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BRIDGFORD FOODS CORP - Annual Report: 2003 (Form 10-K)

Bridgford Foods Corporation
Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 10-K
     
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED OCTOBER 31, 2003
     
[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM       TO      

Commission file number: 0-2396

BRIDGFORD FOODS CORPORATION


(Exact name of Registrant as specified in its charter)
     
California   95-1778176

 
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
         
1308 North Patt Street, Anaheim, California     92801  

   
 
(Address of principal executive offices)     (Zip code)  

(714) 526-5533


(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

 
Common Stock, par value $1.00 per share

(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES  [X]  NO  [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)

YES  [  ] NO  [X]

The aggregate market value of voting stock held by non-affiliates of the registrant on April 18, 2003 was $22,909,000.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 10,254,458 shares of Common Stock, par value of $1.00 per share, as of January 23, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of items 5, 6, 7 and 8 of Part II are incorporated by reference from the registrant’s Annual Report to Shareholders for the fiscal year ended October 31, 2003. Items 10, 11, 12, 13 and 14 of Part III are incorporated by reference from the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held March 17, 2004.

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  [X]


TABLE OF CONTENTS

PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant’s Common Equity And Related Stockholder Matters
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. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO EXHIBITS
EXHIBIT 13.1
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2


Table of Contents

BRIDGFORD FOODS CORPORATION
FORM 10-K
YEAR ENDED OCTOBER 31, 2003
Table of Contents

                 
            PAGE
PART I
               
ITEM 1.
  BUSINESS     3  
ITEM 2.
  PROPERTIES     8  
ITEM 3.
  LEGAL PROCEEDINGS     8  
ITEM 4.
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS     8  
PART II
               
ITEM 5.
  MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS     9  
ITEM 6.
  SELECTED FINANCIAL DATA     9  
ITEM 7.
  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     9  
ITEM 7A.
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     9  
ITEM 8.
  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     9  
ITEM 9.
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE     10  
ITEM 9A.
  CONTROLS AND PROCEDURES     10  
PART III
               
ITEM 10.
  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT     11  
ITEM 11.
  EXECUTIVE COMPENSATION     11  
ITEM 12.
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT     11  
ITEM 13.
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     12  
ITEM 14.
  PRINCIPAL ACCOUNTANT FEES AND SERVICES     12  
PART IV
               
ITEM 15.
  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K     13  
SIGNATURES
            14  
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS         15  

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PART I

Item 1. Business

     This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding the following: general economic and business conditions; the impact of competitive product and pricing; success of operating initiatives; development and operating costs; advertising and promotional efforts; adverse publicity; acceptance of new product offerings; consumer trial and frequency; changes in business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; commodity, labor, and employee benefit costs; changes in, or failure to comply with, government regulations; weather conditions; construction schedules; and other factors referenced in this Report.

     The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on assumptions regarding the Company’s business, which involve judgments with respect to, among other things, future economic and competitive conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, actual results may differ materially from those set forth in the forward-looking statements. In light on the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as representation by the Company or any other person that the objectives or plans of the Company will be achieved. The forward-looking statements contained herein speak as of the date of this report and the Company undertakes no obligation to update such statements after the date hereof.

     Background of Business

     Bridgford Foods Corporation, a California corporation (collectively with its subsidiaries, the “Company”), was organized in 1952. The Company originally began its operations as a retail meat market in San Diego, California, and evolved into a meat wholesaler for hotels and restaurants, a distributor of frozen food products, a processor and packer of meat and a manufacturer and distributor of frozen food products for sale on a retail and wholesale basis. For more than the past five years, the Company and its subsidiaries have been primarily engaged in the manufacturing, marketing and distribution of an extensive line of frozen, refrigerated and snack food products throughout the United States. The Company has not been involved in any bankruptcy, receivership or similar proceedings, nor has it been party to any merger, acquisition, etc. or acquired or disposed of any material amounts of assets during the past five years. Substantially all of the assets of the Company have been acquired in the ordinary course of business. The Company had no significant change in the type of products produced or distributed, nor in the markets or methods of distribution since the beginning of the fiscal year.

     Description of Business

     The Company operates in one business segment – the manufacture and distribution of frozen, refrigerated and snack food products. The products manufactured and distributed by the Company consist of an extensive line of food products, including biscuits, bread dough items, roll dough items, dry sausage products and a variety of sandwiches and sliced luncheon meats. The products purchased by the Company for resale include a variety of jerky, cheeses, salads, party dips, Mexican foods, nuts and other delicatessen type food products.

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    2003   2002   2001
   
 
 
Products manufactured or processed by the Company
    70 %     69 %     69 %
Items manufactured or processed by third parties for distribution
    30 %     31 %     31 %
 
   
     
     
 
 
    100 %     100 %     100 %
 
   
     
     
 

     Although the Company has recently introduced several new products, none of these products have contributed significantly to the Company’s revenue growth for the fiscal year. The Company’s sales are not subject to material seasonal variations. Historically the Company has been able to respond quickly to the receipt of orders and, accordingly, the Company does not maintain a significant sales backlog. The Company and its industry generally have no unusual demands or restrictions on working capital items. During the last fiscal year the Company did not enter into any new markets or any significant contractual or other material relationships.

     The Company has two classes of similar food products, each of which has accounted for 10% or more of consolidated sales in the prior three fiscal years listed below. The following table shows sales, as a percentage of consolidated sales, for each of these two classes of similar products for each of the last three fiscal years:

                         
    2003   2002   2001
   
 
 
Frozen Food Products
    34 %     36 %     37 %
Refrigerated and Snack Food Products
    66 %     64 %     63 %
 
   
     
     
 
 
    100 %     100 %     100 %
 
   
     
     
 

     To date, federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the environment, have not had a material effect on the Company’s business.

     Major Product Classes

Frozen Food Products

     The Company’s frozen food division serves both food service and retail customers. The Company sells approximately 200 unique frozen food products through wholesalers, cooperatives and distributors to approximately 18,000 retail outlets and 21,000 restaurants and institutions.

Frozen Food Products – Food Service Customers

     The food service industry is composed of establishments that serve food outside the home and includes restaurants; the food operations of health care providers, schools and other institutions, hotels, resorts, and corporations, and other non-traditional food service outlets. Growth in this industry has been driven by the increase in away-from-home meal preparation, which has accompanied the expanding number of both dual income and single-parent households. Another trend within the food service industry is the growth in the number of non-traditional food service outlets such as convenience stores, retail stores and supermarkets. These non-traditional locations often lack extensive cooking, storage or preparation facilities, resulting in a need for pre-cooked and prepared foods similar to those provided by the Company. The expansion in the food service industry has also been accompanied by the continued consolidation and growth of broadline and specialty food service distributors, many of which are long-standing customers of the Company.

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     The Company supplies its food service customers generally through distributors that take title to the product and resell it. Among the Company’s customers are many of the country’s largest broadline and specialty food service distributors. For these and other large end purchasers, the Company’s products generally go through extensive qualification procedures and its manufacturing capabilities are subjected to thorough review by the end purchasers prior to the Company’s approval as a vendor. Large end purchasers typically select suppliers that can consistently meet increased volume requirements on a national basis during peak promotional periods. In its value-added operations, the Company believes that its manufacturing flexibility, national presence and long-standing customer relationships should pose barriers to entry for other manufacturers seeking to provide similar products to the Company’s current large food service end purchasers, although no assurances can be given.

Frozen Food Products – Retail Customers

     The majority of the Company’s existing and targeted retail customers are involved in the resale of branded and private label packaged foods. The same trends which have contributed to the increase in away-from-home meal preparation have also fueled the growth in easy to prepare, microwaveable frozen and refrigerated convenience foods. Among the fastest growing segments is the frozen and refrigerated hand-held foods market. This growth has been driven by improved product quality and variety and the increasing need for inexpensive and healthy food items that require minimal preparation. Despite rapid growth, many categories of frozen and refrigerated hand-held foods have achieved minimal household penetration. The Company believes it has been successful in establishing and maintaining supply relationships with certain selected leading retailers in this market.

Frozen Food Products – Sales and Marketing

     The Company’s frozen food business covers the United States and Canada. In addition, to regional sales managers, the Company maintains a network of independent food service and retail brokers covering most of the states as well as Canada. Brokers are compensated on a commission basis. The Company believes that its broker relationships in close cooperation with the regional sales managers, are a valuable asset providing significant new product and customer opportunities. The regional sales managers perform several significant functions for the Company including identifying and developing new business opportunities and providing customer service and support to the Company’s distributors and end purchasers through the effective use of the Company’s broker network.

     The Company’s annual advertising expenditures are directed towards retail and institutional customers. These customers participate in various special promotional programs and direct advertising allowances sponsored by the Company. The Company also invests in general consumer advertising in various newspapers and periodicals. The Company directs advertising at food service customers with campaigns in major industry publications and through Company participation in trade shows throughout the United States.

Refrigerated and Snack Food Products – Customers

     The Company’s refrigerated and snack food products division sells approximately 300 different items through a direct store delivery network serving approximately 37,000 supermarkets, mass merchandise and convenience retail stores located in 49 states and Canada.

     These customers are comprised of large retail chains and smaller “independent” operators. This part of the Company’s business is highly competitive. Proper placement of the Company’s product lines is critical to selling success since most items could be considered “impulse” items

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which are often consumed shortly after purchase. The Company’s ability to sell successfully to this distribution channel depends on aggressive marketing and maintaining relationships with key buyers.

Refrigerated and Snack Food Products – Sales and Marketing

     The Company’s direct store delivery network consists of two separate divisions, refrigerated and non-refrigerated snack food products. Refrigerated snack food products are distributed through five different regions located in the southwest, primarily operating in California, Arizona and Nevada. Non-refrigerated snack food products are distributed in nine geographic regions across the United States and Canada, each managed by regional sales managers. The regional sales managers perform several significant functions for the Company including identifying and developing new business opportunities and providing customer service and support to the Company’s customers. The Company also utilizes the services of brokers where appropriate to support efficient product distribution and customer satisfaction.

     Product Planning and Research and Development

     The Company continually monitors the consumer acceptance of each product within its extensive product line. Individual products are regularly added to and deleted from the Company’s product line. The addition or deletion of any product has not had a material effect on the Company’s operations. The Company believes that a key factor in the success of its products is its system of carefully targeted research and testing of its products to ensure high quality and that each product matches an identified market opportunity. The emphasis in new product introductions in the past few years has been in microwaveable, single service items. The Company is constantly searching to develop new products to complement its existing product line and improved processing techniques and formulas for its existing product line. The Company utilizes in-house test kitchens to research and experiment with unique food preparation methods, improve quality control and analyze new ingredient mixtures. The Company does not anticipate any significant change in product-mix as a result of its current research and development efforts.

     Competition

     The products of the Company are sold under highly competitive conditions. All food products can be considered competitive with other food products, but the Company regards its principal competitors to include national, regional and local producers and distributors of refrigerated, frozen and snack food products. Several of the Company’s competitors include large companies with substantially greater financial and marketing resources than those of the Company. Existing competitors may broaden their product lines and potential competitors may enter or increase their focus on the Company’s market, resulting in greater competition for the Company. The Company believes that its products compete favorably with those of the Company’s competitors. Such competitors’ products compete against those of the Company for retail shelf space, institutional distribution and customer preference.

     Importance of Key Customers

     One customer comprised approximately 14.6% of sales during the fiscal 2003 year.

     Employees

     At the end of fiscal 2003, the Company had approximately 812 employees, approximately 46% of whose employment relationship with the Company was governed by collective bargaining agreements. These agreements currently expire between March 2004 and March 2006. The Company believes that its relationship with its employees is good.

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     General Risks of Food Industry

     The food industry, and the markets within the food industry in which the Company competes, are subject to various risks, including: adverse changes in general economic conditions; evolving consumer preferences; nutritional and health-related concerns; federal, state and local food inspection and processing controls; consumer product liability claims; risks of product tampering; and the availability and expense of liability insurance. The meat and poultry industries have recently been subject to increasing scrutiny due to the association of meat and poultry products with recent outbreaks of illness, and on rare occasions even death, caused by food borne pathogens. Product recalls are sometimes required in the food industries to withdraw contaminated or mislabeled products from the market.

     Risks Relating to Suppliers and Raw Materials

     The Company purchases large quantities of commodity pork, beef and flour. Historically, market prices for products processed by the Company have fluctuated in response to a number of factors, including changes in the United States government farm support programs, changes in international agricultural and trading policies, weather and other conditions during the growing and harvesting seasons.

     Risks Relating to Government Regulation

     The operations of the Company are subject to extensive inspection and regulation by the United States Department of Agriculture (the “USDA”), the Food and Drug Administration (the “FDA”) and by other federal, state and local authorities, regarding the processing, packaging, storage, transportation, distribution and labeling of products that are manufactured, produced and processed by the Company. The Company’s processing facilities and products are subject to frequent inspection by USDA and/or other federal, state and local authorities. On July 25, 1996, the USDA issued strict new policies concerning contamination by food borne pathogens such as E. coli, Listeria monocytogenes and Salmonella, and established a new system of regulation known as the Hazard Analysis Critical Control Points (“HACCP”) program. The HACCP program requires all meat and poultry processing plants to develop and implement sanitary operating procedures and other program requirements on or before January 26, 1998. The Company believes that it is currently in compliance with all material governmental laws and regulations (including the January 1998 HACCP requirements), and that it maintains all material permits and licenses relating to its operations.

     On October 6, 2003, new USDA regulations regarding the control of Listeria Monocytogenes in Ready-To-Eat Meat and Poultry Products took effect. These regulations require environmental and/or finished product testing for harmful bacteria that may be present. This testing could result in products being retained, recalled or destroyed if Listeria Monocytogenes is detected. The Company believes that it is in full compliance with this new regulation.

     Risks Relating to Dependence on Key Management

     The Company’s executive officers and certain other key employees have been primarily responsible for the development and expansion of the Company’s business, and the loss of the services of one or more of these individuals could have an adverse effect on the Company. The Company’s future success will be dependent in part upon its continued ability to recruit, motivate and retain qualified personnel. There can be no assurance that the Company will be successful in this regard. The Company has no employment or non-competition agreements with key personnel.

Executive Officers of the Registrant

     The names, ages and positions of all the executive officers of the Company as of January 1, 2004 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

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annual meeting of shareholders. All executive officers are full-time employees of the Company, except for Allan L. Bridgford, who worked 80% of full-time.

             
Name   Age   Position(s) with the Company

 
 
Allan L. Bridgford     68     Chairman and member of the Executive Committee
Robert E. Schulze     69     President and member of the Executive Committee
Hugh Wm. Bridgford     72     Vice President and Chairman of the Executive Committee
William L. Bridgford     49     Secretary
Raymond F. Lancy     50     Chief Financial Officer, Vice President, Treasurer and Assistant Secretary

Item 2. Properties

The Company owns the following facilities:

                       
Property Location   Building Square Footage   Acreage

 
 
 
Anaheim, California
    100,000       5  
 
Modesto, California
    2,500       0.3  
     
Dallas, Texas
    94,000       4  
     
Dallas, Texas
    30,000       2  
     
Dallas, Texas
    16,000       1  
     
Dallas, Texas
    3,200       1.5  
Statesville, North Carolina
    42,000       8  
   
Chicago, Illinois
    156,000       1.5  

     The foregoing plants are, in general, fully utilized by the Company for processing, warehousing, distributing and administrative purposes. The Company also leases small warehouse and/or office facilities through the United States and Canada. The Company believes that its properties are adequate to satisfy its foreseeable needs. Additional properties may be acquired and/or plants expanded if favorable opportunities and conditions arise.

Item 3. Legal Proceedings

     No material legal proceedings were pending at October 31, 2003 against the Company. The Company is likely to be subject to claims arising from time to time in the ordinary course of its business. In certain of such actions, plaintiffs may request punitive or other damages that may not be covered by insurance and, accordingly, no assurance can be given with respect to the ultimate outcome of any such possible future claims or litigation or their effect on the Company.

Item 4. Submission of Matters to a Vote of Security Holders

     No matters were submitted to the Company’s shareholders during the fourth quarter of the fiscal year ended October 31, 2003.

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PART II

Item 5. Market for Registrant’s Common Equity And Related Stockholder Matters

     The Company’s Common Stock, par value $1.00 per share (the “Common Stock”), is traded in the over-the-counter market and prices are quoted on The Nasdaq National Market under the symbol “BRID.” As of January 2, 2004, there were 424 holders of record of the Company’s Common Stock. The market price and dividend information with respect to the Company’s Common Stock are set forth on the inside cover of the Company’s 2003 Annual Report to Shareholders in the section thereof entitled “Common Stock and Dividend Data” and are incorporated herein by reference. The payment of any future dividends will be at the discretion of the Company’s Board of Directors and will depend upon future earnings, financial requirements and other factors.

Item 6. Selected Financial Data

     The information set forth on page 4 of the Company’s 2003 Annual Report to Shareholders is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The information set forth on pages 4, 5, 6, 7 and in Note 1 of the Company’s 2003 Annual Report to Shareholders, including a description of the Company’s critical accounting policies, is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

     The Company did not have significant overall currency exposure at October 31, 2003. The Company’s financial instruments consist of cash and cash equivalents and life insurance policies at October 31, 2003 and the carrying value of the Company’s financial instruments approximated their fair market values based on current market prices and rates. It is not the Company’s policy to enter into derivative financial instruments. The Company does not currently have any significant foreign currency exposure. The Company does not engage in buying or selling spot or futures commodity contracts. The Company’s investment portfolio is not subject to significant market risk or interest rate fluctuations.

Item 8. Financial Statements and Supplementary Data

     The information set forth on pages 8 through 16 of the Company’s 2003 Annual Report to Shareholders in the sections thereof entitled “Consolidated Balance Sheets”, “Consolidated Statements of Income”, “Consolidated Statements of Shareholders’ Equity”, “Consolidated Statements of Cash Flows”, “Notes to Consolidated Financial Statements” and “Report of Independent Accountants” is incorporated herein by reference.

     The Company has historically reported quarterly results to reflect fiscal quarters of 13 weeks in length. Starting with its 2003 fiscal year, the Company is changing its quarterly fiscal reporting periods to report results after 12, 24, 36 and 52-week periods (or 53 weeks as applicable). The Company changed its quarterly reporting periods during the fiscal year to align reported periods with its internal financial systems and provide more meaningful comparison with its peer group companies.

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Unaudited Interim Financial Information

(in thousands, except per share amounts)

                                 
    Quarter 1   Quarter 2   Quarter 3   Quarter 4
    (12 weeks)   (12 weeks)   (12 weeks)   (16 weeks)
    January 24   April 18   July 11   October 31
    2003   2003   2003   2003
   
 
 
 
Net sales
  $ 32,445     $ 29,074     $ 29,977     $ 44,755  
Income (loss) before taxes
    (246 )     174       665       1,358  
Net income (loss)
    (153 )     108       412       843  
Basic earnings (loss) per share
  $ (.01 )   $ .01     $ .04     $ .08  

(in thousands, except per share amounts)

                                 
    Quarter 1   Quarter 2   Quarter 3   Quarter 4
    (13 weeks)   (13 weeks)   (13 weeks)   (13 weeks)
    February 1   May 3   August 2   November 1
    2002   2002   2002   2002
   
 
 
 
Net sales
  $ 38,223     $ 34,679     $ 32,025     $ 34,275  
Income (loss) before taxes
    2,505       2,413       (693 )     (1,954 )
Net income (loss)
    1,552       1,497       (430 )     (1,481 )
Basic earnings (loss) per share
  $ .15     $ .14     $ (.04 )   $ (.14 )

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    Not applicable.

Item 9A. Controls and Procedures

     An evaluation as of the end of the period covered by this annual report was carried out under the supervision and with the participation of the Company’s management, including the Company’s Chairman and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures”, as such term is defined under Rules 13a-15(e) and 15d -15(e) promulgated under the Securities Exchange Act of 1934. Based upon that evaluation, the Company’s Chairman and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

     The Company’s management, including the Company’s Chairman and Chief Financial Officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the quarterly period ended October 31, 2003, and has concluded that there was no change during the Company’s fourth quarter of its 2003 fiscal year that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART III

Item 10. Directors and Executive Officers of the Registrant

     Information set forth in the sections entitled “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” contained in the Company’s definitive proxy statement for the Annual Meeting of Shareholders to be held on March 17, 2004 is incorporated herein by reference. Information concerning the executive officers of the Company is set forth in Part I hereof under the heading “Executive Officers of the Registrant”.

     The Company intends to adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 during the first quarter of 2004, which will apply to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and other designated officers and employees. The Company will post the Code of Ethics on its website at www.bridgford.com as soon as such Code of Ethics is adopted by its Board of Directors.

Item 11. Executive Compensation

     Information set forth in the section entitled “Compensation of Executive Officers” contained in the Company’s definitive proxy statement for the 2003 Annual Meeting of Shareholders to be held on March 17, 2004 is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     Information set forth in the section entitled “Principal Shareholders and Management” contained in the Company’s definitive proxy statement for the 2003 Annual Meeting of Shareholders to be held on March 17, 2004 is incorporated herein by reference.

Equity Compensation Plan Information

     The following table sets forth information regarding outstanding options, warrants and rights and shares reserved for future issuance under the Company’s existing compensation plans as of October 31, 2003. The Company’s sole shareholder approved equity compensation plan is the 1999 Stock Incentive Plan. The Company does not have any non-stockholder approved equity compensation plans.

                           
                      Number of securities
                      remaining available for
      Number of securities   Weighted-   future issuance under
      to be issued upon   average exercise   equity compensation
      exercise of   price of   plans as of October 31,
      outstanding options,   outstanding   2003 (excluding
      warrants and rights as   options, warrants   securities
      of October 31, 2003   and rights   reflected in column (a))
Plan Category   (a)   (b)   (c)

 
 
 
Equity compensation plans approved by security holders
    250,000     $ 10.00       650,000  
Equity compensation plans not approved by security holders
                 
 
   
     
     
 
 
Total
    250,000     $ 10.00       650,000  
 
   
     
     
 

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Item 13. Certain Relationships and Related Transactions

     Information set forth in the section entitled “Related Party Transactions” contained in the Company’s definitive proxy statement for the 2004 Annual Meeting of Shareholders to be held on March 17, 2004 is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

     Information set forth in the section entitled “Proposal Two- Audit Fees” contained in the Company’s definitive proxy statement for the Annual Meeting of Shareholders to be held on March 17, 2004 is incorporated herein by reference.

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PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

  (a)   The following documents are filed as a part of this report:

  (1)   Financial Statements. See “Index to Consolidated Financial Statements” included on page 15 in this report.
 
  (2)   Financial Statement Schedule. See “Index to Consolidated Financial Statements” included on page 15 in this report.
 
  (3)   Exhibits. The exhibits filed as a part of this report are listed in the accompanying “Index to Exhibits”.

  (b)   Report on Form 8-K. The Company did not file a Current Report on Form 8-K during the quarter ended October 31, 2003.

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SIGNATURES

     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.

         
  BRIDGFORD FOODS CORPORATION
         
    By:   /s/ Allan L. Bridgford
     
      Allan L. Bridgford, Chairman
      Date: January 23, 2004

POWER OF ATTORNEY

     We, the undersigned directors and officers of Bridgford Foods Corporation do hereby constitute and appoint Allan L. Bridgford and Robert E. Schulze, 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/ Allan L. Bridgford
Allan L. Bridgford
  Chairman
(Principal Executive Officer)
  January 23, 2004
         
/s/ Robert E. Schulze
Robert E. Schulze
  President and Director   January 23, 2004
         
/s/ Hugh Wm. Bridgford
Hugh Wm. Bridgford
  Vice President and Director   January 23, 2004
         
/s/ Raymond F. Lancy
Raymond F. Lancy
  Chief Financial Officer
(Principal Financial Officer)
  January 23, 2004
         
/s/ Paul A. Gilbert
Paul A. Gilbert
  Director   January 12, 2004
         
/s/ Richard A. Foster
Richard A. Foster
  Director   January 23, 2004
         
/s/ Steven H. Price
Steven H. Price
  Director   January 12, 2004
         
/s/ Norman V. Wagner II
Norman V. Wagner II
  Director   January 12, 2004
         
/s/ Paul R. Zippwald
Paul R. Zippwald
  Director   January 12, 2004

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BRIDGFORD FOODS CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     The consolidated financial statements of the Registrant and its subsidiaries, including the report thereon of PricewaterhouseCoopers LLP dated December 19, 2003, appearing on pages 8 through 15 of the accompanying 2003 Annual Report to Shareholders are incorporated by reference in this Annual Report on Form 10-K. With the exception of the aforementioned information and the information incorporated in Items 5, 6, 7, 8, 10, 11, 12, 13 and 14, the 2003 Annual Report to Shareholders is not to be deemed filed as part of this Annual Report on Form 10-K. The following Financial Statement Schedule should be read in conjunction with the financial statements in such 2003 Annual Report to Shareholders.

           
      Page
     
Report of Independent Auditors on Financial Statement Schedule
    F-1  
Financial Statement Schedule for the three years ended October 31, 2003:
       
 
Schedule II – Valuation and Qualifying Accounts
    F-2  

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

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REPORT OF INDEPENDENT AUDITORS ON

FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of
Bridgford Foods Corporation

Our audits of the consolidated financial statements referred to in our report dated December 19, 2003 appearing on page 16 of the 2003 Annual Report to Shareholders of Bridgford Foods Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/PricewaterhouseCoopers LLP
Orange County, California
December 19, 2003

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BRIDGFORD FOODS CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS (000’s)

                                 
            Provision for   Accounts   Balance at
    Balance at   losses on   written off   close
    beginning   Accounts   less   of
    of period   Receivable   Recoveries   period
   
 
 
 
November 2, 2001
Allowance for doubtful accounts
  $ 694     $ 275     $ 190     $ 779  
 
   
     
     
     
 
November 1, 2002
Allowance for doubtful accounts
  $ 779     $ 3,750     $ 1,110     $ 3,419  
 
   
     
     
     
 
October 31, 2003
Allowance for doubtful accounts
  $ 3,419     $ 915     $ 2,905     $ 1,429  
 
   
     
     
     
 

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BRIDGFORD FOODS CORPORATION

INDEX TO EXHIBITS

                 
    Exhibit        
    No.       Page No.
   
     
      3.5     Restated Articles of Incorporation, dated December 29, 1989 (filed as Exhibit 3.5 to Form 10-K on January 28, 1993 and incorporated herein by reference).   NA
                 
      3.6     Amendment to Articles of Incorporation, dated July 27, 1990 (filed as Exhibit 3.6 to Form 10-K on January 28, 1993 and incorporated herein by reference).   NA
                 
      3.7     By-laws, as amended (filed as Exhibit 2 to Form 10-K on January 28,1993 and incorporated herein by reference).   NA
                 
      10.1     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).   NA
                 
      10.2     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).   NA
                 
      10.3     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).   NA
                 
      10.4     Bridgford Foods Corporation 1999 Stock Incentive Plan and Form of Stock Option Agreement (files as Exhibit 4.1 to Form S-8 on May 28, 1999 and incorporated herein by reference).   NA
                 
      13.1     2003 Annual Report to Shareholders.   NA
                 
      21.1     Subsidiaries of the Registrant.   NA
                 
      23.1     Consent of Independent Auditors.   NA
                 
      24.1     Power of Attorney (included as part of the signature page of this Annual Report on Form 10-K).   NA
                 
      31.1     Certification of Principal Executive Officer.   NA
                 
      31.2     Certification Pursuant to Principal Financial Officer.   NA
                 
      32.1     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).   NA
                 
      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 Financial Officer).   NA