Bridgford Foods Corp (BRID) SEC Quarterly Report (10-Q) for Q1 2016

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		January 22, 2016				October 30, 2015
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	12,642			$	5,842
Accounts receivable, less allowance for doubtful accounts of $82 and $146, respectively, and promotional allowances of $3,704 and $3,061, respectively			12,679				14,619
Inventories, less inventory reserves of $359 and $381, respectively (Note 2)			16,327				19,977
Prepaid expenses and other current assets			1,017				319
Total current assets			42,665				40,757
Property, plant and equipment, net of accumulated depreciation and amortization of $61,056 and $60,454, respectively			10,114				10,235
Other non-current assets			23,988				24,310
Total assets		$	76,767			$	75,302
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	5,050			$	6,087
Accrued payroll, advertising and other expenses			4,425				5,203
Current portion of non-current liabilities			2,654				2,825
Income taxes payable			1,342				96
Total current liabilities			13,471				14,211
Non-current liabilities			25,804				25,446
Total liabilities			39,275				39,657
Commitments and contingencies (Note 3)
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 –9,077 and 9,080 shares, respectively			9,135				9,138
Capital in excess of par value			8,312				8,334
Retained earnings			42,175				40,303
Accumulated other comprehensive loss			(22,130	)			(22,130	)
Total shareholders' equity			37,492				35,645
Total liabilities and shareholders' equity		$	76,767			$	75,302

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		12 weeks ended
		January 22, 2016				January 23, 2015
Net sales		$	36,156			$	34,712
Cost of products sold			22,377				25,095
Gross margin			13,779				9,617
Selling, general and administrative expenses			10,678				9,150
Income before taxes			3,101				467
Income tax provision			1,229				-
Net income		$	1,872			$	467
Net income per share – Basic and diluted		$	0.21			$	0.05
Weighted average common shares – Basic and diluted			9,079				9,113

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		12 weeks ended
		January 22, 2016				January 23, 2015
Cash flows from operating activities:
Net income		$	1,872			$	467
Income or charges not affecting cash and cash equivalents:
Depreciation			700				722
Provision for (recoveries) losses on accounts receivable			(82	)			52
Provision for promotional allowances			643				704
Gain on sale of property, plant and equipment			(1	)			(29	)
Changes in operating assets and liabilities:
Accounts receivable			1,379				(2,040	)
Inventories			3,650				6,917
Prepaid expenses and other current assets			(698	)			(325	)
Other non-current assets			322				(66	)
Accounts payable			(1,133	)			(1,016	)
Accrued payroll, advertising and other expenses			(949	)			(258	)
Income taxes payable			1,342				-
Non-current liabilities			393				(237	)
Net cash provided by operating activities			7,438				4,891
Cash used in investing activities:
Proceeds from sale of property, plant and equipment			1				29
Additions to property, plant and equipment			(578	)			(92	)
Net cash used in investing activities			(577	)			(63	)
Cash used in financing activities:
Shares repurchased			(25	)			(38	)
Payment of capital lease obligations			(36	)			(55	)
Net cash used in financing activities			(61	)			(93	)
Net increase in cash and cash equivalents			6,800				4,735
Cash and cash equivalents at beginning of period			5,842				192
Cash and cash equivalents at end of period		$	12,642			$	4,927
Supplemental cash flow information:
Cash paid for income taxes		$	153			$	12

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Note 1 - Summary of Significant Accounting Policies:

The unaudited condensed consolidated financial statements of Bridgford Foods Corporation (the "Company", "we", "our", "us") for the twelve weeks ended January 22, 2016 and January 23, 2015 have been prepared in conformity with the accounting principles described in the Company's Annual Report on Form 10-K for the fiscal year ended October 30, 2015 (the "Annual Report") and include all adjustments considered necessary by management for a fair presentation of the interim periods.  This report should be read in conjunction with the Annual Report. Due to seasonality and other factors, interim results are not necessarily indicative of the results for the full year.  Recent accounting pronouncements and their effect on the Company are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

The October 30, 2015 balance sheet amounts within these interim condensed consolidated financial statements were derived from the audited fiscal 2015 financial statements.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results may vary from these estimates.  Some of the estimates needed to be made by management include the allowance for doubtful accounts, promotional and returns allowances, inventory reserves, the estimated useful lives of property and equipment, and the valuation allowance for the Company's deferred tax assets. Actual results could materially differ from these 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 which vary from our current estimates. Market conditions and the volatility in stock markets may cause significant changes in the measurement of our pension fund liabilities and the performance of our life insurance policies in future periods. 

Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll, advertising and other expenses.  The carrying amount of these instruments approximate fair market value due to their short term maturity.  At January 22, 2016, the Company had accounts in excess of the Federal Deposit Insurance Corporation insurance coverage limit.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.  The Company grants payment terms to a significant number of customers that are diversified over a wide geographic area.  The Company monitors the payment histories of its customers and maintains an allowance for doubtful accounts which is reviewed for adequacy on a quarterly basis.  The Company does not require collateral from its customers.  

The table below shows customers that accounted for more than 20% of consolidated accounts receivable ("AR") or 10% of consolidated sales for the twelve weeks ended January 22, 2016 and January 23, 2015, respectively.

Customer Concentration > 20% of AR or 10% of Sales *

* = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twelve weeks ended January 22, 2016 or the twelve weeks ended January 23, 2015.

Subsequent events

Management has evaluated events subsequent to January 22, 2016 through the date that the accompanying condensed consolidated financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustments of and/or disclosure in such financial statements.   

Basic and diluted earnings per share

Basic and diluted earnings per share are calculated based on the weighted average number of shares outstanding for all periods presented.  No stock options, warrants, or convertible securities were outstanding as of January 22, 2016 or January 23, 2015, respectively.

Note 2 - Inventories:

Inventories are comprised of the following at the respective period ends:  

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 ingredients, labor and manufacturing overhead. We regularly review inventory quantities on hand and write down any excess or obsolete inventories to estimated 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 may need to be sold at reduced prices and could result in additional reserve provisions.

Note 3 - Commitments and Contingencies:

We invested in OTR (over-the-road) tractors during the third quarter of 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. The total capital lease obligation remaining for transportation equipment as of January 22, 2016 is $689.  The lease arrangement also contains a variable component of seven cents per mile based on miles driven over the lease life.  The capital lease arrangement replaced the long-standing month-to-month leases of transportation equipment.