BRIDGFORD FOODS CORP - Quarter Report: 2009 April (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands)

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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 (the “Exchange Act”). 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 Quarterly Report on Form 10-Q. Assumptions relating to budgeting, marketing, and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, capital expenditure or other budgets, which may in turn affect our business, financial position, results of operations and cash flows. The reader is therefore cautioned not to place undue reliance on forward-looking statements contained herein and to consider other risks detailed more fully in our Annual Report on Form 10-K for the fiscal year ended October 31, 2008. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

Critical Accounting Policies and Management Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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. 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 which vary from our current estimates. Actual results could differ from those estimates. We record promotional and returns allowances based on recent and historical trends. Management believes its current estimates are reasonable and based on the best information available at the time.

Our credit risk is diversified across a broad range of customers and geographic regions. Losses due to credit risk have recently been immaterial. The provision for doubtful accounts receivable is based on historical trends and current collection risk. We have significant amounts receivable with a few large, well known customers which, although historically secure, could be subject to material risk should these customers’ operations suddenly deteriorate. We monitor these customers closely to minimize the risk of loss. Sales to Wal-Mart® comprised 9.1% of revenues in the first twenty-four weeks of fiscal year 2009 and 15.4% of accounts receivable was due from Wal-Mart® at April 17, 2009. In comparison, Wal-Mart® comprised 13.1% of revenues for the first twenty-four weeks of fiscal year 2008 and 16.3% of accounts receivable at the end of the second quarter of fiscal year 2008. A portion of sales to Wal-Mart and other major customers are now handled by independent third-party food distributors who pay us with the sales invoices of Bridgford products sold to these customers.

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 our own direct store delivery system. The Company also uses independent distributors to deliver products in remote geographic areas of the country.

We record the cash surrender 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.

Deferred taxes are provided for items whose financial and tax bases differ. A valuation allowance is provided against deferred tax assets when it is expected that it is more likely than not that the related asset will not be fully realized.

We provide tax reserves for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing, and is a subjective estimate. 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. Actual outcomes may differ materially from these estimates.

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We assess the recoverability of our long-lived assets on an annual basis or whenever adverse events or changes in circumstances or business climate indicate that expected undiscounted future cash flows related to such long-lived assets may not be sufficient to support the net book value of such assets. If undiscounted cash flows are not sufficient to support the recorded assets, we recognize an impairment to reduce the carrying value of the applicable long-lived assets to their estimated fair value.

Overview of Reporting Segments

We operate in two business segments -- the processing and distribution of frozen products (the Frozen Food Products Segment), and the processing and distribution of refrigerated and snack food products, (the Refrigerated and Snack Food Products Segment). For information regarding the separate financial performance of the business segments refer to Note 6 of the Notes to the Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q. We manufacture and distribute products consisting of an extensive line of food products, including biscuits, bread dough items, roll dough items, dry sausage products, beef jerky and a variety of sandwiches and sliced luncheon meats. We purchase products for resale including a variety of jerky, cheeses, salads, party dips, Mexican foods, nuts and other delicatessen type food products.

Frozen Food Products Segment

In our Frozen Food Products Segment, we manufacture and distribute an extensive line of food products, including biscuits, bread dough items, roll dough items and sandwiches. All items within this Segment are considered similar products and have been aggregated at this level. Our frozen food division serves both food service and retail customers. We sell approximately 190 unique frozen food products through wholesalers, cooperatives and distributors to approximately 21,000 retail outlets and 22,000 restaurants and institutions.

Refrigerated and Snack Food Products Segment

In our Refrigerated and Snack Food Products Segment, we distribute both products manufactured by us and products manufactured or processed by third parties. All items within this Segment are considered similar products and have been aggregated at this level. The dry sausage division includes products such as jerky, meat snacks, sausage and pepperoni products. The deli division includes products such as ham, sandwiches, cheese, Mexican food, pastries and other delicatessen type food products. Our Refrigerated and Snack Food Products Segment sells approximately 270 different items through a direct store delivery network serving approximately 36,000 supermarkets, mass merchandise and convenience retail stores located in 49 states and Canada. These customers are comprised of large retail chains and smaller “independent” operators. Independent distributors serve approximately 1,000 stores of all types in areas impractical to serve by our Company-owned vehicles and personnel.

Results of Operations for the Twelve Weeks ended April 17, 2009 and Twelve Weeks ended April 18, 2008 (in thousands, except percentages)

Net Sales-Consolidated

Net sales increased by $732 (2.9%) to $25,632 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period last year. Average selling prices per pound increased 3.6%. The selling price increases were offset by decreased unit sales volume in the amount of 1.0%. Promotional allowances remained flat, as a percent of sales, compared to the same twelve-week period last year. Product return levels decreased 0.2% as a percent of sales compared to the same twelve-week period last year.

Compared to the prior twelve-week period ended January 23, 2009 (not shown), average weekly sales decreased $491 (18.7%). The average selling price per pound and volume levels remained essentially flat during the second twelve weeks of the 2009 fiscal year compared to the previous twelve-week period. Promotional allowances increased 1.4% as a percent of sales, compared to the prior twelve-week period.

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Net Sales-Frozen Food Products Segment

Net sales in the Frozen Food Products Segment, excluding inter-segment sales, increased by $489 (4.4%) to $11,600 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period last year. Unit sales volume decreased 7.9% offset by selling price per pound increase of 11.1% when compared to the comparative twelve-week period last year. Promotional allowances increased by approximately 0.2%, as a percent of sales, compared to the same twelve-week period last year.

Net Sales-Refrigerated and Snack Food Segment

Net sales in the Refrigerated and Snack Food Products Segment, excluding inter-segment sales, increased by $243 (1.8%) to $14,032 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period last year. Unit sales volume increased by 5.2% and was partially offset by a selling price per pound decrease of 2.2% compared to the same twelve-week period in the prior year.

Cost of Products Sold and Gross Margin-Consolidated

Cost of products sold decreased by $1,678 (10.3%) to $14,671 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period in fiscal 2008. The gross margin before depreciation increased from 34.3% to 42.8% in the second twelve weeks of the 2009 fiscal year due to higher selling prices, lower commodity costs and slight increases in the proportion of goods processed in Company facilities when compared to the same twelve-week period in fiscal year 2008.

Compared to the prior twelve-week period ended January 23, 2009 (not shown), the average weekly cost of products sold during the second twelve weeks of fiscal year 2009 decreased $389 (24.2%). This decrease is consistent with the overall sales volume decrease compared to the corresponding period of fiscal year 2008.

Cost of Products Sold-Frozen Food Products Segment

Cost of products sold in the Frozen Food Products Segment decreased by $728 (9.7%) to $6,783 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period in fiscal year 2008. Lower flour costs contributed significantly to this decrease.

Cost of Products Sold-Refrigerated and Snack Food Segment

Cost of products sold in the Refrigerated and Snack Food Products Segment decreased by $1,052 (11.5%) to $8,076 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period in fiscal year 2008. This decrease corresponds to the reduction in meat commodity costs and increased in-sourcing of products previously purchased from outside suppliers.

Selling, General and Administrative Expenses-Consolidated

Selling, general and administrative (“SG&A”) expenses increased by $86 (0.9%) to $9,154 in the second twelve weeks of fiscal year 2009 compared to the same twelve-week period in the prior fiscal year. The increase in this category for the twelve-week period ended April 17, 2009 did not directly correspond to the sales increase. The table below summarizes the primary expense increases and decreases included in this category:

		12 Weeks Ended						Expense/Loss
		April 17, 2009			April 18, 2008			Increase (Decrease)
Fuel		$                519			$                941			$                        (422	)
Benefits-Health/Life		847			1,034			(187	)
Benefits-Workers Compensation		146			247			(101	)
Benefits-Pension		239			(28	)		267
Cash Surrender Value (Gain)/Loss		(167	)		(127	)		(40	)
Other SG&A		7,570			7,001			569
Total		$             9,154			$             9,068			$                           86

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When comparing the second twelve weeks of fiscal year 2009 to the prior twelve-week period ended January 23, 2009 (not shown), average weekly SG&A decreased by $69 (8.3%).

Selling, General and Administrative Expenses-Frozen Food Products Segment

SG&A expenses in the Frozen Food Products Segment increased by $388 (10.9%) to $3,940 in the second twelve weeks of fiscal year 2009 compared to the same twelve week period in the prior fiscal year. Increased advertising expenses were the primary contributor to this variance.

Selling, General and Administrative Expenses-Refrigerated and Snack Food Segment

SG&A in the Refrigerated and Snack Food Products Segment decreased by $302 (5.5%) to $5,214 in the second twelve weeks of fiscal year 2009 compared to the same twelve-week period in the prior fiscal year. Significant decreases in fuel cost and lower travel expenses contributed to the decrease in SG&A expenses when compared to the same twelve-week period in the prior fiscal year. This decline was partially offset by higher pension costs.

Depreciation Expense-Consolidated

Depreciation expense decreased by $31 (4.1%) to $717 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period in fiscal year 2008. The decrease in depreciation expense reflects a decline in current capital expenditure projects and routine asset disposals during the second twelve weeks of fiscal year 2009. Compared to the prior twelve-week period ended January 23, 2009 (not shown), average weekly depreciation remained flat.

Depreciation Expense-Frozen Food Products Segment

Depreciation expense in the Frozen Food Products Segment decreased by $8 (4.5%) to $168 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period in fiscal year 2008. This decrease reflects lower capital spending activity.

Depreciation Expense-Refrigerated and Snack Food Segment

Depreciation expense in the Refrigerated and Snack Food Products Segment increased by $10 (2.0%) to $508 in the second twelve weeks of the 2009 fiscal year compared to the same twelve-week period in fiscal year 2008. The increase in depreciation expense reflects the impact of capital projects placed in service in the second twelve weeks of fiscal year 2009.

Income Taxes-Consolidated

Our income tax benefits for the second twelve weeks ended April 17, 2009 and April 18, 2008 are as follows:

		April 17, 2009			April 18, 2008
Total income tax benefit		$                 —			$             (481)
Regular effective tax rate		0%			38.0%

We previously recorded a full income tax valuation allowance as of October 31, 2008. As a result, the estimated annual effective tax rate is 0% in the second twelve weeks of fiscal year 2009 as compared to 38.0% in the prior fiscal year and 0% for the prior twelve-week period.

Net Income (Loss)-Consolidated

The net income of $1,090 in the twelve weeks ended April 17, 2009 includes a non-taxable gain on life insurance policies in the amount of $167. Gains and losses on life insurance policies are dependent upon the performance of the underlying equities and future results may vary considerably. Taxable investment income decreased on a comparative basis due to lower short-term interest rates.

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After considering the effect of these transactions, our results for the twelve week periods ended April 17, 2009 and April 18, 2008 are as follows:

	12 Weeks Ended
	April 17, 2009			April 18, 2008
Net income (loss) before taxes, life insurance gains
and investment income	$	917		$	(1,487	)
Life insurance gains and investment income		173			222
Income (loss) before taxes		1,090			(1,265	)
Income tax (benefit)		—			(481	)
Net income (loss)	$	1,090		$	(784	)

We present net income or loss before taxes, life insurance gains (losses) and investment income because we believe it is an important measure for investors to use in understanding our underlying operations.

Results of Operations for the Twenty-four Weeks ended April 17, 2009 and April 18, 2008 (in thousands, except percentages)

Net Sales-Consolidated

Net sales increased by $937 (1.7%) to $57,155 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period last year. Average selling prices per pound increased 6.0%. The selling price increases were offset by decreased unit sales volume in the amount of 2.9%. Promotional allowances remained flat, as a percent of sales, compared to the same twenty-four week period last year. Product return levels increased 0.1% as a percent of sales compared to the same twenty-four week period last year.

Net Sales-Frozen Food Products Segment

Net sales in the Frozen Food Products Segment, excluding inter-segment sales, increased by $1,155 (4.7%) to $25,714 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period last year. Unit sales volume decreased 8.0% offset by selling price per pound increase of 13.2% when compared to the comparative twenty-four week period last year. Promotional allowances increased by approximately 0.2%, as a percent of sales, compared to the same twenty-four week period last year.

Net Sales-Refrigerated and Snack Food Segment

Net sales in the Refrigerated and Snack Food Products Segment, excluding inter-segment sales, decreased by $218 (0.7%) to $31,441 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period last year. Unit sales volume decreased by 1.6% compared to the same twenty-four week period last year. The selling price per pound increased 3.0% compared to the same twenty-four week period in the prior year.

Cost of Products Sold and Gross Margin-Consolidated

Cost of products sold decreased by $3,312 (8.9%) to $34,014 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period in fiscal 2008. The gross margin before depreciation increased from 33.6% to 40.5% in the first twenty-four weeks of the 2009 year fiscal year primarily due to lower commodity costs when compared to the same twenty-four week period in fiscal year 2008.

Cost of Products Sold-Frozen Food Products Segment

Cost of products sold in the Frozen Food Products Segment decreased by $1,310 (8.1%) to $14,951 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period in fiscal year 2008. Lower flour costs contributed significantly to this decrease.

Cost of Products Sold-Refrigerated and Snack Food Segment

Cost of products sold in the Refrigerated and Snack Food Products Segment decreased by $2,392 (11.0%) to $19,421 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period in fiscal year 2008. This decrease corresponds to the reduction in sales volume and increased in-sourcing of products previously purchased from outside suppliers.

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Selling, General and Administrative Expenses-Consolidated

SG&A expenses increased by $46 (0.2%) to $19,139 in the first twenty-four weeks of fiscal year 2009 compared to the same twenty-four week period in the prior fiscal year. The increase in this category for the twenty-four week period ended April 17, 2009 did not correspond to the sales increase. The table below summarizes the primary expenses included in this category:

		24 Weeks Ended					Expense/Loss
	April 17, 2009			April 18, 2008			Increase (Decrease)
Fuel		$                  956			$               1,712			$                         (756	)
Benefits-Health/Life		1,846			1,957			(111	)
Benefits-Workers Compensation		561			521			40
Benefits-Pension		451			116			335
Cash Surrender Value Loss		73			190			(117	)
Other SG&A		15,252			14,597			655
Total		$             19,139			$             19,093			$                            46

Selling, General and Administrative Expenses-Frozen Food Products Segment

SG&A expenses in the Frozen Food Products Segment increased by $726 (10.3%) to $7,768 in the first twenty-four weeks of fiscal year 2009 compared to the same twenty-four week period in the prior fiscal year. Increases in pension and workers’ compensation were the primary contributors to this variance.

Selling, General and Administrative Expenses-Refrigerated and Snack Food Segment

SG&A expenses in the Refrigerated and Snack Food Products Segment decreased by $680 (5.6%) to $11,371 in the first twenty-four weeks of fiscal year 2009 compared to the same twenty-four week period in the prior fiscal year. Significant decreases in fuel cost and lower travel expenses contributed to the decrease in SG&A expenses when compared to the same twenty-four week period in the prior fiscal year. This decline was partially offset by higher pension costs.

Depreciation Expense-Consolidated

Depreciation expense decreased by $66 (4.4%) to $1,431 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period in fiscal year 2008. The decrease in depreciation expense reflects a decline in current capital expenditure projects and routine asset disposals during the first twenty-four weeks of fiscal year 2009.

Depreciation Expense-Frozen Food Products Segment

Depreciation expense in the Frozen Food Products Segment decreased by $24 (6.7%) to $333 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period in fiscal year 2008. This decrease reflects lower capital spending activity.

Depreciation Expense-Refrigerated and Snack Food Segment

Depreciation expense in the Refrigerated and Snack Food Products Segment increased by $25 (2.5%) to $1,017 in the first twenty-four weeks of the 2009 fiscal year compared to the same twenty-four week period in fiscal year 2008. The increase in depreciation expense reflects the impact of capital projects placed in service in the first twenty-four weeks of fiscal year 2009.

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Income Taxes-Consolidated

Our income tax benefits for the first twenty-four weeks ended April 17, 2009 and April 18, 2008 are as follows:

		April 17, 2009			April 18, 2008
Total Income tax benefit		$                 —			$             (649)
Regular effective tax rate		0%			38.2%

We previously recorded a full income tax valuation allowance as of October 31, 2008. As a result, the estimated annual effective tax rate is 0% in the first twenty-four weeks of fiscal 2009 as compared to 38.2% in the prior fiscal year.

Net Income (Loss)-Consolidated

The net income of $2,571 in the twenty-four weeks ended April 17, 2009 includes a non-taxable loss on life insurance policies in the amount of $73. Gains and losses on life insurance policies are dependent upon the performance of the underlying equities and future results may vary considerably. Taxable investment income also decreased on a comparative basis due to lower short-term interest rates.

After considering the effect of these transactions, our results for the twenty-four week periods ended April 17, 2009 and April 18, 2008 are as follows:

	24 Weeks Ended
	April 17, 2009				April 18, 2008
Net income (loss) before taxes, life insurance gains (losses)
and investment income	$	2,619			$	(1,703	)
Life insurance (losses) gains and investment income		(48	)			5
Income (loss) before taxes		2,571				(1,698	)
Income tax (benefit)		—				(649	)
Net income (loss)	$	2,571			$	(1,049	)

We present net income or loss before taxes, life insurance gains (losses) and investment income because we believe it is an important measure for investors to use in understanding our underlying operations.

Liquidity and Capital Resources (in thousands)

Our need for operations’ growth, capital expenses and share repurchases are expected to be met with cash flows provided by future operating activities.

Cash flows from operating activities for the twenty-four weeks ended:

	April 17, 2009				April 18, 2008
Net income (loss)	$	2,571			$	(1,049	)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation		1,431				1,497
Recovery on losses on accounts receivable		(26	)			(96	)
Gain on sale of property, plant and equipment		(9	)			(29	)
Changes in operating working capital		2,126				1,003
Net cash provided by operating activities	$	6,093			$	1,326

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Significant changes in working capital for the twenty-four weeks ended:

April 17, 2009 – Sources of cash included reductions in inventory of $1,050 and accounts receivable of $1,467. The increase in operating cash flows for the period ended April 17, 2009 included an increase in accounts payable of $982 and a decrease in other non-current assets of $72. During the period we funded $361 towards our defined benefit pension plan.

April 18, 2008- Operating cash flows increased primarily due to a reduction in inventories in the amount of $327 offset by an increase in prepaid expenses and other current assets in the amount of $423. During the period we funded $1,792 towards our defined benefit pension plan.

Cash used in investing activities for the twenty-four weeks ended:

	April 17, 2009				April 18, 2008
Proceeds from sale of property, plant and
equipment	$	54			$	35
Additions to property, plant and equipment		(774	)			(880	)
Net cash used in investing activities	$	(720	)		$	(845	)

Expenditures for property, plant and equipment include the acquisition of new equipment, upgrading of facilities to maintain operating efficiency and investments in cost effective technologies to lower costs. Overall capital spending has declined in recent years as we carefully scrutinize capital investments for short term pay-back of investment.

Cash used in financing activities for the twenty-four weeks ended:

	April 17,  2009				April 18, 2008
Shares repurchased	$	(12	)		$	(2,941	)
Net cash used in financing activities	$	(12	)		$	(2,941	)

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 shares of our common stock on the open market. As of April 17, 2009, up to approximately 475 shares were still authorized for repurchase under the program. No cash dividends were paid during the first twenty-four weeks of the 2009 fiscal year. The Board of Directors suspended the quarterly cash dividend at its May 2004 meeting in recognition of lower profitability levels in recent periods.

Fluctuations in the discount rate used to value our the pension liability resulted in significant changes in net worth between comparative quarters and year end.

We remained free of interest bearing debt during the first twenty-four weeks of fiscal year 2009. We have remained free of interest-bearing debt for twenty-two consecutive years. We maintain a line of credit with Bank of America that expires April 30, 2010. Under the terms of this line of credit, we may borrow up to $2,000 at an interest rate equal to the bank’s reference rate, unless we elect an optional interest rate. The borrowing agreement contains various covenants, the more significant of which require us to maintain certain levels of shareholders’ equity and working capital. We were in compliance with all loan covenants as of April 17, 2009. There were no borrowings under this line of credit during the year. Management believes that our strong financial position and our capital resources are sufficient to provide for our operating needs and capital expenditures for fiscal 2009.

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Recent Accounting Pronouncements

During the last three years, 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 on Form 10-K for fiscal year ended October 31, 2008.

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) FAS 107-1/APB 28-1 (“FSP 107-1”), which is entitled “Interim Disclosures about Fair Value of Financial Instruments.” This pronouncement amended SFAS No 107, Disclosures about Fair Value of Financial Instruments, to require disclosure of the carrying amount and the fair value of all financial instruments for interim reporting periods and annual financial statements of publicly traded companies (even if the financial instrument is not recognized in the balance sheet), including the methods and significant assumptions used to estimate the fair values and any changes in such methods and assumptions. FSP 107-1 also amended APB Opinion No. 28, Interim Financial Reporting, to require disclosures in summarized financial information at interim reporting periods. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ended after March 15, 2009 if a company also elects to early adopt FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Indentifying Transactions That Are Not Orderly, and FSP FAS 115-2/FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments.

In April 2009, the FASB also issued FSP FAS 157-4, which generally applies to all assets and liabilities within the scope of any accounting pronouncements that require or permit fair value measurements. This pronouncement, which does not change SFAS No. 157’s guidance regarding Level 1 inputs, requires the entity to (i) evaluate certain factors to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability when compared with normal market activity, (ii) consider whether the preceding indicates that transactions or quoted prices are not determinative of fair value and, if so, whether a significant adjustment thereof is necessary to estimate fair value in accordance with SFAS No. 157, and (iii) ignore the intent to hold the asset or liability when estimating fair value. FSP FAS 157-4 also provides guidance to consider in determining whether a transaction is orderly (or not orderly) when there has been a significant decrease in the volume and level of activity for the asset or liability, based on the weight of available evidence. This pronouncement is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption of FSP FAS 157-4 also requires early adoption of the pronouncement described in the following paragraph. However, early adoption for periods ended before March 15, 2009 is not permitted.

In April 2009, the FASB issued FSP FAS 115-2 and 124-2 (hereinafter referred to as “FAS 115-2/124-2”), which amends the other-than-temporary impairment (“OTTI”) recognition guidance in certain existing U.S. GAAP (including SFAS No. 115 and 130, FSP FAS 115-1/FAS 124-1, and EITF Issue 99-20) for debt securities classified as available-for-sale and held-to-maturity. FAS 115-2/124-2 requires the entity to consider (i) whether the entire amortized cost basis of the security will be recovered (based on the present value of expected cash flows), and (ii) its intent to sell the security. Based on the factors described in the preceding sentence, this pronouncement also explains the process for determining the OTTI to be recognized in “other comprehensive income” (generally, the impairment charge for other than a credit loss) and in earnings. FAS 115-2/124-2 does not change existing recognition or measurement guidance related to OTTI of equity securities. This pronouncement is effective as described in the preceding paragraph. Certain transition rules apply to debt securities held at the beginning of the interim period of adoption when an OTTI was previously recognized. If an entity early adopts either FSP 107-1 or FSP FAS 157-4, the entity is also required to early adopt this pronouncement. In addition, if an entity early adopts FAS 115-2/124-2, it is also required to early adopt FSP FAS 157-4.

The pronouncements described in the immediately preceding three paragraphs do not require any of the new disclosures for earlier periods (ended before initial adoption) that are presented for comparative purposes.

Off-Balance Sheet Arrangements

We are not engaged in any “off-balance sheet arrangements” within the meaning of Item 303(a)(4)(ii) of Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting company.

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Item 4T. 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 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. 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 to provide reasonable assurance that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. There has been no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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, 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 its 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.

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 have centralized most accounting and many administrative functions at our corporate headquarters in an effort to control the cost of maintaining our control systems. On July 11, 2006, The Committee of Sponsoring Organizations (“COSO”) issued guidance on how small companies should implement an effective internal control framework over financial reporting and other risks. This guidance is considered a key tool to help smaller public companies to confront the challenges of the Act. As a result, we may incur substantial additional expenses and diversion of management’s time. During the course of these activities, we may identify certain internal control issues which management believes should be improved. These improvements, if necessary, will likely include further formalization of policies and procedures, improved segregation of duties, additional information technology system controls and additional monitoring controls. Although management does not believe that any of these matters will result in material weaknesses being identified in our internal controls as defined by the Public Company Accounting Oversight Board Auditing Standard No. 5, no assurances can be given regarding the outcome of these efforts. Additionally, control weaknesses may not be identified in a timely enough manner to allow remediation prior to the issuance of the auditor’s report on internal controls over financial reporting. Any failure to adequately comply could result in sanctions or investigations by regulatory authorities, which could harm our business or investors’ confidence in us.

The Securities and Exchange Commission, on December 15, 2006, adopted new measures to grant relief to smaller public companies by extending the date of compliance with Section 404 of the Act. Under these new measures, we will be required to comply with the Act in two phases. The first phase was completed by us for the fiscal year ended October 31, 2008 and required us to issue a management report on internal control over financial reporting. The second phase will require us to provide an auditor’s attestation report on internal control over financial reporting beginning with the fiscal year ending October 30, 2010.

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Part II. Other Information

Item 1A. Risk Factors

The risk factors listed in Part I “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended October 31, 2008, should be considered with the information provided elsewhere in this Quarterly Report on Form 10-Q, which could materially adversely affect our business, financial condition or results of operations. There have been no material changes to the risk factors as previously disclosed in such Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We have not sold any equity securities during the period covered by this report.

The following table provides information regarding repurchases by us of our common stock, for each of the three four-week periods included in the interim twelve-week period ended April 17, 2009.

ISSUER PURCHASES OF EQUITY SECURITIES

									Maximum
							Total Number of		Number of
							Shares		Shares that May
							Purchased as		Yet Be
		Total Number of					Part of Publicly		Purchased Under
		Shares		Average Price			Announced Plans		the Plans or
Period (1)		Purchased		Paid Per Share			or Programs (2)		Programs (2)
January 24, 2009 – February 20, 2009		124		$	4.08		124		476,938
February 21, 2009 – March 20, 2009		250		$	3.92		250		476,688
March 21, 2009 – April 17, 2009		1,612		$	4.19		1,612		475,076
Total		1,986		$	4.15		1,986

	(1)		The periods shown are the fiscal periods during the twelve-week quarter ended April 17, 2009.
	(2)		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 our 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 our common stock in compliance with the requirements of Rule 10b5-1 under the Exchange Act. Commencing on October 14, 2008 and continuing through and including October 13, 2009, CGM shall act as our exclusive agent to purchase shares of our common 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 or in privately-negotiated transactions. As of April 17, 2009, the total maximum number of shares that may be purchased under the Purchase Plan is 475,076 at a total maximum aggregate price (exclusive of commission) of $4,750,760.

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

The Company held its annual meeting of shareholders on Wednesday, March 18, 2009 at the offices of Bridgford Foods Corporation, 1308 North Patt Street, Anaheim, California at 10:00 am. Shareholders representing 9,002,547 or 95% of the 9,433,700 shares entitled to vote were present in person or by proxy. Proxies for the meeting were solicited pursuant to Regulation 14A of the Securities Exchange Act of 1934.

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The following persons were nominated and elected directors:
Allan L. Bridgford	William L. Bridgford	Bruce H. Bridgford
Todd C. Andrews	Richard A. Foster	Robert E. Schulze
D. Gregory Scott	Paul R. Zippwald

The shareholder voting for board members is summarized as follows:

Director	Votes For	Votes Withheld
Allan L. Bridgford	8,570,386	432,161
William L. Bridgford	8,565,294	437,253
Bruce H. Bridgford	8,564,934	437,613
Todd C. Andrews	8,860,607	141,940
Richard A. Foster	8,856,046	146,501
Robert E. Schulze	8,558,612	443,935
D. Gregory Scott	8,860,407	142,140
Paul R. Zippwald	8,857,846	144,701

Votes cast for appointment of Squar, Milner, Peterson, Miranda & Williamson, LLP as the independent registered public accounting firm for the Company for the fiscal year commencing November 1, 2008 were as follows:

	8,858,749 FOR
	17,397 AGAINST
	126,401 ABSTAIN or WITHHELD.

Item 6.

Exhibits

	Exhibit No.		Description
	31.1		Certification of Chairman (Principal Executive Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification of Chief Financial Officer (Principal Financial Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of Chairman (Principal Executive Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2		Certification of Chief Financial Officer (Principal Financial Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements 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
	(Registrant)
Dated: June 1, 2009	By:	/s/	Raymond F. Lancy
			Raymond F. Lancy
			Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

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