize Vice President for Information Technology Bob Delong
for his dedication (and patience!) in keeping us up to speed both collectively and individually.
FINANCIAL MATTERS
Our working capital totaled $26,546,000 at October 30, 2015, $8,686,000 (48.6%) higher
than at the beginning of the fiscal year, and our working capital ratio increased to 2.9 to
1 at October 30, 2015, compared to 2.2 to 1 at October 31, 2014. The increase in working
capital resulted from lower payments for meat commodities, increased profitability and
reestablishing our deferred tax assets. We repurchased 33,000 shares of the Company’s
common stock in the amount of $283,000 ($8.58 average price paid per share) during
2015. Projected contributions totaling $1,150,000 were recorded as a current liability
related to our defined benefit pension plan at October 30, 2015, and we contributed a
total of $1,157,000 toward this plan during the 2015 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 paid $798,000 related to the Company’s withdrawal from the Western
Conference of Teamsters Pension Plan during fiscal 2015. We maintain a line of credit with
Wells Fargo Bank in the amount of $4,000,000 which expires March 1, 2016. The Company
did not borrow under this line of credit during fiscal 2015 and had no borrowings
outstanding as of October 30, 2015.
Shareholders’ equity totaled $35,645,000, an increase of $10,395,000 (41.2%) compared
to the end of the prior year. The reversal of the tax valuation allowance, as mentioned
above, coupled with net income from operations of $8,118,000, were the most significant
components of this change. Our frozen defined benefit pension recognized a loss of
$4,665,000 in Shareholders’ equity. This loss resulted from a change in the mortality tables
used by our actuaries and lower than expected investment returns on our pension assets
partially offset by an increase in the Citigroup Pension Liability Index from 4.05% in fiscal
year 2014 to 4.15% in fiscal year 2015. This rate is used to compute the present value of
our defined benefit pension obligations. Approximately 125,000 shares of the Company’s
common stock remain available for repurchase under the 2 million share repurchase plan
previously authorized by the Board of Directors. Shareholders’ equity per share was $3.92
at October 30, 2015 compared to $2.77 at October 31, 2014.
Management assessed the effectiveness of the Company’s internal control over financial
reporting for the fiscal year ended October 30, 2015. We believe our control systems remain
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 2015 fiscal year.
Our accounting and financial reporting team, led by Corporate Secretary and Controller Cindy
Matthews-Morales, did a fantastic job working with a downsized and reorganized staff to
continue to provide timely and accurate information to help us run our business profitably.
SUMMARY
As we begin 2016, we expect many of the trends that benefited us in 2015 to continue.
While the price of pork dropped dramatically during the past year from the record highs
achieved in 2014, beef prices only recently began to soften, and that gradual trend is
expected to continue for the next couple of years. Flour and fuel costs also show no indication
of a dramatic strengthening in the near term. The cessation of two unprofitable operations
in 2014 did provide the relief we expected. Our workforce got very lean as 2014 played out,
and we intend to keep it that way. As we stated in last year’s letter, tough times bring out
the best in tough organizations; in many ways we have grown and benefited as a result of
that disappointing year, and we’re determined to keep moving forward without repeating the
mistakes of the past. Our mission remains the same: 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 back during the 2015 year, and we are excited about our prospects for 2016.
Over our history, we’ve been fortunate to enjoy the contributions of many long-tenured
associates, and one such person is Lorene Salcido, who was a key part of our team for over 41
years and a major contributor to these annual reports for most of those years. Please join us
in congratulating Lorene on her recent retirement, and wishing her well in the years to come!
Similarly, Paul Zippwald will be stepping down from our Board of Directors in March of
2016, and we’d like to thank him for almost a quarter-century of friendship, sage advice and
rock-solid support.
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 30, 2015
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 ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)
Accelerated filer ☐
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 17, 2015 was $13,672,000.
As of January 11, 2016, there were 9,079,019 shares of common stock outstanding.
Portions of the registrant’s Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held March 9, 2016 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 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.
Description of Business
Bridgford Foods Corporation currently operates in two business segments - the processing and distribution of frozen
products and the processing and distribution of 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 business segment during the last two fiscal
years:
Frozen Food Products
Snack Food Products
Refrigerated Food Products (Discontinued)
2015
2014
39 %
61 %
- %
100 %
38 %
57 %
5 %
100 %
We manufacture and distribute an extensive line of food products, including biscuits, bread dough items, roll dough items,
dry sausage products and beef jerky. 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. Our frozen food products division serves both
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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 23,000 restaurants and institutions.
Products manufactured, processed or packaged by Bridgford
Products manufactured or processed by third parties for distribution
2015
2014
100 %
- %
100 %
96 %
4 %
100 %
Although we have recently introduced several new products, most of these products have not contributed significantly to
our revenue growth for the 2015 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 23,000 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. 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. 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. Our advertising strategy includes our presence on social media and
online distribution of promotional material.
Snack Food Products
During fiscal 2015, our snack food products division sold approximately 90 different items through customer owned
distribution centers and a direct store delivery network serving approximately 15,000 supermarkets, mass merchandise and
convenience retail stores located in 49 states. By the end of fiscal 2014, we ceased our route distribution operations in Canada as a
cost cutting measure to concentrate on our core route business in the United States in addition to ceasing distribution of
refrigerated deli food division because of continued losses.
Products produced or distributed by the Snack Food Products 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.
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.
Snack Food Products — Sales and Marketing
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.
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 31.4% of revenues in fiscal 2015 and 42.6% of total accounts receivable was due from Wal-
Mart® at October 30, 2015. 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.
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. We 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
6
period. We monitor and manage our ingredient costs to help negate volatile daily swings in market prices when
possible. We do not participate in the commodity futures market or hedging to limit commodity exposure.
Employees
We had 507 employees at October 30, 2015, approximately 38% of whose employment relationship is governed by
collective bargaining agreements. These agreements currently expire between February 2016 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 15, 2016 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 and Allan L. Bridgford worked 50% of full time during fiscal 2015.
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
80
84
61
60
62
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
7
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.
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 31.4% of sales in fiscal year 2015. 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
$798,000 related to this plan. The amount recorded was paid in October 2015. 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.
Eminent domain and land risk regulations could negatively impact our financial results and financial position.
We own real property on which we operate our processing and/or our distribution operations. As is the case with any owner
of real property, we may be subject to eminent domain proceedings that can impact the value of investments we have made in real
property as well as potentially disrupt our business operations. If subject to eminent domain proceedings or other government
takings we may not be adequately compensated.
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 Snack Products Food Segment
We utilize the foregoing properties for processing, warehousing, distributing and administrative purposes. We also lease
warehouse and/or office facilities throughout the United States and Canada 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 30, 2015 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
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock and Dividend Data
Our common stock is traded in the national over-the-counter market and is authorized for quotation on the Nasdaq Global
Market under the symbol “BRID”. The following table reflects the high and low closing sale prices reported by Nasdaq as well as
cash dividends paid for each of the last eight fiscal quarters.
Fiscal Year 2015
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year 2014
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
$
$
$
$
High
$
$
$
$
Low
8.35 $
8.65 $
10.81 $
10.95 $
Low
10.16 $
10.20 $
10.00 $
8.58 $
Cash
Dividends
Paid
7.01 $
7.50 $
7.38 $
8.06 $
Cash
Dividends
Paid
9.36 $
9.55 $
7.79 $
7.77 $
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
On January 11, 2016, the closing sale price for our common stock on the Nasdaq Global Market was $9.57 per share. As of
January 11, 2016, there were 774 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.
Repurchases of Equity Securities by the Issuer
During fiscal year 2015, we repurchased an aggregate of 33,132 shares of our common stock for $282,540 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 2015.
Period (1)
July 11, 2015 – August 7, 2015
August 8, 2015 – September 4, 2015
September 5, 2015 – October 2, 2015
October 3, 2015 – October 30, 2015
Total
Total
Number of
Shares
Purchased
As Part of
Publicly
Announced
Plans or
Programs (2)
Total
Number of
Shares
Purchased
Average
Price Paid
Per Share
Maximum
Number of
Shares that
May Yet
Be
Purchased
Under the
Plans or
Programs (2)
132,267
130,377
127,191
124,568
699
1,890
3,186
2,623
8,398
699 $
1,890
3,186
2,623
8,398 $
9.43
8.67
9.30
9.25
9.16
10
(1)
The periods shown are our fiscal periods during the sixteen-week quarter ended October 30, 2015.
(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, 2015 and continuing through and including October 14, 2016, CGM shall act
as our exclusive agent to purchase Stock under the Purchase Plan. This Purchase Plan supplements any purchases of stock by
us “outside” of the Purchase Plan, which may occur from time to time, in open market transactions pursuant to Rule 10b-18 of
the Exchange Act. The daily purchase quantity is defined as a number of shares up to, but not to exceed, each day’s applicable
Rule 10b-18 maximum volume limit (i.e. 25% of the prior four calendar weeks’ average daily trading volume); however, once
per week a block of stock may be purchased that exceeds the Rule 10b-18 average daily trading volume condition, provided
that no other Purchase Plan purchases are made on any day on which such a block is purchased. As of October 30, 2015, the
total maximum number of shares that may be purchased under the Purchase Plan is 124,568 at a purchase price not to exceed
$10.00 per share for a total maximum aggregate price (exclusive of commission) of $1,245,680.
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 30, 2015 (52 weeks) Compared to Fiscal Year Ended October 31, 2014 (52 weeks)
Net Sales-Consolidated
Net sales in fiscal 2015 decreased $2,953 (2.2%) 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 sales volume in pounds
Returns activity
Promotional activity
Increase in net sales – Continuing operations
Discontinued Refrigerated Deli Products Division
Decrease in net sales
Net Sales-Frozen Food Products Segment
%
$
8.8
-7.9
1.3
1.5
3.7
-5.9
-2.2
12,440
(11,189 )
1,834
2,215
5,300
(8,253 )
(2,953 )
Net sales in the Frozen Food Products segment in fiscal 2015 decreased $191 (0.4%) compared to the prior year. The changes in
net sales were comprised as follows:
Impact on Net Sales-Frozen Food Products
Selling price per pound
Unit sales volume in pounds
Returns activity
Promotional activity
Decrease in net sales
%
$
-0.9
-2.2
-0.1
2.8
-0.4
(528 )
(1,269 )
(60 )
1,666
(191 )
The decrease in net sales in fiscal 2015 was attributable to lower sales volumes. Selling prices per pound remained
essentially unchanged from the prior year. The majority of the volume decrease took place in the biscuit category while rolls, sheet
dough, monkey bread and shelf-stable categories increased slightly. Returns activity also increased slightly. Lower promotional
activity due to recent favorable spending trends compared to fiscal year 2014 helped mitigate the decline in net sales.
12
Net Sales-Snack Food Products Segment
Net sales, excluding intersegment sales, in the Snack Food Products segment in fiscal 2015 decreased $2,762 (3.3%) compared to
the prior year. The changes in net sales were comprised as follows:
Impact on Net Sales-Snack Food Products
Selling price per pound
Unit sales volume in pounds
Returns activity
Promotional activity
Continuing operations - Increase in net sales
Discontinued Refrigerated Deli Products Division
Total - Decrease in net sales
%
$
15.4
-11.8
2.2
0.5
6.3
-9.6
-3.3
12,968
(9,920 )
1,894
549
5,491
(8,253 )
(2,762 )
As noted above, net sales, excluding intersegment sales and discontinued operations, in the Snack Food Products segment in fiscal
2015 increased $5,491 (6.3%) compared to the prior year. The increase in net sales from continuing operations in fiscal 2015 was
attributable to higher selling prices per pound partially offset by lower unit sales volume. The increase in selling prices per pound
was mainly due to price increases instituted during the year and a sales mix trend favoring higher value beef products. Total beef
based product sales volume was essentially flat during the year while sales of pork based products comprised the majority of the
volume decrease. The volume decrease related to a significant promotion in FY 2014 that was not repeated in FY 2015 and the de-
emphasis of lower margin items. Returns and promotional activity were lower than the prior year period due to the program
mentioned above. At the end of fiscal 2014, we discontinued operation of our Refrigerated Deli Products Division and ceased
refrigerated snack food product distribution because of continued net losses. The reduction in sales from the discontinued
operation offset the increase in sales from continuing operations.
Cost of Products Sold and Gross Margin-Consolidated
Cost of products sold from continuing operations decreased by $6,907 (7.3%) compared to the prior year. Overhead spending
decreased due to a significant reduction in workers’ compensation, facility repairs and utility costs. The Company's workers'
compensation benefits cost decreased due to favorable trends in claims experience in the current fiscal year. In addition, workers’
compensation benefits cost decreased by an additional $554 due to a change in accounting method to estimate future liabilities.
Increases in meat commodity costs year to date partially offset the decrease in cost of products sold as described in the segment
analysis below. The gross margin increased from 29.0% to 35.9%.
Change in Cost of Products Sold by Segment
Frozen Food Products Segment
Snack Food Products Segment
Continuing operations
Discontinued Refrigerated Deli Products Division
Total
$
%
(1,418 )
(5,489 )
(6,907 )
(4,258 )
(11,165 )
Commodity $
(Decrease)
Increase
-1.5
-5.8
-7.3
-4.5
-11.8
(511 )
1,039
528
-
528
Cost of Products Sold and Gross Margin–Frozen Food Products Segment
Cost of products sold in the Frozen Food Products segment decreased by $1,418 (4.5%) to $30,372 in the 2015 fiscal year
compared to the prior year. Lower unit volume and to a lesser extent lower flour commodity costs of approximately $511 were the
primary contributing factors to this decrease. The gross margin percentage increased from 37.3% to 39.9% during fiscal year 2015
compared to the prior fiscal year.
Cost of Products Sold and Gross Margin–Snack Food Products Segment
Cost of products sold in the Snack Food Products segment decreased by $5,489 (5.8%) compared to the prior year. Cost of
products sold was significantly reduced due to lower pounds sold, lower workers’ compensation costs and lower utility costs. The
cost of significant meat commodities increased approximately $1,039 during fiscal 2015 compared to the prior year. The gross
margin earned in this segment increased from 23.8% to 33.4% in during fiscal year 2015 primarily as a result of price increases
and a favorable change in product mix.
13
Selling, General and Administrative Expenses-Consolidated
Selling, general and administrative expenses ("SG&A") in fiscal 2015 decreased $4,338 (10.1%) when compared to the prior
year. The decrease in this category did not directly correspond to the change in sales.
The table below summarizes the primary expense variances in this category:
Wages and bonus
Product advertising
Workers’ compensation
Fuel
Cash surrender value
Outside consultants
Vehicle repairs
Healthcare
Insurance
Other SG&A
Continuing operations - SG&A
Discontinued Refrigerated Deli Products Division
Total
52 weeks ended
October 30,
2015
October 31,
2014
Expense
Increase
(Decrease)
$
$
15,835 $
3,064
(167 )
1,485
(6 )
1,163
525
2,271
997
13,584
38,751
-
38,751 $
13,684 $
4,008
585
2,146
(514 )
1,516
751
2,048
797
13,067
38,088
5,001
43,089 $
2,151
(944 )
(752 )
(661 )
508
(354 )
(225 )
223
200
517
663
(5,001 )
(4,338 )
Higher profits and profit sharing accruals resulted in increased wages and bonus in the fiscal 2015 fiscal year compared to the
prior year. Costs for product advertising decreased during fiscal 2015 mainly as a result of lower sales and spending trends in the
Frozen Food Products segment. Our workers' compensation benefits cost decreased due to a one-time gain of $125 on closing out
older policy years. In addition, workers’ compensation benefits cost decreased by an additional $508 due to a change in accounting
estimate to value future liabilities. The decrease in fuel expense was driven by per gallon fuel price decreases compared to the
prior year as a result of lower cost trends in petroleum markets. The cash surrender value on life insurance policies decreased due
to a decline in the value of underlying equities that support the policies compared to the prior year. Outside consulting costs
decreased due to lower custom programming and human resource software processing costs. Vehicle repairs decreased due to the
replacement of older fleet vehicles. Healthcare costs have increased due to recent unfavorable claim activity. Insurance expense
increased due to unfavorable market conditions, higher coverage levels and unfavorable claims experience. The major components
comprising the increase of “Other SG&A” expenses were increases in telephone expense, computer maintenance and outside
storage.
Selling, General and Administrative Expenses-Frozen Food Products Segment
SG&A expenses in the Frozen Food Products segment decreased by $1,090 (6.9%) to $14,625 during fiscal year 2015 compared to
the prior fiscal year. The overall decrease in SG&A expenses was mainly due to lower product advertising and lower workers’
compensation costs as described above.
Selling, General and Administrative Expenses-Refrigerated and Snack Food Products Segment
Snack Food Products Segment
Discontinued Refrigerated Deli Products Division
Total
52 weeks ended
October 30,
2015
October 31,
2014
Expense
Increase
(Decrease)
$
$
24,126 $
-
24,126 $
22,373 $
5,001
27,374 $
1,753
(5,001 )
(3,248 )
SG&A expenses in the Snack Food Products segment decreased by $3,248 (11.9%) to $24,126 during fiscal year 2015 compared
to the prior fiscal year. Most of the decrease was due to the closure of the Refrigerated Deli Products Division at the end of fiscal
2014.
14
Income Taxes
The effective income tax rate was -89.8% and 2.0% in fiscal years 2015 and 2014, respectively. The 2015 tax benefit of $7,323
related primarily to reversal of the valuation allowance offset partially by income tax expense on book income. In fiscal year 2015,
the effective income tax rate differed from the applicable mixed statutory rate of approximately 37.7% primarily due to the
reversal of the entire valuation allowance of $10,848 (refer to Note 4 of Notes to the Consolidated Financial Statements) on our
deferred tax assets. The 2014 tax benefit of $88 related to the reduction in liability on unrecognized benefits related to research
and development tax credits being carried forward due to utilization of a net operating loss.
ASC 740 requires that an entity's deferred tax assets be reduced by a valuation allowance to the extent its management determines
that it is more likely than not that such deferred tax asset, or portion thereof, will not be realized. Management evaluated the
realizability of its deferred tax assets to determine the need and appropriateness of a valuation allowance. In its determinations,
Management considers items of evidence, both positive and negative, including those items outlined in ASC 740. 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 30, 2015, the Company (1) has utilized its entire federal net operating loss, (2) has positive thirty-six month cumulative
book income and (3) meat commodity costs have lowered and stabilized and we have reduced the level of significant non-
performing divisions (closure of the refrigerated deli food division during the prior fiscal year). As of October 30, 2015 all three
criteria for valuation allowance reversal set forth in the Company policy have been satisfied and the Company has reversed the
valuation allowance on deferred tax assets.
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 did not borrow on the line of credit during the fiscal 2015. There were no
borrowings outstanding under this line of credit as of October 30, 2015. 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
or to meet customer demand.
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Depreciation
Provision for losses on accounts receivable
Reduction of (provision for) promotional allowances
Gain on sale of property, plant and equipment
Deferred income taxes, net
Tax valuation allowance
Changes in operating working capital
Net cash provided by (used in) operating activities
52 Weeks
2015
2014
$
15,442 $
(4,344 )
3,050
24
2,749
(127 )
3,170
(10,848 )
(6,000 )
7,460 $
2,827
28
(2,654 )
(152 )
1,598
(1,598 )
274
(4,021 )
$
For the fifty-two weeks ended October 30, 2015, net cash provided by operating activities was $7,460, an increase of $11,481
compared to the fifty-two weeks ended October 31, 2014. The increase is primarily related to income from operations of $15,442.
During fiscal year 2015 we funded $1,157 towards our defined benefit pension plan. The Company also paid the Teamster
pension withdrawal liability in full in the amount of $798. Plan funding strategies may be adjusted depending upon economic
conditions, investment options, tax deductibility, or recent legislative changes in funding requirements.
15
Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal
to 79 days for the fifty-two weeks ended October 30, 2015 and 57 days for the fifty-two weeks ended October 31, 2014. The
Company had a large promotional program in the Snack Food Products segment ship out just prior to year end contributing to the
increase in accounts receivable at the end of fiscal 2015.
For the fifty-two weeks ended October 31, 2014, net cash used by operating activities was $4,021. This result was primarily
related to a net loss and an increase in inventory in the Snack Food Products segment. During fiscal year 2014, we funded $1,587
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
2015
2014
$
$
52 $
(1,404 )
(1,352 ) $
163
(3,877 )
(3,714 )
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. We 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.
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
Quality control and communication systems
Computer software and hardware
Forklifts
Increase (decrease) in projects in process
Additions to property, plant and equipment
Cash used in financing activities:
Shares repurchased
Payments of capital lease obligations
Net cash used in financing activities
52 Weeks
October 30,
2015
October 31,
2014
6 $
200
72
18
664
49
-
-
395
1,404 $
10
2,228
250
438
963
-
6
51
(69 )
3,877
52 Weeks
2015
2014
(283 ) $
(175 )
(458 ) $
(184 )
(214 )
(398 )
$
$
$
$
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 2015, 124,568 shares were
still authorized for repurchase under the program.
We invested in OTR (over-the-road) tractors during fiscal 2012 financed by a capital lease obligation in the amount of
$1,848. After reevaluating our fleet delivery needs, we returned five OTR tractors financed by the capital lease arrangement with
a remaining liability of $656 during the second quarter of fiscal 2015 that resulted in a gain of $75. The total capital lease
obligation remaining as of October 30, 2015 is $725. The capital lease arrangement replaced 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, 2016. During the first quarter of fiscal 2015,
we converted our line of credit to a revolving line of credit. Under the terms of this line of credit, we may borrow up to $4,000 at
16
an interest rate equal to the bank’s prime rate or Libor plus 1.5%. The borrowing agreement contains various covenants, the more
significant of which require us to maintain a minimum tangible net worth, minimum net income after tax and total capital
expenditures of less than $3,000. We were in compliance with all covenants as of October 30, 2015. There have been no
borrowings under this line of credit during fiscal 2015.
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.
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 2016.
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 have remained free of interest bearing debt (excluding capital leases) for twenty-seven of the last twenty-eight years (with
fiscal 2014 being the only exception) and had no other debt or other contractual obligations within the meaning of Item 303(a)(5)
of Regulation S-K, as of October 30, 2015.
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 promotions, returns allowances, 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. 16 (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
18
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.
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
Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control-Integrated Framework (2013)
(the "2013 Framework") and related illustrative documents as an update to Internal Control-Integrated Framework (1992) (the
"1992 Framework"). The Company has determined that the 17 principles are present and functioning during our assessment of the
effectiveness of internal controls. 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 30,
2015. 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 30, 2015 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 2016 Annual Meeting of Shareholders to be held on
March 9, 2016 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 2016 Annual Meeting of Shareholders to be held on March 9, 2016 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 2016 Annual Meeting of Shareholders to be held on March 9, 2016 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 2016 Annual Meeting of Shareholders to be held on March
9, 2016 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
our approximate 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 nine hundred dollars for each meeting attended. Total fees paid under this arrangement
for fiscal year 2015 were approximately twenty 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 2015 were approximately one hundred and eight
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 2015 were approximately $136,000. As a
member of the board of directors, he was paid a fee of one thousand nine hundred dollars for each meeting attended during fiscal
2015. Total fees paid under this arrangement for fiscal year 2015 were $16,600. He was reappointed as Director as of January 12,
2015.
Real estate consultant and prospective new Board member Keith Ross currently provides consulting services to the board
and management. He was paid a fee of two thousand dollars for each board meeting attended during fiscal 2015 for a total of
$4,000 during fiscal year 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 2016 Annual Meeting of Shareholders to be held on March 9, 2016 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 Annual Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of October 30, 2015 and October 31, 2014
Consolidated Statements of Operations for years ended October 30, 2015 and October 31, 2014
Consolidated Statements of Comprehensive Income (Loss) for years ended October 30, 2015 and October 31, 2014
Consolidated Statements of Shareholders’ Equity for years ended October 30, 2015 and October 31, 2014
Consolidated Statements of Cash Flows for years ended October 30, 2015 and October 31, 2014
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
3.6
3.7
3.8
10.1
10.2
10.3
21.1
24.1
31.1
31.2
32.1
Description
Restated Articles of Incorporation, dated December 29, 1989 (filed as Exhibit 3.5 to Form 10-K on January 28, 1993 and
incorporated herein by reference).
Amendment to Articles of Incorporation, dated July 27, 1990 (filed as Exhibit 3.6 to Form 10-K on January 28, 1993 and
incorporated herein by reference).
By-laws, as amended (filed as Exhibit 2 to Form 10-K on January 28, 1993 and incorporated herein by reference).
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.
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Principal Executive Officer).
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Principal Financial Officer).
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 15, 2016
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 15, 2016
/s/ BRUCE H. BRIDGFORD
Bruce H. Bridgford
/s/ JOHN V. SIMMONS
John V. Simmons
Director
January 15, 2016
President & Director
January 15, 2016
/s/ RAYMOND F. LANCY
Chief Financial Officer, Vice President,
January 15, 2016
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
January 15, 2016
January 15, 2016
January 15, 2016
January 15, 2016
Treasurer & Director
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
22
Report Of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Bridgford Foods Corporation
We have audited the accompanying consolidated balance sheets of Bridgford Foods Corporation (the "Company") as of October
30, 2015 and October 31, 2014 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 30, 2015 and October 31, 2014 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 LLP (formerly Squar, Milner, Peterson, Miranda & Williamson, LLP)
Newport Beach, California
January 15, 2016
23
BRIDGFORD FOODS CORPORATION
CONSOLIDATED BALANCE SHEETS
October 30, 2015 and October 31, 2014
(in thousands, except share and per share amounts)
Current assets:
ASSETS
Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of $146 and $144, respectively
and promotional allowances of $3,061 and $5,810, respectively
Inventories, less reserves of $381 and $601, respectively
Prepaid expenses
Refundable income taxes
Deferred income taxes, less valuation allowance of $0 and $2,113, respectively
Total current assets
Property, plant and equipment, net of accumulated depreciation and amortization of $60,454
and $58,450, respectively
Other non-current assets
Deferred income taxes, less valuation allowance of $0 and $8,486, respectively
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued payroll, advertising and other expenses
Income taxes payable
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 –
9,080 and 9,113
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
2015
2014
$
5,842 $
192
14,619
19,977
319
-
-
40,757
10,235
13,666
10,644
75,302 $
6,087 $
5,203
96
2,825
14,211
25,446
39,657
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
-
-
9,138
8,334
40,303
(22,130 )
35,645
75,302 $
9,171
8,584
24,861
(17,366 )
25,250
58,176
$
$
$
See accompanying notes to consolidated financial statements.
24
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal years ended October 30, 2015 and October 31, 2014
(in thousands, except share and per share amounts)
Net sales
Cost of products sold
Gross margin
Selling, general and administrative expenses
Income (loss) before taxes
Provision (benefit) for income taxes
Net income (loss)
Basic earnings (loss) per share
52 Weeks
2015
2014
$
130,448 $
133,401
83,579
94,744
46,869
38,657
38,751
43,089
8,118
(4,432 )
(7,324 )
(88 )
15,442 $
(4,344 )
1.70 $
(0.48 )
$
$
Shares used to compute basic earnings per common share
9,098,742
9,123,593
See accompanying notes to consolidated financial statements
25
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the fiscal years ended October 30, 2015 and October 31, 2014
(in thousands)
Net income (loss)
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 benefit (provision) on other comprehensive income/loss
Valuation allowance on tax benefit from items of other comprehensive income
Change in other comprehensive (loss) income, net of tax
52 Weeks
2015
2014
$
15,442 $
(4,344 )
(7,525 )
-
(7,525 )
(170 )
(36 )
(206 )
(3,454 )
1
(3,453 )
(321 )
97
(224 )
(7,731 )
(3,677 )
2,967
-
1,054
(1,054 )
(4,764 )
(3,677 )
Comprehensive income (loss), net of tax
$
10,678 $
(8,021 )
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the fiscal years ended October 30, 2015 and October 31, 2014
(in thousands)
Shares
Amount
Capital in
excess of
par value
Retained
earnings
Accumulated
other
comprehensive
loss
Total
shareholders’
equity
Balance, November 1, 2013
Shares repurchased and retired
Net loss
Net change in defined benefit
plans and other benefit plans
Balance, October 31, 2014
Shares repurchased and retired
Net income
Net change in defined benefit
plans and other benefit plans
9,134 $
(21 )
9,191 $
(20 )
8,748 $
(164 )
29,205 $
(13,689 ) $
9,113 $
(33 )
9,171 $
(33 )
8,584 $
(250 )
(4,344 )
24,861 $
15,442
33,455
(184 )
(4,344 )
(3,677 )
25,250
(283 )
15,442
(4,764 )
35,645
(3,677 )
(17,366 ) $
(4,764 )
(22,130 ) $
Balance, October 30, 2015
9,080 $
9,138 $
8,334 $
40,303 $
See accompanying notes to consolidated financial statements.
26
BRIDGFORD FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal years ended October 30, 2015 and October 31, 2014
(in thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
activities:
Depreciation
Provision (recovery) for losses on accounts receivable
Provision for promotional allowances
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
Income taxes payable
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 increase (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
Transportation equipment returned originally financed by capital lease obligation
52 Weeks
2015
2014
$
15,442 $
(4,344 )
3,050
24
2,749
(127 )
3,171
(10,848 )
(7,090 )
1,315
27
133
(6 )
307
(826 )
96
365
(322 )
7,460
52
(1,404 )
(1,352 )
(283 )
(175 )
-
(458 )
5,650
192
5,842 $
156 $
(656 ) $
2,827
28
(2,654 )
(152 )
1,598
(1,598 )
4,470
(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
-
-
$
$
$
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.
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 30, 2015 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 31.4% of revenues in fiscal 2015 and 42.6% of total accounts receivable was due from
Wal-Mart® at October 30, 2015. 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.
Business segments
Our company and its subsidiaries operate in two business segments - the processing and distribution of frozen foods
products, and the processing and distribution of snack food products. See Note 7 to the Consolidated Financial Statements for
further information.
28
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 2015 and 2014 each included 52 weeks.
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, $3,663 and $5,045 for 2015 and 2014, 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 2015 and 2014 were $8,881 and $10,868, respectively.
Advertising expenses
Advertising and other promotional expenses are recorded as selling, general and administrative expenses. Advertising
expenses for fiscal years 2015 and 2014 were $1,861 and $3,093, 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 $5,842 at October 30, 2015 and $192 at October 31, 2014.
All material cash and cash equivalents at October 30, 2015 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.
The Company does not have any assets or liabilities measured at fair value on a recurring or non-recurring basis for the
years ended October 30, 2015 and October 31, 2014.
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
29
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.
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 non-current 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. 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 and local 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 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, 2017, including interim periods within that reporting period. The
Company is currently evaluating this statement and its impact on its results of operations or financial position.
In July 2015, the FASB issued ASU 2015-11 “Simplifying the Measurement of Inventory”. The guidance is part of the
“Simplification Initiative” to identify and re-evaluate areas where the generally accepted accounting principles may be complex
and cumbersome to apply. The guidance will require that inventory be stated at the lower of cost and net realizable value as
30
opposed to the lower of cost or market. Net realizable value is the estimated selling price for the inventory less completion,
disposal and transportation costs. The guidance becomes effective for fiscal years beginning after December 15, 2016. The
Company already values inventory by the proposed method.
In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”. The guidance
requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the
balance sheet. The guidance becomes effective for annual reporting periods beginning after December 6, 2016 with early adoption
permitted. The Company applied this guidance to its current fiscal year ending October 30, 2015. Adoption of this guidance had
no material impact on the results of operations or financial position.
NOTE 2 - Composition of Certain Financial Statement Captions:
2015
2014
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
$
$
$
$
$
$
$
$
$
$
$
$
5,268 $
1,125
13,584
19,977 $
1,802 $
14,272
47,687
-
1,192
5,219
517
70,689
(60,454 )
10,235 $
13,660 $
6
13,666 $
3,589 $
704
356
554
5,203 $
1,150 $
277
1,196
162
40
2,825 $
17,362 $
4,630
563
1,929
-
962
25,446 $
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
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
2015
2014
$
$
113 $
2,176
(3,346 )
1,244
-
187 $
135
2,226
(3,131 )
830
1
61
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
2015
2014
4.15 %
N/A
8.00 %
4.05 %
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
2015
2014
$
$
$
$
42,320 $
1,157
(640 )
(1,418 )
41,419 $
54,277 $
113
2,176
4,783
(1,418 )
59,931
(18,512 )
0
25,844
7,332 $
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
We perform 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 30, 2015 and October 31, 2014 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 2016 is $1,150.
32
During fiscal 2015, our actuary updated mortality tables from the IRS 2014 Combined Static Mortality assumptions to the
SOA RP 2014 Total Dataset Adjusted to 2006 with Scale MP-2015. The change in mortality table resulted in a significant liability
increase in fiscal 2015 as well as an increased net periodic pension cost (NPPC) projection for fiscal 2016. The expected rate of
return on plan assets decreased from 8.00% to 7.00% effective for the 2016 fiscal year. The lower expected rate of return increases
net pension costs in future fiscal years.
The actual and target allocation for plan assets are as follows:
Asset Class
Large Cap Equities
Mid Cap Equities
Small Cap Equities
International (equities only)
Fixed Income
Other (Government/Corporate, Bonds)
Cash
Total
Target
Asset
Allocation
32.0 %
0.0 %
12.0 %
21.0 %
31.0 %
2.0 %
2.0 %
100 %
2015
31.1 %
0 %
13.3 %
20.3 %
30.8 %
1.9 %
2.6 %
100.0
Target
Asset
Allocation
2014
30.9 %
0 %
15.6 %
18.4 %
29.2 %
2.8 %
3.1 %
100.0
30.0 %
0.0 %
15.0 %
20.0 %
31.0 %
2.0 %
2.0 %
100 %
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 2015
Total plan assets
$
41,419
-
- $
41,419
Expected payments for the pension benefits are as follows:
Fiscal Years
2016
2017
2018
2019
2020
2021-2025
Executive Retirement Plans
Non-Qualified Deferred Compensation
Pension
Benefits
1,940
2,064
2,158
2,295
2,443
14,914
$
$
$
$
$
$
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 2015 and 2014.
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 $4,907 and
$4,694 at October 30, 2015 and October 31, 2014, 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 $13,660 and $13,654 at October 30, 2015 and October 31, 2014, respectively.
33
Expected payments for executive postretirement benefits are as follows:
Fiscal Years
2016
2017
2018
2019
2020
2021-2025
Executive
Postretirement
Benefits
$
$
$
$
$
$
280
78
126
280
502
2,510
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 $3,125 and $1,359 at October 30, 2015 and October 31, 2014, respectively. Future payments are approximately
$1,196, $900, $868, $102 and $59 for fiscal years 2016 through 2020, 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 cost (benefit)
52 Weeks
2015
2014
$
$
20 $
36
-
(37 )
19 $
18
37
-
(65 )
(10 )
Weighted average assumptions for the fiscal years ended October 30, 2015 and October 31, 2014 are as follows:
Discount rate
Medical trend rate next year
Ultimate trend rate
Year ultimate trend rate is achieved
2015
2014
3.94 %
8.50 %
5.00 %
2021
3.83 %
8.50 %
5.00 %
2021
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
2015
2014
$
$
5 $
80 $
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
2015
2014
$
$
(4 ) $
(66 ) $
5
78
(4 )
(64 )
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
2016
2017
2018
2019
2020
2021-2025
2015
2014
$
$
$
965 $
20
36
1
(19 )
1,003 $
1,003
-
(174 )
174
1,003 $
880
18
37
52
(22 )
965
965
-
(212 )
212
965
Postretirement
Heathcare
Benefits
$
$
$
$
$
$
41
41
41
41
86
436
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 2015 and 2014, we made total employer
contributions to the Plan in the amounts of $515 and $500, 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 and
expense in other selling and administrative expenses for fiscal 2014. This amount was paid in October 2015.
NOTE 4 - Income Taxes:
The (benefit) provision for taxes on income includes the following:
Current:
Federal
State
Deferred:
Federal
State
52 Weeks
2015
2014
$
$
253 $
100
353
(6,335 )
(1,342 )
(7,677 )
(7,324 ) $
(91 )
3
(88 )
-
-
(88 )
35
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
2015
2014
$
2,772 $
(1,477 )
641
(3 )
(2 )
(10,848 )
116
(7,324 ) $
61
(25 )
(175 )
1,598
(70 )
(88 )
$
Deferred income taxes result from differences in the bases of assets and liabilities for tax and accounting purposes.
2015
2014
Receivables allowance
Returns allowance
Inventory packaging reserve
Inventory overhead capitalization
Incentive compensation
State taxes
Employee benefits
Other
Valuation allowance
Current tax assets, net
Receivables allowance
Returns allowance
Inventory packaging reserve
Inventory overhead capitalization
Employee benefits
Other
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 $
201
125
400
793
1
(515 )
925
9,202
(816 )
271
-
10,645 $
58
163
165
452
272
8
911
84
(2,113 )
-
-
-
-
-
-
-
263
257
6,366
(1,280 )
2,880
(8,486 )
-
ASC 740 requires that an entity's deferred tax assets be reduced by a valuation allowance to the extent its management
determines that it is more likely than not that such deferred tax asset, or portion thereof, will not be realized. Management
evaluated the realizability of its deferred tax assets to determine the need and appropriateness of a valuation allowance. In its
determinations, Management considers items of evidence, both positive and negative, including those items outlined in ASC 740.
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 30, 2015, the Company (1) will extinguish its federal tax NOL, (2) has positive thirty-six month
cumulative book income and (3) profitable operations are anticipated given recent positive economic factors including lower and
more stable commodity costs combined with a reduction in the level of significant non-performing divisions (closure of the
refrigerated snack division during the prior fiscal year).
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
36
determine in the future that the assets are unrealizable, materially decreasing net income in one or more periods. Following
recognition, management could reinstate a full valuation allowance should operating performance decline.
As of October 30, 2015, we had federal and state net operating loss carryforwards of approximately $0 and $2,951
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.
In November 2015, the FASB issued guidance in ASU 2015-17 concerning the balance sheet classification of deferred taxes
in an initiative to reduce complexity in accounting standards. All deferred tax liabilities and assets should now be classified as
noncurrent in the statement of financial position to simplify presentation of deferred tax assets. The guidance is effective for
financial statements issued for annual periods beginning after December 15, 2016. We have already adopted this guidance and the
change is reflected of October 30, 2015.
As of October 30, 2015, we have provided a liability of $112 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.
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. 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
2015
2014
$
$
100 $
12
2
(2 )
-
112 $
100
-
1
(1 )
-
100
We recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of
October 30, 2015, we had approximately $6 in accrued interest and penalties which is included as a component of the $112
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, 2012
through 2014.
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, 2011 through 2014.
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, 2016. During the first quarter of fiscal
2015, we converted our line of credit to a revolving line of credit. Under the terms of this line of credit, we may borrow up to
$4,000 at an interest rate equal to the bank’s prime rate or Libor plus 1.5%. The borrowing agreement contains various covenants,
the more significant of which require us to maintain a minimum tangible net worth, minimum net income after tax and total capital
expenditures less than $3,000. We were in compliance with all covenants as of October 30, 2015. There have been no borrowings
under this line of credit during fiscal 2015.
37
NOTE 6 - Contingencies and Commitments:
We lease warehouse and/or office facilities throughout the United States and Canada through month-to-month rental
agreements.
Leases for semi-truck trailers expired in 2015 and are classified as operating leases. Six year leases for OTR (over-the-
road) tractors expire in 2018 and are classified as capital leases. After reevaluating our fleet delivery needs, we returned five OTR
tractors financed by the capital lease arrangement with a remaining liability of $445 during the second quarter of fiscal 2015 that
resulted in a gain of $75. Rental payments including prior leases were $448 in 2015 and $574 in 2014. Amortization of equipment
under capital lease was $225 in 2015.
The following is a schedule by years of future minimum lease payments for transportation leases:
Fiscal Year
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
246
246
452
944 $
(186 )
(33 )
725
$
$
16
-
-
16 $
262
246
452
960
(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 $93 in 2015 and $116 in 2014 including prior lease arrangements.
(b) Amount necessary to reduce net minimum lease payments to present value calculated at our incremental borrowing rate at the
inception of the leases.
(c) Reflected in Note 2, as current and noncurrent obligations under capital leases of $162 and $563, respectively.
38
NOTE 7 - Segment Information:
We have two reportable operating segments, Frozen Food Products (the processing and distribution of frozen products) and
Snack Food Products (the processing and distribution of 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 30, 2015 (52 weeks) and October 31, 2014 (52
weeks):
2015
Sales
Intersegment sales
Net sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Segment Information
Frozen Food
Products
Snack Food
Products
Other
Elimination
Totals
$
50,549
-
50,549
30,372
20,177
14,625
5,552
79,899
-
79,899
53,207
26,692
24,126
2,566
-
-
-
-
-
-
-
- $
-
-
-
-
-
-
- $
- $
130,448
-
130,448
83,579
46,869
38,751
8,118
75,302
1,404
Total assets
Additions to PP&E
$
$
11,206
186
33,853
1,231
30,243
(13 )
2014
Sales
Intersegment sales
Net sales
Cost of products sold
Gross margin
SG&A
Income before taxes
Segment Information
Refrigerated
and Snack
Food
Products
Frozen
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
5,001
(3,055 )
Total assets
Additions to PP&E
$
$
11,332
201
32,427
3,601
14,417
75
- $
- $
58,176
3,877
* = At the end of fiscal year 2014, we discontinued operation of the refrigerated snack food products division which was reported
under the Refrigerated and Snack Food Products segment.
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 15, 2016
/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 15, 2016
/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 30, 2015 (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 15, 2016
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.
/s/ WILLIAM L. BRIDGFORD
William L. Bridgford
Chairman of the Board
(Principal Executive Officer)
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 30, 2015 (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 15, 2016
/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 2016 ANNUAL MEETING OF SHAREHOLDERS
March 9, 2016
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 9, 2016 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 LLP as the Company's independent registered public accountants for the fiscal year
ending on October 28, 2016.
(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 2016 Annual Meeting of
Shareholders, or the Notice.
Only shareholders of record at the close of business on February 5, 2016 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 9, 2016.
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 2015
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 2015 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 Anaheim Blvd. 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 22, 2016
(This page intentionally left blank.)
BRIDGFORD FOODS CORPORATION
1308 North Patt Street, Anaheim, California 92801
2016 ANNUAL MEETING OF SHAREHOLDERS
to be held March 9, 2016
_________________________________
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 2016 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 9, 2016 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 5,
2016 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, 22, 2016.
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 LLP as the Company's independent registered public accountants for the fiscal year
ending on October 28, 2016 (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 LLP as the Company's independent registered public accountants for
the fiscal year ending on October 28, 2016.
6.
Who can vote at the Annual Meeting?
Only our “shareholders of record” at the close of business on February 5, 2016, the Record Date, will be entitled to vote at the Annual
Meeting. On the Record Date, there were 9,078,507 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 Anaheim Blvd. 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 26, 2015 for the 2016 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 2015 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
Phone: (714) 526-5533
Upon receipt of any such request, the Company agrees to promptly deliver a copy of this Proxy Statement and/or the 2015 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 2017 Annual Meeting?
Proposals of shareholders intended to be presented at the 2017 Annual Meeting of Shareholders must be received at the Company’s
principal office no later than October 26, 2016 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 9, 2017, 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 30, 2015, as such was filed with the SEC,
including financial statements and associated schedules. Such report was filed with the SEC on January 15, 2016 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. Seven of the eight nominees are presently directors of the Company and were elected to the
Board of Directors by the Company’s shareholders at the 2015 Annual Meeting, with the sole exception being Keith Ross, who has been
selected by the Board of Directors as the nominee to replace incumbent Paul Zippwald, who has chosen not to stand for re-election. 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, his principal occupation 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 persons as of February 5, 2016 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
Keith A. Ross
Principal Occupation
Age
61 Chairman of the Board and Member of the Executive Committee of the Company (1)(4)
56 Retired Executive of the Company (1)(4)
63 President of Bridgford Foods of California (1)(4)
60 President and Member of the Executive Committee of the Company (4)
50 Vice President and Controller of Public Storage (2)(3)(4)
59 Managing Director of Peak Holdings, LLC (2)(3)(4)
62 Chief Financial Officer, Vice President, Treasurer and Member of the Executive Committee
of the Company (4)
53 Real Estate Consultant
Year First
Became
Director
2004
2011
2009
2011
2004
2006
2013
N/A
(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
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 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.
Keith A. Ross
Keith A. Ross is a real estate consultant. From August 2013 to present, Mr. Ross serves as Executive Vice President of CT Realty, or CTR, a
real estate investment, development and management company based in Aliso Viejo, California. At CTR, Mr. Ross is in charge of all
development and is responsible for sourcing, evaluating, and closing on all commercial development opportunities. In addition, Mr. Ross
serves on CTR’s Executive Committee and Investment Committee. CTR was founded in 1994 and has successfully acquired in excess of $2.5
Billion in commercial real estate properties across Northern and Southern California. Prior to joining CTR, from 2001 to 2009, Mr. Ross was
2
Founder and Principal of Centra Realty Corporation and oversaw the company’s land acquisitions, capital raises of both equity and debt,
architectural design, engineering, construction and sales/leasing efforts. Centra was consistently ranked as one of the most active real estate
development companies in Orange County California.
Mr. Ross began his professional career at the Koll Company and was with Koll for over a decade and served in various roles from project
manager to marketing before leading the real estate development efforts of the company in Southern California. Keith attended San Diego State
University. He currently serves on the Board of Directors and is a Co-Founder of Miocean, a nonprofit foundation that applies proven business
approaches to curb the harmful effects of urban run-off pollution.
Mr. Ross brings to the board extensive real estate acquisition development experience as well as project management and marketing expertise,
which qualify him to serve as a member of the Board.
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 2015, the Company’s Board of Directors held eleven 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.
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 78.8% 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. In addition, if elected, the Board of Directors has determined that Mr. Ross would qualify as an independent
director.
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 2015 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 2015. 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 2015 consisted 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.
3
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 2015. 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
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. The Nominating Committee
does not act pursuant to a written charter.
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. Upon the recommendation of corporate counsel Richard K. Bridgford, the Board, by
unanimous vote of its independent directors, agreed to nominate Mr. Ross as a director nominee to fill the vacancy created on the Board from
Paul Zippwald’s retirement.
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;
4
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
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) attended the Company’s
2015 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:
5
Allan L. Bridgford
Allan L. Bridgford, age 80, 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 84, 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
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 5, 2016 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
Keith A. Ross
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
—
—
7,156,396
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
—
78.8%
79.4%
80.5%
78.9%
78.8%
78.9%
79.0%
*
*
*
*
*
*
7,403,037
7,156,396
7,403,037
81.5%
* 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
6
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 5, 2016 is based upon 9,078,507 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
and written representations that no other reports were required, during the fiscal year ended October 30, 2015, 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 units 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.
7
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 2015. 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.
• 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.
8
For fiscal year 2015, the Compensation Committee maintained the 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. For fiscal year 2015, there was no base salary increase
compared to fiscal year 2014.
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 30, 2015, discretionary bonuses were awarded to the members of the
Company’s Executive Committee as disclosed in detail in the Summary Compensation Table.
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
9
of the employee. The maximum benefit under the plan is $100,000 per year per retiree. The plan is subject to annual renewal by the Board of
Directors and may be discontinued at the Board’s discretion. The plan was renewed for one year at the Board of Directors meeting held in
January 2016. The combined cost of this plan during fiscal year 2015 was $19,000 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.
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 2013, 2014 and 2015, 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.
Name and Principal
Position
Allan L. Bridgford
Vice President; Member of
the Executive Committee;
Former Senior Chairman of
the Board
Year
2015
2014
2013
Base
Salary($)(7)Bonus($)(1)
144,071
0
64,636
125,908
151,090
146,689
Stock
Awards($)(2)
—
—
—
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
0
Hugh Wm. Bridgford
Vice President; Chairman of
the Executive Committee
2015
2014
2013
151,090
151,090
146,689
172,885
0
64,636
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)
2015
2014
2013
251,816
251,816
244,482
288,142
0
107,726
2015
2014
2013
2015
2014
2013
251,816
251,816
244,482
288,142
0
107,726
251,816
251,816
244,482
288,142
0
107,726
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0
0
0
165,930
355,662
137,742
58,878
62,037
0
72,813
333,625
138,017
18,600
18,400
18,200
18,600
18,400
18,200
42,976
42,776
42,576
18,600
18,400
18,200
Total($)
277,979
159,090
219,325
342,575
169,490
229,525
724,488
625,878
508,150
641,812
356,629
394,784
631,371
603,841
508,425
(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 2013, 2014 or 2015.
(3) The Company did not grant any option awards to any of the NEOs during fiscal years 2013, 2014 or 2015.
(4) The Company did not utilize any non-equity incentive plans in order to pay compensation to its NEOs in fiscal year 2015. 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. 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 2015 Allan L.
Bridgford, ($67,676), Hugh Wm. Bridgford ($83,473), (ii) fiscal year 2014 Allan L. Bridgford, ($108,940), Hugh Wm. Bridgford
($101,195), (iii) fiscal year 2013 Allan L. Bridgford, ($212,235), Hugh Wm. Bridgford ($215,627), and John V. Simmons ($60,233).
(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, 2014 and 2015 were 52 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 2015, 2014 or 2013.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding options or stock awards held by any NEO as of October 30, 2015.
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 2015, 2014
or 2013.
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 30, 2015:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Number of
Years
Credited
Service
57
59
42
36
23
Present Value
of
Accumulated
Benefit (1)
$
$
$
$
$
987,462 $
880,398 $
688,442 $
554,031 $
501,023 $
Payments
During
Fiscal Year
78,398
56,427
—
—
—
(1)
The assumed discount rate used was 4.15% to compute the present value of the accumulated benefit. The IRS 2014 Combined Static
Mortality table was used and an expected return on assets of 8.00% was assumed.
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)
Payments
During
Fiscal Year
$
$
$
$
$
937,783 $
837,378 $
615,896 $
495,153 $
448,889 $
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.
12
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.
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.
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 30, 2015:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
(1) A 4.15% discount rate was used to compute the present values.
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.
13
Present Value
of
Accumulated
Benefit (1)
Payments
During
Last Fiscal
Year
$
$
$
$
$
33,948 $
40,241 $
2,153,073 $
--- $
2,080,368 $
51,528
61,080
---
---
---
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
---
---
---
For the Fiscal Year ended November 1, 2013:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
John V. Simmons
Raymond F. Lancy
Present Value
of
Accumulated
Benefit (1)
Payments
During
Last Fiscal
Year
$
$
$
$
$
129,653 $
153,687 $
1,778,672 $
--- $
1,778,672 $
51,528
61,080
---
---
---
(1) A 4.65% discount rate was used to compute the present values.
The following table estimates the present value of SERP benefits under different employment termination scenarios as of October 30, 2015:
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)
$
$
$
$
$
33,948 $
40,241 $
2,153,073 $
— $
2,080,368 $
33,948 $
40,241 $
2,153,073 $
— $
2,080,368 $
33,948 $
40,241 $
2,153,073 $
— $
2,080,368 $
33,948
40,241
2,153,073
—
2,080,368
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 30, 2015. A 4.15% 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 4.15%.
14
The following table estimates future SERP payments under different termination scenarios as of October 30, 2015:
Name
Allan L. Bridgford
Hugh Wm. Bridgford
William L. Bridgford
Payment Upon
Voluntary Termination
of Employment
Payment if
Disabled (1)
Death Benefit
from Plan (2)
Continues to receive
$4,294 for another
8 months
Continues to receive
$4,294 for another
8 months
Continues to receive
$4,294 for another
8 months
Continues to receive
$5,090 for another
8 months
$15,950.86 per month for
180 months beginning on
10/30/15
Continues to receive
$5,090 for another
8 months
$15,950.86 per month for
180 months commencing
after disability
Continues to receive
$5,090 for another
8 months
$15,950.86 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
8 months
Continues to receive
$5,090 for another
8 months
Lump Sum payment due at
termination of $2,153,073
John V. Simmons
—
—
—
—
Raymond F. Lancy
$15,423.23 per month for
180 months beginning on
10/30/15
$15,423.23 per month for
180 months commencing
after disability
$15,423.23 per month for
180 months beginning
just after death
Lump Sum payment due at
termination of $2,080,368
(1) Disability amount is decreased by any Company paid disability insurance policies, Social Security disability benefits, or other Federal or
State disability programs. In the case of a voluntary termination, the participant shall be entitled to the vested portion of any such early
retirement benefit but shall not commence receipt of such early retirement benefit until the commencement date following the date the
participant would have attained the early retirement date had the participant remained employed by the Company. Upon a finding that the
participant (or, after the participant’s death, a beneficiary) has suffered an unforeseeable emergency, the Committee may at the request of
the participant or beneficiary, and subject to compliance with Internal Revenue Code Section 409A, accelerate distribution of benefits
under the SERP in the amount reasonably necessary to alleviate such unforeseeable emergency.
(2) Assumes death on October 30, 2015. The discount rate used to calculate the lump sum amount is 4.15%.
See “Compensation Discussion and Analysis – Total Compensation for Executive Officers -- Pension and Retirement Benefits” for further
discussion of the pension benefits contained in the tables above.
Non-Qualified Deferred Compensation
The table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year ended
October 30, 2015.
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
$
$
$
$
$
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
73,809 $
73,809 $
— $
— $
— $
49,040
49,040
—
—
—
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
$
$
$
$
$
— $
— $
— $
— $
— $
15
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
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
—
—
—
The following table estimates the present value of non-qualified deferred compensation benefits under different employment termination
scenarios as of October 30, 2015:
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
$
$
$
$
$
49,040 $
49,040 $
— $
— $
— $
49,040 $
49,040 $
— $
— $
— $
49,040 $
49,040 $
— $
— $
— $
49,040
49,040
—
—
—
Effective January 1, 2016, Allan L. Bridgford and Hugh Wm. Bridgford each receive a monthly deferred compensation payment of $6,073 for
seven (7) months and $6,530 for one (1) month, as compared to $6,147 prior to such date. As of October 30, 2015, eight (8) 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 2015. 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
$
$
$
$
19,500 $
16,600 $
16,800 $
21,400 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
19,500
16,600
16,800
21,400
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.
16
The directors are not paid an annual retainer for their service on the Board. Instead, each non-employee director was paid $1,800 for each of
the first seven Board meetings attended during fiscal year 2015 and $1,900 for each subsequent Board meeting attended in fiscal year
2015. 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.
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 $1,800 to $1,900 for
each Board of Directors meeting attended. Total fees paid under this arrangement were $20,200 in fiscal year 2015 and $19,600 in fiscal year
2014. 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 2015 and 2014 were approximately $108,000 and $1,000, 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 arrangement 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 $136,000 in fiscal year 2015 and $173,000 in fiscal year 2014.
Director nominee Keith Ross provides real-estate consulting services to the Chicago plant and management. He was paid a fee of $1,900 for
each board meeting attended as a consultant during fiscal 2015 for a total of $3,800.
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 LLP as the Company’s
independent registered public accounting firm for the fiscal year ending October 28, 2016.
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 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 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 LLP AS THE COMPANY’S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING OCTOBER
28, 2016.
Audit Fees
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees charged by Squar Milner 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 2015 were approximately $143,000. Fees charged by
Squar Milner 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 were approximately $137,000.
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 LLP for fiscal year 2015 or fiscal year 2014.
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 LLP for fiscal year 2015 or fiscal year 2014.
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 LLP for fiscal year 2015 or fiscal year 2014.
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 2015 and
2014, 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 11, 2016, 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 Auditing Standard No. 16,
“Communications with Audit Committees” (formerly known as Statement on Auditing Standards No. 16, which superseded Statement on
Auditing Standards No. 61, for fiscal years beginning after December 15, 2012) of the Public Company Accounting Oversight Board; and
(iii) received the written disclosures and the letter from Squar Milner 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 30, 2015.
AUDIT COMMITTEE
D. Gregory Scott, Chairman
Todd C. Andrews
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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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
Bridgford Pro Angling Team
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A
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O
T
S Bridgford Foods is pleased to report greatly improved financial results during our 2015
Discontinuing our Western Deli processing and distribution operations at the close of the
fiscal year. The challenges we faced during 2014 led us to re-evaluate our operations and
2014 fiscal year left us with an underutilized plant in Anaheim, and we decided to offer
make some difficult but important changes, and those adjustments were rewarded with the
storage space to other businesses to generate additional income. It took most of the 2015
4th best year in the Company’s 83-year history. As the year progressed, we benefited from
year to find suitable, compatible tenants, but we are now approaching capacity and bringing
declining costs in many aspects of our business, and those lower costs plus the elimination
in steady revenues to complement our continuing bakery operations.
of operations that had been a drain on our finances in prior years produced great results.
Sales during our 2015 fiscal year were $130,448,000, a decrease of 2.2% from sales of
$133,401,000 in 2014. Sales on continuing operations in 2015 were $130,448,000, an
increase of 3.7% from sales of $125,747,000 on those same operations in 2014. The
Company recorded a net profit before taxes of $8,118,000 on operations in 2015, equal
to $0.89 per share. These positive results, combined with a favorable outlook for our future
performance, resulted in a reversal of the tax valuation allowance imposed in 2008 in the
amount of $10,848,000, combined with a tax provision of -$3,524,000, resulting in total
net income for the year of $15,442,000.
SALES AND MARKETING HIGHLIGHTS
In our foodservice bread division, led by Senior Vice President Dan Yost, school feeding
continues to be an important part of our marketing efforts. Our “Better For You” line of
products enables schools to serve healthier, better tasting bread products to their students,
as we strive to help Food Service Directors across the country meet the guidelines mandated
by the United States Department of Agriculture while providing meals that kids will actually
eat! We introduced both Maple- and Blueberry-Flavored White Whole Wheat Biscuits during
the year, and have high hopes for their future success. A major fast food chain is testing our
4-ounce Single Serve Monkey Bites in their breakfast program, and the initial response has
been very positive.
In the retail arena, Walmart has been testing a twin-pack of our Monkey Bites in over 700
of their stores, and the success it has enjoyed has us optimistic that the distribution will be
expanded in the future. Super Target recently authorized Bridgford Ready-Dough, Bridgford
Parkerhouse Rolls, and Bridgford Monkey Bread for sale in their western division beginning
in the Spring of 2016. We have also been supplying the biscuit component of entrees
produced by Fra’Mani Handcrafted Foods for sale in Costco.
In today’s constantly changing technology-driven world, staying up-to-date is a never-ending
challenge, and we’d like to recognize Vice President for Information Technology Bob Delong
for his dedication (and patience!) in keeping us up to speed both collectively and individually.
FINANCIAL MATTERS
Our working capital totaled $26,546,000 at October 30, 2015, $8,686,000 (48.6%) higher
than at the beginning of the fiscal year, and our working capital ratio increased to 2.9 to
1 at October 30, 2015, compared to 2.2 to 1 at October 31, 2014. The increase in working
capital resulted from lower payments for meat commodities, increased profitability and
reestablishing our deferred tax assets. We repurchased 33,000 shares of the Company’s
common stock in the amount of $283,000 ($8.58 average price paid per share) during
2015. Projected contributions totaling $1,150,000 were recorded as a current liability
related to our defined benefit pension plan at October 30, 2015, and we contributed a
total of $1,157,000 toward this plan during the 2015 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 paid $798,000 related to the Company’s withdrawal from the Western
Conference of Teamsters Pension Plan during fiscal 2015. We maintain a line of credit with
Wells Fargo Bank in the amount of $4,000,000 which expires March 1, 2016. The Company
did not borrow under this line of credit during fiscal 2015 and had no borrowings
outstanding as of October 30, 2015.
Shareholders’ equity totaled $35,645,000, an increase of $10,395,000 (41.2%) compared
to the end of the prior year. The reversal of the tax valuation allowance, as mentioned
above, coupled with net income from operations of $8,118,000, were the most significant
components of this change. Our frozen defined benefit pension recognized a loss of
$4,665,000 in Shareholders’ equity. This loss resulted from a change in the mortality tables
used by our actuaries and lower than expected investment returns on our pension assets
Our retail Shelf-Stable Sandwich Twin-Packs achieved greatly increased distribution during
partially offset by an increase in the Citigroup Pension Liability Index from 4.05% in fiscal
the year. Some or all varieties are currently offered in all Cabela’s and Dick’s Sporting Goods
year 2014 to 4.15% in fiscal year 2015. This rate is used to compute the present value of
outlets, and in over 2,200 Walmarts. Our shelf-stable sandwich business with European
our defined benefit pension obligations. Approximately 125,000 shares of the Company’s
Union customers also improved in 2015, and while business with the U.S. military remained
common stock remain available for repurchase under the 2 million share repurchase plan
weak, we continue to work on the development of new items with military researchers at
previously authorized by the Board of Directors. Shareholders’ equity per share was $3.92
Natick Laboratories.
at October 30, 2015 compared to $2.77 at October 31, 2014.
Our Chicago Dry Sausage and Meat Snack Division continued to make solid inroads in the
Management assessed the effectiveness of the Company’s internal control over financial
grocery segment of our business. Our Direct Store Delivery (DSD) route system is an
reporting for the fiscal year ended October 30, 2015. We believe our control systems remain
important factor in that growth, due to the service and value it allows us to provide to our
effective. Management’s Report on Internal Controls over Financial Reporting is included
customers. New products introduced during the year included Summer Sausage & Crackers,
in the Form 10-K report. No significant weaknesses in internal accounting control, to the
Bridgford Sweet Baby Ray’s Honey Barbecue Beef Jerky, and Bridgford Bacon Jerky. The
extent identified, were unresolved at the conclusion of the 2015 fiscal year.
management of our marketing efforts is in very stable hands, with Corporate Vice President
Chris Cole and Division Vice President Baron Bridgford II leading the team. The Company’s
presence in the world of professional bass fishing increased significantly during the year.
We are now represented by five premier anglers: Randy Blaukat, Matt Stefan, Luke Clausen,
Joe Uribe Jr., and Chad Randles, all of whom compete primarily in FLW (Fishing League
Worldwide) events. In addition to their success on the water, these gentlemen are all first-
class guys and great representatives for our brand and our products, and we are proud to
have them on the Bridgford Foods team.
OPERATIONS
Though the 2015 fiscal year began with very high commodity costs, prices for meat, flour
and fuel declined for the most part as the year progressed. Under the direction of Baron
R.H. Bridgford, President of Bridgford Foods of Illinois, our Dry Sausage and Meat Snacks
Division made great improvements to the processes we employ to produce our beef jerky,
and we truly believe that we are currently making the most tender, consistent and flavorful
jerky in the world. Our Pepperoni, Summer Sausage and other dry sausage products also
proudly carry our designation as “The Premium Brand”, and command a higher price in the
marketplace than our competition.
Our team of managers in the frozen food division, Monty Griffith in Statesville, Jeff Robinson
in Anaheim, Blaine Bridgford at Superior Foods in Dallas, and Joe deAlcuaz at Frozen-Rite, are
simply the best. As a result of the success of our various Monkey Bread products, we are
evaluating options to increase our production capacity in this area. We are eliminating some
low-margin items at our Superior plant to provide more production hours, but we are also
studying ways to add Monkey Bread production at our other locations. Director Bruce Bridgford
has done a stellar job of leading our efforts to reduce our freight expenses, and the savings
we have achieved in this area since he took on that role two years ago are significant.
Our accounting and financial reporting team, led by Corporate Secretary and Controller Cindy
Matthews-Morales, did a fantastic job working with a downsized and reorganized staff to
continue to provide timely and accurate information to help us run our business profitably.
SUMMARY
As we begin 2016, we expect many of the trends that benefited us in 2015 to continue.
While the price of pork dropped dramatically during the past year from the record highs
achieved in 2014, beef prices only recently began to soften, and that gradual trend is
expected to continue for the next couple of years. Flour and fuel costs also show no indication
of a dramatic strengthening in the near term. The cessation of two unprofitable operations
in 2014 did provide the relief we expected. Our workforce got very lean as 2014 played out,
and we intend to keep it that way. As we stated in last year’s letter, tough times bring out
the best in tough organizations; in many ways we have grown and benefited as a result of
that disappointing year, and we’re determined to keep moving forward without repeating the
mistakes of the past. Our mission remains the same: 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 back during the 2015 year, and we are excited about our prospects for 2016.
Over our history, we’ve been fortunate to enjoy the contributions of many long-tenured
associates, and one such person is Lorene Salcido, who was a key part of our team for over 41
years and a major contributor to these annual reports for most of those years. Please join us
in congratulating Lorene on her recent retirement, and wishing her well in the years to come!
Similarly, Paul Zippwald will be stepping down from our Board of Directors in March of
2016, and we’d like to thank him for almost a quarter-century of friendship, sage advice and
rock-solid support.
Respectfully,
January 16, 2015
William L. Bridgford
Chairman
John V. Simmons
President
Raymond F. Lancy
Chief Financial Officer
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A N N U A L R E P O R T 2 0 I 5
Notice of 20I6 Annual Meeting and Proxy Statement
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 LLP
Newport Beach, California
©2016 Bridgford Foods Corp. YW 048-1277