** **

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

** **

**FORM 10-Q**

** **

**(Markone)**

 
|   | **x****QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES   AND EXCHANGE ACT OF 1934** |
|--------|-------------------------------------------------------------------------------------------------------------------|

 

**Forthe quarterly period ended January 25, 2008**

 

**OR**

 

**o  TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**Forthe transition period from             to               .**

 

**Commissionfile number 0-2396**

 

**BRIDGFORDFOODS CORPORATION**

(Exact name ofRegistrant as specified in its charter)

 

| **California**                   | ** ** | **95-1778176**          |
|----------------------------------|------------|-------------------------|
| (State or other  jurisdiction of |       | (I.R.S. Employer        |
| incorporation or  organization)  |       | identification  number) |

 

**1308N. Patt Street, Anaheim, CA 92801**

(Address ofprincipal executive offices-Zip code)

 

**714-526-5533**

(Registrant’stelephone number, including area code)

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

Yes x          No o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer,”and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer o    |   | Smaller reporting  company x |
|---------------------------|--------|---------------------|--------|----------------------------|--------|------------------------------|
|                      |   |                |   | (Do not check if a         |   |                         |
|                      |   |                |   | smaller reporting company) |   |                         |

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).

 

Yes o          No x

 

As of March 5,2008 the registrant had 9,856,074 shares of common stock outstanding.

 

 

----

 

**BRIDGFORD FOODS CORPORATION**

FORM 10-QQUARTERLY REPORT

INDEX

 

References to “BridgfordFoods” or the “Company” contained in this Quarterly Report on Form 10-Qrefer to Bridgford Foods Corporation.

 
| ** **                                                                                                                        | ** **                                                                                                                                                             | **Page** |
|-----------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| Part I. Financial Information                                                                                                |                                                                                                                                                                   |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 1.                                                                                                               | Financial Statements                                                                                                                                                   |     |
|                                                                                                                              |                                                                                                                                                                   |     |
|                                                                                                                              | a.  Consolidated Condensed Balance Sheets at  January 25, 2008 (unaudited) and November 2, 2007                                                         | 3        |
|                                                                                                                              |                                                                                                                                                                   |     |
|                                                                                                                              | b.   Consolidated Condensed Statements of Operations for the twelve weeks  ended January 25, 2008 and January 26, 2007 (unaudited)                      | 4        |
|                                                                                                                              |                                                                                                                                                                   |     |
|                                                                                                                              | c.   Consolidated Condensed Statement of Shareholders’ Equity and  Comprehensive Income (Loss) for the twelve weeks ended January 25, 2008  (unaudited) | 4        |
|                                                                                                                              |                                                                                                                                                                   |     |
|                                                                                                                              | d.   Consolidated Condensed Statements of Cash Flows for the twelve weeks  ended January 25, 2008 and January 26, 2007 (unaudited)                      | 5        |
|                                                                                                                              |                                                                                                                                                                   |     |
|                                                                                                                              | e.  Notes to Consolidated Condensed Financial  Statements (unaudited)                                                                                             | 6        |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 2.                                                                                                               | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                                            | 9        |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 3.                                                                                                               | Quantitative  and Qualitative Disclosures about Market Risk                                                                                                            | 15       |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 4.                                                                                                               | Controls and  Procedures                                                                                                                                               | 16       |
|                                                                                                                              |                                                                                                                                                                   |     |
| Part II.  Other Information                                                                                                  |                                                                                                                                                                   |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 1A.                                                                                                              | Risk  Factors                                                                                                                                                          | 18       |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 2.                                                                                                               | Unregistered  Sales of Equity Securities and Use of Proceeds                                                                                                           | 18       |
|                                                                                                                              |                                                                                                                                                                   |     |
|   Item 6.                                                                                                               | Exhibits                                                                                                                                                               | 19       |
|                                                                                                                              |                                                                                                                                                                   |     |
| Signatures                                                                                                                        | 20                                                                                                                                                                     |
|                                                                                                                              |                                                                                                                                                                   |     |
| Items 1 and 3-5 of Part II. have been omitted  because they are not applicable with respect to the current reporting period. |                                                                                                                                                                   |

 

2

----

 

**Part I.   FinancialInformation**

 

Item1. a.

 

**BRIDGFORDFOODS CORPORATION**

**CONSOLIDATEDCONDENSED BALANCE SHEETS**

(in thousands, except pershare amounts)

 
| ** **                                                                                                                                                | ** ** | **January 25** | ** ** | **November 2** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|---------------------|------------|
| ** **                                                                                                                                                | ** ** | **2008**            | ** ** | **2007**            | ** ** |
| ** **                                                                                                                                                | ** ** | **(Unaudited)**     | ** ** | ** **          | ** ** |
| **ASSETS**                                                                                                                                                |       |                |       |                |       |
|                                                                                                                                                      |       |                |       |                |       |
| Current assets:                                                                                                                                           |       |                |       |                |       |
|                                                                                                                                                      |       |                |       |                |       |   |   |
| Cash and cash equivalents                                                                                                                                 |       | $                   | 15,610     |                | $          | 11,336 |   |
| Accounts receivable, less allowance for doubtful accounts of $475 and  $482, respectively, and promotional allowances of $2,319 and $1,980,  respectively |       | 8,230               |       | 8,563               |       |
| Inventories (Note 3)                                                                                                                                      |       | 13,435              |       | 18,332              |       |
| Prepaid expenses and other current assets                                                                                                                 |       | 2,856               |       | 3,124               |       |
|                                                                                                                                                      |       |                |       |                |       |
| Total current assets                                                                                                                                      |       | 40,131              |       | 41,355              |       |
|                                                                                                                                                      |       |                |       |                |       |
| Property, plant and equipment, less accumulated depreciation of  $54,362 and $53,840, respectively                                                        |       | 10,904              |       | 11,221              |       |
|                                                                                                                                                      |       |                |       |                |       |
| Other non-current assets                                                                                                                                  |       | 17,125              |       | 15,071              |       |
|                                                                                                                                                      |       | $                   | 68,160     |                | $          | 67,647 |   |
|                                                                                                                                                      |       |                |       |                |       |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**                                                                                                            |       |                |       |                |       |
|                                                                                                                                                      |       |                |       |                |       |
| Current liabilities:                                                                                                                                      |       |                |       |                |       |
|                                                                                                                                                      |       |                |       |                |       |
| Accounts payable                                                                                                                                          |       | $                   | 3,177      |                | $          | 2,978 |   |
| Accrued payroll, advertising and other expenses                                                                                                           |       | 7,805               |       | 8,924               |       |
|                                                                                                                                                      |       |                |       |                |       |
| Total current liabilities                                                                                                                                 |       | 10,982              |       | 11,902              |       |
|                                                                                                                                                      |       |                |       |                |       |
| Non-current liabilities                                                                                                                                   |       | 11,612              |       | 5,776               |       |
|                                                                                                                                                      |       |                |       |                |       |
| Commitments (Notes 5 and  6)                                                                                                                              |       |                |       |                |       |
|                                                                                                                                                      |       |                |       |                |       |
| Shareholders’ equity:                                                                                                                                |       |                |       |                |       |
| Preferred stock, without par value                                                                                                                        |       |                |       |                |       |
| Authorized - 1,000 shares                                                                                                                                 |       |                |       |                |       |
| Issued and outstanding - none                                                                                                                             |       | —              |       | —              |       |
|                                                                                                                                                      |       |                |       |                |       |
| Common stock, $1.00 par value                                                                                                                             |       |                |       |                |       |
| Authorized - 20,000 shares                                                                                                                                |       |                |       |                |       |
| Issued and outstanding - 9,867 and 9,889 shares                                                                                                           |       | 9,924               |       | 9,946               |       |
| Capital in excess of par value                                                                                                                            |       | 13,666              |       | 13,789              |       |
| Retained earnings                                                                                                                                         |       | 26,482              |       | 26,837              |       |
| Accumulated other comprehensive loss                                                                                                                      |       | (4,506              | )          | (603                | )          |
|                                                                                                                                                      |       | 45,566              |       | 49,969              |       |
|                                                                                                                                                      |       | $                   | 68,160     |                | $          | 67,647 |   |

 

See accompanying notes to consolidated condensed financial statements.

 

3

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Item 1. b.

 

**BRIDGFORDFOODS CORPORATION**

**CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS**

**(Unaudited)**

 
| ** **                                          | ** ** | **(in thousands, except per share amounts)** | ** ** |
|-----------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                          | ** ** | **12 weeks ended**                           | ** ** | **12 weeks ended** | ** ** |
| ** **                                          | ** ** | **January 25**                          | ** ** | **January 26** | ** ** |
| ** **                                          | ** ** | **2008**                                     | ** ** | **2007** | ** ** |
|                                                |       |                                         |       |   |   |
| Net sales                                           |       | $                                            | 31,319     |   | $ | 32,314 |   |
|                                                |       |                                         |       |   |   |
| Cost of products sold,  excluding depreciation      |       | 20,977                                       |       | 21,556 |   |
|                                                |       |                                         |       |   |   |
| Selling, general and  administrative expenses       |       | 10,025                                       |       | 9,921 |   |
| Depreciation                                        |       | 748                                          |       | 782 |   |
|                                                |       | 31,750                                       |       | 32,259 |   |
|                                                |       |                                         |       |   |   |
| (Loss) income before taxes                          |       | (431                                         | )          | 55 |   |
|                                                |       |                                         |       |   |   |
| Income tax (benefit)  provision                     |       | (168                                         | )          | 15 |   |
|                                                |       |                                         |       |   |   |
| Net (loss) income                                   |       | $                                            | (263       | ) | $ | 40 |   |
|                                                |       |                                         |       |   |   |
| Basic and diluted (loss) income  per share (Note 4) |       | $                                            | (.03       | ) | $ | .00 |   |
|                                                |       |                                         |       |   |   |
| Basic and diluted shares  computed                  |       | 9,880                                        |       | 9,955 |   |

 

See accompanying notes to consolidated condensed financial statements.

 

Item 1. c.

 

**CONSOLIDATED CONDENSED STATEMENT OFSHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)**

**(Unaudited)**

(in thousands)

 
| ** **                       | ** ** | ** **       | ** ** | ** **    | ** ** | ** **   | ** ** | ** **        | ** ** | **Accumulated**   | ** ** | ** ** | ** ** |
|----------------------------------|------------|------------------|------------|---------------|------------|--------------|------------|-------------------|------------|-------------------|------------|------------|------------|
| ** **                       | ** ** | ** **       | ** ** | ** **    | ** ** | **Capital**  | ** ** | ** **        | ** ** | **other**         | ** ** | ** ** | ** ** |
| ** **                       | ** ** | **Common Stock** | ** ** | **in excess** | ** ** | **Retained** | ** ** | **comprehensive** | ** ** | ** **        | ** ** |
| ** **                       | ** ** | **Shares**       | ** ** | **Amount**    | ** ** | **of par**   | ** ** | **earnings**      | ** ** | **income (loss)** | ** ** | **Total**  | ** ** |
| November 2, 2007            |       | 9,889            |       | $             | 9,946      |         | $          | 13,789            |       | $                 | 26,837     |       | $          | (603 | ) | $ | 49,969 |   |
| Adoption of FIN#48 (Note  8)     |       |             |       |          |       |         |       |              | (92        | )                 |       |       |       | (92 | ) |
| Shares repurchased               |       | (22              | )          | (22           | )          | (123         | )          |              |       |              |       | (145       | )          |
| Net loss                         |       |             |       |          |       |         |       | (263              | )          |              |       | (263       | )          |
| Other comprehensive income:      |       |             |       |          |       |         |       |              |       |              |       |       |       |
| Unrealized income on investments |       |             |       |          |       |         |       |              |       | (34               | )          | (34        | )          |
| Increase in pension liability    |       |             |       |          |       |         |       |              |       | (3,869            | )          | (3,869     | )          |
| Comprehensive income             |       |             |       |          |       |         |       |              |       |              |       | (4,166     | )          |
| January 25, 2008            |       | 9,867            |       | $             | 9,924      |         | $          | 13,666            |       | $                 | 26,482     |       | $          | (4,506 | ) | $ | 45,566 |   |

 

See accompanying notes toconsolidated condensed financial statements.

 

4

----

 

Item 1. d.

 

**BRIDGFORDFOODS CORPORATION**

**CONSOLIDATED CONDENSED STATEMENTS OFCASH FLOWS**

**(Unaudited)**

 
| ** **                                           | ** ** | **12 weeks ended**  | ** ** | **12 weeks ended**  | ** ** |
|------------------------------------------------------|------------|---------------------|------------|---------------------|------------|
| ** **                                           | ** ** | **January 25** | ** ** | **January 26** | ** ** |
| ** **                                           | ** ** | **2008**            | ** ** | **2007**            | ** ** |
| ** **                                           | ** ** | **(in thousands)**  | ** ** | **(in thousands)**  | ** ** |
| Cash flows from operating  activities:               |       |                |       |                |       |
|                                                 |       |                |       |                |       |
| Net income (loss)                                    |       | $                   | (263       | )                   | $          | 40 |   |
|                                                 |       |                |       |                |       |
| Income charges not affecting cash:                   |       |                |       |                |       |
| Depreciation                                         |       | 748                 |       | 782                 |       |
| Loss (recovery) on accounts receivable               |       | 24                  |       | (197                | )          |
| Gain on sale of property, plant and equipment        |       | (13                 | )          | (2                  | )          |
| Effect on cash of changes in assets and liabilities: |       |                |       |                |       |
| Trading securities                                   |       | —              |       | (3,000              | )          |
| Accounts receivable, net                             |       | 309                 |       | 2,360               |       |
| Inventories                                          |       | 4,897               |       | 4,468               |       |
| Prepaid expenses and other current assets            |       | 234                 |       | (343                | )          |
| Other non-current assets                             |       | 317                 |       | (184                | )          |
| Accounts payable                                     |       | 199                 |       | (1,098              | )          |
| Accrued payroll, advertising and other expenses      |       | (1,211              | )          | (1,067              | )          |
| Non-current liabilities                              |       | (404                | )          | (61                 | )          |
|                                                 |       |                |       |                |       |
| Net cash provided by operating activities            |       | 4,837               |       | 1,698               |       |
|                                                 |       |                |       |                |       |
| Cash used in investing  activities:                  |       |                |       |                |       |
| Proceeds from sale of property, plant and equipment  |       | 13                  |       | 2                   |       |
| Additions to property, plant and equipment           |       | (431                | )          | (346                | )          |
|                                                 |       |                |       |                |       |
| Net cash used in investing activities                |       | (418                | )          | (344                | )          |
|                                                 |       |                |       |                |       |
| Cash used in financing  activities:                  |       |                |       |                |       |
| Shares repurchased                                   |       | (145                | )          | (39                 | )          |
|                                                 |       |                |       |                |       |
| Net cash used in financing activities                |       | (145                | )          | (39                 | )          |
|                                                 |       |                |       |                |       |
| Net increase in cash and  cash equivalents           |       | 4,274               |       | 1,315               |       |
|                                                 |       |                |       |                |       |
| Cash and cash equivalents  at beginning of period    |       | 11,336              |       | 1,180               |       |
|                                                 |       |                |       |                |       |
| Cash and cash equivalents  at end of period          |       | $                   | 15,610     |                | $          | 2,495 |   |
|                                                 |       |                |       |                |       |
| Cash paid for income taxes                           |       | $                   | 0          |                | $          | 0 |   |
|                                                      |            |                     |            |                     |            |  |  |  |

 

See accompanying notes to consolidated condensed financial statements.

 

5

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Item 1. e.

 

**BRIDGFORD FOODS CORPORATION**

 

**NOTES TO CONSOLIDATED CONDENSEDFINANCIAL STATEMENTS (Unaudited)**

(in thousands,except share and per share amounts)

 

Note 1 - TheCompany and Summary of Significant Accounting Policies:

 

The unauditedconsolidated condensed financial statements of Bridgford Foods Corporation (the“Company”)for the twelve weeks ended January 25, 2008 and January 26,2007 have been prepared in conformity with the accounting principles describedin the Company’s Annual Report on Form 10-K for thefiscal year ended November 2, 2007(the “Annual Report”) and include all adjustments considered necessary bymanagement for a fair statement of the interim periods.  Such adjustments consist only of normalrecurring items.  This report should beread in conjunction with the Annual Report. Due to seasonality and other factors, interim results are notnecessarily indicative of the results to be expected for the full year.  New accounting pronouncements and theiraffect on the Company are included in Management’s Discussion and Analysis ofFinancial Condition and Results of Operations in this Form 10-Q.

 

Note 2 - TradingSecurities:

 

At January 25,2008, the Company held no auction rate securities.  The Company elected to sell all auction rate securitiesduring the second quarter of fiscal 2007 and invest in 90-day treasury billswhich are classified as cash and cash equivalents on the accompanyingconsolidated condensed balance sheet.

 

At January 26, 2007,the Company held $15,200 of auction rate securities, identified as a separatelystated current asset  in accordance withSFAS 115, “Accounting for Certain Debt and Equity Securities.”  Auction rate securities are variable-ratebonds tied to short-term interest rates with maturities on the face of thesecurities in excess of 90 days.  TheCompany’s investments in these auction rate securities are classified astrading securities under SFAS 115.  Thesecurities are recorded at cost, which approximates fair market value becauseof their variable interest rates, which typically reset every 7 to 35days.  Despite the long-term nature oftheir stated contractual maturities, the Company has the intent andability to quickly liquidate thesesecurities; therefore, the Company has no cumulative gross unrealized holdinggains or losses, or gross unrealized gains or losses from theseinvestments.  All income generated fromthese investments was recorded as interest income.

 

Note 3 -Inventories:

 

Inventories arecomprised as follows at the respective periods:

* *
| ** **                     | ** ** | **January 25** | ** ** | **November 2** | ** ** |
|--------------------------------|------------|---------------------|------------|---------------------|------------|
| ** **                     | ** ** | **2008**            | ** ** | **2007**            | ** ** |
| Meat, ingredients and supplies |       | $                   | 3,843      |                | $          | 3,726 |   |
| Work in progress               |       | 1,354               |       | 1,360               |       |
| Finished goods                 |       | 8,238               |       | 13,246              |       |
|                           |       | $                   | 13,435     |                | $          | 18,332 |   |

 

Inventories arevalued at the lower of cost (which approximates actual cost on a first-in,first-out basis) or market.  Costsrelated to warehousing, transportation and distribution to customers areconsidered when computing market value. Inventories include the cost of raw materials, labor and manufacturingoverhead.  The Company regularly reviewsinventory quantities on hand and writes down any excess or obsolete inventoriesto net realizable value.  An inventoryreserve is created when potentially slow-moving or obsolete inventories areidentified in order to reflect the appropriate inventory value.  Changes in economic conditions, productionrequirements, and lower than expected customer demand could result inadditional obsolete or slow-moving inventory that cannot be sold or can be soldat reduced prices and could result in additional reserve provisions.

 

Note 4 - Basic anddiluted earnings per share:

 

The Company had250,000 employee stock options outstanding during the twelve week periods endedJanuary 25, 2008 and January 26, 2007, respectively.  The effect of the employee stock optionsoutstanding for the twelve weeks ended January 25, 2008 and January 26,2007 was not included in the calculation ofdiluted shares and diluted earnings per share as to doso would be anti-dilutive.  No optionswere granted during the first twelve weeks ended January 25, 2008 and January 26,2007.

 

6

----

 

Note 5 -Retirement and Other Benefit Plans:

 

The Company hasnoncontributory-trusteed defined benefit retirement plans for sales, administrative,supervisory and certain other employees. The benefits under these plans areprimarily based on years of service and compensation levels. The Company’sfunding policy is to contribute annually the maximum amount deductible forfederal income tax purposes, without regard to the plans’ unfunded currentliabilities. The measurement date for the plans is the Company’s fiscal yearend.

 

Net pension cost consisted of the following:

* *
|                                            | ** ** | **12 weeks ended** | ** ** | **12 weeks ended** | ** ** |
|-------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                      | ** ** | **January 25**          | ** ** | **January 26**          | ** ** |
| ** **                                      | ** ** | **2008**                     | ** ** | **2007**                     | ** ** |
|                                            |       |                         |       |                         |       |
| Service cost                                    |       | $                            | 56         |                         | $          | 61 |   |
| Interest cost                                   |       | 505                          |       | 429                          |       |
| Expected return on plan assets                  |       | (543                         | )          | (462                         | )          |
| Amortization of net loss from earlier periods   |       | —                       |       | —                       |       |
| Amortization of unrecognized prior service cost |       | 1                            |       | —                       |       |
| Curtailment cost                                |       | —                       |       | 47                           |       |
| Amortization of net (gain) loss                 |       | 8                            |       | —                       |       |
|                                            |       |                         |       |                         |       |
| Net pension cost                                |       | $                            | 27         |                         | $          | 75 |   |

 

The expectedCompany contribution to the plans in fiscal year 2008 is $2,877. The Companyhas funded the plans in the amount of $1,442 through the first twelve weeks offiscal 2008.

 

Note 6 -Commitments:

 

The Company leasescertain transportation and computer equipment under operating leases.  The terms of the transportation leasesprovide for annual renewal options and contingent rental payments based uponmileage and adjustments of rental payments based on the Consumer PriceIndex.   No material changes have beenmade to these contracts during the first twelve weeks of fiscal 2008.

 

Note 7 - SegmentInformation:

 

The Company hastwo reportable operating segments, Frozen Food Products (the processing anddistribution of frozen products) and Refrigerated and Snack Food Products (theprocessing and distribution of refrigerated meat and other convenience foods).

 

The Companyevaluates each segment’s performance based on revenues and operating income.Selling, general and administrative expenses include corporate accounting,information systems, human resource management and marketing, which are managedat the corporate level. These activities are allocated to each operatingsegment based on revenues and/or actual usage.

 

7

----

 

The following segmentinformation is presented for the twelve week periods ended January 25,2008 and January 26, 2007.

* *
| ** **                                    | ** ** | ** **           | ** ** | **Refrigerated**    | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
|-----------------------------------------------|------------|----------------------|------------|---------------------|------------|------------|------------|-----------------|------------|------------|------------|
| ** **                                    | ** ** | ** **           | ** ** | **and**             | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| **Twelve Weeks Ended**              | ** ** | **Frozen Food** | ** ** | **Snack Food** | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| **January 25, 2008**                | ** ** | **Products**         | ** ** | **Products**        | ** ** | **Other**  | ** ** | **Elimination** | ** ** | **Totals** | ** ** |
| Sales from external customers                 |       | $                    | 13,448     |                | $          | 17,871     |       | $               | —     |       | $          | — |   | $ | 31,319 |   |
| Intersegment sales                            |       | —               |       | 458                 |       | —     |       | 458             |       | —     |       |
| Net sales                                     |       | 13,448               |       | 18,329              |       | —     |       | 458             |       | 31,319     |       |
| Cost of products sold, excluding depreciation |       | 8,750                |       | 12,685              |       | —     |       | 458             |       | 20,977     |       |
| Selling, general and administrative expenses  |       | 3,490                |       | 6,535               |       | —     |       | —          |       | 10,025     |       |
| Depreciation                                  |       | 181                  |       | 493                 |       | 74         |       | —          |       | 748        |       |
|                                          |       | 12,421               |       | 19,713              |       | 74         |       | 458             |       | 31,750     |       |
| Income (loss) before taxes                    |       | 1,027                |       | (1,384              | )          | (74        | )          | —          |       | (431       | )          |
| Income tax provision (benefit)                |       | 380                  |       | (548                | )          | —     |       | —          |       | (168       | )          |
| Net income (loss)                             |       | $                    | 647        |                | $          | (836       | )          | $               | (74        | )          | $          | — |   | $ | (263 | ) |
| ** **                                    | ** ** | ** **           | ** ** | ** **          | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| Total assets                                  |       | $                    | 10,541     |                | $          | 22,312     |       | $               | 35,307     |       | $          | — |   | $ | 68,160 |   |
| Additions to property, plant and equipment    |       | $                    | —     |                | $          | 342        |       | $               | 89         |       | $          | — |   | $ | 431 |   |

 
| ** **                                    | ** ** | ** **           | ** ** | **Refrigerated**    | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
|-----------------------------------------------|------------|----------------------|------------|---------------------|------------|------------|------------|-----------------|------------|------------|------------|
| ** **                                    | ** ** | ** **           | ** ** | **and**             | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| **Twelve Weeks Ended**              | ** ** | **Frozen Food** | ** ** | **Snack Food** | ** ** | ** ** | ** ** | ** **      | ** ** | ** ** | ** ** |
| **January 26, 2007**                | ** ** | **Products**         | ** ** | **Products**        | ** ** | **Other**  | ** ** | **Elimination** | ** ** | **Totals** | ** ** |
| Sales from external customers                 |       | $                    | 11,918     |                | $          | 20,396     |       | $               | —     |       | $          | — |   | $ | 32,314 |   |
| Intersegment sales                            |       | —               |       | 299                 |       | —     |       | 299             |       | —     |       |
| Net sales                                     |       | 11,918               |       | 20,695              |       | —     |       | 299             |       | 32,314     |       |
| Cost of products sold, excluding depreciation |       | 7,462                |       | 14,393              |       | —     |       | 299             |       | 21,556     |       |
| Selling, general and administrative expenses  |       | 3,438                |       | 6,483               |       | —     |       | —          |       | 9,921      |       |
| Depreciation                                  |       | 203                  |       | 483                 |       | 96         |       | —          |       | 782        |       |
| Gain on sale of equity securities             |       | —               |       | —              |       | —     |       | —          |       | —     |       |
|                                          |       | 11,103               |       | 21,359              |       | 96         |       | 299             |       | 32,259     |       |
| Income (loss) before taxes                    |       | 815                  |       | (664                | )          | (96        | )          | —          |       | 55         |       |
| Income tax provision (benefit)                |       | 296                  |       | (281                | )          | —     |       | —          |       | 15         |       |
| Net income (loss)                             |       | $                    | 519        |                | $          | (383       | )          | $               | (96        | )          | $          | — |   | $ | 40 |   |
|                                          |       |                 |       |                |       |       |       |            |       |       |       |
| Total assets                                  |       | $                    | 10,411     |                | $          | 25,289     |       | $               | 34,879     |       | $          | — |   | $ | 70,579 |   |
| Additions to property, plant and equipment    |       | $                    | 64         |                | $          | 290        |       | $               | (8         | )          | $          | — |   | $ | 346 |   |

 

Note 8 - Incometaxes:

 

In July 2006,the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty inIncome Taxes,” (“FIN 48”), an interpretation of FASB Statement No. 109, “Accountingfor Income Taxes,” (“FASB 109”).  FIN 48clarifies the accounting for uncertainty in income taxes recognized in anenterprise’s financial statements in accordance with FASB 109. ThisInterpretation prescribes a recognition threshold and measurement attribute forthe financial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification,interest and penalties, accounting ininterim periods, disclosure, and transition. FIN 48 is effective for fiscalyears beginning after December 15, 2006. The cumulative effect, if any, of applying FIN 48 is reported as anadjustment to the opening balance of retained earnings in the year of adoption.

 

As of November 3,2007, the Company has provided a liability of $92 for unrecognized tax benefitsrelated to various federal and state income tax matters. The cumulative effectof applying FIN 48 has been recorded as a decrease of $92 to opening retainedearnings with an offsetting increase in the accrued FIN 48 liability. Thisentire amount would reduce the Company’s effective income tax rate if an assetis recognized in future reporting periods.

 

As of January 25,2008, the Company has not identified any new unrecognized tax benefits.

 

The Company willrecognize any future accrued interest and penalties related to unrecognized taxbenefits in income tax expense.  As of January 25,2008, the Company had approximately $2 in accrued interest and penalties whichis included as a component of the $92 unrecognized tax benefit noted above.

 

The Company issubject to U.S. federal income tax, and is currently under audit by theInternal Revenue Service for the years ended November 1, 2002 through October 28,2005. The Company’s federal income tax returns are open to audit under thestatute of limitations for the years ended October 29, 2004 through November 3,2006.  The Company’s statute oflimitations for its years ended November 1, 2002 and October 31, 2003have been extended to October 31, 2008. The Company believes the appropriate provisions for all outstandingissues have been made for all years under audit.

 

The Company issubject to income tax in California and various other state taxingjurisdictions. The Company’s state income tax returns are open to audit underthe statute of limitations for the years ended October 31, 2003 through November 3,2006. The Company is currently under examination relating to its income taxesin New York and Texas.

 

The Company does notanticipate a significant change to the total amount of unrecognized taxbenefits within the next twelve months.

 

8

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## **Item 2**.   Management’sDiscussion and Analysis of Financial Condition and Results of Operations

## ** **

**NOTE REGARDING FORWARD-LOOKING STATEMENTS**

 

Certain statements under “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and elsewhere in this reportconstitute “forward-looking statements” within the meaning of the SecuritiesAct of 1933 and the Securities Exchange Act of 1934 (the “Exchange Act”). Suchforward-looking statements involve known and unknown risks, uncertainties, andother factors which may cause the actual results, performance or achievementsof Bridgford Foods Corporation to be materially different from any futureresults, performance or achievements expressed or implied by suchforward-looking statements. Such factors include, among others, the following:general economic and business conditions; the impact of competitive productsand pricing; success of operating initiatives; development and operating costs;advertising and promotional efforts; adverse publicity; acceptance of newproduct offerings; consumer trial and frequency; changes in business strategyor development plans; availability, terms and deployment of capital;availability of qualified personnel; commodity, labor, and employee benefitcosts; changes in, or failure to comply with, government regulations; weatherconditions; construction schedules; and other factors referenced in thisReport.  Assumptions relating tobudgeting, marketing, and other management decisions are subjective in manyrespects and thus susceptible to interpretations and periodic revisions basedon actual experience and business developments, the impact of which may causethe Company to alter its marketing, capital expenditure or other budgets, whichmay in turn affect the Company’s business, financial position, results ofoperations and cash flows.  The reader is therefore cautioned not toplace undue reliance on forward-looking statements contained herein and toconsider other risks detailed more fully in the Company’s Annual Report on Form 10-Kfor the fiscal year ended November 2, 2007.  The Company undertakes no obligation topublicly release the result of any revisions to these forward-lookingstatements which may be made to reflect events or circumstances after the datehereof, or to reflect the occurrence of unanticipated events.

 

###### **Critical Accounting Policies and Management Estimates**

 

The preparation offinancial statements in conformity with generally accepted accountingprinciples requires management to make certain estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported revenues and expenses during the respective reporting periods.  Actual results could differ from thoseestimates.  Amounts estimated related toliabilities for self-insured workers’ compensation, employee healthcare andpension benefits are especially subject to inherent uncertainties and theseestimated liabilities may ultimately settle at amounts not originallyestimated. The Company records promotional and returns allowances based onrecent and historical trends.  Managementbelieves its current estimates are reasonable and based on the best informationavailable at the time.

 

The Company’s creditrisk is diversified across a broad range of customers and geographic regions.Losses due to credit risk have recently been immaterial.  The provision for doubtful accountsreceivable is based on historical trends and current collection risk.  The Company has significant amountsreceivable with a few large, well known customers which, although historicallysecure, could be subject to material risk should these customers’ operationssuddenly deteriorate. The Company monitors these customers closely to minimizethe risk of loss.  Sales to Wal-Mart®comprised 13.8% of revenues in the first twelve weeks of fiscal year 2008 and20.4% of accounts receivable was due from Wal-Mart® at January 25, 2008.Sales to Wal-Mart® comprised 14.9% of revenues in the first quarter of fiscalyear 2007 and 21.5% of accounts receivable was due from Wal-Mart® at January 26,2007.

 

Revenues are recognizedupon passage of title to the customer, typically upon product pick-up, shipmentor delivery to customers. Products are delivered to customers primarily throughthe Company’s own long-haul fleet or through a Company owned direct storedelivery system.

 

The Company records thecash surrender or contract value for life insurance policies as an adjustmentof premiums paid in determining the expense or income to be recognized underthe contract for the period.

 

Estimated amountsrelated to liabilities for pension benefits are especially subject to inherentuncertainties and these liabilities may ultimately settle at amounts notoriginally estimated. Management believes its current estimates are reasonableand based on the best information available at the time.

 

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

 

9

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The Company provides taxreserves for federal, state, local and international exposures relating toaudit results, tax planning initiatives and compliance responsibilities.  The development of these reserves requirejudgments about tax issues, potential outcomes and timing, and is a subjectiveestimate.  Although the outcome of thesetax audits is uncertain, in management’s opinion adequate provisions for incometaxes have been made for potential liabilities emanating from thesereviews.  Actual outcomes may differmaterially from these estimates.

 

The Company assesses therecoverability of its long-lived assets on an annual basis or whenever adverseevents or changes in circumstances or business climate indicate that expectedundiscounted future cash flows related to such long-lived assets may not besufficient to support the net book value of such assets.  If undiscounted cash flows are not sufficientto support the recorded assets, the Company recognizes an impairment to reducethe carrying value of the applicable long-lived assets to their estimated fairvalue.

 

**Executive Level Overview ofBusiness Segments**

 

The Company operates in twobusiness segments — the processing and distribution of frozen products (theFrozen Food segment), and the processing and distribution of refrigerated andsnack food products, (the Refrigerated and Snack Food segment).  For information regarding the separatefinancial performance of the business segments refer to Note 7 of the Notes tothe Consolidated Condensed Financial Statements included in this QuarterlyReport on Form 10-Q.  The productsmanufactured and distributed by the Company consist of an extensive line offood products, including biscuits, bread dough items, roll dough items, drysausage products, beef jerky and a variety of sandwiches and sliced luncheonmeats.  The products purchased by theCompany for resale include a variety of jerky, cheeses, salads, party dips,Mexican foods, nuts and other delicatessen type food products. Although theCompany has recently introduced several new products, most of these productshave not contributed significantly to the Company’s revenue growth for the 2008fiscal year

 

**Frozen Food Products Segment**

 

The products manufacturedand distributed by the Company in the Frozen Food Products Segment consist ofan extensive line of food products, including biscuits, bread dough items, rolldough items and sandwiches.  All itemswithin this segment are considered similar products and have been aggregated atthis level.  The Company’s frozen fooddivision serves both food service and retail customers.  The Company sells approximately 200 uniquefrozen food products through wholesalers, cooperatives and distributors toapproximately 21,000 retail outlets and 22,000 restaurants and institutions.

 

**Refrigerated and Snack Food Segment**

 

The products distributed bythe Company in the Refrigerated and Snack Food Products segment consist of bothproducts manufactured by the Company and product manufactured or processed bythird parties.   All items within thissegment are considered similar products and have been aggregated at thislevel.  The dry sausage division includesproducts such as jerky, meat snacks, sausage, summer sausage and pepperoniproducts.  The deli division includes productssuch as ham, sandwiches, cheese, Mexican food, pastries and other delicatessentype food products.  The Company’srefrigerated and snack food products division sells approximately 260 differentitems through a direct store delivery network serving approximately 35,000supermarkets, mass merchandise and convenience retail stores located in 49states and Canada. These customers are comprised of large retail chains andsmaller “independent” operators.

 

**Resultsof Operations for the Twelve Weeks ended January 25, 2008 and Twelve Weeksended January 26, 2007 (in thousands, except share amounts)**

 

**NetSales-Consolidated**

 

Net sales decreased by$995 (3.1%) to $31,319 in the first twelve weeks of the 2008 fiscal yearcompared to the same twelve-week period last year. Unit volume decreasedapproximately 12.4% offset by unit price increases of 7.5%.  Promotional allowances decreased byapproximately 0.7% as a percent of sales also offsetting the net sales decreasecompared to the same twelve-week period last year.  Product return levels were slightly loweragainst the comparative prior period which also offset the decrease in netsales.

 

10

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Compared to the priorsixteen-week period ended November 2, 2007 (not shown), average weeklysales increased $223 (9.3%).  Theincrease primarily relates to unit price increases of 4.1% and higher unitsales volume of 3.2% during the first twelve weeks of the 2008 fiscal yearcompared to the previous sixteen-week period. The increase in unit sales resulted from normal seasonal factors.  Lower promotional allowances also helpedincrease weekly sales compared to the prior period.

 

**NetSales-Frozen Food Products Segment**

 

Net sales in the FrozenFood Products segment increased by $1,530 (12.8%) to $13,448 in the firsttwelve weeks of the 2008 fiscal year compared to the same twelve-week periodlast year.  Unit volume decreases of 2.1%were offset by unit price increases of 8.9%. Promotional allowances were lowercompared to the same twelve-week period last year also contributing to the netsales increase.

 

**Net Sales-Refrigeratedand Snack Food Segment**

 

Net sales in theRefrigerated and Snack Food Products segment decreased by $2,525 (12.4%) to$17,871 in the first twelve weeks of the 2008 fiscal year compared to the sametwelve-week period last year.  Unitvolume decreased by 20.6% compared to the same twelve-week period lastyear.  An increase in unit selling prices(6.5%) partially offset the impact of the unit volume decreases.

 

**Cost ofProducts Sold and Gross Margin -Consolidated**

 

Cost of products sold decreased by $579 (2.7%) to $20,977 in the firsttwelve weeks of the 2008 fiscal year compared to the same twelve-week period infiscal 2007.  The gross margin beforedepreciation decreased from 33.3% to 33.0% primarily due to higher commoditycosts when compared to the same twelve-week period in fiscal 2007.  Lower promotional allowances also increasednet selling prices helping to mitigate the gross margin decline.

 

Compared to the prior sixteen-week period ended November 2, 2007(not shown), the average weekly cost of products sold increased $206 (13.4%)for the first twelve weeks of fiscal year 2008. The increase is consistent with the weekly sales increase and highertrends in commodity costs.

 

**Cost ofProducts Sold- Frozen Food Products Segment**

 

Cost of products sold inthe Frozen Food Products segment increased by $1,288 (17.3%) to $8,750 in thefirst twelve weeks of the 2008 fiscal year compared to the same twelve-weekperiod in fiscal 2007.  An increase inunit volume and higher flour commodity costs were the primary contributingfactor to this increase.

 

**Cost ofProducts Sold-Refrigerated and Snack Food Segment**

 

Cost of products sold inthe Refrigerated and Snack Food Products segment decreased by $1,708 (11.9%) to$12,685 in the first twelve weeks of the 2008 fiscal year compared to the sametwelve-week period in fiscal 2007.  Unitvolume declines were the primary factor causing this decrease.  Meat commodity costs were generallyconsistent between the comparative twelve week periods.

 

###### **Selling, General and Administrative Expenses-Consolidated**

 

Selling, general and administrative expenses increased by $104 (1.0%)to $10,025 in the first twelve weeks of fiscal year 2008 compared to the sametwelve-week period in the prior fiscal year. The change in this category for the twelve-week period ended January 25,2008 did not directly correspond to the sales decrease.  Unfavorable trends were experienced in cashsurrender value gains, bad debt recoveries and interest income causing anincrease in this category.  Favorabletrends in healthcare and workers’ compensation expenses helped mitigate theseunfavorable trends compared to the same twelve week period in the prior year.

 

Compared to the prior sixteen-week period ended November 2, 2007(not shown), average weekly selling, general and administrative expensesincreased by $31 (3.9%).  The increasewas primarily caused by an increase in average weekly sales and unfavorabletrends in cash surrender value gains offset by lower cost trends related tohealthcare and workers’ compensation expenses.

 

11

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###### **Selling, General and Administrative Expenses-Frozen FoodProducts Segment**

 

Selling, general and administrative expenses in the Frozen FoodProducts segment increased by $52 (1.5%) to $3,490 in the first twelve weeks offiscal year 2008 compared to the same twelve week period in the prior fiscalyear.  The increase was primarily drivenby higher sales volumes.  Lowerhealthcare and workers’ compensation costs offset some of the increase.

 

###### **Selling, General and Administrative Expenses-Refrigerated andSnack Food Segment**

 

Selling, general and administrative expenses in the Refrigerated andSnack Food Products segment increased by $52 (0.8%) to $6,535 in the firsttwelve weeks of fiscal year 2008 compared to the same twelve-week period in theprior fiscal year.  The increase wasprimarily caused by a favorable bad debt recovery in the prior year that didnot recur.

 

**DepreciationExpense-Consolidated**

 

Depreciation expensedecreased by $34 (4.3%) to $748 in the first twelve weeks of the 2008 fiscalyear compared to the same twelve-week period in fiscal year 2007.  The decrease in depreciation expense reflectslower capital expenditure levels in recent years and certain significant assetsbecoming fully depreciated in the 2008 fiscal year.  Compared to the prior sixteen-week periodended November 2, 2007 (not shown), average weekly depreciation decreasedby $7 due to the reasons mentioned previously.

 

**DepreciationExpense-Frozen Food Products and Refrigerated and Snack Food Segments**

 

Depreciation expense inthe Frozen Food Products segment decreased by $22 (10.8%) to $181 in the firsttwelve weeks of the 2008 fiscal year compared to the same twelve-week period infiscal year 2007.  This decrease reflectslower capital spending activity and significant facilities becoming fullydepreciated.

 

Depreciation expense inthe Refrigerated and Snack Food Products segment increased by $10 (2.1%) to$493 in the first twelve weeks of the 2008 fiscal year compared to the sametwelve-week period in fiscal year 2007. The increase in depreciation expense reflects the impact of a new majormanufacturing line put in service in the last sixteen weeks of fiscal year2007.

 

**IncomeTaxes-Consolidated**

 

The Company recorded anincome tax provision based on an estimated annual effective tax rate of 38.9%in the first twelve weeks of fiscal 2008 as compared to 27.4% in the priorfiscal year and 20.4% for the prior sixteen-week period. The change from thefirst twelve weeks of fiscal 2007 reflects revisions to the Company’s fourthfiscal period tax rate to reflect actual results.  The change from the same period in the prioryear relates to lower expected cash surrender value gains expected for fiscalyear 2008.

 

**Net Income(Loss)-Consolidated**

 

The net loss of $263 inthe twelve weeks ended January 25, 2008 included non-taxable losses onlife insurance policies in the amount of $318. Gains and losses on lifeinsurance policies are dependent upon the performance of the underlyingequities and future results may not produce gains of equal magnitude or mayproduce losses.  Taxable investmentincome also decreased on a comparative basis during the first twelve weeks offiscal 2008 in the amount of $63 due to lower cash balances and lowershort-term interest rates.

 

After considering theeffect of these transactions, the Company’s results for the twelve week periodsended January 25, 2008 and January 26, 2007 are as follows:

 
|                                                              |   | **January 25, 2008** | ** ** | **January 26,  2007** |   |
|-------------------------------------------------------------------|--------|---------------------------|------------|----------------------------|--------|
|                                                              |   |                      |       |                       |   |
| Net loss before  taxes, life insurance gain and investment income |   | $                         | (213       | )                          | $      | (293 | ) |
| Life insurance  (loss) gain and investment income                 |   | (218                      | )          | 348                        |   |
| (Loss) income  before taxes                                       |   | (431                      | )          | 55                         |   |
| Income tax  (provision) benefit                                   |   | (168                      | )          | 15                         |   |
| Net (loss)  income                                                |   | $                         | (263       | )                          | $      | 40 |   |

 

The Company presents netincome or loss before taxes, life insurance gain or loss and investment incomebecause the Company believes it is an important measure for investors to use inunderstanding the Company’s underlying operations.

 

12

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**Liquidityand Capital Resources (in thousands except share amounts)**

 

TheCompany’s need for operations growth, capital expenses and share repurchasesare expected to be met with cash flows provided by operating activities.

 

**Cashflows from operating activities for the twelve weeks ended:**

 
| ** **                                                                                | ** ** | **January 25, 2008** | ** ** | **January 26, 2007** | ** ** |
|-------------------------------------------------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| ** **                                                                                | ** ** | ** **                     | ** ** | ** **                     | ** ** |
| Net (loss)  income                                                                        |       | $(263                          | )          | $40                            |       |
| Adjustments to  reconcile net (loss) income to net cash provided by operating activities: |       |                           |       |                           |       |
| Depreciation                                                                              |       | 748                            |       | 782                            |       |
| Loss (recovery)  on accounts receivable                                                   |       | 24                             |       | (197                           | )          |
| Gain on sale of  property, plant and equipment                                            |       | (13                            | )          | (2                             | )          |
| Changes in  working capital                                                               |       | 4,341                          |       | 1,074                          |       |
| Net cash  provided by operating activities                                                |       | $4,837                         |       | $1,697                         |       |

 

Cash provided by operating activities was $4,837 which enabled theCompany to fund pension contributions in the amount of $1,442, additions toproperty, plant and equipment in the amount of $431and share repurchases of$145.

 

**Significant changes in working capital for thetwelve weeks ended were as follows:**

 

**January 25, 2008 –**Operating cash flows increased primarily due to a significant reduction ininventories in the amount of $4,897 offset by a reduction in accrued payroll,advertising and other expenses in the amount of $1,211. During the period theCompany funded $1,442 towards its defined benefit pension plan.

 

**January 26, 2007-** Operatingcash flows increased primarily due to the a significant reduction ininventories in the amount of $4,468 offset by purchases of trading securitiesof  $3,000 and reductions  in accounts payable and accrued payroll,advertising and other expenses in the amount of $2,165. During the period theCompany funded $1,333 toward its defined benefit pension plan.

 

**Cash used in investing activities for the twelveweeks ended:**

 
| ** **                                           | ** ** | **January 25, 2008** | ** ** | **January 26, 2007** | ** ** |
|------------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| Proceeds from  sale of property, plant and equipment |       | $                              | 13         |                           | $          | 2 |   |
| Additions to  property, plant and equipment          |       | (431                           | )          | (346                           | )          |
| Net cash used in  investing activities               |       | $                              | (418       | )                              | $          | (344 | ) |

 

Expenditures for property,plant and equipment include the acquisition of new equipment, upgrading offacilities to maintain operating efficiency and investments in cost effectivetechnologies to lower costs. Overall capital spending has declined in recentyears as the Company carefully scrutinizes capital investments for short termpay-back of investment.

 

13

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**Cashused in financing activities for the twelve weeks ended:**

 
| ** **                             | ** ** | **January 25, 2008** | ** ** | **January 26, 2007** | ** ** |
|----------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|
| Shares  repurchased                    |       | $                              | (145       | )                              | $          | (39 | ) |
| Cash dividends  paid                   |       | —                         |       | —                         |       |
| Net cash used in  financing activities |       | $                              | (145       | )                              | $          | (39 | ) |

 

The Company’s stock repurchase program was approved by the Board ofDirectors in November 1999 and was expanded in June 2005.  Under the stock repurchase program, theCompany is authorized, at the discretion of management and the Board ofDirectors, to purchase up to an aggregate of 2,000,000 shares of the Company’scommon stock on the open market.  As ofJanuary 25, 2008, up to 497,516 shares were still authorized for repurchaseunder the program.  No cash dividendswere paid during the first twelve weeks of the 2008 fiscal year.  The Board of Directors suspended thequarterly cash dividend at its May 2004 meeting in recognition of lowerprofitability levels in recent quarters.

 

The Company remained free of interest bearing debt during the firsttwelve weeks of fiscal year 2008.  TheCompany’s revolving line of credit with Bank of America expires on April 30,2008 and provides for borrowings up to $2,000. The Company has not borrowed under this line for more than twentyconsecutive years and expects to renew the line of credit prior to itsexpiration.

 

**Recent Accounting Pronouncements**

 

In July 2006, the FASBissued FASB Interpretation No. 48, “Accounting for Uncertainty in IncomeTaxes,” (“FIN 48”), an interpretation of FASB Statement No. 109, “Accountingfor Income Taxes,” (“FASB 109”). FIN 48 clarifies the accounting foruncertainty in income taxes recognized in an enterprise’s financial statementsin accordance with FASB 109. This Interpretation prescribes a recognitionthreshold and measurement attribute for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return.FIN 48 also provides guidance on derecognition, classification, interest andpenalties, accounting in interim periods, disclosure, and transition. FIN 48 iseffective for fiscal years beginning after December 15, 2006. Thecumulative effect of applying FIN 48 is to be reported as an adjustment to theopening balance of retained earning in the year of adoption.  As a result of the implementation of FIN 48,the Company recorded a decrease of $92 to opening retained earnings with anoffsetting increase to accrued FIN 48 liability. This entire amount wouldreduce the Company’s effective income tax rate if the asset is recognized infuture reporting periods. The Company does not anticipate a significant changeto the total amount of unrecognized tax benefits within the next 12 months.

 

In December 2007, theFASB issued Statement of Financial Accounting Standards No. 141R, “BusinessCombinations” (SFAS 141R).  SFAS 141Restablishes principles and requirements for how an acquirer in a businesscombination: 1) recognizes and measures in its financial statements theidentifiable assets acquired, the liabilities assumed, and any noncontrollinginterest in the acquiree; 2) recognizes and measures the goodwill acquired inthe business combination or a gain from a bargain purchase; and 3) determineswhat information to disclose to enable users of the financial statements toevaluate the nature and financial effects of the business combination.  SFAS 141R is effective for business combinationsfor which the acquisition date is on or after the beginning of the first annualreporting period beginning on or after December 15, 2008.  Therefore, the Company expects to adopt SFAS141R for any business combinations entered into beginning in fiscal 2010.

 

In September 2006, theFASB issued Statement of Accounting Standards No. 157, “Fair ValueMeasurements” (“SFAS157”). This Statement defines fair value, provides aframework for measuring fair value, and expands the disclosures required forfair value measurements. SFAS 157 applies to other accounting pronouncementsthat require fair value measurements; it does not require any new fair valuemeasurements. SFAS 157 is effective for financial statements for fiscal yearsbeginning after November 15, 2008, the Company’s fiscal year 2010.   The Company does not expect this Statementwill have a material impact on the Company’s results of operations or financialposition upon adoption.

 

14

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In September 2006, theFASB issued SFAS No. 158, “Employers’ Accounting for Defined BenefitPension and Other Postretirement Plans–an amendment of FASB Statements No. 87,88, 106, and 132(R).” SFAS 158 requires employers to recognize the over- orunder-funded status of defined benefit plans and other postretirement plans inthe statement of financial position and to recognize changes in the fundedstatus in the year in which the changes occur through comprehensive income. Inaddition, SFAS 158 requires employers to measure the funded status of plans asof the date of the year-end statement of financial position. The recognitionand disclosure provisions of SFAS 158 became effective for the Company’s fiscalyear ended November 2, 2007 while the requirement to measure plan assetsand benefit obligations as of a company’s year-end date is effective for fiscalyears ending after December 15, 2008 (effective for the Company’s fiscalyear ending October 30, 2009).  Theimpact of the Company’s initial adoption of SFAS 158 is disclosed in Note 3 tothe Consolidated Financial Statements.

 

In February 2007, the FASB issued Statement ofFinancial Accounting Standards No. 159, “The Fair Value Option forFinancial Assets and Financial Liabilities” (“SFAS 159”).  SFAS 159 expands opportunities to use fairvalue measurement in financial reporting and permits entities to choose tomeasure many financial instruments and certain other items at fair value.  This Statement is effective for fiscal yearsbeginning after November 15, 2007, or the Company’s fiscal year ending October 30,2009.  The Company does not expect thisstatement will have a material impact on its results of operations or financialposition.

 

In December 2007, theFASB issued Statement of Financial Accounting Standards No. 160, “NoncontrollingInterests in Consolidated Financial Statements” (SFAS 160).  SFAS 160 amends Accounting Research Bulletin No. 51,“Consolidated Financial Statements” to establish accounting and reportingstandards for noncontrolling interest in a subsidiary and for thedeconsolidation of a subsidiary. This statement clarifies that a noncontrollinginterest in a subsidiary is an ownership interest in the consolidated entityand should be reported as equity in the consolidated financial statements,rather than in the liability or mezzanine section between liabilities andequity.  SFAS 160 also requiresconsolidated net income to be reported at amounts that include the amountsattributable to both the parent and the noncontrolling interest.   SFAS 160 is effective for fiscal years, andinterim periods within those fiscal years, beginning on or after December 15,2008; therefore, the Company expects to adopt SFAS 160 at the beginning offiscal 2010.  Adoption of  SFAS 160 is not expected to have a materialimpact on the Company’s financial position.

 

**Off-Balance Sheet Arrangements**

 

The Company is not engaged in any “off-balance sheetarrangements” within the meaning of Item 303(a)(4)(ii) of Regulation S-K.

 

**Item 3.   Quantitative and Qualitative Disclosuresabout Market Risk**

 

**General Business Risks**

 

General risk factors include, among others, the following: generaleconomic and business conditions; the impact of competitive products andpricing; success of operating initiatives; development and operating costs;advertising and promotional efforts; adverse publicity; acceptance of newproduct offerings; consumer trial and frequency; changes in business strategyor development plans; availability, terms and deployment of capital;availability of qualified personnel; commodity, labor, and employee benefitcosts; changes in, or failure to comply with, government regulations; weatherconditions; construction schedules; and other factors referenced in thisQuarterly Report on Form 10-Q and in Bridgford Foods’ Annual Report on Form 10-Kfor the fiscal year ended November 2, 2007.  Because of these and other factors that mayaffect the Company’s operating results, past financial performance should notbe considered an indicator of future performance, and investors should not usehistorical trends to anticipate results or trends in future periods. TheCompany expressly disclaims any intent or obligation to publicly release theresults of any revisions to these forward-looking statements that may be madeto reflect events or circumstances after the date hereof, or to reflect theoccurrence of unanticipated events.

 

There can be no assurances that the Company’s growth objectives will bemet or that product lines will be profitable. Anticipated and unanticipated declines in customer demand or taste,sales softness or aggressive competition may have a material adverse effect onthe Company’s results of operations.  Thebusiness is also exposed to the risk of negative publicity, whether or notbased in fact, which affects consumer perceptions about the health, safety orquality of food and inputs of food products.

 

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The Company’s operating results are heavily dependent upon the pricespaid for raw materials.  Othersignificant factors that influence operating results include transportation andenergy costs.  The marketing of theCompany’s value-added products does not lend itself to instantaneous changes inselling prices.  Changes in sellingprices are relatively infrequent and do not compare with the volatility of commoditymarkets, transportation costs and energy prices.

 

**Financial Instrument Risk**

 

The Company’s financial instruments generally consist of cash and cashequivalents and life insurance policies. At January 25, 2008, the carrying value of the Company’s financialinstruments approximated their fair market values based on current marketprices and rates.  It is not the Company’spolicy to enter into derivative financial instruments.

 

**Foreign Currency Risk**

 

The Company did not have significant foreign currency exposure at January 25,2008.

 

**Concentration of Credit Risk**

 

The Company’s credit risk is diversified across a broad range ofcustomers and geographic regions. Losses due to credit risk have recently beenimmaterial.  The provision for doubtfulaccounts receivable is based on historical trends and current collectionrisk.  The Company has significantamounts receivable with a few large, well known customers which, althoughhistorically secure, could be subject to material risk should these customers’operations suddenly deteriorate.  TheCompany monitors these customers closely to minimize the risk of loss.

 

**Fixed – Price Contracts Risk**

 

The Company purchases bulk flour under short-term fixed price contractsduring the normal course of business. Under these arrangements, the Company isobligated to purchase specific quantities at fixed prices, within the specifiedcontract period.  These contracts providefor automatic price increases if agreed quantities are not purchased within thespecified contract period. No significant contracts remained unfulfilled at January 25,2008.

 

**Item 4.  Controls and Procedures**

 

Management of the Company, with the participation and under thesupervision of the Company’s Chairman and Chief Financial Officer, hasevaluated the effectiveness of the Company’s disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered bythis quarterly report. Based on this evaluation, the Chairman and ChiefFinancial Officer have concluded that the Company’s disclosure controls andprocedures are effective as of the end of the period covered by this report toprovide reasonable assurance that material information required to be disclosedby the Company in the reports that it files or submits under the Exchange Actis recorded, processed, summarized and reported within the time periodsspecified by the Securities and Exchange Commission’s rules andforms.  There has been no change in theCompany’s internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) during the period covered by thisreport that has materially affected, or is reasonably likely to materiallyaffect, the Company’s internal control over financial reporting.

 

The Company’s management, including its Chairman and Chief FinancialOfficer, does not expect that the Company’s disclosure controls and internalcontrols will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provideonly reasonable, not absolute, assurance that the objectives of the controlsystem are met.  Further, the design of acontrol system must reflect the fact that there are resource constraints, andthe benefits of controls must be considered relative to their costs.  Because of inherent limitations in allcontrol systems, no evaluation of controls can provide absolute assurance thatall control issues and instances of fraud, if any, within the Company have beendetected.  These inherent limitationsinclude the realities that judgments in decision-making can be faulty, and thatbreakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented bythe individual acts of some persons, by collusion of two or more people, or bymanagement override of the control.

 

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The design of any system of controls is also based in part upon certainassumptions about the likelihood of future events, and there can be noassurance that any design will succeed in achieving its stated goals under allpotential future conditions; over time, a control may become inadequate becauseof changes in conditions, or the degree of compliance with the policies orprocedures may deteriorate.  Because ofinherent limitations in a cost-effective control system, misstatements due toerror or fraud may occur and not be detected.

 

Section 404 of the Sarbanes-Oxley Act of 2002:

 

In order to comply with the Sarbanes-Oxley Act of 2002 (the “Act”), theCompany has undertaken and continues a comprehensive effort, which includes thedocumentation and review of its internal controls. In order to comply with theAct, the Company is in the process of centralizing most accounting and manyadministrative functions at its corporate headquarters in an effort to controlthe cost of maintaining its control systems. On July 11, 2006, The Committee of Sponsoring Organizations (“COSO”)issued guidance on how small companies should implement an effective internalcontrol framework over financial reporting and other risks. This guidance isconsidered a key tool to help smaller public companies to confront thechallenges of the Act.  As a result, theCompany may incur substantial additional expenses and diversion of management’stime. During the course of these activities, the Company may identify certaininternal control issues which management believes should be improved. Theseimprovements, if necessary, will likely include further formalization ofpolicies and procedures, improved segregation of duties, additional informationtechnology system controls and additional monitoring controls. Althoughmanagement does not believe that any of these matters will result in materialweaknesses being identified in the Company’s internal controls as defined bythe Public Company Accounting Oversight Board Auditing Standard No. 5, noassurances can be given regarding the outcome of these efforts. Additionally,control weaknesses may not be identified in a timely enough manner to allowremediation prior to the issuance of the auditor’s report on internal controlsover financial reporting. Any failure to adequately comply could result insanctions or investigations by regulatory authorities, which could harm theCompany’s business or investors’ confidence in the Company.

 

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

 

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**Part II.  Other Information**

 

**Item 1A. Risk Factors**

 

The risk factors listed in Part I “Item 1A. Risk Factors” in theAnnual Report on Form 10-K for the fiscal year ended November 2,2007, should be considered with the information provided elsewhere in thisQuarterly Report on Form 10-Q, which could materially adversely affect thebusiness, financial condition or results of operations.  There have been no material changes to therisk factors as previously disclosed in such Annual Report on Form 10-K.

 

**Item 2.  Unregistered Sales of Equity Securities andUse of Proceeds**

 

The Company has not sold any equity securities during the periodcovered by this report.

 

The following tableprovides information regarding repurchases by the Company of its common stock,for each of the three four-week periods included in the interim twelve-weekperiod ended January 25, 2008.

 

**ISSUER PURCHASES OF EQUITY SECURITIES**

** **
| **Period (1)**                                  | ** ** | **Total Number of   Shares   Purchased** | ** ** | **Average Price   Paid Per Share** | ** ** | **Total Number of   Shares   Purchased as   Part of Publicly   Announced Plans   or Programs (2)** | ** ** | **Maximum   Number of   Shares that May   Yet Be   Purchased Under   the Plans or   Programs (2)** | ** ** |
|------------------------------------------------------|------------|--------------------------------------------------------------|------------|--------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                 |       |                                                         |       |                                                   |       |                                                                                                                                                                |       |                                                                                                                                                                     |       |   |
| November 3,  2007 – November 30, 2007 |       | 3,589                                                        |       | $7.03                                                  |       | 3,589                                                                                                                                                               |       | 515,169                                                                                                                                                                  |       |
|                                                 |       |                                                         |       |                                                   |       |                                                                                                                                                                |       |                                                                                                                                                                     |       |
| December 1,  2007 – December 29, 2007 |       | 7,443                                                        |       | $6.58                                                  |       | 7,443                                                                                                                                                               |       | 507,726                                                                                                                                                                  |       |
|                                                 |       |                                                         |       |                                                   |       |                                                                                                                                                                |       |                                                                                                                                                                     |       |
| December 30,  2007 – January 25, 2008 |       | 10,210                                                       |       | $6.86                                                  |       | 10,210                                                                                                                                                              |       | 497,516                                                                                                                                                                  |       |
|                                                 |       |                                                         |       |                                                   |       |                                                                                                                                                                |       |                                                                                                                                                                     |       |
| Total                                                |       | 21,242                                                       |       | $6.79                                                  |       | 21,242                                                                                                                                                              |       |                                                                                                                                                                     |       |
|                                                      |            |                                                              |            |                                                        |            |                                                                                                                                                                     |            |                                                                                                                                                                          |            |  |

 

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(1)                                  The periodsshown are the Company’s fiscal periods during the twelve-week quarter ended January 25,2008.

 

(2)                                  Allrepurchases reflected in the foregoing table were made on the open market.  The Company’s stock repurchase program wasapproved by the Board of Directors in November 1999 (1,500,000 sharesauthorized, disclosed in a Form 10-K filed on January 26, 2000) andwas expanded in June 2005 (500,000 additional shares authorized, disclosedin a press release and Form 8-K filed on June 17, 2005).  Under the stock repurchase program, theCompany is authorized, at the discretion of management and the Board ofDirectors, to purchase up to an aggregate of 2,000,000 shares of the Company’scommon stock on the open market.  TheCompany’s Stock Purchase Plan (“Purchase Plan”) is administered by CitigroupGlobal Markets Inc. (“CGM”) for purchase of shares of common stock (“Stock”)issued by the Company in compliance with the requirements of Rule 10b5-1under the Exchange Act. Commencing on September 16, 2007 and continuingthrough and including September 15, 2008, CGM shall act as the Company’sexclusive agent to purchase Stock under the Purchase Plan.   This Purchase Plan supplements any purchasesof stock by the Company “outside” of the Purchase Plan, which may occur fromtime to time, in open market transactions pursuant to Rule 10b-18 of theExchange Act. The daily purchase quantity is defined as a number of shares upto, but not to exceed, each day’s applicable Rule 10b-18 maximum volumelimit (i.e. 25% of the prior four calendar weeks’ average daily tradingvolume); however, once per week a block of stock may be purchased that exceedsthe Rule 10b-18  average dailytrading volume condition, provided that no other Purchase Plan purchases aremade on any day on which such a block is purchased.  As of January 25, 2008, the totalmaximum number of shares that may be purchased under the Purchase Plan is497,516 at a total maximum aggregate price (exclusive of commission) of$4,975,160.

 

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**Item 6.**

 

##### **Exhibits**

##### ** **

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

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|                        | BRIDGFORD FOODS  CORPORATION                               |
|-----------------------------|------------------------------------------------------------|
|                        |                                                       | (Registrant) |
|                        |                                                       |
| Dated: March 10,  2008 |                                                       |   |   | By: | /s/ | Raymond F. Lancy |
|                        | Raymond F. Lancy                                           |
|                        | Chief Financial  Officer                                   |
|                        | (Duly Authorized  Officer and Principal Financial Officer) |
|                             |                                                            |  |  |  |  |  |  |

 

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