BOBE Bob Evans Farms, Inc. (delisted)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 2 ON

FORM 8-K/A

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 2, 2015 (September 1, 2015)

 

 

Bob Evans Farms, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		0-1667		31-4421866
(State or other jurisdiction of incorporation)		(Commission File No.)		(I.R.S. Employer Identification No.)

 

8111 Smith’s Mill Road
New Albany, Ohio		43054
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (614) 491-2225

Not applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2b)

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c)

 

 

 

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Explanatory Note

On September 1, 2015, Bob Evans Farms, Inc. (the “Company”) issued an earnings release announcing its results for the first quarter of fiscal year 2016 ended July 24, 2015 and filed a Current Report on Form 8-K (the “Report”) in connection therewith. A copy of the earnings release was furnished with the Report.

This amendment to the Report amends Items 2.02 and 9.01 of the Report to include an updated earnings release which incorporates:

 

(1)

additional information with a new table titled “Bob Evans Restaurants same-store sales analysis (18-month core, 542 restaurants)- Q1 Fiscal 2016” at page 14; and

 

(2)

revisions to the table titled “Bob Evans Same-Store Sales Day Part Performance” on page 15 as further described below.

 

Item 2.02.

Results of Operations and Financial Condition.

Attached and incorporated herein by reference as Exhibit 99.1 is an updated earnings release. The updated earnings release includes additional information with a new table titled “Bob Evans Restaurants same-store sales analysis (18-month core, 542 restaurants) - Q1 Fiscal 2016” at page 14 and revised information in the “Off-Premises” column in the “Bob Evans Same-Store Sales Day Part Performance” table on page 15, and specifically the information in the “Off-Premises” column for the sub-tables titled “First-quarter Fiscal 2016 SSS% Day Part Performance - Total Chain” and “First-quarter Fiscal 2016 SSS% Day Part Performance - Restaurants offering Broasted Chicken.”

Within the news release the Company sets forth the reasons it believes that presentation of the non-GAAP financial measures contained in the press release provides useful information to investors regarding the Company’s financial condition and results of operations. To the extent material, the exhibit also discloses the additional purposes, if any, for which the Company’s management uses these non-GAAP financial measures. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures is included in the “fact sheet.”

The information in this Report, including the information contained in Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as otherwise explicitly stated in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired – Not Applicable

(b) Pro Forma Financial Information – Not applicable

(c) Shell Company Transactions – Not Applicable

(d) Exhibits:

The following exhibits are included with this Current Report on Form 8-K:

 

Exhibit No.		Description
99.1		News release (revised) issued by Bob Evans Farms, Inc. on September 1, 2015, announcing financial results for the first quarter of fiscal year 2016 ended July 24, 2015, with additional financial information made available by Bob Evans Farms, Inc. in conjunction with the news release issued on September 1, 2015

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SIGNATURE

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, hereunto duly authorized.

Date: September 2, 2015

 

NOTE: ATTACHED FACT SHEET REVISED SEPTEMBER 2, 2015

Exhibit 99.1

 

 

BOB EVANS REPORTS FISCAL 2016 FIRST-QUARTER RESULTS, RAISES FISCAL YEAR 2016 GUIDANCE AND WILL PURSUE $200 MILLION SALE-LEASEBACK OF RESTAURANT PROPERTIES

 

•

Q1 2016 net sales total $321.7 million. GAAP net income of $0.19 per diluted share. Non-GAAP net income(1) of $0.51 per diluted share

 

•

Company increases fiscal year 2016 non-GAAP diluted EPS guidance range to $1.85 to $2.00

 

•

Bob Evans Restaurants reports 21 percent increase in Q1 2016 non-GAAP operating income, compared to the corresponding period last year

 

•

BEF Foods reports 327 percent increase in Q1 2016 non-GAAP operating income, compared to the corresponding period last year

 

•

Board authorizes pursuit of a $200 million sale-leaseback transaction for a select portion of its restaurant properties

 

•

Company repurchased $60.6 million (1.3 million shares) during Q1 2016, expects to complete the remainder of the current $150 million repurchase authorization during the balance of fiscal 2016

 

•

Quarterly dividend of $0.31 per share payable on September 21, 2015, to stockholders of record at the close of business on September 7, 2015

NEW ALBANY, Ohio – September 1, 2015 – Bob Evans Farms, Inc. (NASDAQ: BOBE) today announced its financial results for the fiscal 2016 first quarter ended Friday, July 24, 2015. On a GAAP basis, the Company reported net income of $4.3 million, or $0.19 per diluted share, compared with a net loss of $1.0 million, or $0.04 per diluted share, in the corresponding period last year. On an adjusted basis⁽¹⁾, non-GAAP net income was $11.7 million, or $0.51 per diluted share, compared with net income of $2.3 million, or $0.10 per diluted share, in the corresponding period last year.

Please note, the Company has added a “Corporate and Other” category to its financial reporting to separate corporate and other costs from direct business segment costs. The Company believes this reporting view to be more in-line with how management measures results of operations and allocates resources.

First quarter fiscal 2016 commentary

Executive Chairman Doug Benham said, “Our teams remain laser-focused on continuous improvement in both of our businesses and execution of our strategic initiatives. BEF Foods is achieving promising results. At Bob Evan’s Restaurants, we are implementing our strategy of

 

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improving the quality of our food offerings; significantly lowering discounting that was historically utilized to drive transactions; and optimizing our investments in labor to deliver a better guest experience. We are continuing our CEO search as the CEO Search Committee of the Board of Directors remains engaged in a thoughtful and thorough process to identify and appoint the right chief executive to lead the Company forward.”

Chief Financial Officer Mark Hood said, “We continued to make progress in the improvement of Bob Evans Farms’ operating performance during the first quarter of fiscal 2016. The improvement continues to be led by BEF Foods which posted strong operating results for the third consecutive quarter. We also saw improvement in Bob Evans Restaurants’ operating performance during the quarter. Although same-store sales declined by 0.3 percent, sales were more profitable.

“We remain focused on executing our turnaround plan, and our priorities continue to be:

 

1.

improve the brand experience for our restaurant guests and grocery customers;

 

2.

profitably increase sales in our restaurants, and increase points of distribution of our consumer food products;

 

3.

reduce costs, particularly at the corporate level; and

 

4.

allocate capital efficiently.

“At Bob Evans Restaurants, non-GAAP operating income increased 21 percent, to $20.3 million, as our strategic initiatives resulted in significantly lower discounting and improved food costs. Additionally, spending discipline resulted in lower costs in most expense categories. We are excited to have launched our “Best in Class Breakfast” initiative in the second quarter and to continue the efforts begun in the first quarter to target our marketing more effectively to drive transactions and to serve our guests more efficiently.”

Hood continued, “We have completed our review of alternatives concerning a transaction for our owned restaurant properties and determined, along with our external advisors, that given our current business and market conditions, a sale-leaseback transaction of up to $200 million is the most appropriate path to further enhance shareholder value. We would anticipate net proceeds of $165 to $170 million from such a transaction. The sale-leaseback of the restaurant properties would be in addition to the previously announced pursuit of a sale-leaseback of our headquarters building and select industrial properties for which we expect net proceeds of $85 to $90 million. We expect to use net proceeds from these transactions to pay down debt and repurchase shares while maintaining a prudent adjusted leverage level. Approval of such sale-leaseback transaction(s) remains subject to final Board approval, amendment of our credit agreement, and other normal conditions of closing. The Company cannot guarantee if and when the transaction(s) will be completed, but expects to complete such transaction(s) in the second half of fiscal 2016.”

President, BEF Foods, Mike Townsley said, “At BEF Foods non-GAAP operating income more than quadrupled to $15.9 million as we benefitted from lower sow costs combined with a 14.6 percent increase in branded retail volume, which more than offset the 42.6 percent decline in foodservice volume. Foodservice volume declined as planned this quarter as we continue to replace lower-margin volume in that business with higher-margin branded retail volume. Lower

 

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average net selling prices due to increased trade spending of $5.6 million resulted in a 3.7 percent decline in net sales. We are on track with our key initiatives in fiscal 2016 and are excited about the second quarter launch of our new natural line of refrigerated side dish products in select markets.”

First-quarter fiscal 2016 Bob Evans Restaurants segment summary

Bob Evans Restaurants’ net sales were $238.7 million, a decline of $1.5 million, or 0.6 percent, compared to net sales of $240.2 million in the corresponding period last year. Same-store sales declined 0.3 percent in the quarter, below the national Knapp-Track™ family dining index increase of 2.5 percent. Bob Evans closed 18 restaurants during the first quarter.

 

Same-Store Sales (SSS) Restaurants		May				June				July				1Q FY ’16
542			-0.2	%			-0.9	%			0.3	%			-0.3	%

Bob Evans Restaurants’ GAAP operating income was $9.8 million, compared to GAAP operating income of $14.9 million in the corresponding period last year. First-quarter fiscal 2016 GAAP operating income includes $10.5 million of costs for expected settlement of legal matters; see attached schedules for a reconciliation of GAAP to non-GAAP operating income. Bob Evans Restaurants’ non-GAAP operating income was $20.3 million; an increase of $3.5 million compared to $16.8 million in the year ago period. Approximately $0.5 million of sales deleverage was offset by a combination of a $1.4 million decline in food cost rate resulting from lower discounting, favorable commodity costs, and sales mix increase of breakfast items; a $1.2 million increase in labor and benefit cost rates driven primarily by an increase in average wage rates and incentive compensation, partially offset by a reduction of direct labor hours; a $2.4 million decline in other operating expenses driven by reduced occupancy costs, marketing costs (timing), and utility costs; a $0.7 million decline in S,G&A costs due to cost savings initiatives partially offset by higher performance-based compensation expense; and a $0.8 million decline in depreciation expense due in part to the closure of 18 restaurants.

First-quarter fiscal 2016 BEF Foods segment summary

BEF Foods’ net sales were $83.0 million, a decrease of $3.1 million, or 3.7 percent, compared to net sales of $86.2 million in the corresponding period last year. Overall, total pounds sold increased 0.4 percent compared to the prior year period. From a net sales perspective, a 17.2 percent increase in side-dish volume and a 14.8 percent increase in sausage volume were offset by a $5.6 million increase in trade spending (reduces net sales) to reflect current market conditions including sow costs, as well as a 42.6 percent decline in foodservice volume.

BEF Foods’ GAAP operating income was $15.9 million, compared to GAAP operating income of $3.0 million in the year ago period. BEF Foods’ non-GAAP operating income was $15.9 million, compared to $3.7 million in the prior year, an improvement of $12.1 million. Approximately $1.0 million of deleverage from lower net sales driven by the increase in trade spending and a decline in foodservice volume previously discussed, was offset by a combination of $14.2 million in cost of goods sold favorability resulting from $9.9 million of lower sow costs, improved production yields, and an increased sales mix of retail items. The favorability was partially offset by a $0.3 million increase in labor and benefit cost rates; $0.4 million of higher operating expenses due to increased advertising expenditures; and a $0.3 million increase in S,G&A expenses due to increased performance-based compensation expense, partially offset by cost savings initiatives.

 

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First-quarter fiscal 2016 Corporate and Other summary

Corporate and Other’s GAAP operating costs were $17.4 million, compared to GAAP operating costs of $17.9 million in the year ago period. Corporate and Other’s non-GAAP operating costs were $17.4 million, compared to $15.4 million in the prior year, an increase of $2.0 million due to $1.2 million of increased S,G&A costs associated primarily with higher performance-based compensation expense, partially offset by cost savings initiatives, and $0.8 million resulting from increased depreciation expense related primarily to ERP capital expenditures.

First-quarter fiscal 2016 net interest expense – The Company’s net interest expense was $2.6 million in the first quarter, an increase of $0.5 million, compared to $2.1 million in the corresponding period last year. The borrowing rate on the Company’s outstanding debt was 1.94 percent at the end of the first quarter, compared to 1.91 percent at the end of the comparable prior year period.

First-quarter fiscal 2016 taxes – The Company’s provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company recognized GAAP tax expense of 24.3 percent for the first quarter of fiscal 2016, as compared to a 34.5 percent benefit for the prior year period. The decrease in the tax rate was primarily driven by discrete items booked in the first quarter related to interest received on refunds for amended returns filed, uncertain tax positions, and equity compensation, as well as the impact of yearly variances in the forecasted annual rate related to wage credits, officers’ life insurance, and the domestic productions activities deduction. For non-GAAP items, the tax rate was 28 percent, reflecting the Company’s annual non-GAAP estimated tax rate.

First-quarter fiscal 2016 balance sheet highlights – The Company’s cash balance and revolver borrowings at the end of the first quarter of fiscal 2016 were $6.1 million and $487.7 million, respectively, compared to $3.6 million and $458.8 million, respectively, in the prior year. The Company was in compliance with its debt covenants at the end of the first quarter. The increase in borrowings was primarily the result of the Company’s $60.6 million share repurchase activity during the first quarter, partially offset by increased net income, lower capital expenditures, and other changes in operating cash flow. The Company’s leverage ratio as defined in its credit agreement was 3.22 at the end of the quarter, down from 3.37 in the prior quarter.

Fiscal year 2016 outlook

Chief Financial Officer Mark Hood said, “As first quarter earnings performance exceeded our expectations, we are raising our fiscal 2016 diluted EPS guidance range to $1.85 to $2.00, from $1.75 to $1.95. We remain focused on executing our turnaround plans and improving operating efficiencies where we now expect to achieve $17 million of cost savings in fiscal 2016, an additional $3 million over our prior estimate. However, our guidance remains cautious as a result of commodity headwinds associated with avian influenza, continued efforts to reduce restaurant discounts while growing transactions, and general economic conditions, including volatility in financial markets. Our guidance includes the estimated impact of the previously announced pursuit of a sale-leaseback of our headquarters building and select industrial properties, but does not include the impact of a potential restaurant real estate transaction. Our guidance also includes increased marketing investments in the second and third fiscal quarters, incentive compensation at targeted levels, higher interest costs, and a higher effective tax rate relative to the prior year.”

 

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Summary of performance drivers: fiscal 2016 guidance versus fiscal 2015

 

		1Q (actual)				2Q				3Q				4Q				Full Year
sss% 2016 (guidance)			-0.3	%			flat to low- single digits				low-single digits				low-single digits				1.0% to 2.0%
sss% 2015 (actual)			-2.0	%			0.0	%			3.8	%			2.1	%			0.9	%
sow costs (per hundredweight) 2016 (guidance)		$	38.75			$	52			$	55			$	62			$	52
sow costs (per hundredweight) 2015 (actual)		$	87.87			$	78.82			$	67.79			$	43.02			$	69.41

 

Guidance Metric		FY ‘16
Consolidated net sales		$1.33 to $1.39 billion
Bob Evans Restaurants same-store sales		1.0% to 2.0%
Bob Evans Restaurants commodity pricing		approximately 5% (including eggs)
BEF Foods net sales		$373 to $383 million
Capital expenditures		$78 to $82 million
ERP implementation (included in S,G&A)		$2.5 to $3.5 million
Depreciation and amortization		$82 to $86 million
Net interest expense		$12.5 to $13.5 million
Tax rate		27.5% to 28.5%
Diluted weighted-average share count		22.0 million shares
Non-GAAP earnings per diluted share		$1.85 to $2.00

This outlook is subject to a number of factors beyond the Company’s control, including the risk factors discussed in the Company’s fiscal 2015 Annual Report on Form 10-K and its other subsequent filings with the Securities and Exchange Commission.

Investor Conference Call

The Company will host a conference call to discuss its first-quarter fiscal 2016 results at 10 a.m. (ET) on Wednesday, September 2, 2015. The dial-in number is (855) 468-0551, access code 83140551. A replay will be available at (800) 585-8367, access code 83140551.

A simultaneous webcast will be available at http://investors.bobevans.com/events.cfm. The archived webcast will also be available on the Web site.

⁽¹⁾Non-GAAP Financial Measures

The Company uses non-GAAP financial measures to monitor and evaluate the ongoing performance of the Company. The Company believes the additional measures are useful to investors for financial analysis. Excluding these items reflects operating results that are more indicative of the Company’s ongoing operating performance and improve comparability to prior periods. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Reconciliations to the applicable GAAP financial measures are included in the attached schedules.

 

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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Certain statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements involve various important assumptions, risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events. We discuss these factors and events, along with certain other risks, uncertainties and assumptions, under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 24, 2015, and in our other filings with the Securities and Exchange Commission. We note these factors for investors as contemplated by the Private Securities Litigation Reform Act of 1995. Predicting or identifying all such risk factors is impossible. Consequently, investors should not consider any such list to be a complete set of all potential risks and uncertainties. Any strategic transaction with respect to our headquarters, our BEF Foods Facilities or a portion of our restaurant real estate remains subject to evaluation by the Board and there can be no assurance if and when any such transaction will be undertaken or consummated. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect circumstances or events that occur after the date of the statement to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on behalf of the Company are qualified by the cautionary statements in this section.

About Bob Evans Farms, Inc.

Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the first fiscal quarter (July 24, 2015), Bob Evans Restaurants owned and operated 549 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names. For more information about Bob Evans Farms, Inc., visit www.bobevans.com.

Contact:

Scott C. Taggart

Vice President, Investor Relations

(614) 492-4954

BOBE–E

Source: Bob Evans Farms, Inc.

 

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Bob Evans Farms, Inc.

Earnings Release Fact Sheet (unaudited) (REVISED SEPTEMBER 2, 2015)

First quarter Fiscal 2016, three months ended July 24, 2015, compared to the corresponding period a year ago:

 

(in thousands, except per share amounts)										Basic EPS								Diluted EPS
		Three Months Ended								Three Months Ended								Three Months Ended
		July 24, 2015				July 25, 2014				July 24, 2015				July 25, 2014				July 24, 2015				July 25, 2014
Operating Income (Loss) as Reported
Bob Evans Restaurants		$	9,796			$	14,927
BEF Foods			15,851				3,045
Corporate and Other			(17,385	)			(17,908	)
Total operating income from continuing operations			8,262				64
Net interest expense			2,606				1,616
Per-tax Income (loss) from continuing operations			5,656				(1,552	)
Provision (Benefit) for income taxes			1,376				(536	)
Net Income (Loss) as reported			4,280				(1,016	)		$	0.19			$	(0.04	)		$	0.19			$	(0.04	)
Adjustments
Bob Evans Restaurants
Impairments including from Assets Held for Sale			—				1,577
Severance/Restructuring			—				91
Activism, Strategic Initiatives and Other			—				163
Litigation Reserves			10,500				—
			10,500				1,831
BEF Foods
Severance/Restructuring			—				666
			—				666
Corporate and Other
Severance/Restructuring			—				192
Loss on Sale of Assets			—				117
Activism, Strategic Initiatives and Other			—				2,226
			—				2,535
Total adjustments
Impairments including from Assets Held for Sale			—				1,577
Severance/Restructuring			—				949
Loss on Sale of Assets			—				117
Activism, Strategic Initiatives and Other			—				2,389
Litigation Reserves			10,500				—
			10,500				5,032
Non-GAAP operating income
Bob Evans Restaurants			20,296				16,758
BEF Foods			15,851				3,711
Corporate and Other			(17,385	)			(15,373	)
Total non-GAAP operating income			18,762				5,096
Adjustments to net interest expense			—				445
Non-GAAP net interest expense			2,606				2,061
Non-GAAP pre-tax income before taxes			16,156				3,035
Adjustments to income tax provision			3,076				1,259
Non-GAAP income tax provision			4,452				723
Non-GAAP net income		$	11,704			$	2,312			$	0.51			$	0.10			$	0.51			$	0.10
Weighted Average Shares Outstanding											22,733				23,535				22,881				23,677

 

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First quarter Fiscal 2016, three months ended July 24, 2015, compared to the corresponding period a year ago:

 

(in thousands)		Three Months Ended
		Consolidated Results																Bob Evans Restaurants
		July 24, 2015				% of Sales				July 25, 2014				% of Sales				July 24, 2015				% of Sales				July 25, 2014				% of Sales
Operating income as reported
Net Sales		$	321,713							$	326,341							$	238,669							$	240,151
Cost of sales			96,322				29.9	%			114,168				35.0	%			61,469				25.8	%			63,211				26.3	%
Operating wage and fringe benefit expenses			104,959				32.6	%			104,429				32.0	%			95,465				40.0	%			94,840				39.5	%
Other operating expenses			51,589				16.0	%			53,714				16.5	%			39,935				16.7	%			42,505				17.7	%
Selling, general and administrative expenses			40,428				12.6	%			32,416				9.9	%			18,524				7.8	%			8,855				3.7	%
Depreciation and amortization expense			20,153				6.3	%			19,973				6.1	%			13,480				5.6	%			14,236				5.9	%
Impairments			—				—	%			1,577				0.5	%			—				—	%			1,577				0.7	%
Total as reported			8,262				2.6	%			64				—	%			9,796				4.1	%			14,927				6.2	%
Adjustments
Net Sales			—								—								—								—
Cost of sales			—								—								—								—
Operating wage and fringe benefit expenses			—								(14	)							—								(14	)
Other operating expenses			—								(149	)							—								(149	)
Selling, general and administrative expenses			(10,500	)							(3,292	)							(10,500	)							(91	)
Depreciation and amortization expense			—								—								—								—
Impairments			—								(1,577	)							—								(1,577	)
Total Adjustments			10,500								5,032								10,500								1,831
Non-GAAP operating income
Net Sales			321,713								326,341								238,669								240,151
Cost of sales			96,322				29.9	%			114,168				35.0	%			61,469				25.8	%			63,211				26.3	%
Operating wage and fringe benefit expenses			104,959				32.6	%			104,415				32.0	%			95,465				40.0	%			94,826				39.5	%
Other operating expenses			51,589				16.0	%			53,565				16.4	%			39,935				16.7	%			42,356				17.7	%
Selling, general and administrative expenses			29,928				9.4	%			29,124				8.9	%			8,024				3.4	%			8,764				3.6	%
Depreciation and amortization expense			20,153				6.3	%			19,973				6.1	%			13,480				5.6	%			14,236				5.9	%
Impairments			—				—	%			—				—	%			—				—	%			—				—	%
Total non-GAAP operating income		$	18,762				5.8	%		$	5,096				1.6	%		$	20,296				8.5	%		$	16,758				7.0	%

 

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(in thousands)		Three Months Ended
		BEF Foods																Corporate and Other
		July 24, 2015				% of Sales				July 25, 2014				% of Sales				July 24, 2015				July 25, 2014
Operating income as reported
Net Sales		$	83,044							$	86,190							$	—			$	—
Cost of sales			34,853				42.0	%			50,957				59.1	%			—				—
Operating wage and fringe benefit expenses			9,494				11.4	%			9,589				11.1	%			—				—
Other operating expenses			11,654				14.0	%			11,209				13.0	%			—				—
Selling, general and administrative expenses			6,795				8.2	%			7,114				8.3	%			15,109				16,447
Depreciation and amortization expense			4,397				5.3	%			4,276				5.0	%			2,276				1,461
Impairments			—				—	%			—				—	%			—				—
Total as Reported			15,851				19.1	%			3,045				3.5	%			(17,385	)			(17,908	)
Adjustments
Net Sales			—								—								—				—
Cost of sales			—								—								—				—
Operating wage and fringe benefit expenses			—								—								—				—
Other operating expenses			—								—								—				—
Selling, general and administrative expenses			—								(666	)							—				(2,535	)
Depreciation and amortization expense			—								—								—				—
Impairments			—								—								—				—
Total adjustments			—								666								—				2,535
Non-GAAP operating income
Net Sales			83,044								86,190								—				—
Cost of sales			34,853				42.0	%			50,957				59.1	%			—				—
Operating wage and fringe benefit expenses			9,494				11.4	%			9,589				11.1	%			—				—
Other operating expenses			11,654				14.0	%			11,209				13.0	%			—				—
Selling, general and administrative expenses			6,795				8.2	%			6,448				7.5	%			15,109				13,912
Depreciation and amortization expense			4,397				5.3	%			4,276				5.0	%			2,276				1,461
Impairments			—				—	%			—				—	%			—				—
Total non-GAAP operating income		$	15,851				19.1	%		$	3,711				4.3	%		$	(17,385	)		$	(15,373	)

 

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(in thousands, except per share amounts)		Consolidated Results
		Three Months Ended
		July 24, 2015				% of sales				July 25, 2014				% of sales
										(as adjusted)				(as adjusted)
Net sales		$	321,713							$	326,341
Cost of sales			96,322				29.9	%			114,168				35.0	%
Operating wage and fringe benefit expenses			104,959				32.6	%			104,429				32.0	%
Other operating expenses			51,589				16.0	%			53,714				16.5	%
Selling, general and administrative expenses			40,428				12.6	%			32,416				9.9	%
Depreciation and amortization expense			20,153				6.3	%			19,973				6.1	%
Impairments			—				—	%			1,577				0.5	%
Operating Income			8,262				2.6	%			64				—	%
Net interest expense			2,606				0.8	%			1,616				0.5	%
Income (Loss) Before Income Taxes			5,656				1.8	%			(1,552	)			(0.5	)%
Provision (Benefit) for income taxes			1,376				0.4	%			(536	)			(0.2	)%
Net Income (Loss)		$	4,280				1.3	%		$	(1,016	)			(0.3	)%
Earnings (Loss) per share
Basic		$	0.19							$	(0.04	)
Diluted		$	0.19							$	(0.04	)
Cash dividends paid per share		$	0.31							$	0.31
Weighted average shares outstanding
Basic			22,733								23,535
Dilutive Shares			148								—
Diluted			22,881								23,535
Shares outstanding at quarter end			22,352								23,328

The number of dilutive shares that were not included in the computation of dilutive earnings per share, because to do so would have been antidilutive, were 205,144 shares for the three months ended July 24, 2015.

Income taxes as a percentage of pre-tax income were 24.3% for the three months ended July 24, 2015 and a 34.5% benefit for the three months ended July 25, 2014.

 

(in thousands)		Three Months Ended
		Bob Evans Restaurants																BEF Foods
		July 24, 2015								July 25, 2014								July 24, 2015								July 25, 2014
Net sales		$	238,669							$	240,151							$	83,044							$	86,190
Cost of sales			61,469				25.8	%			63,211				26.3	%			34,853				42.0	%			50,957				59.1	%
Operating wage and fringe benefit expenses			95,465				40.0	%			94,840				39.5	%			9,494				11.4	%			9,589				11.1	%
Other operating expenses			39,935				16.7	%			42,505				17.7	%			11,654				14.0	%			11,209				13.0	%
Selling, general and administrative expenses			18,524				7.8	%			8,855				3.7	%			6,795				8.2	%			7,114				8.3	%
Depreciation and amortization expense			13,480				5.6	%			14,236				5.9	%			4,397				5.3	%			4,276				5.0	%
Impairments			—				—	%			1,577				0.7	%			—				—	%			—				—	%
Operating income		$	9,796				4.1	%		$	14,927				6.2	%		$	15,851				19.1	%		$	3,045				3.5	%

 

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(in thousands)		Three Months Ended
		Corporate and Other
		July 24, 2015				July 25, 2014
Net sales		$	—			$	—
Cost of sales			—				—
Operating wage and fringe benefit expenses			—				—
Other operating expenses			—				—
Selling, general and administrative expenses			15,109				16,447
Depreciation and amortization expense			2,276				1,461
Impairments			—				—
Operating loss		$	(17,385	)		$	(17,908	)

 

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Consolidated Balance Sheets

 

(in thousands, except par value amounts)		Unaudited July 24, 2015				April 24, 2015
Assets
Current Assets
Cash and equivalents		$	6,064			$	6,358
Accounts receivable, net			25,436				26,100
Inventories			26,715				24,620
Deferred income taxes			16,117				16,117
Federal and state income taxes receivable			14,766				23,722
Prepaid expenses and other current assets			6,083				5,035
Current assets held for sale			21,371				22,243
Total Current Assets			116,552				124,195
Property, Plant and Equipment			1,598,566				1,588,966
Less accumulated depreciation			776,541				757,488
Net Property, Plant and Equipment			822,025				831,478
Other Assets
Deposits and other			5,144				3,756
Notes receivable			19,154				18,544
Rabbi trust assets			32,133				32,302
Goodwill and other intangible assets			19,947				19,986
Non-current deferred tax assets			2,326				2,326
Total Other Assets			78,704				76,914
Total Assets		$	1,017,281			$	1,032,587
Liabilities and Stockholders’ Equity
Current Liabilities
Current portion of long-term debt		$	413			$	409
Accounts payable			37,745				30,019
Accrued property, plant and equipment purchases			3,241				4,820
Accrued non-income taxes			15,513				14,951
Accrued wages and related liabilities			22,478				34,529
Self-insurance reserves			21,292				18,900
Deferred gift card revenue			12,529				13,714
Current reserve for uncertain tax provision			1,594				1,594
Other accrued expenses			42,854				34,156
Total Current Liabilities			157,659				153,092
Long-Term Liabilities
Deferred compensation			19,653				22,481
Reserve for uncertain tax positions			2,746				2,767
Deferred income taxes			17,825				17,825
Deferred rent and other			5,826				5,755
Credit facility borrowings and other long term debt			490,644				450,676
Total Long-Term Liabilities			536,694				499,504
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at July 24, 2015, and April 24, 2015			426				426
Capital in excess of par value			238,714				235,958
Retained earnings			833,490				836,362
Treasury stock, 20,286 shares at July 24, 2015, and 19,231 shares at April 24, 2015, at cost			(749,702	)			(692,755	)
Total Stockholders’ Equity			322,928				379,991
Total Liabilities and Stockholders’ Equity		$	1,017,281			$	1,032,587

 

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Consolidated Statements of Cash Flows (unaudited)

 

(in thousands)		Three Months Ended
		July 24, 2015				July 25, 2014
Operating activities:
Net income (Loss)		$	4,280			$	(1,016	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			20,153				19,973
Impairments			—				1,577
Gain on disposal of fixed assets			(701	)			(139	)
Loss (Gain) on long-term investments			169				(958	)
(Gain) Loss Deferred compensation			(138	)			1,452
Share based compensation			2,048				850
Accretion on long-term note receivable			(499	)			(445	)
Amortization of deferred financing costs			418				147
Cash provided by (used for) assets and liabilities:
Accounts receivable			664				1,842
Inventories			(2,095	)			1,788
Prepaid expenses and other current assets			(1,048	)			(1,949	)
Accounts payable			7,726				(423	)
Federal and state income taxes			8,935				3,615
Accrued wages and related liabilities			(7,160	)			(2,413	)
Self-insurance			2,392				(507	)
Accrued non-income taxes			562				(405	)
Deferred revenue			(1,185	)			(1,231	)
Other assets and liabilities			5,624				(2,499	)
Net cash provided by operating activities			40,145				19,259
Investing activities:
Purchase of property, plant and equipment			(12,264	)			(16,702	)
Proceeds from sale of property, plant and equipment			1,597				338
Deposits and other			(98	)			(243	)
Net cash used in investing activities			(10,765	)			(16,607	)
Financing activities:
Cash dividends paid			(7,028	)			(7,224	)
Gross proceeds from credit facility borrowings and other long-term debt			170,739				97,159
Gross repayments of credit facility borrowings and other long-term debt			(130,768	)			(94,288	)
Payments of debt issuance costs			(1,705	)			(1,279	)
Purchase of treasury stock			(60,564	)			—
Proceeds from share-based compensation			165				197
Cash paid for taxes on share-based compensation			(617	)			(1,675	)
Excess tax benefits from stock-based compensation			104				257
Net cash used in financing activities			(29,674	)			(6,853	)
Net decrease in cash and equivalents			(294	)			(4,201	)
Cash and equivalents at the beginning of the period			6,358				7,826
Cash and equivalents at the end of the period		$	6,064			$	3,625

 

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Summary of Operating Efficiency Savings Fiscal 2016 to date - (July 24, 2015)

 

(in millions)		Consolidated				Bob Evans Restaurants				BEF Foods				Corporate and Other
S,G&A
Wage-Related		$	2.7			$	1.0			$	0.3			$	1.4
Non Wage-Related			0.4				0.2				—				0.2
Total S,G&A			3.1				1.2				0.3				1.6
Non-S,G&A
Wage-Related			0.1				—				0.1				—
Non Wage-Related			0.3				—				0.3				—
Total Non-S,G&A			0.4				—				0.4				—
Grand Total		$	3.5			$	1.2			$	0.7			$	1.6

Bob Evans Restaurants openings and closings, by quarter

 

Fiscal Year		Beginning Total				Q1				Q2*				Q3*				Q4*				Full Year				Closings*				Ending Total
2016			567				—				—				1				—				1				20				548
2015			561				1				—				2				4				7				1				567
2014			560				1				1				1				1				4				3				561
2013			565				2				—				—				—				2				7				560
2012			563				—				2				—				2				4				2				565

 

*	Includes estimate for remaining quarters in fiscal 2016

Bob Evans Restaurants same-store sales analysis (18-month core, 542 restaurants)

Q1 Fiscal 2016

 

		Total				Mix/Pricing				Traffic
May			(0.3	)%			3.9	%			(4.2	)%
June			(0.9	)%			4.4	%			(5.3	)%
July			0.3	%			5.8	%			(5.5	)%
Q1’16			(0.3	)%			4.8	%			(5.0	)%

 

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Bob Evans Same-Store Sales Day Part Performance

First-quarter Fiscal 2016 SSS% Day Part Performance - Total Chain

 

Day Part		On-Premises				Off-Premises				Total
Breakfast			(0.7	)%			13.7	%			0.5	%
Lunch			(0.7	)%			16.2	%			1.0	%
Dinner			(5.8	)%			13.2	%			(2.5	)%
Total			(2.2	)%			14.2	%			(0.3	)%

First-quarter Fiscal 2016 SSS% Day Part Performance - Restaurants offering Broasted Chicken

 

Day Part		On-Premises				Off-Premises				Total
Breakfast			(1.4	)%			11.5	%			(0.1	)%
Lunch			(0.5	)%			15.1	%			1.4	%
Dinner			(3.4	)%			17.1	%			0.7	%
Total			(1.7	)%			15.2	%			0.7	%

First-quarter Fiscal 2016 SSS% Day Part Performance - Restaurants without Broasted Chicken

 

Day Part		On-Premises				Off-Premises				Total
Breakfast			—	%			17.5	%			1.1	%
Lunch			(1.0	)%			18.3	%			0.6	%
Dinner			(8.8	)%			5.0	%			(7.0	)%
Total			(2.8	)%			12.4	%			(1.4	)%

 

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Bob Evans Restaurants key restaurant sales data

 

		Bob Evans Restaurants
Average annual store sales ($) - FY15		$	1,720,000
Q1 FY2016 day part mix (%):
Breakfast			33	%
Lunch			36	%
Dinner			31	%
Q1 FY2016 dine-in check average per guest ($):
Breakfast		$	9.32
Lunch		$	9.71
Dinner		$	9.89
Q1 FY2016 dine-in check average per guest ($):		$	9.62
Q1 FY2016 dine-in check average per ticket ($):		$	18.93
Q1 FY2016 carry-out check average per ticket ($):		$	14.50

 

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BEF Foods historical sow cost review (average cost per hundredweight)

 

Fiscal Year		Q1				Q2				Q3				Q4				Average
2016		$	38.75															$	38.75
2015		$	87.87			$	78.82			$	67.79			$	43.02			$	69.41
2014		$	63.24			$	77.33			$	72.36			$	78.47			$	73.23
2013		$	54.19			$	43.22			$	58.73			$	59.07			$	53.87
2012		$	57.06			$	67.82			$	60.56			$	60.41			$	61.58

BEF Foods total pounds sold review

 

Fiscal Year		Q1				Q2				Q3				Q4				Average
2016			0.4	%															0.4	%
2015			(6.1	)%			(4.5	)%			5.5	%			0.9	%			(0.9	)%
2014			13.0	%			0.2	%			(11.1	)%			(6.9	)%			(2.4	)%
2013			7.2	%			16.1	%			13.1	%			21.4	%			14.6	%
2012			(2.7	)%			3.1	%			0.9	%			(1.3	)%			0.1	%

BEF Foods total pounds sold, by category

Fiscal 2016

 

Category		Q1				Q2		Q3		Q4
Sausage			22.0	%
Sides			49.6	%
Food Service - External			14.1	%
Food Service - Intersegment			6.2	%
Frozen			4.6	%
Other			3.5	%

Fiscal 2015

 

Category		Q1				Q2				Q3				Q4
Sausage			19.3	%			20.5	%			26.2	%			23.7	%
Sides			42.5	%			46.9	%			48.0	%			49.8	%
Food Service - External			24.0	%			18.0	%			12.8	%			11.8	%
Food Service - Intersegment			6.0	%			6.0	%			5.5	%			5.8	%
Frozen			4.6	%			5.0	%			4.1	%			4.8	%
Other			3.6	%			3.6	%			3.4	%			4.1	%

 

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BEF Foods net sales review (dollars in thousands)

 

		Q1 2016				Q1 2015
Gross sales		$	97,797			$	94,870
Less: promotions			12,853				7,600
Less: discounts			1,274				806
Less: returns and slotting			626				274
Net sales		$	83,044			$	86,190

 

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