Document and Entity Information
Document and Entity Information - shares | 8 Months Ended | |
Jul. 12, 2019 | Aug. 23, 2019 | |
Deferred Tax [Member] | ||
Entity Registrant Name | BRIDGFORD FOODS CORP | |
Entity Central Index Key | 0000014177 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 12, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-01 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,076,832 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 12, 2019 | Nov. 02, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 7,817 | $ 8,179 |
Accounts receivable, less allowance for doubtful accounts of $37 and $33, respectively, and promotional allowances of $3,446 and $2,122, respectively | 21,831 | 20,293 |
Inventories, net | 24,043 | 23,413 |
Prepaid expenses and other current assets | 545 | 1,331 |
Total current assets | 54,236 | 53,216 |
Property, plant and equipment, net of accumulated depreciation and amortization of $69,092 and $66,337, respectively | 49,644 | 32,638 |
Other non-current assets | 12,344 | 11,630 |
Deferred income taxes (Note 5) | 4,010 | 4,010 |
Total assets | 120,234 | 101,494 |
Current liabilities: | ||
Accounts payable | 7,767 | 7,655 |
Accrued payroll, advertising and other expenses | 4,731 | 4,577 |
Income taxes payable | 1,163 | 155 |
Current notes payable - equipment | 1,918 | |
Current portion of non-current liabilities | 5,309 | 5,980 |
Total current liabilities | 20,888 | 18,367 |
Long-term notes payable - equipment | 12,460 | |
Non-current liabilities | 16,005 | 17,447 |
Total liabilities | 49,353 | 35,814 |
Contingencies and commitments (Note 3) | ||
Shareholders' equity: | ||
Preferred stock, without par value; authorized - 1,000,000 shares; issued and outstanding - none | ||
Common stock, $1.00 par value; authorized - 20,000,000 shares; issued and outstanding - 9,076,832 and 9,076,832 shares, respectively | 9,134 | 9,134 |
Capital in excess of par value | 8,298 | 8,298 |
Retained earnings | 71,149 | 65,948 |
Accumulated other comprehensive loss | (17,700) | (17,700) |
Total shareholders' equity | 70,881 | 65,680 |
Total liabilities and shareholders' equity | $ 120,234 | $ 101,494 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jul. 12, 2019 | Nov. 02, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 37 | $ 33 |
Accounts receivable, allowance for promotional allowances | 3,446 | 2,122 |
Property, plant and equipment, accumulated depreciation | $ 69,092 | $ 66,337 |
Preferred stock, par value | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,076,832 | 9,076,832 |
Common stock, shares outstanding | 9,076,832 | 9,076,832 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Jul. 12, 2019 | Jul. 13, 2018 | Jul. 12, 2019 | Jul. 13, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 42,837 | $ 38,468 | $ 129,321 | $ 117,560 |
Cost of products sold | 29,422 | 26,034 | 85,851 | 79,107 |
Gross margin | 13,415 | 12,434 | 43,470 | 38,453 |
Selling, general and administrative expenses | 11,819 | 10,730 | 36,514 | 34,214 |
Gain on sale of property, plant and equipment | (9) | (9) | (6,002) | |
Income before taxes | 1,605 | 1,704 | 6,965 | 10,241 |
Provision for income taxes | 500 | 256 | 1,764 | 5,786 |
Net income | $ 1,105 | $ 1,448 | $ 5,201 | $ 4,455 |
Basic earnings per share | $ 0.12 | $ 0.16 | $ 0.57 | $ 0.49 |
Shares used to compute basic earnings per share | 9,076,832 | 9,076,832 | 9,076,832 | 9,076,832 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Capital in Excess of Par Value [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at Nov. 03, 2017 | $ 9,134 | $ 8,298 | $ 56,902 | $ (18,296) | $ 56,038 |
Balance, shares at Nov. 03, 2017 | 9,076,000 | ||||
Net income | 4,455 | 4,455 | |||
Reclassification upon early adoption of ASU 2018-02 | 2,529 | (2,529) | |||
Balance at Jul. 13, 2018 | $ 9,134 | 8,298 | 63,886 | (20,825) | 60,493 |
Balance, shares at Jul. 13, 2018 | 9,076,000 | ||||
Balance at Apr. 20, 2018 | $ 9,134 | 8,298 | 62,438 | (20,825) | 59,045 |
Balance, shares at Apr. 20, 2018 | 9,076,000 | ||||
Net income | 1,448 | 1,448 | |||
Balance at Jul. 13, 2018 | $ 9,134 | 8,298 | 63,886 | (20,825) | 60,493 |
Balance, shares at Jul. 13, 2018 | 9,076,000 | ||||
Balance at Nov. 02, 2018 | $ 9,134 | 8,298 | 65,948 | (17,700) | 65,680 |
Balance, shares at Nov. 02, 2018 | 9,076,000 | ||||
Net income | 5,201 | 5,201 | |||
Balance at Jul. 12, 2019 | $ 9,134 | 8,298 | 71,149 | (17,700) | 70,881 |
Balance, shares at Jul. 12, 2019 | 9,076,000 | ||||
Balance at Apr. 19, 2019 | $ 9,134 | 8,298 | 70,044 | (17,700) | 69,776 |
Balance, shares at Apr. 19, 2019 | 9,076,000 | ||||
Net income | 1,105 | 1,105 | |||
Balance at Jul. 12, 2019 | $ 9,134 | $ 8,298 | $ 71,149 | $ (17,700) | $ 70,881 |
Balance, shares at Jul. 12, 2019 | 9,076,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 8 Months Ended | |
Jul. 12, 2019 | Jul. 13, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 5,201 | $ 4,455 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation | 2,785 | 2,598 |
Provision for losses on accounts receivable | 35 | 5 |
(Reduction in) provision for promotional allowances | (914) | 499 |
Gain on sale of property, plant and equipment | (9) | (6,002) |
Deferred income taxes, net | 3,200 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (659) | 850 |
Inventories | (630) | (1,677) |
Prepaid expenses and other current assets | 786 | 1,438 |
Other non-current assets | (714) | 1,210 |
Accounts payable | 112 | 1,354 |
Accrued payroll, advertising and other expenses | (517) | 248 |
Income taxes payable | 1,008 | 813 |
Non-current liabilities | (1,442) | (3,991) |
Net cash provided by operating activities | 5,042 | 5,000 |
Cash (used in) investing activities: | ||
Proceeds from sale of property, plant and equipment | 9 | 6,002 |
Additions to property, plant and equipment | (19,791) | (9,704) |
Net cash used in investing activities | (19,782) | (3,702) |
Cash provided by used in financing activities: | ||
Payment of capital lease obligations | (82) | |
Proceeds from bank borrowings | 17,000 | |
Repayments of bank borrowings | (2,622) | |
Net cash provided by financing activities | 14,378 | (82) |
Net (decrease) increase in cash and cash equivalents | (362) | 1,216 |
Cash and cash equivalents at beginning of period | 8,179 | 12,109 |
Cash and cash equivalents at end of period | 7,817 | 13,325 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 564 | 1,407 |
Cash paid for interest | $ 183 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 8 Months Ended |
Jul. 12, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 and thirty-six weeks ended July 12, 2019 and July 13, 2018 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 November 2, 2018 (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 Report. The November 2, 2018 balance sheet amounts within these interim condensed consolidated financial statements were derived from the audited fiscal year 2018 financial statements. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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. 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, plant 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. Certain items in fiscal year 2018 have been reclassified to conform to the fiscal year 2019 presentation. Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued payroll, advertising and other expenses and notes payable. The carrying amount of these instruments approximate fair market value due to their short-term maturity. As of July 12, 2019, 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 with regard to its 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 thirty-six weeks ended July 12, 2019 and July 13, 2018, respectively. Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Dollar General Sales AR Sales AR July 12, 2019 35.9 % 33.3 % 10.7 % 25.1 % July 13, 2018 36.6 % 34.4 % 9.1 % 23.9 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the thirty-six weeks ended July 12, 2019 or the thirty-six weeks ended July 13, 2018. Revenue recognition Revenues are recognized in accordance with Accounting Standards Codification (“ASC”) 606 – Contracts with Customers upon passage of title to the customer, typically upon product pick-up, shipment or delivery to customers. Products are delivered to customers primarily through our own long-haul fleet or through a Company owned direct store delivery system. We recognize revenue mainly through retail and foodservice distribution channels. Our revenues primarily result from contracts with customers and are generally short term in nature with the delivery of product as the single performance obligation. We recognize revenue for the sale of the product at the point in time when our performance obligation has been satisfied and control of the product has transferred to our customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale. We elected to account for shipping and handling activities that occur after the customer has obtained control of the product as a fulfillment cost rather than an additional promised service. Our contracts are generally less than one year, and therefore we recognize costs paid to third party brokers to obtain contracts as expenses. Additionally, items that are not material in the context of the contract are recognized as expense. Revenue is measured by the transaction price, which is defined as the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes consumer incentives, trade promotions, and allowances, such as coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs. Variable consideration related to these programs is recorded as a reduction to revenue based on amounts we expect to pay. We base these estimates on current performance, historical utilization, and projected redemption rates of each program. We review and update these estimates regularly until the incentives or product returns are realized and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established on a regular basis such that most customer arrangements and related incentives have a duration of less than one year. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time is required before payments are due. Additionally, we do not grant payment financing terms greater than one year. Subsequent events Management has evaluated events subsequent to July 12, 2019 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 and has determined that no such transactions or other events occurred. Basic earnings per share Basic 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 July 12, 2019 or July 13, 2018. |
Inventories
Inventories | 8 Months Ended |
Jul. 12, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 2 – Inventories: Inventories are comprised of the following at the respective period ends: (unaudited) July 12, 2019 November 2, 2018 Meat, ingredients and supplies $ 6,791 $ 6,455 Work in progress 2,427 1,415 Finished goods 14,825 15,543 $ 24,043 $ 23,413 Inventories are valued at the lower of cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. Costs related to warehousing, transportation and distribution to customers are considered when computing net realizable 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. |
Contingencies and Commitments
Contingencies and Commitments | 8 Months Ended |
Jul. 12, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | Note 3 – Contingencies and Commitments: We continue to rent OTR (over-the-road) tractors on a month-to-month basis. We plan to invest in new capital lease arrangements later in fiscal year 2019. The Company also leases warehouse and/or office facilities throughout the United States through month-to-month rental agreements. No material changes have been made to these agreements during the thirty-six weeks ended July 12, 2019. The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations. Most flour purchases are made at market price with contracts. However, the Company may purchase bulk flour at current market prices under short-term (30 - 120 days) fixed price contracts during the normal course of business. Under these arrangements, the Company is obligated to purchase specific quantities at fixed prices, within the specified contract period. These contracts provide for potential price increases if agreed quantities are not purchased within the specified contract period. The contracts are not material. These contracts are typically settled within a month’s time and no significant contracts remain open at the close of the quarterly or annual reporting period. No significant contracts remained unfulfilled at July 12, 2019. The Company does not participate in the commodity futures market or hedging to limit commodity exposure. |
Segment Information
Segment Information | 8 Months Ended |
Jul. 12, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Note 4 – Segment Information: The Company has two reportable operating segments: Frozen Food Products (the processing and distribution of frozen food products) and Snack Food Products (the processing and distribution of meat and other convenience foods). We evaluate each segment’s performance based on revenues and operating income. Selling, general and administrative (“SG&A”) expenses include corporate accounting, information systems, human resource management and marketing, which are managed at the corporate level. These activities are allocated to each operating segment based on revenues and/or actual usage. Assets managed at the corporate level have been included as “other” in the accompanying segment information. The following segment information is presented for the twelve weeks ended July 12, 2019 and July 13, 2018. Segment Information Twelve weeks Ended July 12, 2019 Frozen Food Products Snack Food Products Other Totals Sales $ 11,273 $ 31,564 $ - $ 42,837 Cost of products sold 7,486 21,936 - 29,422 Gross margin 3,787 9,628 - 13,415 SG&A 3,434 8,385 - 11,819 Gain on sale of property, plant and equipment (9 ) - - (9 ) Income before taxes 362 1,243 - 1,605 Total assets $ 11,350 $ 83,478 $ 25,406 $ 120,234 Additions to PP&E $ 198 $ 5,475 $ - $ 5,673 Twelve weeks Ended July 13, 2018 Frozen Food Products Snack Food Products Other Totals Sales $ 9,574 $ 28,894 $ - $ 38,468 Cost of products sold 6,474 19,560 - 26,034 Gross margin 3,100 9,334 - 12,434 SG&A 3,004 7,726 - 10,730 Gain on sale of property, plant and equipment - - - - Income before taxes 96 1,608 - 1,704 Total assets $ 10,532 $ 57,529 $ 32,280 $ 100,341 Additions to PP&E $ 251 $ 4,642 $ - $ 4,893 The following segment information is presented for the thirty-six weeks ended July 12, 2019 and July 13, 2018. Thirty-six weeks Ended July 12, 2019 Frozen Food Products Snack Food Products Other Totals Sales $ 34,691 $ 94,630 $ - $ 129,321 Cost of products sold 22,800 63,051 - 85,851 Gross margin 11,891 31,579 - 43,470 SG&A 10,325 26,189 - 36,514 Gain on sale of property, plant and equipment (9 ) - - (9 ) Income before taxes 1,575 5,390 - 6,965 Total assets $ 11,350 $ 83,478 $ 25,406 $ 120,234 Additions to PP&E $ 476 $ 19,315 $ - $ 19,791 Thirty-six weeks Ended July 13, 2018 Frozen Food Products Snack Food Products Other Totals Sales $ 31,175 $ 86,385 $ - $ 117,560 Cost of products sold 20,612 58,495 - 79,107 Gross margin 10,563 27,890 - 38,453 SG&A 9,761 24,453 - 34,214 Gain on sale of property, plant and equipment (6 ) (19 ) (5,977 ) (6,002 ) Income before taxes 808 3,456 5,977 10,241 Total assets $ 10,532 $ 57,529 $ 32,280 $ 100,341 Additions to PP&E $ 552 $ 9,152 $ - $ 9,704 The following information further disaggregates our sales to customers by major distribution channel and customer type for the twelve and thirty-six weeks ended July 12, 2019. Twelve weeks Ended July 12, 2019 Distribution Channel Retail (a) Foodservice (b) Totals Direct store delivery $ 23,046 $ - $ 23,046 Direct customer warehouse 8,518 - 8,518 Total Snack Food Products 31,564 - 31,564 Distributors 1,009 10,264 11,273 Total Frozen Food Products 1,009 10,264 11,273 Totals $ 32,573 $ 10,264 $ 42,837 Thirty-six weeks Ended July 12, 2019 Distribution Channel Retail (a) Foodservice (b) Totals Direct store delivery $ 69,270 $ - $ 69,270 Direct customer warehouse 25,360 - 25,360 Total Snack Food Products 94,630 - 94,630 Distributors 4,648 30,043 34,691 Total Frozen Food Products 4,648 30,043 34,691 Totals $ 99,278 $ 30,043 $ 129,321 (a) Includes sales to food retailers, such as grocery retailers, warehouse club stores, and internet-based retailers. (b) Includes sales to foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities and the military. |
Income Taxes
Income Taxes | 8 Months Ended |
Jul. 12, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5 – Income Taxes: On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. tax code that affect the Company including, but not limited to, (1) reducing the corporate federal income tax rate from 35% to 21%, (2) bonus depreciation that allows for full expensing of qualified property in the year placed in service, and (3) the repeal of the domestic production activity deduction beginning with our fiscal year 2020. Under U.S. GAAP, specifically ASC Topic 740, Income Taxes, The Tax Act reduced the corporate tax rate from 35% to 21%, effective January 1, 2018. This results in a blended corporate tax rate of 25.3% in fiscal year 2018 and 21% in fiscal year 2019 and thereafter. We analyzed our deferred tax balances to estimate which of those balances are expected to reverse in fiscal 2018 or thereafter, and we re-measured the deferred taxes at 23.07% or 21% accordingly. The change in deferred taxes was recorded as an adjustment to our income tax provision which resulted in a charge totaling $3,059 in fiscal year 2018. The effective tax rate was 23.6% and 56.5% for the third quarter of fiscal 2019 and 2018, respectively. The remeasurement of deferred income taxes at newly enacted tax rates resulted in a $3,200 income tax expense or a 37.5% impact on the effective tax rate for the third quarter of fiscal year 2018, and a blended 23.07% statutory federal income tax rate for fiscal 2018. The effective tax rate for the third quarter of fiscal 2018 also reflects the impact of $1,640 of income tax expense or 19.2% related to tax on the gain on the sale of a land parcel in Chicago, Illinois. Additionally, the effective tax rates for the third quarter of fiscal years 2019 and 2018 were impacted by such items as the domestic production deduction, non-taxable gains and losses on life insurance policies and state income taxes. As of July 12, 2019, the Company did not have any outstanding federal or state, other than California, net operating loss carryforwards. Our federal income tax returns are open to audit under the statute of limitations for the fiscal years ended on or about October 31, 2015 through 2017. We are subject to income tax in California and various other state taxing jurisdictions. Our California state income tax returns are open to audit under the statute of limitations for the fiscal years ended on or about October 31, 2014 through 2017. |
Equipment Note Payable and Fina
Equipment Note Payable and Financial Arrangements | 8 Months Ended |
Jul. 12, 2019 | |
Debt Disclosure [Abstract] | |
Equipment Note Payable and Financial Arrangements | Note 6 – Equipment Note Payable and Financial Arrangements On December 26, 2018, we entered into a master collateral loan and security agreement with Wells Fargo Bank, N.A for up to $15,000 in equipment financing. Pursuant to the loan agreement, we borrowed $15,000, two separate receipts of $7,500 each, to purchase specific equipment for our new Chicago processing facility at a fixed rate of 4.13% and 3.98%, respectively, per annum. The loan terms are seven years and are secured by the purchased equipment. The first funding of $7,500 was received on December 28, 2018. The second funding was received on April 23, 2019. The master collateral loan and security agreement with Wells Fargo Bank, N.A. contains various affirmative and negative covenants that limit the use of funds and define other provisions of the loan. The Company was in compliance with all covenants under the master collateral loan and security agreement as of July 12, 2019. The first secured equipment note payable is due with monthly principal and interest payments of $103 commencing on January 31, 2019 for 84 monthly installments including interest of 4.13% per annum. The second secured equipment note payable is due with monthly principal and interest payments of $102 commencing on May 31, 2019 for 84 monthly installments including interest of 3.98% per annum. (unaudited) (unaudited) July 12, 2019 July 13, 2018 Secured equipment notes payable to Wells Fargo Bank, N.A. collateralized by equipment for the new Chicago processing facility. $ 14,378 $ - Less current portion of notes payable (1,918 ) - Total long-term notes payable $ 12,460 $ - We maintain a line of credit with Wells Fargo Bank, N.A. that expires on March 1, 2020. Under the terms of this line of credit, we may borrow up to $7,500 at an interest rate equal to the bank’s prime rate or LIBOR plus 1.5%. The borrowing agreement contains various covenants, the more significant of which require us to maintain a minimum tangible net worth, a minimum quick ratio, a minimum net income after tax and total capital expenditures less than $5,000. The Company was in violation of the capital expenditure covenant which was subsequently waived (per letter dated August 19, 2019). The Company borrowed $2,000 under this line of credit on April 15, 2019, which was repaid on April 25, 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 8 Months Ended |
Jul. 12, 2019 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue recognition Revenues are recognized in accordance with Accounting Standards Codification (“ASC”) 606 – Contracts with Customers upon passage of title to the customer, typically upon product pick-up, shipment or delivery to customers. Products are delivered to customers primarily through our own long-haul fleet or through a Company owned direct store delivery system. We recognize revenue mainly through retail and foodservice distribution channels. Our revenues primarily result from contracts with customers and are generally short term in nature with the delivery of product as the single performance obligation. We recognize revenue for the sale of the product at the point in time when our performance obligation has been satisfied and control of the product has transferred to our customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale. We elected to account for shipping and handling activities that occur after the customer has obtained control of the product as a fulfillment cost rather than an additional promised service. Our contracts are generally less than one year, and therefore we recognize costs paid to third party brokers to obtain contracts as expenses. Additionally, items that are not material in the context of the contract are recognized as expense. Revenue is measured by the transaction price, which is defined as the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes consumer incentives, trade promotions, and allowances, such as coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs. Variable consideration related to these programs is recorded as a reduction to revenue based on amounts we expect to pay. We base these estimates on current performance, historical utilization, and projected redemption rates of each program. We review and update these estimates regularly until the incentives or product returns are realized and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established on a regular basis such that most customer arrangements and related incentives have a duration of less than one year. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time is required before payments are due. Additionally, we do not grant payment financing terms greater than one year. |
Subsequent Events | Subsequent events Management has evaluated events subsequent to July 12, 2019 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 and has determined that no such transactions or other events occurred. |
Basic Earnings Per Share | Basic earnings per share Basic 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 July 12, 2019 or July 13, 2018. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 8 Months Ended |
Jul. 12, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Customer Concentration | Customer Concentration > 20% of AR or 10% of Sales * Wal-Mart Dollar General Sales AR Sales AR July 12, 2019 35.9 % 33.3 % 10.7 % 25.1 % July 13, 2018 36.6 % 34.4 % 9.1 % 23.9 % * = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the thirty-six weeks ended July 12, 2019 or the thirty-six weeks ended July 13, 2018. |
Inventories (Tables)
Inventories (Tables) | 8 Months Ended |
Jul. 12, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are comprised of the following at the respective period ends: (unaudited) July 12, 2019 November 2, 2018 Meat, ingredients and supplies $ 6,791 $ 6,455 Work in progress 2,427 1,415 Finished goods 14,825 15,543 $ 24,043 $ 23,413 |
Segment Information (Tables)
Segment Information (Tables) | 8 Months Ended |
Jul. 12, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following segment information is presented for the twelve weeks ended July 12, 2019 and July 13, 2018. Segment Information Twelve weeks Ended July 12, 2019 Frozen Food Products Snack Food Products Other Totals Sales $ 11,273 $ 31,564 $ - $ 42,837 Cost of products sold 7,486 21,936 - 29,422 Gross margin 3,787 9,628 - 13,415 SG&A 3,434 8,385 - 11,819 Gain on sale of property, plant and equipment (9 ) - - (9 ) Income before taxes 362 1,243 - 1,605 Total assets $ 11,350 $ 83,478 $ 25,406 $ 120,234 Additions to PP&E $ 198 $ 5,475 $ - $ 5,673 Twelve weeks Ended July 13, 2018 Frozen Food Products Snack Food Products Other Totals Sales $ 9,574 $ 28,894 $ - $ 38,468 Cost of products sold 6,474 19,560 - 26,034 Gross margin 3,100 9,334 - 12,434 SG&A 3,004 7,726 - 10,730 Gain on sale of property, plant and equipment - - - - Income before taxes 96 1,608 - 1,704 Total assets $ 10,532 $ 57,529 $ 32,280 $ 100,341 Additions to PP&E $ 251 $ 4,642 $ - $ 4,893 The following segment information is presented for the thirty-six weeks ended July 12, 2019 and July 13, 2018. Thirty-six weeks Ended July 12, 2019 Frozen Food Products Snack Food Products Other Totals Sales $ 34,691 $ 94,630 $ - $ 129,321 Cost of products sold 22,800 63,051 - 85,851 Gross margin 11,891 31,579 - 43,470 SG&A 10,325 26,189 - 36,514 Gain on sale of property, plant and equipment (9 ) - - (9 ) Income before taxes 1,575 5,390 - 6,965 Total assets $ 11,350 $ 83,478 $ 25,406 $ 120,234 Additions to PP&E $ 476 $ 19,315 $ - $ 19,791 Thirty-six weeks Ended July 13, 2018 Frozen Food Products Snack Food Products Other Totals Sales $ 31,175 $ 86,385 $ - $ 117,560 Cost of products sold 20,612 58,495 - 79,107 Gross margin 10,563 27,890 - 38,453 SG&A 9,761 24,453 - 34,214 Gain on sale of property, plant and equipment (6 ) (19 ) (5,977 ) (6,002 ) Income before taxes 808 3,456 5,977 10,241 Total assets $ 10,532 $ 57,529 $ 32,280 $ 100,341 Additions to PP&E $ 552 $ 9,152 $ - $ 9,704 |
Schedule of Disaggregates Our Sales to Customer | The following information further disaggregates our sales to customers by major distribution channel and customer type for the twelve and thirty-six weeks ended July 12, 2019. Twelve weeks Ended July 12, 2019 Distribution Channel Retail (a) Foodservice (b) Totals Direct store delivery $ 23,046 $ - $ 23,046 Direct customer warehouse 8,518 - 8,518 Total Snack Food Products 31,564 - 31,564 Distributors 1,009 10,264 11,273 Total Frozen Food Products 1,009 10,264 11,273 Totals $ 32,573 $ 10,264 $ 42,837 Thirty-six weeks Ended July 12, 2019 Distribution Channel Retail (a) Foodservice (b) Totals Direct store delivery $ 69,270 $ - $ 69,270 Direct customer warehouse 25,360 - 25,360 Total Snack Food Products 94,630 - 94,630 Distributors 4,648 30,043 34,691 Total Frozen Food Products 4,648 30,043 34,691 Totals $ 99,278 $ 30,043 $ 129,321 (a) Includes sales to food retailers, such as grocery retailers, warehouse club stores, and internet-based retailers. (b) Includes sales to foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities and the military. |
Equipment Note Payable and Fi_2
Equipment Note Payable and Financial Arrangements (Tables) | 8 Months Ended |
Jul. 12, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Notes Payable | (unaudited) (unaudited) July 12, 2019 July 13, 2018 Secured equipment notes payable to Wells Fargo Bank, N.A. collateralized by equipment for the new Chicago processing facility. $ 14,378 $ - Less current portion of notes payable (1,918 ) - Total long-term notes payable $ 12,460 $ - |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 8 Months Ended | |
Jul. 12, 2019 | Jul. 13, 2018 | |
Accounts Receivable [Member] | ||
Concentration risk, percentage | 20.00% | 20.00% |
Sales Revenue, Net [Member] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Customer Concentration (Details) | 8 Months Ended | ||
Jul. 12, 2019 | Jul. 13, 2018 | ||
Sales Revenue, Net [Member] | |||
Concentration risk, percentage | 10.00% | 10.00% | |
Accounts Receivable [Member] | |||
Concentration risk, percentage | 20.00% | 20.00% | |
Wal-Mart [Member] | Sales Revenue, Net [Member] | |||
Concentration risk, percentage | [1] | 35.90% | 36.60% |
Wal-Mart [Member] | Accounts Receivable [Member] | |||
Concentration risk, percentage | [1] | 33.30% | 34.40% |
Dollar General [Member] | Sales Revenue, Net [Member] | |||
Concentration risk, percentage | [1] | 10.70% | 9.10% |
Dollar General [Member] | Accounts Receivable [Member] | |||
Concentration risk, percentage | [1] | 25.10% | 23.90% |
[1] | No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the thirty-six weeks ended July 12, 2019 or the thirty-six weeks ended July 13, 2018. |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Customer Concentration (Details) (Parenthetical) | 8 Months Ended | |
Jul. 12, 2019 | Jul. 13, 2018 | |
Accounts Receivable [Member] | ||
Concentration risk, percentage | 20.00% | 20.00% |
Sales Revenue, Net [Member] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jul. 12, 2019 | Nov. 02, 2018 |
Inventory Disclosure [Abstract] | ||
Meat, ingredients and supplies | $ 6,791 | $ 6,455 |
Work in progress | 2,427 | 1,415 |
Finished goods | 14,825 | 15,543 |
Inventories, net | $ 24,043 | $ 23,413 |
Segment Information (Details Na
Segment Information (Details Narrative) | 8 Months Ended |
Jul. 12, 2019Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Jul. 12, 2019 | Jul. 13, 2018 | Jul. 12, 2019 | Jul. 13, 2018 | Nov. 02, 2018 | |
Sales | $ 42,837 | $ 38,468 | $ 129,321 | $ 117,560 | |
Cost of products sold | 29,422 | 26,034 | 85,851 | 79,107 | |
Gross margin | 13,415 | 12,434 | 43,470 | 38,453 | |
SG&A | 11,819 | 10,730 | 36,514 | 34,214 | |
Gain on sale of property, plant and equipment | (9) | (9) | (6,002) | ||
Income before taxes | 1,605 | 1,704 | 6,965 | 10,241 | |
Total assets | 120,234 | 100,341 | 120,234 | 100,341 | $ 101,494 |
Additions to PP&E | 5,673 | 4,893 | 19,791 | 9,704 | |
Frozen Food Products [Member] | |||||
Sales | 11,273 | 9,574 | 34,691 | 31,175 | |
Cost of products sold | 7,486 | 6,474 | 22,800 | 20,612 | |
Gross margin | 3,787 | 3,100 | 11,891 | 10,563 | |
SG&A | 3,434 | 3,004 | 10,325 | 9,761 | |
Gain on sale of property, plant and equipment | (9) | (9) | (6) | ||
Income before taxes | 362 | 96 | 1,575 | 808 | |
Total assets | 11,350 | 10,532 | 11,350 | 10,532 | |
Additions to PP&E | 198 | 251 | 476 | 552 | |
Snack Food Products [Member] | |||||
Sales | 31,564 | 28,894 | 94,630 | 86,385 | |
Cost of products sold | 21,936 | 19,560 | 63,051 | 58,495 | |
Gross margin | 9,628 | 9,334 | 31,579 | 27,890 | |
SG&A | 8,385 | 7,726 | 26,189 | 24,453 | |
Gain on sale of property, plant and equipment | (19) | ||||
Income before taxes | 1,243 | 1,608 | 5,390 | 3,456 | |
Total assets | 83,478 | 57,529 | 83,478 | 57,529 | |
Additions to PP&E | 5,475 | 4,642 | 19,315 | 9,152 | |
Other [Member] | |||||
Sales | |||||
Cost of products sold | |||||
Gross margin | |||||
SG&A | |||||
Gain on sale of property, plant and equipment | (5,977) | ||||
Income before taxes | 5,977 | ||||
Total assets | 25,406 | 32,280 | 25,406 | 32,280 | |
Additions to PP&E |
Segment Information - Schedul_2
Segment Information - Schedule of Disaggregates Our Sales to Customer (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Jul. 12, 2019 | Jul. 13, 2018 | Jul. 12, 2019 | Jul. 13, 2018 | ||
Direct store delivery | $ 23,046 | $ 69,270 | |||
Direct customer warehouse | 8,518 | 25,360 | |||
Total Snack Food Products | 31,564 | 94,630 | |||
Distributors | 11,273 | 34,691 | |||
Total Frozen Food Products | 11,273 | 34,691 | |||
Totals | 42,837 | $ 38,468 | 129,321 | $ 117,560 | |
Retail [Member] | |||||
Direct store delivery | [1] | 23,046 | 69,270 | ||
Direct customer warehouse | [1] | 8,518 | 25,360 | ||
Total Snack Food Products | [1] | 31,564 | 94,630 | ||
Distributors | [1] | 1,009 | 4,648 | ||
Total Frozen Food Products | [1] | 1,009 | 4,648 | ||
Totals | [1] | 32,573 | 99,278 | ||
Foodservice [Member] | |||||
Direct store delivery | [2] | ||||
Direct customer warehouse | [2] | ||||
Total Snack Food Products | [2] | ||||
Distributors | [2] | 10,264 | 30,043 | ||
Total Frozen Food Products | [2] | 10,264 | 30,043 | ||
Totals | [2] | $ 10,264 | $ 30,043 | ||
[1] | Includes sales to food retailers, such as grocery retailers, warehouse club stores, and internet-based retailers. | ||||
[2] | Includes sales to foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, convenience stores, healthcare facilities and the military. |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | 12 Months Ended | |
Jul. 12, 2019 | Jul. 13, 2018 | Jul. 12, 2019 | Nov. 02, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax rate reconciliation description | On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act includes significant changes to the U.S. tax code that will affect our fiscal year ending November 1, 2019, and future periods, including, but not limited to, (1) reducing the corporate federal income tax rate from 35% to 21%, | |||
Federal income tax rate | 21.00% | |||
Blended corporate tax rate before and after the Tax Act | 25.30% | |||
Re-measured deferred taxes description | We analyzed our deferred tax balances to estimate which of those balances are expected to reverse in fiscal 2018 or thereafter, and we re-measured the deferred taxes at 23.07% or 21% accordingly. | |||
Adjustment to income tax provision | $ 3,059 | |||
Effective income tax rate | 23.60% | 56.50% | ||
Deferred tax assets, reclassified from other comprehensive income to retained earnings | $ 3,200 | $ 3,200 | ||
Deferred income taxes, description | The remeasurement of deferred income taxes at newly enacted tax rates resulted in a $3,200 income tax expense or a 37.5% impact on the effective tax rate for the third quarter of fiscal year 2018, and a blended 23.07% statutory federal income tax rate for fiscal 2018. | |||
Impact on income tax expenses | $ 1,640 | |||
Impact on income tax, percent | 19.20% |
Equipment Note Payable and Fi_3
Equipment Note Payable and Financial Arrangements (Details Narrative) - USD ($) $ in Thousands | May 31, 2019 | Apr. 25, 2019 | Apr. 23, 2019 | Jan. 31, 2019 | Dec. 28, 2018 | Dec. 26, 2018 | Apr. 15, 2019 |
Wells Fargo Bank N.A [Member] | |||||||
Line of credit facility, expiration date | Mar. 1, 2020 | ||||||
Line of credit facility, maximum borrowing capacity | $ 7,500 | ||||||
Line of credit facility, covenant terms | The borrowing agreement contains various covenants, the more significant of which require us to maintain a minimum tangible net worth, a minimum quick ratio, a minimum net income after tax and total capital expenditures less than $5,000. The Company was in violation of the capital expenditure covenant which was subsequently waived (per letter dated August 19, 2019). | ||||||
Minimum tangible net worth and capital expenditure | $ 5,000 | ||||||
Line of credit | $ 2,000 | ||||||
Repayments of line of credit | $ 2,000 | ||||||
Wells Fargo Bank N.A [Member] | LIBOR [Member] | |||||||
Line of credit facility, interest rate | 1.50% | ||||||
First Secured Equipment Notes Payable [Member] | |||||||
Facility fixed rate percentage | 4.13% | ||||||
Debt monthly principal and interest payments | $ 103 | ||||||
Debt monthly term | 84 months | ||||||
Second Secured Equipment Notes Payable [Member] | |||||||
Facility fixed rate percentage | 3.98% | ||||||
Debt monthly principal and interest payments | $ 102 | ||||||
Debt monthly term | 84 months | ||||||
Loan Agreement [Member] | |||||||
Debt term | The loan terms are seven years and are secured by the purchased equipment. | ||||||
Proceeds from funds | $ 7,500 | $ 7,500 | |||||
Loan Agreement [Member] | Receipt 1 [Member] | |||||||
Purchase specific equipment amount | $ 7,500 | ||||||
Facility fixed rate percentage | 4.13% | ||||||
Loan Agreement [Member] | Receipt 2 [Member] | |||||||
Purchase specific equipment amount | $ 7,500 | ||||||
Facility fixed rate percentage | 3.98% | ||||||
Maximum [Member] | |||||||
Equipment financing amount | $ 15,000 |
Equipment Note Payable and Fi_4
Equipment Note Payable and Financial Arrangements - Schedule of Long Term Notes Payable (Details) - USD ($) $ in Thousands | Jul. 13, 2019 | Jul. 12, 2019 | Nov. 02, 2018 |
Debt Disclosure [Abstract] | |||
Secured equipment notes payable to Wells Fargo Bank, N.A. collateralized by equipment for the new Chicago processing facility. | $ 14,378 | ||
Less current portion of notes payable | (1,918) | ||
Total long-term notes payable | $ 12,460 |