2007 was a year of excellent progress for Bridgford Foods
Corporation in spite of historic increases in grain prices,
petroleum, and virtually every expense we incur in the
course of our business. Sales in our 52 week 2007 fiscal year
were $125,091,000, a decline of 6.8% from sales of
$134,264,000 in our 53 week 2006 fiscal year. Many
unprofitable products and territories were discontinued.
Due to the severity of cost increases the Company recorded a
net loss of $292,000 in 2007, equal to ($0.03) cents per share.
SALES AND MARKETING
Bridgford Monkey Bread, manufactured at our Superior
Foods plant in Dallas under the direction of President Blaine
Bridgford, continues to be a star performer, with a 14%
sales increase in 2007. During the year, we continued to
successfully develop sales of our secondMonkey Bread variety,
Garlic Parmesan flavor. The Company has streamlined the
Anaheim deli production operations, eliminating unprofitable
processing operations and focusing on value-added
sandwiches and meal kits. Our Chicago based direct route
sales distribution system for dry sausage products is being
reorganized for higher sales per route per week with an
emphasis on manufactured products. Meat snack package
sizes have been reduced to conform with ecological
standards of our large customers. In December, 2007,
Bridgford Foods announced an agreement with DOT Foods,
a major national re-distributor, to sell the Company’s frozen
food products through DOT, providing a major new avenue
of distribution for those products.
OPERATIONS
Major achievements include the development and successful
introduction of new products and new technologies. In the
fourth quarter, we began a major shift toward the sale of
manufactured items on our Chicago direct store delivery
routes. New and improved products include new styles and
flavors of frozen bread dough and rolls for our food service
customers, as well as beef jerky manufactured and
packaged in our Chicago meat processing plant. Many of
our new bread products follow recent trends toward whole
grain ingredients utilizing cracked wheat and entire wheat
flour, and ethnic styles such as sopapilla bites and tortilla
balls. Our new jerky production system utilizes techniques
for rapid processing that are very unique. Depending on
commodity market conditions, we are free to utilize our
entire system or purchase pre-processed products from
overseas, made to our specifications, which can be integrated
into our packaging system. Both methods are being actively
used. All Jerky operations will eventually be performed in
Chicago, directed by Baron R.H. Bridgford, President of our
division, Bridgford Foods of Illinois. During 2007, we
completed development work and preparations for the
production of “First Strike” rations for the U.S. military
forces. These very unique sandwich products utilize our
production facilities in Chicago and Statesville, North
Carolina. The British Army purchased a good quantity of
these products in 2007 and shipped them directly to Iraq
and Afghanistan from the U.S.
FINANCIAL MATTERS
Working capital at November 2, 2007 totaled $29,453,000,
$2,229,000 (7.0%) lower than at the beginning of the
fiscal year. The working capital ratio improved to 3.5 to 1 at
November 2, 2007 compared to 3.2 to 1 at November 3,
2006. The Company anticipates significant funding of
its frozen defined benefit pension plan in fiscal year 2008
as required by the Pension Protection Act. Projected
contributions for fiscal year 2008, in the amount of
$2,877,000, were recorded as a current liability at the end
of the 2007 fiscal year, which significantly reduced working
capital and non-current liabilities. During the fiscal year the
Company purchased 69,000 shares of common stock at
a cost of $515,000 ($7.46 average cost per share) and
capital expenditures totaled $1,587,000. The Company has
remained free of interest bearing debt for twenty-one
consecutive years.
Shareholders’ equity totaled $49,969,000, a decrease of
$217,000 (0.4%) compared to the end of the prior year.
The decrease principally relates to lower net income offset
by a decrease in the minimum pension liability, which is
recorded in the Consolidated Statements of Shareholders’
Equity and Comprehensive Income under the “Accumulated
other comprehensive income (loss)” column. The decrease
in this liability resulted from the Company’s adoption of
Statement of Financial Accounting Standards No. 158 (SFAS
No. 158) on November 2, 2007. Liabilities related to the
Company’s postretirement healthcare and supplemental
executive retirement plans also decreased shareholders’
equity when the Company adopted SFAS No. 158. No cash
dividends were paid during the 2007 fiscal year. The Board
of Directors suspended the cash dividend at its May, 2004
meeting in recognition of lower profitability levels in recent
years. Approximately 519,000 shares remain available for
repurchase under the 2.0 million share repurchase plan
previously authorized by the Board of Directors.
Shareholders’ equity per share was $5.05 at November 2,
2007 compared with $5.04 at November 3, 2006.
SUMMARY
Despite the challenges of 2007 and the continuing escalation
of our raw material and operating costs, your Company
refuses to compromise the quality of our products or the
service we provide to our customers. We are forging ahead,
making improvements in every area, seeking economies in
every expense category, and making innovative changes to
manufacturing operations and distribution methods.
On behalf of all of our directors and officers, we thank our
shareholders, customers and suppliers for their support during
2007 and look forward to reporting better results in 2008.
Respectfully submitted,
William L. Bridgford
Chairman
John V. Simmons
President
January 31, 2008 |
