**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM10-Q**

** **

**(Markone)**

**ý****QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF**

**THESECURITIES AND EXCHANGE ACT OF 1934**

 

**Forthe quarterly period ended April 14, 2006**

 

**OR**

 

**o****TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF**

**THESECURITIES EXCHANGE ACT OF 1934**

 

**Forthe transition period from**

 

**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 filed by Section 13 or15(d) of the Securities Exchange Actof 1934 during the preceding 12 months ( or for such shorter period that the registrant wasrequired to file such reports), and (2)has been subject to such filing requirements for the past 90 days. 

 

Yes ý                    No o

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o                    Accelerated Filer o                             Non-acceleratedfiler ý

 

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

 

Yes o                    No ý

 

As of May 30, 2006the registrant had 9,964,000 shares of common stock outstanding.

 

 

----

 

**BRIDGFORDFOODS CORPORATION**

FORM 10-QQUARTERLY REPORT

INDEX

 

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

 
| Part I.  Financial Information                                                                                                                                 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                           |   |
| Item 1. Financial Statements                                                                                                                                   |   |
|                                                                                                                                                           |   |
| a. Consolidated Condensed  Balance Sheets at April 14, 2006 (unaudited) and October 28, 2005                                                                   |   |
|                                                                                                                                                           |   |
| b. Consolidated Condensed  Statements of Operations for the twelve and twenty-four weeks ended April 14,  2006 and April 15, 2005 (unaudited)                  |   |
|                                                                                                                                                           |   |
| c. Consolidated Condensed  Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the  twenty-four weeks ended April 14, 2006 (unaudited) |   |
|                                                                                                                                                           |   |
| d. Consolidated Condensed  Statements of Cash Flows for the twenty-four weeks ended April 14, 2006  and April 15, 2005 (unaudited)                             |   |
|                                                                                                                                                           |   |
| e. Notes to Consolidated  Condensed Financial Statements (unaudited)                                                                                           |   |
|                                                                                                                                                           |   |
| Item 2. Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                            |   |
|                                                                                                                                                           |   |
| Item 3. Quantitative and  Qualitative Disclosures about Market Risk                                                                                            |   |
|                                                                                                                                                           |   |
| Item 4. Controls and Procedures                                                                                                                                |   |
|                                                                                                                                                           |   |
| Part II.  Other Information                                                                                                                                    |   |
|                                                                                                                                                           |   |
| Item 2. Unregistered Sales  of Equity Securities and Use of Proceeds                                                                                           |   |
|                                                                                                                                                           |   |
| Item 4. Submission of  Matters to Vote of Security Holders                                                                                                     |   |
|                                                                                                                                                           |   |
| Item 6. Exhibits                                                                                                                                               |   |
|                                                                                                                                                           |   |
| Signatures                                                                                                                                                     |   |
|                                                                                                                                                           |   |
| Items 1, 3 and 5 of Part II. have been omitted  because they are not applicable with respect to the current reporting period.                                  |   |

 

2

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**PartI. Financial Information**

Item 1. a.

 

**BRIDGFORDFOODS CORPORATION**

**CONSOLIDATED CONDENSED BALANCE SHEETS**

(in thousands, except per share amounts)

 
| ** **                                                                                                                                                | ** ** | **April 14** | ** ** | **October 28** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|---------------------|------------|
| ** **                                                                                                                                                | ** ** | **2006**          | ** ** | **2005**            | ** ** |
| ** **                                                                                                                                                | ** ** | **(Unaudited)**   | ** ** | ** **          | ** ** |
| **ASSETS**                                                                                                                                                |       |              |       |                |       |
| Current assets:                                                                                                                                           |       |              |       |                |       |
|                                                                                                                                                      |       |              |       |                |       |
| Cash and cash  equivalents                                                                                                                                |       | $                 | 17,567     |                | $          | 10,355 |   |
| Accounts  receivable, less allowance for doubtful accounts of $477 and $468,  respectively, and promotional allowances of $1,664 and $2,092, respectively |       | 7,981             |       | 9,508               |       |
| Inventories  (Note 2)                                                                                                                                     |       | 16,090            |       | 21,324              |       |
| Prepaid expenses  and other current assets                                                                                                                |       | 2,591             |       | 2,551               |       |
|                                                                                                                                                      |       |              |       |                |       |
| Total current  assets                                                                                                                                     |       | 44,229            |       | 43,738              |       |
|                                                                                                                                                      |       |              |       |                |       |
| Property, plant  and equipment, less accumulated depreciation of $52,515 and $50,731,  respectively                                                       |       | 13,750            |       | 14,519              |       |
|                                                                                                                                                      |       |              |       |                |       |
| Other  non-current assets                                                                                                                                 |       | 14,729            |       | 14,706              |       |
|                                                                                                                                                      |       | $                 | 72,708     |                | $          | 72,963 |   |
|                                                                                                                                                      |       |              |       |                |       |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                             |       |              |       |                |       |
|                                                                                                                                                      |       |              |       |                |       |
| Current  liabilities:                                                                                                                                     |       |              |       |                |       |
|                                                                                                                                                      |       |              |       |                |       |
| Accounts payable                                                                                                                                          |       | $                 | 3,062      |                | $          | 3,806 |   |
| Accrued payroll,  advertising and other expenses                                                                                                          |       | 8,325             |       | 8,035               |       |
|                                                                                                                                                      |       |              |       |                |       |
| Total current  liabilities                                                                                                                                |       | 11,387            |       | 11,841              |       |
|                                                                                                                                                      |       |              |       |                |       |
| Non-current  liabilities                                                                                                                                  |       | 12,807            |       | 12,860              |       |
|                                                                                                                                                      |       |              |       |                |       |
| Commitments  (Note 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 - 9,966 and 9,986 shares                                             |       | 10,023            |       | 10,043              |       |
| Capital in  excess of par value                                                                                                                           |       | 14,268            |       | 14,394              |       |
| Retained  earnings                                                                                                                                        |       | 25,824            |       | 25,889              |       |
| Accumulated  other comprehensive loss                                                                                                                     |       | (1,601            | )          | (2,064              | )          |
|                                                                                                                                                      |       | 48,514            |       | 48,262              |       |
|                                                                                                                                                      |       | $                 | 72,708     |                | $          | 72,963 |   |

 

See accompanyingnotes to consolidated condensed financial statements.

 

3

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Item 1. b.

 

**BRIDGFORDFOODS CORPORATION**

**CONSOLIDATED CONDENSED STATEMENTS OFOPERATIONS**

**(Unaudited)**

 
| ** **                                     | ** ** | **(in thousands, except per share amounts)** | ** ** | **(in thousands, except per share amounts)** | ** ** |
|------------------------------------------------|------------|-----------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|
| ** **                                     | ** ** | **12 weeks ended**                                          | ** ** | **12 weeks ended**                                          | ** ** | **24 weeks ended** | ** ** | **24 weeks ended** | ** ** |
| ** **                                     | ** ** | **April 14**                                                     | ** ** | **April 15**                                                     | ** ** | **April 14** | ** ** | **April 15** | ** ** |
| ** **                                     | ** ** | **2006**                                                              | ** ** | **2005**                                                              | ** ** | **2006** | ** ** | **2005** | ** ** |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Net sales                                      |       | $                                                                     | 28,305     |                                                                  | $          | 27,714 |   | $ | 62,880 |   | $ | 61,305 |   |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Cost of products  sold, excluding depreciation |       | 17,510                                                                |       | 17,860                                                                |       | 41,063 |   | 40,431 |   |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Selling, general  and administrative expenses  |       | 9,841                                                                 |       | 9,874                                                                 |       | 20,211 |   | 20,182 |   |
| Depreciation                                   |       | 892                                                                   |       | 1,029                                                                 |       | 1,784 |   | 2,057 |   |
| Gain on sale of  equity securities             |       | (106                                                                  | )          | —                                                                |       | (106 | ) | — |   |
|                                           |       | 28,137                                                                |       | 28,763                                                                |       | 62,952 |   | 62,670 |   |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Income (loss)  before taxes                    |       | 168                                                                   |       | (1,049                                                                | )          | (72 | ) | (1,365 | ) |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Income tax  provision (benefit)                |       | 96                                                                    |       | (399                                                                  | )          | (7 | ) | (519 | ) |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Net income  (loss)                             |       | $                                                                     | 72         |                                                                  | $          | (650 | ) | $ | (65 | ) | $ | (846 | ) |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Basic and  diluted income (loss) per share     |       | $                                                                     | .01        |                                                                  | $          | (.07 | ) | $ | 0.00 |   | $ | (.08 | ) |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Basic and  diluted shares computed             |       | 9,966                                                                 |       | 9,998                                                                 |       | 9,970 |   | 9,999 |   |
|                                           |       |                                                                  |       |                                                                  |       |   |   |   |   |
| Cash dividends  paid per share                 |       | $                                                                     | .00        |                                                                  | $          | .00 |   | $ | .00 |   | $ | .00 |   |

 

Item 1. c.

 

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

**(Unaudited)**

(in thousands, except per share amounts)

 
| ** **                                                   | ** ** | ** **            | ** ** | ** ** | ** ** | ** **         | ** ** | ** **   | ** ** | **Accumulated**        | ** ** | ** ** | ** ** |
|--------------------------------------------------------------|------------|-----------------------|------------|------------|------------|--------------------|------------|--------------|------------|------------------------|------------|------------|------------|
| ** **                                                   | ** ** | ** **            | ** ** | ** ** | ** ** | **Capital**        | ** ** | ** **   | ** ** | **other**              | ** ** | ** ** | ** ** |
| ** **                                                   | ** ** | **Common Stock** | ** ** | ** ** | ** ** | **in excess** | ** ** | **Retained** | ** ** | **comprehensive**      | ** ** | ** ** | ** ** |
| ** **                                                   | ** ** | **Shares**            | ** ** | **Amount** | ** ** | **of par**    | ** ** | **earnings** | ** ** | **income (loss)** | ** ** | **Total**  | ** ** |
| October 28, 2005                                             |       | 9,986                 |       | $          | 10,043     |               | $          | 14,394       |       | $                      | 25,889     |       | $          | (2,064 | ) | $ | 48,262 |   |
| Shares  repurchased                                          |       | (20                   | )          | (20        | )          | (126               | )          |         |       |                   |       | (146       | )          |
| Net loss                                                     |       |                  |       |       |       |               |       | (65          | )          |                   |       | (65        | )          |
| Other  comprehensive income (loss):                          |       |                  |       |       |       |               |       |         |       |                   |       |       |       |
| Reclassification  adjustment for gain included in net income |       |                  |       |       |       |               |       |         |       | (56                    | )          | (56        | )          |
| Minimum pension liability                                    |       |                  |       |       |       |               |       |         |       | 519                    |       | 519        |       |
| Comprehensive  income                                        |       |                  |       |       |       |               |       |         |       |                   |       | 398        |       |
| April 14, 2006                                               |       | 9,966                 |       | $          | 10,023     |               | $          | 14,268       |       | $                      | 25,824     |       | $          | (1,601 | ) | $ | 48,514 |   |

 

See accompanyingnotes to consolidated condensed financial statements.

 

4

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Item 1. d.

 

**BRIDGFORDFOODS CORPORATION**

**CONSOLIDATED CONDENSED STATEMENTS OFCASH FLOWS**

**(Unaudited)**

 
| ** **                                            | ** ** | **24 weeks ended** | ** ** | **24 weeks ended** | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                            | ** ** | **April 14**            | ** ** | **April 15**            | ** ** |
| ** **                                            | ** ** | **2006**                     | ** ** | **2005**                     | ** ** |
| ** **                                            | ** ** | **(in thousands)**      | ** ** | **(in thousands)**      | ** ** |
|                                                  |       |                         |       |                         |       |
| Cash flows from  operating activities:                |       |                         |       |                         |       |
|                                                  |       |                         |       |                         |       |
| Net loss                                              |       | $                            | (65        | )                            | $          | (846 | ) |
|                                                  |       |                         |       |                         |       |
| Income charges  not affecting cash:                   |       |                         |       |                         |       |
| Depreciation                                          |       | 1,784                        |       | 2,057                        |       |
| Recovery on  losses on accounts receivable            |       | (339                         | )          | (192                         | )          |
| Effect on cash  of changes in assets and liabilities: |       |                         |       |                         |       |
| Accounts  receivable, net                             |       | 1,866                        |       | 3,124                        |       |
| Inventories                                           |       | 5,234                        |       | 4,586                        |       |
| Prepaid expenses  and other current assets            |       | (98                          | )          | (774                         | )          |
| Other  non-current assets                             |       | (355                         | )          | (131                         | )          |
| Accounts payable                                      |       | (744                         | )          | (1,399                       | )          |
| Accrued payroll,  advertising and other expenses      |       | 290                          |       | (737                         | )          |
| Income taxes  payable                                 |       | —                       |       | (913                         | )          |
| Non-current liabilities                               |       | 800                          |       | 748                          |       |
|                                                  |       |                         |       |                         |       |
| Net cash  provided by operating activities            |       | 8,373                        |       | 5,523                        |       |
|                                                  |       |                         |       |                         |       |
| Cash used in  investing activities:                   |       |                         |       |                         |       |
| Additions to  property, plant and equipment           |       | (1,015                       | )          | (695                         | )          |
|                                                  |       |                         |       |                         |       |
| Cash used in  financing activities:                   |       |                         |       |                         |       |
| Shares  repurchased                                   |       | (146                         | )          | (32                          | )          |
|                                                  |       |                         |       |                         |       |
| Net cash used in  financing activities                |       | (146                         | )          | (32                          | )          |
|                                                  |       |                         |       |                         |       |
| Net increase in  cash and cash equivalents            |       | 7,212                        |       | 4,796                        |       |
|                                                  |       |                         |       |                         |       |
| Cash and cash  equivalents at beginning of period     |       | 10,355                       |       | 7,972                        |       |
|                                                  |       |                         |       |                         |       |
| Cash and cash  equivalents at end of period           |       | $                            | 17,567     |                         | $          | 12,768 |   |
|                                                  |       |                         |       |                         |       |
| Cash paid for  income taxes                           |       | $                            | 22         |                         | $          | 684 |   |

 

See accompanyingnotes to consolidated condensed financial statements.

 

5

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Item 1. e.

 

**BRIDGFORDFOODS CORPORATION**

 

**NOTESTO CONSOLIDATED CONDENSED FINANCIAL 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 thetwelve and twenty-four weeks ended April 14, 2006 and April 15, 2005 have beenprepared in conformity with theaccounting principles described in the Company’s Annual Report on Form 10-K forthe fiscal year ended October28, 2005 (the “Annual Report”) and include all adjustments considered necessaryby management for a fairstatement 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 otherfactors, interim results are not necessarilyindicative of the results to be expected for the full year. 

 

On February 22,2006 the Company sold 5,028 shares of common stock of Sears HoldingsCorporation received asthe result of the bankruptcy of a significant customer. This transactionresulted in a pre-tax gain of $106 and areduction in other comprehensive income of $67. 

 

Note 2 -Inventories:

 

Inventories arecomprised as follows at the respective periods:

 
| ** **                      | ** ** | **April 14** | ** ** | **October 28** | ** ** |
|---------------------------------|------------|-------------------|------------|---------------------|------------|
| ** **                      | ** ** | **2006**          | ** ** | **2005**            | ** ** |
| Meat,  ingredients and supplies |       | $                 | 6,031      |                | $          | 6,433 |   |
| Work in progress                |       | 1,556             |       | 2,293               |       |
| Finished goods                  |       | 8,503             |       | 12,598              |       |
|                            |       | $                 | 16,090     |                | $          | 21,324 |   |

 

In November 2004,the FASB issued Statement of Financial Accounting Standards No. 151, “InventoryCosts”. TheStatement requires abnormal amounts of inventory costs related to amounts ofidle freight, handling costs and spoilagebe recognized as current period expenses. The standard is effective for fiscalyears beginning after June 15,2005 with early application permitted. The Company’s policy has always been tohandle inventory costs in amanner consistent with the provisions of this Statement, and, therefore, theadoption had no impact. 

 

Note 3 - Basic anddiluted earnings per share:

 

The Company had 250,000 employee stock optionsoutstanding during the twelve and twenty-four week periods ended April 14, 2006 and April 15,2005. The effect of the employee stock options outstanding for the twelve and twenty-four weeks ended April 14,2006 and April 15, 2005 was not included in the calculation of diluted sharesand diluted earnings per shareas to do so would be anti-dilutive. 

 

6

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Note 4 - Retirementand 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’s funding policy is to contributeannually the maximum amount deductible forfederal income tax purposes, without regard to the plans’ unfunded currentliability. The measurement date for theplans is the Company’s fiscal year end.

 

Net pension costconsisted of the following: 

 
| ** **                                                    | ** ** | **24 weeks ended** | ** ** | **24 weeks ended** | ** ** |
|---------------------------------------------------------------|------------|--------------------|------------|--------------------|------------|
| ** **                                                    | ** ** | **April 14  2006** | ** ** | **April 15  2005** | ** ** |
|                                                          |       |               |       |               |       |
| Service cost                                                  |       | $                  | 811        |               | $          | 784 |   |
| Interest cost                                                 |       | 896                |       | 861                |       |
| Expected return on plan assets                                |       | (720               | )          | (655               | )          |
| Amortization of unrecognized transition liability or  (asset) |       | 0                  |       | 0                  |       |
| Amortization of net loss from earlier periods                 |       | 123                |       | 0                  |       |
| Amortization of transition asset (15.2 years)                 |       | 0                  |       | 200                |       |
| Amortization of unrecognized prior service cost               |       | 16                 |       | 19                 |       |
|                                                          |       |               |       |               |       |
| Net pension cost                                              |       | $                  | 1,126      |               | $          | 1,209 |   |

 

The Companyintends to contribute $1,800 to the plans during July of 2006.

 

Note 5 -Stock-Based Compensation:

 

In December 2004,the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment”. SFAS No. 123Rrequires public companies to measure and recognize compensation expense for all share-based paymentsto employees, including grants of employee stock options, in the financial statements based on the fair value atthe date of the grant. The Statement also clarifies and expands SFAS No. 123’s guidance in severalareas, including measuring fair value, classifying an award as equity or as a liability, and attributingcompensation cost to reporting periods. SFAS No. 123R became effective for the Company’s fiscal year ending November3, 2006. The Company has not issued, awarded, granted or entered into any stock-based payment agreementssince April 29, 1999. The modified prospective adoption of SFAS No. 123R did not have any impact on the Company’sfinancial condition or results of operations for the first twenty-four weeksended April 14, 2006.

 

Prior to adoptionof SFAS No. 123R, the Company adopted SFAS No. 123 ‘“Accounting for Stock-Based Compensation” which allowed theCompany to apply the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issuedto Employees,” and related interpretations in accounting for stock-based compensation and, therefore, nocompensation expense was recognized for its fixed stock option plans as options are generally granted at fair marketvalue based upon the closing price on the date immediately preceding the grant date. On December 31, 2002 the FASBissued SFAS No. 148, “Accounting for Stock Based Compensation- Transition and Disclosure”, whichamended SFAS No. 123. SFAS No. 148 requires more prominent and frequent disclosures about the effects ofstock-based compensation. Accordingly, if compensation expense for theCompany’s stock options had beenrecognized, based upon the fair value of awards granted, there would have beenno impact on the Company’s netincome and earnings per share for the first twenty-four weeks ending April 15,2005.

 

No options weregranted during the first twenty-four weeks of the fiscal year ending November3, 2006 and during the first twenty-four weeks of the fiscal year ended October28, 2005.

 

Note 6 -Commitments:

 

The Company leasescertain transportation and computer equipment under operating leases. The termsof thetransportation leases provide for annual renewal options and contingent rentalpayments based upon mileage andadjustments of rental payments based on the Consumer Price Index. No materialchanges have been made to thesecontracts during the first twenty-four weeks of fiscal 2006.

 

7

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Note 7 - SegmentInformation:

 

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

 

The Companyevaluates each segment’s performance based on revenues and operating income.Selling, general andadministrative expenses include corporate accounting, information systems,human resource management andmarketing, which are managed at the corporate level. These activities areallocated to each operating segment basedon revenues and/or actual usage.

 

The following segmentinformation is presented for the twelve and twenty-four week periods endedApril 14, 2006 and April 15, 2005.

 
| **Twelve Weeks Ended  April 14, 2006**        | ** ** | **Frozen Food  Products** | ** ** | **Refrigerated  and  Snack Food  Products** | ** ** | **Other** | ** ** | **Elimination** | ** ** | **Totals** | ** ** |
|-----------------------------------------------|------------|---------------------------|------------|---------------------------------------------|------------|-----------|------------|-----------------|------------|------------|------------|
| Sales                                         |       | $                         | 11,994     |                                        | $          | 16,311    |       | $               | —     |       | $          | — |   | $ | 28,305 |   |
| Intersegment sales                            |       | —                    |       | 484                                         |       | —    |       | 484             |       | —     |       |
| Net sales                                     |       | 11,994                    |       | 16,795                                      |       | —    |       | 484             |       | 28,305     |       |
| Cost of products sold, excluding depreciation |       | 6,570                     |       | 11,424                                      |       | —    |       | 484             |       | 17,510     |       |
| Selling, general and administrative expenses  |       | 3,349                     |       | 6,492                                       |       | —    |       | —          |       | 9,841      |       |
| Depreciation                                  |       | 291                       |       | 502                                         |       | 99        |       | —          |       | 892        |       |
| Gain on sale of equity securities             |       | —                    |       | (106                                        | )          | —    |       | —          |       | (106       | )          |
|                                          |       | 10,210                    |       | 18,312                                      |       | 99        |       | 484             |       | 28,137     |       |
| Income (loss) before taxes                    |       | 1,784                     |       | (1,517                                      | )          | (99       | )          | —          |       | 168        |       |
| Income tax provision (benefit)                |       | 676                       |       | (580                                        | )          | —    |       | —          |       | 96         |       |
| Net income (loss)                             |       | $                         | 1,108      |                                        | $          | (937      | )          | $               | (99        | )          | $          | — |   | $ | 72 |   |
|                                          |       |                      |       |                                        |       |      |       |            |       |       |       |
| Total assets                                  |       | $                         | 11,757     |                                        | $          | 26,226    |       | $               | 34,725     |       | $          | — |   | $ | 72,708 |   |
| Additions to property, plant and equipment    |       | $                         | 178        |                                        | $          | 266       |       | $               | 52         |       | $          | — |   | $ | 496 |   |

 
| **Twelve Weeks Ended  April 15, 2005**        | ** ** | **Frozen Food  Products** | ** ** | **Refrigerated  and  Snack Food  Products** | ** ** | **Other** | ** ** | **Elimination** | ** ** | **Totals** | ** ** |
|-----------------------------------------------|------------|---------------------------|------------|---------------------------------------------|------------|-----------|------------|-----------------|------------|------------|------------|
| Sales                                         |       | $                         | 10,331     |                                        | $          | 17,383    |       | $               | —     |       | $          | — |   | $ | 27,714 |   |
| Intersegment sales                            |       | —                    |       | 884                                         |       | —    |       | 884             |       | —     |       |
| Net sales                                     |       | 10,331                    |       | 18,267                                      |       | —    |       | 884             |       | 27,714     |       |
| Cost of products sold, excluding depreciation |       | 5,707                     |       | 13,037                                      |       | —    |       | 884             |       | 17,860     |       |
| Selling, general and administrative expenses  |       | 2,954                     |       | 6,920                                       |       | —    |       | —          |       | 9,874      |       |
| Depreciation                                  |       | 395                       |       | 531                                         |       | 103       |       | —          |       | 1,029      |       |
|                                          |       | 9,056                     |       | 20,488                                      |       | 103       |       | 884             |       | 28,763     |       |
| Income (loss) before taxes                    |       | 1,275                     |       | (2,221                                      | )          | (103      | )          | —          |       | (1,049     | )          |
| Income tax provision (benefit)                |       | 471                       |       | (870                                        | )          | —    |       | —          |       | (399       | )          |
| Net income (loss)                             |       | $                         | 804        |                                        | $          | (1,351    | )          | $               | (103       | )          | $          | — |   | $ | (650 | ) |
|                                          |       |                      |       |                                        |       |      |       |            |       |       |       |
| Total assets                                  |       | $                         | 11,981     |                                        | $          | 28,697    |       | $               | 30,872     |       | $          | — |   | $ | 71,550 |   |
| Additions to property, plant and equipment    |       | $                         | 38         |                                        | $          | 292       |       | $               | 24         |       | $          | — |   | $ | 354 |   |

 

8

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Note 7 - SegmentInformation Continued:

 
| **Twenty-Four Weeks Ended  April 14, 2006**   | ** ** | **Frozen Food  Products** | ** ** | **Refrigerated  and  Snack Food  Products** | ** ** | **Other** | ** ** | **Elimination** | ** ** | **Totals** | ** ** |
|-----------------------------------------------|------------|---------------------------|------------|---------------------------------------------|------------|-----------|------------|-----------------|------------|------------|------------|
| Sales                                         |       | $                         | 24,098     |                                        | $          | 38,782    |       | $               | —     |       | $          | — |   | $ | 62,880 |   |
| Intersegment sales                            |       | —                    |       | 1,201                                       |       | —    |       | 1,201           |       | —     |       |
| Net sales                                     |       | 24,098                    |       | 39,983                                      |       | —    |       | 1,201           |       | 62,880     |       |
| Cost of products sold, excluding depreciation |       | 14,200                    |       | 28,064                                      |       | —    |       | 1,201           |       | 41,063     |       |
| Selling, general and administrative expenses  |       | 6,870                     |       | 13,341                                      |       | —    |       | —          |       | 20,211     |       |
| Depreciation                                  |       | 581                       |       | 1,005                                       |       | 198       |       | —          |       | 1,784      |       |
| Gain on sale of equity securities             |       | —                    |       | (106                                        | )          | —    |       | —          |       | (106       | )          |
|                                          |       | 21,651                    |       | 42,304                                      |       | 198       |       | 1,201           |       | 62,952     |       |
| Income (loss) before taxes                    |       | 2,447                     |       | (2,321                                      | )          | (198      | )          | —          |       | (72        | )          |
| Income tax provision (benefit)                |       | 912                       |       | (919                                        | )          | —    |       | —          |       | (7         | )          |
| Net income (loss)                             |       | $                         | 1,535      |                                        | $          | (1,402    | )          | $               | (198       | )          | $          | — |   | $ | (65 | ) |
|                                          |       |                      |       |                                        |       |      |       |            |       |       |       |
| Total assets                                  |       | $                         | 11,757     |                                        | $          | 26,226    |       | $               | 34,725     |       | $          | — |   | $ | 72,708 |   |
| Additions to property, plant and equipment    |       | $                         | 250        |                                        | $          | 692       |       | $               | 73         |       | $          | — |   | $ | 1,015 |   |

 
| **Twenty-Four Weeks Ended  April 15, 2005**   | ** ** | **Frozen Food  Products** | ** ** | **Refrigerated  and  Snack Food  Products** | ** ** | **Other** | ** ** | **Elimination** | ** ** | **Totals** | ** ** |
|-----------------------------------------------|------------|---------------------------|------------|---------------------------------------------|------------|-----------|------------|-----------------|------------|------------|------------|
| Sales                                         |       | $                         | 21,345     |                                        | $          | 39,960    |       | $               | —     |       | $          | — |   | $ | 61,305 |   |
| Intersegment sales                            |       | —                    |       | 1,385                                       |       | —    |       | 1,385           |       | —     |       |
| Net sales                                     |       | 21,345                    |       | 41,345                                      |       | —    |       | 1,385           |       | 61,305     |       |
| Cost of products sold, excluding depreciation |       | 12,080                    |       | 29,736                                      |       | —    |       | 1,385           |       | 40,431     |       |
| Selling, general and administrative expenses  |       | 5,988                     |       | 14,194                                      |       | —    |       | —          |       | 20,182     |       |
| Depreciation                                  |       | 794                       |       | 1,058                                       |       | 205       |       | —          |       | 2,057      |       |
|                                          |       | 18,862                    |       | 44,988                                      |       | 205       |       | 1,385           |       | 62,670     |       |
| Income (loss) before taxes                    |       | 2,483                     |       | (3,643                                      | )          | (205      | )          | —          |       | (1,365     | )          |
| Income tax provision (benefit)                |       | 918                       |       | (1,437                                      | )          | —    |       | —          |       | (519       | )          |
| Net income (loss)                             |       | $                         | 1,565      |                                        | $          | (2,206    | )          | $               | (205       | )          | $          | — |   | $ | (846 | ) |
|                                          |       |                      |       |                                        |       |      |       |            |       |       |       |
| Total assets                                  |       | $                         | 11,981     |                                        | $          | 28,697    |       | $               | 30,872     |       | $          | — |   | $ | 71,550 |   |
| Additions to property, plant and equipment    |       | $                         | 139        |                                        | $          | 478       |       | $               | 78         |       | $          | — |   | $ | 695 |   |

 

Note 8 -Subsequent Events:

 

Effective May 12,2006, the Company froze the defined benefit pension plan accrued benefits formembers employed by the Company within administrative, sales or supervisory jobclassification or within a non-bargaining job class (the Corporate Group). Nofurther benefits will accrue under the plan after May 12, 2006 on account ofwages and other forms of compensation paid to Corporate Group members afterthat date by the Company. This action had no impact on earnings in the firsttwenty-four weeks of fiscal year 2006.

 

9

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**Item 2**.

 

**SPECIAL NOTE REGARDINGFORWARD-LOOKING STATEMENTS**

 

Certain statements inthis Form 10-Q under Item 2 “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” and elsewhere constitute “forward-lookingstatements” within the meaning of the Securities Act of 1933 and the SecuritiesExchange Act of 1934 (the “Exchange Act”). In addition, the Company may fromtime to time make oral forward-looking statements. Words such as “may”, “will”,“should”, “could”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”,“potential” or “contribute” or similar words are intended to identifyforward-looking statements, although not all forward-looking statements containthese words. Such forward-looking statements involve known and unknown risks,uncertainties, and other factors which may cause the actual results,performance, or achievements of the Company to be materially different from anyfuture results, 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 this Form10-Q and in Bridgford Foods’ Annual Report on Form 10-K for the fiscal yearended October 28, 2005. Because of these and other factors that may affect theCompany’s operating results, past financial performance should not beconsidered 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.

 

## **Management’s Discussion andAnalysis of Financial Condition and Results of Operations**

 

###### **Critical Accounting Policies and Risk Factors**

 

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 those estimates. Amounts estimated related toliabilities for pension costs, self-insured workers’ compensation and employeehealthcare are especially subject to inherent uncertainties and these estimatedliabilities may ultimately settle at amounts not originally estimated. Anactuary updates the pension and post-retirement healthcare data on a quarterlybasis. Management believes its current estimates are reasonable and based onthe best information available at the time.

 

The Company’s creditrisk is diversified across a broad range of customers and geographic regions. Lossesdue to credit risk have recently been immaterial although losses in fiscal year2002 were significant. The Company recorded the final payment recovery relatedto its fiscal year 2002 loss in its first quarter of fiscal year 2006,receiving 2,939 shares of stock of Sears Holdings Corporation valued at$344,000. On February 22, 2006, during the second quarter of fiscal year 2006,the Company sold 5,028 shares of common stock of Sears Holdings Corporationreceived as the result of a bankruptcy distribution. This transaction resulted ina pre-tax gain of $106,000 and a reduction in other comprehensive income of$67,000. As a result of this transaction, the Company no longer holds shares inSears Holdings Corporation. The provision for doubtful accounts receivable isbased on historical trends and current collectibility risk. The Company hassignificant amounts receivable with a few large, well known customers which,although historically secure, could be subject to material risk should thesecustomers’ operations suddenly deteriorate. The Company monitors thesecustomers closely to minimize the risk of loss. Wal-Mart® comprised 12.3% ofrevenues for the first twenty-four weeks of fiscal year 2006 and 16.3% ofaccounts receivable at the end of the second quarter of fiscal year 2006. Wal-Mart®comprised 14.0% of revenues for the first twenty-four weeks of fiscal year 2005and 16.9% of accounts receivable in the second quarter of fiscal year 2005.

 

Revenues are recognizedupon passage of title to the customer upon product pick-up, shipment ordelivery to customers as determined by applicable contracts. Products aredelivered to customers through the Company’s own fleet or through aCompany-owned direct store delivery system.

 

10

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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.

 

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

 

The above listing is notintended to be a comprehensive list of all the Company’s accounting policies.In many cases, the accounting treatment of a particular transaction isspecifically dictated by accounting principles generally accepted in the UnitedStates, with no need for management’s judgment in their application. There arealso areas in which management’s judgment in selecting any availablealternative would not produce a materially different result.

 

**Resultsof Operations for the Twelve Weeks ended April 14, 2006 and Twelve Weeks endedApril 15, 2005.**

 

**NetSales**

 

Net sales increased by$591,000 (2.1%) to $28,305,000 in the second twelve weeks of the 2006 fiscalyear compared to the same twelve-week period last year. The primary reason forthe increase was higher unit selling prices between comparative quarters.Average unit selling prices were approximately 7.2% higher than the comparativeperiod in the prior fiscal year. Lower unit volume of approximately 5.9% offsetthe higher unit prices obtained. Product return levels also decreased againstthe comparative period.

 

Compared to the priortwelve-week period ended January 20, 2006 (not shown), sales decreased$6,270,000 (18.1%). The decrease relates to seasonally lower unit sales volumein the twelve-week period ended April 14, 2006. Average unit selling pricesincreased compared to the prior twelve-week period.

 

**Cost ofProducts Sold**

 

Cost of products solddecreased by $350,000 (2.0%) to $17,510,000 in the second twelve weeks of the2006 fiscal year compared to the same twelve-week period in fiscal 2005. Thedecrease in cost of products sold and increase in gross margin on a comparativebasis was due primarily to lower meat commodity costs in the period and higherunit selling prices. Although flour commodity costs increased, this trend hadminimal impact on the gross margin.

 

Compared to the prior twelve-week period ended January 20, 2006 (notshown), the cost of products sold decreased $6,043,000 (25.7%). This decreaseis primarily a result of seasonally lower unit sales volume. The gross marginimproved in the second twelve weeks of fiscal 2006 primarily as a result oflower meat commodity costs and higher unit selling prices.

 

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

 

Selling, general and administrative expenses decreased by $33,000(0.3%) to $9,841,000 in the second twelve weeks of fiscal year 2006 compared tothe same twelve-week period in the prior fiscal year. The change in thiscategory did not correspond to the sales increase. Costs related to fuel andvehicle repairs rose at a higher rate as a percentage of sales than the priorfiscal year. However, gains related to life insurance policies and higherinvestment income more than offset these increases.

 

Compared to the prior twelve-week period ended January 20, 2006 (notshown), selling, general and administrative expenses decreased by $529,000 (5.1%).The decrease was primarily caused by the sales decrease compared to the prior12 week period. The decrease in sales, selling, general and administrativeexpenses did not directly correspond to the sales decrease due to significantseasonal travel costs incurred the second twelve weeks of the fiscal year andlower bad debt recoveries compared to the first twelve weeks of the fiscalyear.

 

11

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**DepreciationExpense**

 

Depreciation expensedecreased by $137,000 (13.3%) to $892,000 in the second twelve weeks of the2006 fiscal year compared to the same twelve-week period in fiscal year 2005. Thedecrease in depreciation expense was due to lower capital expenditures inrecent periods and significant assets becoming fully depreciated in the 2006fiscal year.

 

Compared to the priortwelve-week period ended January 20, 2006 (not shown), depreciation remainedconstant at $892,000 during the second twelve weeks of fiscal 2006.

 

**IncomeTaxes**

 

The effective income taxrate was 57.1% in the second twelve weeks of fiscal 2006 as compared to 38.0%in the prior fiscal year and 42.9% for the prior twelve-week period. The changein the effective income tax rate relates primarily to significant non-taxablegains on life insurance policies, a final state tax payment settlement andrevisions to the Company’s projected tax rates related to updated estimates.

 

**NetIncome (Loss)**

 

Net income in the twelveweeks ended April 14, 2006 was significantly affected by gains related to thesale of equity securities in the amount of $106,000 and non-taxable gains onlife insurance policies in the amount of $146,000. Gains and losses on lifeinsurance policies are dependent upon the performance of the underlyingequities and future results may produce losses of equal magnitude. Taxableinvestment income also increased on a comparative basis during the secondtwelve weeks of fiscal 2006 in the amount of $63,000 due to higher cashbalances and an increase in short-term interest rates. After considering theeffect of these transactions, the Company’s results were as follows:

 
| ** **                                                                                            | ** ** | **12 Weeks Ended  April 14, 2006** | ** ** | **12 Weeks Ended  April 15, 2005** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|
|                                                                                                  |       |                               |       |                               |       |
| Net loss before  taxes, gain on sale of equity securities, life insurance gain and investment  income |       | $                                  | (203,000   | )                                  | $          | (1,139,000 | ) |
| Gain on sale of equity securities                                                                     |       | 106,000                            |       | —                             |       |
| Life insurance gain and investment income                                                             |       | 265,000                            |       | 90,000                             |       |
| Income (loss) before taxes                                                                            |       | 168,000                            |       | (1,049,000                         | )          |
| Income tax provision (benefit)                                                                        |       | 96,000                             |       | (399,000                           | )          |
| Net income (loss)                                                                                     |       | $                                  | 72,000     |                               | $          | (650,000 | ) |

 

The Company presents netloss before taxes, gain on sale of equity securities, life insurance gain andinvestment income because the Company believes it is an important measure forinvestors to use in understanding the Company’s underlying operations. The gainon sale is respect to securities that the Company disposed of during the secondtwelve weeks of fiscal year 2006.

 

**Resultsof Operations for the Twenty-Four Weeks ended April 14, 2006 and Twenty-FourWeeks ended April 15, 2005.**

 

**NetSales**

 

Net sales increased by$1,575,000 (2.6%) to $62,880,000 in the first twenty-four weeks of the 2006fiscal year compared to the same twenty-four-week period last year. The primaryreason for the increase was higher unit selling prices between comparativeperiods. Average unit selling prices were approximately 5.4% higher than thecomparative period in the prior fiscal year. Lower unit volume partially offsetthe higher unit prices obtained.

 

**Cost ofProducts Sold**

 

Cost of products sold increasedby $632,000 (1.6%) to $41,063,000 in the first twenty-four weeks of the 2006fiscal year compared to the same twenty-four-week period in fiscal 2005. Theincrease in cost of products sold is primarily related to lower facilityutilization related to significant maintenance projects completed on theCompany’s facilities in the first 24 weeks of the 2006 fiscal year and higherrepair, energy and delivery costs. Significant declines in meat commodity costshelped offset these higher costs. The gross margin increased 

 

12

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slightly on acomparative basis due primarily to higher selling prices and lower commodityprices. Flour commodity costs increased during the first twenty-four weeks ofthe 2006 fiscal year when evaluated against the comparison period while porkand beef commodities declined significantly.

 

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

 

Selling, general and administrative expenses increased by $29,000(0.1%) to $20,211,000 in the first twenty-four weeks of fiscal year 2006compared to the same twenty-four-week period in the prior fiscal year. The rateof increase in this category did not correspond to the sales increase. Costsrelated to fuel and vehicle repairs rose at a higher rate as a percentage ofsales than the comparable fiscal year 2005 twenty-four week period causing anincrease in this category, while favorable trends in bad debt expenses, gainsrelated to life insurance policies and higher investment income partiallyoffset these increases.

 

**DepreciationExpense**

 

Depreciation expensedecreased by $273,000 (13.3%) to $1,784,000 in the first twenty-four weeks ofthe 2006 fiscal year compared to the same twenty-four-week period in fiscalyear 2005. The decrease in depreciation expense was due to lower capitalexpenditures in recent years and significant assets becoming fully depreciatedin the 2006 fiscal year.

 

**IncomeTaxes**

 

The effective income taxrate was 9.7% in the first twenty-four weeks of fiscal 2006 as compared to38.0% in the prior fiscal year. The change in the effective income tax raterelates primarily to significant non-taxable gains on life insurance policies,a final state tax payment settlement and revisions to the Company’s projectedtax rates related to updated estimates between comparison periods.

 

**NetLoss**

 

Net loss in thetwenty-four weeks ended April 14, 2006 was significantly affected by gainsrelated to the sale of equity securities in the amount of $106,000 andnon-taxable gains on life insurance policies in the amount of $356,000. Gainsand losses on life insurance policies are dependent upon the performance of theunderlying equities and future results may produce losses of equal magnitude.Taxable investment income also increased on a comparative basis during thefirst twenty-four weeks of fiscal 2006 in the amount of $112,000 due to highercash balances and an increase in short-term interest rates. After consideringthe effect of these transactions, the Company’s results were as follows:

 
| ** **                                                                                            | ** ** | **24 Weeks Ended  April 14, 2006** | ** ** | **24 Weeks Ended  April 15, 2005** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|
| ** **                                                                                            | ** ** | ** **                         | ** ** | ** **                         | ** ** |
| Net loss before  taxes, gain on sale of equity securities, life insurance gain and investment  income |       | $                                  | (725,000   | )                                  | $          | (1,575,000 | ) |
| Gain on sale of equity securities                                                                     |       | 106,000                            |       | —                             |       |
| Life insurance gain and investment income                                                             |       | 547,000                            |       | 210,000                            |       |
| Loss before taxes                                                                                     |       | (72,000                            | )          | (1,365,000                         | )          |
| Income tax benefit                                                                                    |       | (7,000                             | )          | (519,000                           | )          |
| Net loss                                                                                              |       | $                                  | (65,000    | )                                  | $          | (846,000 | ) |

 

The Company recorded asignificant recovery related to a bad debt previously written off whichcontributed to a net favorable reduction in the allowance for doubtful accountsof $339,000 in the first twenty-four weeks of fiscal year 2006. The netfavorable reduction recorded in the prior year was $192,000. The Companypresents net loss before taxes, gain on sale of equity securities, lifeinsurance gain and investment income because the Company believes it is animportant measure for investors to use in understanding the Company’sunderlying operations. The gain on sale is respect to securities that theCompany disposed of during the second twelve weeks of fiscal year 2006.

 

13

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**Liquidityand Capital Resources**

 

Net cash from operatingactivities was $8,373,000 for the first twenty-four weeks of the 2006 fiscalyear. The operating loss of $65,000 was offset principally by reductions ininventory. The substantial reduction in inventory in the first twenty-fourweeks of fiscal 2006 is consistent with normal seasonal trends and a plannedseasonal reduction in field inventories. The Company utilized cash flow foradditions to property, plant and equipment and share repurchases. The neteffect of these events resulted in a cash and cash equivalents increase of$7,212,000 (69.6%) to $17,567,000. The additions to property, plant andequipment reflect the Company’s continued investment in processing,transportation and information technology equipment.

 

No cash dividends werepaid during the first twenty-four weeks of the 2006 fiscal year as the Board ofDirectors suspended the quarterly cash dividend at its May 2004 meeting inrecognition of lower profitability levels in recent quarters as was the policyduring the prior year. The Company also repurchased 2,687 shares of its commonstock for $17,000 during the second twelve weeks of fiscal year 2006. Theaverage price per share of such repurchased shares was $6.33.

 

The Company remained free of interest bearing debt during the firsttwenty-four weeks of fiscal year 2006. The Company’s revolving line of creditwith Bank of America that expired April 30, 2006 was renewed until April 30,2008 and provides for borrowings up to $2,000,000. The Company has not borrowedunder this line for more than nineteen consecutive years.

 

The impact of inflationon the Company’s financial position and results of operations has not beensignificant. Management is of the opinion that the Company’s financial positionand its capital resources are sufficient to provide for its near term operatingneeds and capital expenditures.

 

**Off-BalanceSheet Arrangements**

 

The Company is notengaged in any “off-balance sheet arrangements” within the meaning of Item303(a)(4)(ii) of Regulation S-K.

 

# **Item3.**

 

# **Quantitativeand Qualitative Disclosures about Market Risk**

 

The Company does nothave significant foreign currency exposure at April 14, 2006. The Company’sfinancial instruments generally consist of cash and cash equivalents and lifeinsurance policies at April 14, 2006. The Company sold the investment in sharesof stock of Sears Holdings Corporation previously received as a result of thebankruptcy of a significant customer. Realized gains and losses upon the saleof this investment are recognized in the consolidated condensed statements ofoperations. These shares were sold onFebruary 22, 2006 for $606,000. The Company recognized a gain on this sale inthe amount of $106,000 in the consolidated condensed statements of operationsin the second twelve-week period of fiscal year 2006 ended April 14, 2006. Thecarrying value of the Company’s financial instruments approximated their fairmarket values based on current market prices and rates. It is not the Company’spolicy to enter into derivative financial instruments.

 

The Company purchasesbulk flour under short-term fixed price contracts during the normal course ofbusiness. Under these arrangements, the Company is obligated to purchasespecific quantities at fixed prices, within the specified contract period. Thesecontracts provide for automatic price increases if agreed quantities are notpurchased within the specified contract period. No significant contractsremained unfulfilled at April 14, 2006.

 

# **Item4.**

 

# **Controlsand Procedures**

 

Management of theCompany, with the participation and under the supervision of the Company’sChairman and Chief Financial Officer, has evaluated the effectiveness of theCompany’s disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterlyreport. Based on this evaluation, the Chairman and Chief Financial Officer haveconcluded that the Company’s disclosure controls and procedures are effectiveas of the end of the period covered by this report to provide reasonableassurance that material information required to be disclosed by the Company inthe reports that it files or submits under the Exchange Act is recorded,processed, summarized and reported within the time periods specified by theSecurities and Exchange Commission’s rules and forms. There has been no changein the Company’s internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f))

 

14

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during the periodcovered by this report that has materially affected, or is reasonably likely tomaterially affect, the Company’s internal control over financial reporting.

 

The Company’smanagement, including its Chairman and Chief Financial Officer, does not expectthat the Company’s disclosure controls and internal controls will prevent allerror and all fraud. A control system, no matter how well conceived andoperated, can provide only reasonable, not absolute, assurance that theobjectives of the control system are met. Further, the design of a controlsystem must reflect the fact that there are resource constraints, and thebenefits of controls must be considered relative to their costs. Because ofinherent limitations in all control systems, no evaluation of controls canprovide absolute assurance that all control issues and instances of fraud, ifany, within the Company have been detected. These inherent limitations includethe realities that judgments in decision-making can be faulty, and thatbreakdowns can occur because of simple error or mistake. Additionally, controlscan be circumvented by the individual acts of some persons, by collusion of twoor more people, or by management override of the control.

 

The design of any systemof controls is also based in part upon certain assumptions about the likelihoodof future events, and there can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions; over time, acontrol may become inadequate because of changes in conditions, or the degreeof compliance with the policies or procedures may deteriorate. Because ofinherent limitations in a cost-effective control system, misstatements due toerror or fraud may occur and not be detected.

 

**Section404 Sarbanes-Oxley Act of 2002**

 

Based on currentguidance for the Securities and Exchange Commission (the “SEC”), therequirements of Section 404 of the Sarbanes-Oxley Act of 2002 will be effectivefor the Company’s fiscal year ending November 2, 2007. In order to comply withthe Act, 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. Current proposals being consideredat the Securities Exchange Commission (SEC) may exempt the Company from thefinal requirements of Section 404 and as a result, the Company has delayedextensive and costly documentation and testing of its internal controls pendingfurther guidance from the SEC. Should these requirements be imposed on theCompany management will likely incur substantial additional expenses anddiversion of management’s time in the remaining periods of fiscal year 2006 tocomply with Section 404. During the course of these activities, the Company mayidentify certain internal control issues which management believes should be improved.These improvements, 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, no assurances can be givenregarding the outcome of these efforts. Additionally, control weaknesses maynot be identified in a timely enough manner to allow remediation prior to theissuance of the auditor’s report on internal controls over financial reporting.Any failure to adequately comply could result in sanctions or investigations byregulatory authorities, which could harm the Company’s business or investors’confidence in the Company.

 

15

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**Part II. Other Information**

 

**Item 2. Unregistered Sales ofEquity Securities and Use of Proceeds**

 

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 April 14, 2006.

 

**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)** | ** ** |
|-------------------------------------------|------------|----------------------------------------|------------|-----------------------------------|------------|------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|
| January 21, 2006 – February 17, 2006 |       | 473                                    |       | $                                 | 6.63       |                                                                                           | 473        |                                                                                          | 597,180    |   |
|                                      |       |                                   |       |                              |       |                                                                                           |       |                                                                                          |       |
| February 18, 2006 – March 17, 2006   |       | 1,388                                  |       | $                                 | 6.42       |                                                                                           | 1,388      |                                                                                          | 595,792    |   |
|                                      |       |                                   |       |                              |       |                                                                                           |       |                                                                                          |       |
| March 18, 2006 – April 14, 2006      |       | 826                                    |       | $                                 | 6.26       |                                                                                           | 826        |                                                                                          | 594,966    |   |
|                                      |       |                                   |       |                              |       |                                                                                           |       |                                                                                          |       |
| Total                                     |       | 2,687                                  |       | $                                 | 6.33       |                                                                                           | 2,687      |                                                                                          |       |   |

 

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| (1)    |   | Period information is  presented by reference to the Company’s fiscal period ends during the second  quarter of fiscal 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (2)    |   | All repurchases  reflected in the foregoing table were made on the open market. The Company’s  stock repurchase program was approved by the Board of Directors in November  1999 (1,000,000 shares authorized, disclosed in a Form 10-K filed on January  26, 2000) and was expanded in June 2005 (500,000 additional shares  authorized, disclosed in a press release and Form 8-K filed on June 17,  2005). Under the stock repurchase program, the Company is authorized, at the  discretion of management and the Board of Directors, to purchase up to an  aggregate of 1,500,000 shares of the Company’s common stock on the open market. |

 

# **Item4.**

# **Submissionof Matters to a Vote of Security Holders**

 

The Company held its annual meeting of shareholders on Wednesday, March15, 2006 at the Four Points Sheraton, 1500 South Raymond Avenue, Fullerton,California at 10:00 am. Shareholders representing 9,616,032 or 96.5% of the9,967,097 shares entitled to vote were present in person or by proxy. Proxiesfor the meeting were solicited pursuant to Regulation 14A of the SecuritiesExchange Act of 1934. The following persons were nominated and electeddirectors:

 

AllanL. Bridgford

ToddC. Andrews

D.Gregory Scott

HughW. Bridgford

RichardA. Foster

PaulR. Zippwald

WilliamL. Bridgford

RobertE. Schulze

 

Votes cast for directors were 9,549,831 FOR, 45,513 AGAINST and 20,688ABSTAIN or WITHHELD. Votes cast for appointment of Haskell & White, LLP, asthe independent public accountants for the Company for the fiscal yearcommencing October 29, 2005 were 9,579,483 FOR, 9,329 AGAINST and 27,220ABSTAIN or WITHHELD.

 

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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**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|         | BRIDGFORD FOODS  CORPORATION |                                                       |
|--------------|------------------------------|------------------------------------------------------------|
|         |                         | (Registrant)                                               |
|         |                         |
|         | By:                          | /s/      Raymond F. Lancy              |   |
| May 30, 2006 |                         | Raymond F. Lancy                                           |
| Date         |                         | Chief Financial  Officer                                   |
|         |                         | (Duly Authorized Officer  and Principal Financial Officer) |
|              |                              |                                                            |  |  |  |

 

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