---

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SECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549______________________________

FORM 10-K

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

For the fiscal year ended October 31,
2008

Commission file number:
0-2396______________________________

BRIDGFORD FOODS
CORPORATION(Exact name of Registrant as specified in its charter)

|California                     | 95-1778176               
|------------------------------ | -------------------------
|(State of
      incorporation) | (I.R.S.
      Employer   
|                               | Identification
      No.)

1308
North Patt StreetAnaheim, California 92801(Address of principal executive
offices)

(714) 526-5533(Registrants telephone
number, including area code)______________________________

Securities registered pursuant to Section 12(b) of the Act: Common Stock, par
value $1.00 per share, the NASDAQ Stock Market LLC.

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.Yeso No x

Indicate by check mark whether the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. YesoNo x

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YesxNo o

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.x

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

Large
      accelerated filero
    Accelerated
      fileroNon-accelerated
      filero(Do not check if a smaller reporting
      company)
    Smaller
      reporting company x


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act. YesoNo
x

The aggregate market value of voting stock held by non-affiliates of the
registrant on April 18, 2008 was $11,355,000.

As of January 23, 2009, there were 9,433,700 shares of
common stock outstanding.

Portions of the registrants Proxy Statement for the
registrants Annual Meeting of Shareholders to be held March 18, 2009 are
incorporated by reference into Part III, Items 10-14 of this Annual Report on
Form 10-K.

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INDEX TO FORM 10K

|                                                                                                                                 | **Page**
|-------------------------------------------------------------------------------------------------------------------------------- | --------
|PART I                                                                                                                           | 3       
|Item 1.
      Business                                                                                                           | 3       
|Item 1A. Risk Factors                                                                                                            | 6       
|Item 1B.
      Unresolved Staff Comments                                                                                         | 8       
|Item 2. Properties                                                                                                               | 8       
|Item 3. Legal
      Proceedings                                                                                                  | 8       
|Item 4. Submission of Matters to a Vote of Security Holders                                                                      | 9       
|                                                                                                                                
|PART II                                                                                                                          | 9       
|Item 5. Market
      for Registrants Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities | 9       
|Item 6. Selected Financial Data                                                                                                  | 10      
|Item 7.
      Managements Discussion and Analysis of Financial Condition and Results of
      Operations                        | 10      
|Item 7A. Quantitative and Qualitative Disclosures about Market
      Risk                                                        | 16      
|Item 8.
      Consolidated Financial Statements and Supplementary Data                                                           | 16      
|Item 9. Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure                               | 16      
|Item 9A.
      Controls and Procedures                                                                                           | 16      
|Item 9B. Other Information                                                                                                       | 17      
|                                                                                                                                
|PART III                                                                                                                         | 18      
|Item 10.
      Directors, Executive Officers and Corporate Governance                                                            | 18      
|Item 11. Executive Compensation                                                                                                  | 18      
|Item 12.
      Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters              | 18      
|Item 13. Certain Relationships and Related Transactions, and
      Director Independence                                         | 19      
|Item 14.
      Principal Accountant Fees and Services                                                                            | 19      
|                                                                                                                                
|PART IV                                                                                                                          | 19      
|Item 15.
      Exhibits and Financial Statement Schedules                                                                        | 19      
|SIGNATURES                                                                                                                       | 21      

2

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PART I

Item 1.Business

This
Annual Report on Form 10-K contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby.
Readers are cautioned that such statements, which may be identified by words
including anticipates, believes, intends, estimates,
expects, and similar expressions, are only predictions or estimations and
are subject to known and unknown risks and uncertainties. These forward-looking
statements include, but are not limited to, statements regarding the following:
general economic and business conditions; the impact of competitive product and
pricing; success of operating initiatives; development and operating costs;
advertising and promotional efforts; adverse publicity; acceptance of new
product offerings; consumer trial and frequency; changes in business strategy or
development plans; availability, terms and deployment of capital; availability
of qualified personnel; commodity, labor, and employee benefit costs; changes
in, or failure to comply with, government regulations; weather conditions;
construction schedules; and other factors referenced in this
Report.

The
forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. These forward-looking
statements are based on assumptions regarding the Companys business, which
involve judgments with respect to, among other things, future economic and
competitive conditions, and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are beyond the
control of the Company.Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, actual results may differ materially from those set forth in the
forward-looking statements. In light of the significant uncertainties inherent
in the forward-looking information included herein, the inclusion of such
information should not be regarded as representation by the Company or any other
person that the objectives or plans of the Company will be achieved. The
forward-looking statements contained herein speak as of the date of this Report
and the Company undertakes no obligation to update such statements after the
date hereof.

**Background of
Business**

Bridgford
Foods Corporation, a California corporation (collectively with its subsidiaries,
the Company, we or our), was organized in 1952. The Company originally
began its operations in 1932 as a retail meat market in San Diego, California,
and evolved into a meat wholesaler for hotels and restaurants, a distributor of
frozen food products, a processor and packer of meat and a manufacturer and
distributor of frozen food products for sale on a retail and wholesale basis.
For more than the past five years, the Company and its subsidiaries have been
primarily engaged in the manufacturing, marketing and distribution of an
extensive line of frozen, refrigerated and snack food products throughout the
United States. The Company has not been involved in any bankruptcy, receivership
or similar proceedings, nor has it been party to any merger, acquisition, etc.
or acquired or disposed of any material amounts of assets during the past five
years. Substantially all of the assets of the Company have been acquired in the
ordinary course of business. The Company had no significant change in the type
of products produced or distributed, nor in the markets or methods of
distribution since the beginning of the fiscal year.

**Description of
Business**

The Company
operates in two business segments - the processing and distribution of frozen
products and the processing and distribution of refrigerated and snack food
products. For information regarding the separate financial performance of the
business segments refer to Note 7 of the Notes to the Consolidated Financial
Statements included in this Annual Report on Form 10-K. The products
manufactured and distributed by the Company consist of an extensive line of food
products, including biscuits, bread dough items, roll dough items, dry sausage
products, beef jerky and a variety of sandwiches and sliced luncheon meats. The
products purchased by the Company for resale include a variety of jerky,
cheeses, salads, party dips, Mexican foods, nuts and other delicatessen type
food products.

**2008**
    
    **2007**Products manufactured, processed or packaged by the Company
    82
    %
    
    73
    %Items
      manufactured or processed by third parties for distribution
    18
    %
    
    27
    %100
    %
    
    100
    %


Although the
Company has recently introduced several new products, most of these products
have not contributed significantly to the Companys revenue growth for the
fiscal year. The Companys sales are not subject to material seasonal
variations. Historically the Company has been able to respond quickly to the
receipt of orders and, accordingly, the Company does not maintain a significant
sales backlog. The Company and its industry generally have no unusual demands or
restrictions on working capital items. During the last fiscal year the Company
did not enter into any new markets or any significant contractual or other
material relationships.

3

---

The Company
has two classes of similar food products, each of which has accounted for 10% or
more of consolidated sales in the prior two fiscal years listed below. The
following table shows sales, as a percentage of consolidated sales, for each of
these two classes of similar products for each of the last two fiscal
years:

**2008**
    
    **2007**Frozen Food Products
    44
    %
    
    39
    %Refrigerated and
      Snack Food Products
    56
    %
    
    61
    %100
    %
    
    100
    %


To date,
federal, state and local environmental laws and regulations, including those
relating to the discharge of materials into the environment, have not had a
material effect on the Companys business.

**Availability of SEC Filings
and Code of Conduct on Internet Website**

The Company
maintains an Internet website at http://www.bridgford.com. Available on this
website, free of charge, are annual reports on Form 10-K, quarterly reports on
Form 10-Q and reports filed under Section 16 of the Securities and Exchange Act
of 1934, which the Company files with the Securities and Exchange Commission.
The Companys Code of Conduct is also available on the website.

**Major Product
Classes**

Frozen
Food Products

The
Companys frozen food division serves both food service and retail customers.
The Company sells approximately 190 unique frozen food products through
wholesalers, cooperatives and distributors to approximately 21,000 retail
outlets and 22,000 restaurants and institutions.

**Frozen Food Products  Food
Service Customers**

The food
service industry is composed of establishments that serve food outside the home
and includes restaurants, the food operations of health care providers, schools,
hotels, resorts, corporations, and other traditional and non-traditional food
service outlets. Growth in this industry has been driven by the increase in
away-from-home meal preparation, which has accompanied the expanding number of
both dual income and single-parent households. Another trend within the food
service industry is the growth in the number of non-traditional food service
outlets such as convenience stores, retail stores and supermarkets. These
non-traditional locations often lack extensive cooking, storage or preparation
facilities, resulting in a need for pre-cooked and prepared foods similar to
those provided by the Company. The expansion in the food service industry has
also been accompanied by the continued consolidation and growth of broadline and
specialty food service distributors, many of which are long-standing customers
of the Company.

The Company
supplies its food service customers generally through distributors that take
title to the product and resell it. Among the Companys customers are many of
the countrys largest broadline and specialty food service distributors. For
these and other large end purchasers, the Companys products occasionally go
through extensive qualification procedures and its manufacturing capabilities
are subjected to thorough review by the end purchasers prior to the Companys
approval as a vendor. Large end purchasers typically select suppliers that can
consistently meet increased volume requirements on a national basis during peak
promotional periods. The Company believes that its manufacturing flexibility,
national presence and long-standing customer relationships should allow us to
compete effectively with other manufacturers seeking to provide similar products
to the Companys current large food service end purchasers, although no
assurances can be given.

**Frozen Food Products 
Retail Customers**

The majority
of the Companys existing and targeted retail customers are involved in the
resale of branded and private label packaged foods. The same trends which have
contributed to the increase in away-from-home meal preparation have also fueled
the growth in easy to prepare, microwaveable frozen and refrigerated convenience
foods. Among the fastest growing segments is the frozen and refrigerated
hand-held foods market. This growth has been driven by improved product quality
and variety and the increasing need for inexpensive and healthy food items that
require minimal preparation. Despite rapid growth, many categories of frozen and
refrigerated hand-held foods have achieved minimal household penetration. The
Company believes it has been successful in establishing and maintaining supply
relationships with certain selected leading retailers in this
market.

4

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**Frozen Food Products  Sales
and Marketing**

The
Companys frozen food business covers the United States and Canada. In addition
to regional sales managers, the Company maintains a network of independent food
service and retail brokers covering most of the states as well as Canada.
Brokers are compensated on a commission basis. The Company believes that its
broker relationships, in close cooperation with the regional sales managers, are
a valuable asset providing significant new product and customer opportunities.
The regional sales managers perform several significant functions for the
Company, including identifying and developing new business opportunities and
providing customer service and support to the Companys distributors and end
purchasers through the effective use of the Companys broker
network.

The
Companys annual advertising expenditures are directed towards retail and
institutional customers. These customers participate in various special
promotional and marketing programs and direct advertising allowances sponsored
by the Company. The Company also invests in general consumer advertising in
various newspapers and periodicals. The Company directs advertising toward food
service customers with campaigns in major industry publications and through
Company participation in trade shows throughout the United States.

**Refrigerated and Snack Food
Products  Customers**

The
Companys refrigerated and snack food products division sells approximately 270
different items through a direct store delivery network serving approximately
36,000 supermarkets, mass merchandise and convenience retail stores located in
49 states and Canada.

These
customers are comprised of large retail chains and smaller independent
operators. This part of the Companys business is highly competitive. Proper
placement of the Companys product lines is critical to selling success since
most items could be considered impulse items which are often consumed shortly
after purchase. The Companys ability to sell successfully to this distribution
channel depends on aggressive marketing and maintaining relationships with key
buyers.

**Refrigerated and Snack Food
Products  Sales and Marketing**

The
Companys direct store delivery network consists of two separate divisions,
refrigerated and non-refrigerated snack food products. Refrigerated snack food
products are distributed through five different regions located in the
southwest, primarily operating in California, Arizona and Nevada.
Non-refrigerated snack food products are distributed in seventeen geographic
regions across the United States and Canada, each managed by regional sales
managers. The regional sales managers perform several significant functions for
the Company including identifying and developing new business opportunities and
providing customer service and support to the Companys customers. The Company
also utilizes the services of brokers where appropriate to support efficient
product distribution and customer satisfaction.

**Product Planning and
Research and Development**

The Company
continually monitors the consumer acceptance of each product within its
extensive product line. Individual products are regularly added to and deleted
from the Companys product line. The addition or deletion of any product has not
had a material effect on the Companys operations in the current fiscal year.
The Company believes that a key factor in the success of its products is its
system of carefully targeted research and testing of its products to ensure high
quality and that each product matches an identified market opportunity. The
emphasis in new product introductions in the past several years has been in
single service items. The Company is constantly searching to develop new
products to complement its existing product line and improved processing
techniques and formulas for its existing product line. The Company utilizes
in-house test kitchens to research and experiment with unique food preparation
methods, improve quality control and analyze new ingredient mixtures. The
Companys refrigerated and snack food products segment has continued to refine
development of a new major manufacturing line that was put into service in the
fourth quarter of fiscal year 2007. Although operational during the most recent
fiscal year, significant production levels were not achieved on the line in
fiscal year 2008. The Company does not expect to begin significant production
until the second quarter of 2009 on this line. Management believes that the line
will be profitable and improve margins on existing product lines when fully
operational. During 2007, the Company completed development work and
preparations for production of shelf-stable sandwiches for the U.S. military
forces and others. Sales for shelf-stable sandwiches were $1,191,000 during
fiscal year 2008. Other than shelf-stable sandwiches, the Company does not
anticipate any significant change in product-mix as a result of its current
research and development efforts.

5

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**Competition**

The products
of the Company are sold under highly competitive conditions. All food products
can be considered competitive with other food products, but the Company
considers its principal competitors to include national, regional and local
producers and distributors of refrigerated, frozen and snack food products.
Several of the Companys competitors include large companies with substantially
greater financial and marketing resources than those of the Company. Existing
competitors may broaden their product lines and potential competitors may enter
or increase their focus on the Companys market, resulting in greater
competition for the Company. The Company believes that its products compete
favorably with those of the Companys competitors. Such competitors products
compete against those of the Company for retail shelf space, institutional
distribution and customer preference.

**Importance of Key
Customers**

Sales to
Wal-Mart® comprised 10.2% and 14.6% of revenues for fiscal years 2008 and 2007,
respectively. Accounts receivable from Wal-Mart® was 14.2% of total accounts
receivable at October 31, 2008 and 12.4% of total accounts receivable at
November 2, 2007.

**Sources and Availability of
Raw Materials**

The Company
purchases large quantities of pork, beef and flour. These ingredients are
generally available from a number of different suppliers although the
availability of these ingredients is subject to seasonal variation. The Company
builds ingredient inventories to take advantage of downward trends in seasonal
prices or anticipated supply limitations.

**Employees**

The Company
has approximately 613 employees, approximately 42% of whose employment
relationship is governed by collective bargaining agreements. These agreements
currently expire or expired between December 2008 and March 2012. A contract
with Teamsters Locals 87, 150, 386 and 431, covering 12 employees, expired on
March 31, 2007. As of January 2009, a new agreement is in the process of
ratification. The Company believes that its relationship with employees is
favorable.

**Executive Officers of the
Registrant**

The names,
ages and positions of all the executive officers of the Company as of January 1,
2009 are listed below. Messrs. Hugh Wm. Bridgford and Allan L. Bridgford are
brothers. William L. Bridgford is the son of Hugh Wm. Bridgford and the nephew
of Allan L. Bridgford. Officers are normally appointed annually by the board of
directors at their meeting immediately following the annual meeting of
shareholders. All executive officers are full-time employees of the Company,
except for Allan L. Bridgford, who works 60% of full-time effective March,
2005.

|Name                     |  | Age |  | Position(s) with the
      Company                                                        
|------------------------ |  | --- |  | ------------------------------------------------------------------------------------------
|Allan L. Bridgford       |  | 74  |  | Senior Chairman and member of the Executive Committee                                     
|Hugh Wm.
      Bridgford |  | 77  |  | Vice President
      and Chairman of the Executive Committee                              
|William L. Bridgford     |  | 54  |  | Chairman and member of the Executive Committee                                            
|John V.
      Simmons    |  | 53  |  | President and
      member of the Executive Committee                                     
|Raymond F. Lancy         |  | 55  |  | Chief Financial Officer, Executive Vice President, Treasurer and
      member of
      the
|                         |  |     |  | Executive Committee                                                                       

Item 1A.Risk
Factors

In addition
to the other matters set forth in this Annual Report on Form 10-K, the
continuing operations and the price of the Companys common stock are subject to
the following risks, each of which could materially adversely affect the
business, financial condition and results of operations. The risks described
below are not the only risks faced by the Company. The risks described below are
only the risks that the Company currently believes are material to its business.
However, additional risks not presently known, or risks that are currently
believed to be immaterial, may also impair business operations.

General
Risks of Food Industry and Risks Relating to Changes in Consumer Preference and
Economic Conditions

The food
industry, and the markets within the food industry in which the Company
competes, are subject to various risks, including the following: evolving
consumer preferences, nutritional and health-related concerns, federal, state
and local food inspection and processing controls, consumer product liability
claims, risks of product tampering, and the availability and expense of
liability insurance. The meat and poultry industries are subject to scrutiny due
to the association of meat and poultry products with recent outbreaks of
illness, and on rare occasions even death, caused by food borne pathogens.
Product recalls are sometimes required in the food industries to withdraw
contaminated or mislabeled products from the market. Additionally, the failure
to identify and react appropriately to changes in consumer trends, demands and
preferences could lead to, among other things, reduced demand and price
reduction for our products. Further, we may be adversely affected by changes in
domestic or foreign economic conditions, including inflation or deflation,
interest rates, availability of capital markets, consumer spending rates, and
energy availability and costs (including fuel surcharges). These and other
general risks related to the food industry, if realized by us, could have a
significant adverse affect on demand for our products, as well as the costs and
availability of raw materials, ingredients and packaging materials, thereby
negatively affecting our operating results and financial position.

6

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**Risks Relating to Suppliers
and Raw Materials**

The Company
purchases large quantities of commodity pork, beef and flour. Historically,
market prices for products processed by the Company have fluctuated in response
to a number of factors, including changes in the United States government farm
support programs, changes in international agricultural and trading policies,
weather and other conditions during the growing and harvesting
seasons.

The
Companys operating results are heavily dependent upon the prices paid for raw
materials. The marketing of the Companys value-added products does not lend
itself to instantaneous changes in selling prices. Changes in selling prices are
relatively infrequent and do not compare with the volatility of commodity
markets. While fluctuations in significant cost structure components, such as
ingredient commodities and fuel prices, have had a significant impact on
profitability over the last two years, the impact of general price inflation on
the Companys financial position and results of operations has not been
significant. Future volatility of general price inflation or deflation and raw
material cost and availability could adversely affect the Companys financial
results.

**Risks Relating to Government
Regulation**

The
operations of the Company are subject to extensive inspection and regulation by
the United States Department of Agriculture (the USDA), the Food and Drug
Administration (the FDA) and by other federal, state and local authorities,
regarding the processing, packaging, storage, transportation, distribution and
labeling of products that are manufactured, produced and processed by the
Company. The Companys processing facilities and products are subject to
continuous inspection by USDA and/or other federal, state and local authorities.
The USDA has issued strict policies concerning the control of Listeria
Monocytogenes in ready-to-eat meat and poultry products and contamination by
food borne pathogens such as E. coli, listeria monocytogenes and salmonella, and
established a new system of regulation known as the Hazard Analysis Critical
Control Points (HACCP) program. The HACCP program requires all meat and
poultry processing plants to develop and implement sanitary operating procedures
and other program requirements. The Company believes that it is currently in
compliance with governmental laws and regulations and that it maintains
necessary permits and licenses relating to its meat operations.

A failure to
obtain or a loss of necessary permits and licenses could delay or prevent the
Company from meeting current product demand and could adversely affect operating
performance. Furthermore, the Company is routinely subject to new or modified
laws, regulations and accounting standards. If found to be out of compliance
with applicable laws and regulations in these or other areas, the Company could
be subject to civil remedies, including fines, injunctions, recalls or asset
seizures, as well as potential criminal sanctions, any of which could have a
significant adverse effect on the Companys financial results.

**Risks Relating to Dependence
on Key Management**

The
Companys executive officers and certain other key employees have been primarily
responsible for the development and expansion of the Companys business, and the
loss of the services of one or more of these individuals could have an adverse
effect on the Company. The Companys success will be dependent in part upon its
continued ability to recruit, motivate and retain qualified personnel. There can
be no assurance that the Company will be successful in this regard. The Company
has no employment or non-competition agreements with key personnel.

**Risks Relating to Loss of
Major Customers**

The Company
could suffer significant reductions in revenues and operating income if we lost
one or more of our largest customers, including, for example, Wal-Mart Stores,
Inc., which accounted for 10.2% of revenues in fiscal year 2008. Many of our
customers, such as supermarkets, warehouse clubs and food distributors, have
consolidated in recent years.

7

---

Such consolidation has produced large,
sophisticated customers with increased buying power who are more capable of
operating with reduced inventories while demanding lower pricing and increased
promotional programs. These customers also may use their shelf space for their
own private label products. Failure to respond to these trends could reduce our
volume and cause us to lower prices or increase promotional spending for our
product lines which could adversely affect our profitability.

**Members of the Bridgford
Family Can Exercise Significant Control**

Members of
the Bridgford family beneficially own, in the aggregate, approximately 81% of
the outstanding stock of the Company. In addition, three members of the
Bridgford family serve on the Board of Directors. As a result, members of the
Bridgford family have the ability to exert substantial influence or actual
control over our management and affairs and over substantially all matters
requiring action by our shareholders, including amendments to by-laws, election
and removal of directors, any proposed merger, consolidation or sale of all or
substantially all of our assets and other corporate transactions. This
concentration of ownership may also delay or prevent a change in control
otherwise favored by our other shareholders and could depress the Companys
stock price. Additionally, as a result of the Bridgford familys significant
ownership of the outstanding voting stock, we have relied on the controlled
company exemption from certain corporate governance requirements of the NASDAQ
stock market; therefore, we have elected not to implement the rule that provides
for a nominating committee to identify and recommend nominees to the Board of
Directors. Pursuant to this exemption, our compensation committee, which is made
up of independent directors, does not have sole authority to determine the
compensation of our executive officers, including our Chairman.

Item 1B.Unresolved Staff
Comments

Not applicable.

Item 2.Properties

The Company owns the following
facilities:

BuildingSquareProperty Location
    
    Footage
    
    **Acreage**Anaheim, California ***
    
    100,000
    
    5.0Modesto,
      California **
    
    0
    
    0.3Dallas, Texas *
    
    94,000
    
    4.0Dallas, Texas
      *
    
    30,000
    
    2.0Dallas, Texas *
    
    16,000
    
    1.0Dallas, Texas
      *
    
    3,200
    
    1.5Statesville, North Carolina *
    
    42,000
    
    8.0Chicago,
      Illinois **
    
    156,000
    
    1.5


* - property used by Frozen Food
Products Segment

** - property used by Refrigerated
and Snack Food Segment

***- property used by both Frozen
Food Products and Refrigerated and Snack Food Segments

The
foregoing plants are, in general, fully utilized by the Company for processing,
warehousing, distributing and administrative purposes. The Company also leases
warehouse and/or office facilities throughout the United States and Canada. The
Company believes that its properties are generally adequate to satisfy its
foreseeable needs. Additional properties may be acquired and/or plants expanded
if favorable opportunities and conditions arise.

Item 3.Legal
Proceedings

No material
legal proceedings were pending against the Company at October 31, 2008 or as of
the date of filing of this Annual Report on Form 10-K. The Company is likely to
be subject to claims arising from time to time in the ordinary course of its
business. In certain of such actions, plaintiffs may request punitive or other
damages that may not be covered by insurance and, accordingly, no assurance can
be given with respect to the ultimate outcome of any such possible future claims
or litigation or their effect on the Company. Any adverse litigation trends and
outcomes could significantly and negatively affect the financial results of the
Company.

8

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Item 4.Submission of
Matters to a Vote of Security Holders

**Annual Meeting of
Shareholders**

The 2009
annual meeting of shareholders will be held at the offices of Bridgford Foods
Corporation, 1308 North Patt Street, Anaheim, California at 10:00 a.m. on
Wednesday, March 18, 2009.

No matters
were submitted by the Companys shareholders during the fourth quarter of the
fiscal year ended October 31, 2008.

PART II

Item 5. Market for Registrants
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

Common Stock and Dividend Data

The common stock of the Company is
traded in the national over-the-counter market and is authorized for quotation
on the Nasdaq Global Market under the symbol BRID. The following table
reflects the high and low closing prices and cash dividends paid as quoted by
Nasdaq for each of the last eight fiscal quarters.

|                     |  |      |      |     |   | Cash     
|-------------------- |  | ---- | ---- | --- | - | ---------
|                     |  |      |      |     |   | Dividends
|Fiscal Year 2008     |  | High |      | Low |   | Paid     
|First Quarter        |  | $    | 7.45 |     | $ | 6.07     
|Second
      Quarter |  | $    | 6.94 |     | $ | 5.32     
|Third Quarter        |  | $    | 6.77 |     | $ | 5.40     
|Fourth
      Quarter |  | $    | 6.43 |     | $ | 4.26     
|                     |  |      |      |     |   | Cash     
|                     |  |      |      |     |   | Dividends
|Fiscal Year 2007     |  | High |      | Low |   | Paid     
|First Quarter        |  | $    | 8.08 |     | $ | 6.01     
|Second
      Quarter |  | $    | 7.95 |     | $ | 7.02     
|Third Quarter        |  | $    | 7.70 |     | $ | 7.23     
|Fourth
      Quarter |  | $    | 7.83 |     | $ | 6.45     

On January 16, 2009, the closing
sale price for the Companys common stock on the Nasdaq Global Market was $3.79
per share. As of January 16, 2009, there were 322 stockholders of record of the
Companys common stock.

The payment
of any future dividends will be at the discretion of the Companys Board of
Directors and will depend upon future earnings, financial requirements and other
factors.

Unregistered Sales of Equity
Securities

During the
period covered by this Report the Company did not sell or issue any equity
securities that were not registered under the Securities Act of 1933, as
amended.

Repurchases of Equity Securities by the
Issuer

During
fiscal year 2008, the Company repurchased an aggregate of 41,000 shares of its
common stock for $254,000 pursuant to its repurchase plan previously authorized
by the Board of Directors. The following table provides information regarding
the Companys repurchases of its common stock in each of the four periods
comprising the fourth quarter of fiscal year 2008.

9

---

|                                             |  |                       |  |                    |      | Total Number
      of     |       | Maximum
      Number of    
|-------------------------------------------- |  | --------------------- |  | ------------------ | ---- | ------------------------- | ----- | ---------------------------
|                                             |  |                       |  |                    |      | Shares
      Purchased as |       | Shares that
      May Yet  
|                                             |  |                       |  |                    |      | Part of
      Publicly    |       | Be Purchased
      Under   
|                                             |  | Total Number
      of |  | Average Price Paid |      | Announced
      Plans or  |       | the Plans or
      Programs
|Period (1)                                   |  | Shares Purchased      |  | Per Share          |      | Programs (2)              |       | (2)                        
|July 12, 2008 - August 8, 2008(4 weeks)      |  | 207                   |  | $                  | 6.19 |                           | 207   |                            
|August 9, 2008 - September 5,2008 (4 weeks)  |  | 2,091                 |  | $                  | 6.25 |                           | 2,091 |                            
|September 5, 2008 - October 3,2008 (4 weeks) |  | 877                   |  | $                  | 5.87 |                           | 877   |                            
|October 4, 2008 - October 31,2008 (4 weeks)  |  | 283                   |  | $                  | 4.81 |                           | 283   |                            
|Total                                        |  | 3,458                 |  | $                  | 6.03 |                           | 3,458 |                            

|(1) |  | The periods shown are
      the Companys fiscal periods during the sixteen-week quarter ending
      October 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(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 (1,500,000 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 2,000,000 shares of the Companys common
      stock on the open market. The Companys Stock Purchase Plan (Purchase
      Plan) is administered by Citigroup Global Markets Inc. (CGM) for
      purchase of shares of common stock (Stock) issued by the Company in
      compliance with the requirements of Rule 10b5-1 under the Securities
      Exchange Act of 1934 (Exchange Act). Commencing on October 14, 2008 and
      continuing through and including October 13, 2009, CGM shall act as the
      Companys exclusive agent to purchase Stock under the Purchase Plan. This
      Purchase Plan supplements any purchases of stock by the Company outside
      of the Purchase Plan, which may occur from time to time, in open market
      transactions pursuant to Rule 10b-18 of the Exchange Act. The daily
      purchase quantity is defined as a number of shares up to, but not to
      exceed, each days applicable Rule 10b-18 maximum volume limit (i.e. 25%
      of the prior four calendar weeks average daily trading volume); however,
      once per week a block of stock may be purchased that exceeds the Rule
      10b-18 average daily trading volume condition, provided that no other
      Purchase Plan purchases are made on any day on which such a block is
      purchased. As of October 31 2008, the total maximum number of shares that
      may be purchased under the Purchase Plan is 477,758 at a total maximum
      aggregate price (exclusive of commission) of
  $4,777,580.

On March 17,
2008, the Company repurchased approximately 402,000 shares of its common stock
from a shareholder in a privately-negotiated transaction outside of the
Companys stock repurchase program for an aggregate purchase price of
approximately $2,700,000. The repurchased shares were retired and constitute
authorized but unissued shares.

Item 6.Selected
Financial Data

Not applicable to smaller reporting
company.

Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations

For a
complete understanding, this Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
Consolidated Financial Statements and Notes to the Consolidated Financial
Statements contained in this Form 10-K.

Certain
statements under Managements Discussion and Analysis of Financial Condition
and Results of Operations and elsewhere in this report constitute
forward-looking statements within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of Bridgford Foods Corporation to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions; the
impact of competitive products and pricing; success of operating initiatives;
development and operating costs; advertising and promotional efforts; adverse
publicity; acceptance of new product offerings; consumer trial and frequency;
changes in business strategy or development plans; availability, terms and
deployment of capital; availability of qualified personnel; commodity, labor,
and employee benefit costs; changes in, or failure to comply with, government
regulations; weather conditions; construction schedules; and other factors
referenced in this Report.

10

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Results of Operations (in thousands
except percentages)

Fiscal Year Ended October 31, 2008
(52 weeks) Compared to Fiscal Year Ended November 2, 2007 (52
weeks)

**Net
Sales-Consolidated**

Net sales in
fiscal 2008 decreased $4,101 (3.3%) when compared to the prior year. The primary
reason for the decrease was lower unit volume (7.7%). Increased selling prices
(3.5%) partially offset the unit volume decline. Promotional allowances as a
percentage of consolidated sales decreased 0.1% which helped to partially offset
the net sales decrease.

**Net Sales-Frozen Food
Products Segment**

Net sales in
the Frozen Food Products segment increased $3,467 (7.0%) compared to the prior
year. This increase includes initial sales of shelf-stable sandwiches to the
military of $1,191. Unit volume decreases of 2.9% were offset by unit price
increases of 6.3%. Promotional allowances were unchanged compared to the prior
year.

**Net Sales-Refrigerated
and Snack Food Products Segment**

Net sales in
the Refrigerated and Snack Food Products segment decreased $7,568 (10.0%)
compared to the prior year. Unit volume decreased 11.8% in fiscal 2008. The
impact of price increases was negligible. Promotional allowances were unchanged
compared to the prior year.

**Cost of Products
Sold-Consolidated**

Cost of
products sold decreased $803 (1.0%) compared to the prior year primarily due to
lower unit sales volume. Higher commodity costs partially offset the impact of
the unit volume decrease.

**Cost of Products
SoldFrozen Food Products Segment**

Cost of
products sold in the Frozen Food Products segment increased $4,821 (16.0%)
compared to the prior year. Record high flour commodity costs in fiscal 2008
were the primary contributing factor causing this increase.

**Cost of Products
SoldRefrigerated and Snack Food Products Segment**

Cost of
products sold in the Refrigerated and Snack Food Products segment decreased
$5,971 (11.3%) compared to the prior year. Lower unit volumes partially offset
by higher meat commodity costs in fiscal 2008 were the primary factors causing
this change.

**Gross
Margin-Consolidated**

The gross
margin before depreciation decreased from 35.1% to 33.6%, in fiscal 2008,
primarily due to higher flour and meat commodity costs when compared to the
prior fiscal year. Promotional allowances remained essentially unchanged as a
percentage of consolidated sales and had no measurable impact on the gross
margin.

**Gross MarginFrozen Food
Products Segment**

The gross
margin before depreciation decreased from 38.9% to 33.8%, in fiscal 2008,
primarily due to record high flour commodity costs when compared to the prior
fiscal year. Promotional allowances remained unchanged as a percentage of sales.
Increased selling prices were insufficient to overcome increased commodity costs
over the course of the fiscal year.

**Gross MarginRefrigerated
and Snack Food Products Segment**

The gross
margin before depreciation increased from 30.3% to 31.3%, in fiscal 2008,
primarily due to increased in-house production of previously outsourced items
offset by higher meat commodity costs and lower unit volumes when compared to
the prior fiscal year. The impact of price increases was
negligible.

11

---

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

Selling, general and administrative
expenses increased by $2,003 (4.9%) compared to the prior fiscal year. The
increase in this category did not directly correspond to the sales decrease.

The table below summarizes the
primary expense variances:

|                                       |  | 52 Weeks Ended  |        | Expense/Loss          
|-------------------------------------- |  | --------------- | ------ | ----------------------
|                                       |  | October 31,2008 |        | November 2,
      2007
|Fuel                                   |  | $               | 4,158  |                       
|Benefits-Health/Life                   |  |                 | 4,445  |                       
|Benefits-Workers Compensation          |  |                 | 1,986  |                       
|Cash Surrender
      Value Loss/(Gain) |  |                 | 928    |                       
|Interest Income                        |  |                 | (272   | )                     
|Other                                  |  |                 | 32,007 |                       
|Total                                  |  | $               | 43,252 |                       

**Selling, General and
Administrative Expenses-Frozen Food Products Segment**

Selling,
general and administrative expenses in the Frozen Food Products segment
increased by $1,149 (7.9%) compared to the prior year. Higher fuel, healthcare
and workers compensation costs were partially offset by lower advertising
expenses when compared to the prior year.

**Selling, General and
Administrative Expenses-Refrigerated and Snack Food Products
Segment**

Selling,
general and administrative expenses in the Refrigerated and Snack Food Segment
increased $854 (3.2%) compared to the prior year. Higher fuel, healthcare and
workers compensation costs outpaced the impact of the sales decline.

**Depreciation
Expense-Consolidated**

Depreciation
expense decreased by $106 (3.1%) compared to the prior year. The decrease in
depreciation expense reflects lower capital expenditure levels in recent years
and certain significant assets becoming fully depreciated in the 2008 fiscal
year.

**Depreciation
Expense-Frozen Food Products Segment**

Depreciation
expense in the Frozen Food Products segment decreased by $224 (22.2%) compared
to the prior year. The decrease in depreciation expense reflects lower capital
expenditure levels in recent years and certain significant assets becoming fully
depreciated in the 2008 fiscal year.

**Depreciation
Expense-Refrigerated and Snack Food Products Segment**

Depreciation
expense in the Refrigerated and Snack Food Segment decreased by $189 (7.9%)
compared to the prior year. The decrease in depreciation expense reflects lower
capital expenditure levels in recent years and certain significant assets
becoming fully depreciated in the 2008 fiscal year.

**Income
Taxes**

The
effective income tax rate was (112.1)% and (56.6%) in fiscal years 2008 and
2007, respectively. In fiscal year 2008, the effective income tax rate differed
from the applicable mixed statutory rate of approximately 38% primarily due to
recording a full valuation allowance on the Companys deferred tax assets of
$8,615 (Refer to Note 4) and the Companys current year claim for research and
development tax credits and non-taxable life insurance. In fiscal year 2007, the
effective income tax rate differed from the applicable mixed statutory rate of
approximately 38% primarily due to the Companys current year claim for research
and development tax credits and non-taxable life insurance.

Fiscal Year Ended November 2, 2007
(52 weeks) Compared to Fiscal Year Ended November 3, 2006 (53
weeks)

**Net
Sales-Consolidated**

Net sales in
fiscal 2007 decreased $9,173 (6.8%) when compared to the prior year. After
considering the additional week in fiscal 2006, a 53 week year, sales decreased
$6,640 (5.0%) compared to the prior year. The primary reason for the decrease
was lower unit volume (8.3%). Increased selling prices (1.9%) partially offset
the unit volume decline. Promotional allowances as a percentage of consolidated
sales increased 1.1% which also contributed to the net sales
decrease.

12

---

**Net Sales-Frozen Food
Products Segment**

Net sales in
the Frozen Food Products segment decreased $1,405 (2.8%) compared to the prior
year. After considering the additional week in fiscal 2006, sales decreased $446
(0.9%). Unit volume decreases of 5.4% were partially offset by unit price
increases of 4.5%. Promotional allowances were higher compared to the prior year
which also contributed to the slight net sales decline.

**Net Sales-Refrigerated
and Snack Food Products Segment**

Net sales in
the Refrigerated and Snack Food Products segment decreased $7,768 (9.3%)
compared to the prior year. After considering the additional week in fiscal
2006, sales decreased $6,194 (7.6%). Unit volume decreased 9.3% in fiscal 2007.
The impact of price increases was negligible. Promotional allowances were higher
compared to the prior year which also contributed to the sales
decline.

**Cost of Products
Sold-Consolidated**

Cost of products sold decreased
$4,007 (4.7%) compared to the prior year primarily due to lower unit sales
volumes.

**Cost of Products
SoldFrozen Food Products Segment**

Cost of
products sold in the Frozen Food Products segment increased $146 (0.5%) compared
to the prior year. Higher flour commodity costs in fiscal 2007 were the primary
contributing factor causing this increase.

**Cost of Products
SoldRefrigerated and Snack Food Products Segment**

Cost of
products sold in the Refrigerated and Snack Food Products segment decreased
$4,605 (8.0%) compared to the prior year. Lower unit volumes partially offset by
higher meat commodity costs in fiscal 2007 were the primary factors causing this
change.

**Gross
Margin-Consolidated**

The gross
margin before depreciation decreased from 36.6% to 35.1%, in fiscal 2007,
primarily due to higher flour and meat commodity costs when compared to the
prior fiscal year. Higher promotional allowances also reduced net selling prices
contributing to the gross margin decline.

**Gross MarginFrozen Food
Products Segment**

The gross
margin before depreciation decreased from 40.9% to 38.9%, in fiscal 2007,
primarily due to higher flour commodity costs when compared to the prior fiscal
year. Higher promotional allowances also reduced net selling prices contributing
to the gross margin decline. Increased selling prices were insufficient to
overcome increased commodity costs.

**Gross MarginRefrigerated
and Snack Food Products Segment**

The gross
margin before depreciation decreased from 31.2% to 30.3%, in fiscal 2007,
primarily due to higher meat commodity costs and lower unit volumes when
compared to the prior fiscal year. The impact of price increases was negligible.
Promotional allowances were higher compared to the prior year which also
contributed to the slight gross margin decline.

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

Selling,
general and administrative expenses decreased $2,714 (6.2%) when compared to the
prior year. After considering the additional week in fiscal 2006, average weekly
expenses were lower compared to the prior year. Within this category costs for
advertising and outsourced computer network security and support outpaced sales
growth. Offsetting these increases were lower employee benefit expenses
(pension, healthcare, workers compensation and vacation pay), increased gains
on life insurance policies and reduced staff costs related to computer network
outsourcing.

**Selling, General and
Administrative Expenses-Frozen Food Products Segment**

Selling,
general and administrative expenses in the Frozen Food Products segment
increased by $382 (2.7%) compared to the prior year. Higher advertising costs
were partially offset by lower employee benefit expenses when compared to the
prior year.

13

---

**Selling, General and
Administrative Expenses-Refrigerated and Snack Food Procuts
Segment**

Selling,
general and administrative expenses in the Refrigerated and Snack Food Segment
decreased $3,095 (10.4%) compared to the prior year. This decrease was primarily
caused by lower unit sales volume. Lower employee benefit expenses outpaced the
impact of the sales decline.

**Depreciation
Expense-Consolidated**

Depreciation
expense decreased by $388 (10.3%) compared to the prior year. The decrease in
depreciation expense reflects lower capital expenditure levels in recent years
and certain significant assets becoming fully depreciated in the 2007 fiscal
year. Offsetting these decreases was the addition of a new major manufacturing
line put into service in the last quarter of the 2007 fiscal year.

**Depreciation
Expense-Frozen Food Products Segment**

Depreciation
expense in the Frozen Food Products segment decreased by $390 (27.9%) compared
to the prior year. The decrease in depreciation expense reflects lower capital
expenditure levels in recent years and certain significant assets becoming fully
depreciated in the 2007 fiscal year.

**Depreciation
Expense-Refrigerated and Snack Food Products Segment**

Depreciation
expense in the Refrigerated and Snack Food Segment was essentially equal as
compared to the prior year. Recent lower capital expenditure levels were off-set
by the addition of a new major manufacturing line put into service in the last
quarter of the 2007 fiscal year.

**Gain on Sale of Equity
Securities**

The Company
did not engage in the sale of equity securities during fiscal year 2007 and
recorded a pre-tax gain of $106 in fiscal 2006.

**Income
Taxes**

The
effective income tax rate was (56.6)% and 17.2% in fiscal years 2007 and 2006,
respectively. In fiscal year 2007, the effective income tax rate differed from
the applicable mixed statutory rate of approximately 38% primarily due to the
Companys current year claim for research and development tax credits and
non-taxable life insurance. In fiscal year 2006, the effective income tax rate
differed from the applicable mixed statutory rate of approximately 38% primarily
due to the Companys current year claim for research and development tax credits
related to prior year activities.

Liquidity and Capital Resources (in
thousands except share amounts)

The Companys need for operations
growth, capital expenses and share repurchases are expected to be met with cash
flows provided by operating activities.

Cash flows from operating
activities:

2008
    
    2007Net income (loss)
    
    $
    (12,447
    )
    
    $
    (292
    )Adjustments to
      reconcile net income (loss) to net cashprovided by operating
      activities:Depreciation
    
    
    3,283
    
    
    
    3,389(Recovery) from losses on accounts
      receivable
    
    
    (194
    )
    
    
    (245
    )(Gain) on sale of property, plant
      and equipment
    
    
    (27
    )
    
    
    (8
    )(Gain) on sale of equity securities
    
    
    
    
    
    
    Deferred income taxes,
      net
    
    
    (2,107
    )
    
    
    (523
    )Tax valuation allowance
    
    
    8,615
    
    
    
    ---Changes in operating working capital
    
    
    2,483
    
    
    
    9,911Net cash (used)
      provided by operating activities
    
    $
    (394
    )
    
    $
    12,232


14

---

For fiscal year 2008, net cash was
used in operating activities of $394. The Company funded additions to property,
plant and equipment in the amount of $1,880 and share repurchases of $3,039 from
cash balances. For fiscal year 2007, net cash provided by operating activities
was $12,232, which enabled the Company to fund additions to property, plant and
equipment in the amount of $1,587 and share repurchases of $515.

Significant changes in working
capital are as follows:

2008  Operating cash flows decreased
primarily due to reductions in other non-current assets and the current portion
of non-current liabilities offset by decreases in inventories, prepaid expenses
and accrued payroll, advertising and other expenses. During the year the Company
funded $2,467 toward its defined benefit pension plan.

2007  Operating cash flows increased due
to the sale of trading securities and reductions in accounts receivable and
inventories offset by increases in prepaid expenses and other non-current
assets. Significant reductions in accounts payable, accrued payroll, advertising
and other expenses and the current and non-current portion of long-term
liabilities offset cash flow increases during 2007. During the year the Company
funded $3,290 toward its defined benefit pension plan.

Cash used in investing
activities:

2008
    
    2007Proceeds from sale of property, plant and equipment
    
    $
    69
    
    
    $
    26Additions to
      property, plant and equipment
    
    
    (1,880
    )
    
    
    (1,587
    )Net
      cash used in investing activities
    
    $
    (1,811
    )
    
    $
    (1,561
    )


Expenditures
for property, plant and equipment include the acquisition of new equipment,
upgrading of facilities to maintain operating efficiency and investments in cost
effective technologies to lower costs. Overall capital spending has declined in
recent years as the Company carefully scrutinizes capital investments for short
term pay-back of investment. A new major manufacturing line in the amount of
$1,914 was put into service in the last quarter of fiscal year 2007.

Cash used in financing
activities:

2008
    
    2007Shares repurchased
    
    $
    (3,039
    )
    
    $
    (515
    )Net
      cash used in financing activities
    
    $
    (3,039
    )
    
    $
    (515
    )


The
Companys stock repurchase program was approved by the Board of Directors in
November 1999 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
2,000,000 shares of the Companys common stock on the open market. As of October
31, 2008, up to 447,758 shares were still authorized for repurchase under the
program.

The Company
has remained free of interest-bearing debt for twenty-two consecutive years. The
Company maintains a line of credit with Bank of America that expires April 30,
2010. Under the terms of this line of credit, the Company may borrow up to
$2,000 at an interest rate equal to the banks reference rate, unless the
Company elects an optional interest rate. The borrowing agreement contains
various covenants, the more significant of which require the Company to maintain
certain levels of shareholders equity and working capital. The Company was in
violation of the shareholders equity covenant which was subsequently waived and
modified per an amendment to the agreement (dated as of January 9, 2009). The
Company is currently in compliance with all provisions of the agreement. There
were no borrowings under this line of credit during the year. Management
believes that the Companys strong financial position and its capital resources
are sufficient to provide for its operating needs and capital expenditures for
fiscal 2009.

Off-Balance Sheet
Arrangements

The Company
does not currently have any off balance sheet arrangements within the meaning of
Item 303(a)(4) of Regulation S-K.



15

---

Contractual Obligations (in
thousands)

The Company
has remained free of interest bearing debt for twenty-two consecutive years and
had no other debt or other contractual obligations except for leases existing at
October 31, 2008. The Company leases certain transportation equipment under
operating leases.

Future minimum lease payments are
approximately (in thousands):

|                      |  |      |     |      |   |      |  |      |     | **2012**
|--------------------- |  | ---- | --- | ---- | - | ---- |  | ---- | --- | --------
|                      |  |      |     |      |   |      |  |      |     | and     
|                      |  |      |     |      |   |      |  |      |     | there-  
|                      |  | 2008 |     | 2009 |   | 2010 |  | 2011 |     | after   
|Net Lease Commitments |  | $    | 425 |      | $ | 425  |  | $    | 425 |         

Critical Accounting
Policies

The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported revenues and expenses during the respective
reporting periods. Actual results could differ from those estimates. Amounts
estimated related to liabilities for self-insured workers compensation,
employee healthcare and pension benefits are especially subject to inherent
uncertainties and these estimated liabilities may ultimately settle at amounts
not originally estimated. The Company records promotional and returns allowances
based on recent and historical trends. Management believes its current estimates
are reasonable and based on the best information available at the time.

Disclosure
concerning the Companys policies on credit risk, revenue recognition, cash
surrender or contract value for life insurance policies, deferred taxes, income
tax and the recoverability of its long-lived assets are provided in Notes 1 and 4 to
the Consolidated Financial Statements.

Estimated
amounts related to liabilities for pension benefits are especially subject to
inherent uncertainties and these liabilities may ultimately settle at amounts
not originally estimated. Management believes its current estimates are
reasonable and based on the best information available at the time.

Recently
Issued Accounting Pronouncements and Regulations

During the
last three years, various accounting standard-setting bodies have been active in
soliciting comments and issuing statements, interpretations and exposure drafts.
For information on new accounting pronouncements and the impact, if any, on the
Companys financial position or results of operations, see Note 1 of the Notes
to the Consolidated Financial Statements.

Item 7A.Quantitative and
Qualitative Disclosures about Market Risk

Not applicable for smaller reporting
company.

Item 8.Consolidated
Financial Statements and Supplementary Data

Not applicable for smaller reporting
company.

Item 9.Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure

Not
applicable.

Item 9A.Controls and
Procedures

Management
of the Company, with the participation and under the supervision of the
Companys Chairman and Chief Financial Officer, has evaluated the effectiveness
of the Companys disclosure controls and procedures (as defined in Exchange Act
Rule 13a-15(e)) as of the end of the period covered by this Report. Based on
this evaluation the Chairman and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures are effective as of the end of the
period covered by this Report to provide reasonable assurance that material
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified by the Securities and Exchange
Commissions rules and forms.

16

---

The
Companys management, including its Chairman and Chief Financial Officer, does
not expect that the Companys disclosure controls and internal controls will
prevent all error and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must beconsidered relative to their costs. Because
of inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control.

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

The Company
maintains and evaluates a system of internal accounting controls, and a program
of internal auditing designed to provide reasonable assurance that the Companys
assets are protected and that transactions are performed in accordance with
proper authorization, and are properly recorded. This system of internal
accounting controls is continually reviewed and modified in response to evolving
business conditions and operations and to recommendations made by the
independent registered public accounting firm and internal auditor. The Company
has an established a code of conduct. The management of the Company believes
that the accounting and internal control systems provide reasonable assurance
that assets are safeguarded and financial information is reliable.

The Audit
Committee of the Board of Directors meets regularly with the Companys financial
management and counsel, and with the independent registered public accounting
firm engaged by the Company. Internal accounting controls and the quality of
financial reporting are discussed during these meetings. The Audit Committee has
discussed with the independent registered public accounting firm matters
required to be discussed by Statement of Auditing Standards No. 61
(Communication with Audit Committees). In addition, the independent registered
public accounting firms independence from the Company and its management,
including the matters in the written disclosures required by Public Company
Accounting Oversight Board Rule 3526 Communicating with Audit Committees
Concerning Independence, has been discussed by the Committee and the
independent registered public accounting firm.

Section 404 of the Sarbanes-Oxley Act
of 2002

In order to
comply with the Sarbanes-Oxley Act of 2002 (the Act), the Company has
undertaken and continues a comprehensive effort, which includes the
documentation and review of its internal controls. In order to comply with the
Act, the Company is in the process of centralizing most accounting and many
administrative functions at its corporate headquarters in an effort to control
the cost of maintaining its control systems. On July 11, 2006, The Committee of
Sponsoring Organizations (COSO) issued guidance on how small companies should
implement an effective internal control framework over financial reporting and
other risks. This guidance is considered a key tool to help smaller public
companies to confront the challenges of the Act. As a result, the Company may
incur substantial additional expenses and diversion of managements time. During
the course of these activities, the Company may identify certain internal
control issues which management believes should be improved. These improvements,
if necessary, will likely include further formalization of policies and
procedures, improved segregation of duties, additional information technology
system controls and additional monitoring controls. Although management does not
believe that any of these matters will result in material weaknesses being
identified in the Companys internal controls as defined by the Public Company
Accounting Oversight Board Auditing Standard No. 5, no assurances can be given
regarding the outcome of these efforts. Additionally, control weaknesses may not
be identified in a timely enough manner to allow remediation prior to the
issuance of the auditors report on internal controls over financial reporting.
Any failure to adequately comply could result in sanctions or investigations by
regulatory authorities, which could harm the Companys business or investors
confidence in the Company.

The
Securities and Exchange Commission, on December 15, 2006, adopted new measures
to grant relief to smaller public companies by extending the date of compliance
with Section 404 of the Act. Under these new measures, the Company will be
required to comply with the Act in two phases. The first phase was completed by
the Company for fiscal year ending October 31, 2008 and required the Company to
issue a management report on internal control over financial reporting. The
second phase will require the Company to provide an auditors attestation report
on internal control over financial reporting beginning with the Companys fiscal
year ending October 30, 2010.

Item 9B. Other
Information

Not applicable.

17

---

PART III

Item 10.Directors,
Executive Officers and Corporate Governance

Information
set forth in the sections entitled Proposal 1  Election of Directors and
Section 16(a) Beneficial Ownership Reporting Compliance contained in the
Companys definitive proxy statement for the Annual Meeting of Shareholders to
be held on March 18, 2009 is incorporated herein by reference. Information
concerning the executive officers of the Company is set forth in Part I hereof
under the heading Executive Officers of the Registrant.

Item 11.Executive
Compensation

Information
set forth in the sections entitled Proposal 1  Election of Directors and
Compensation of Executive Officers contained in the Companys definitive proxy
statement for the 2009 Annual Meeting of Shareholders to be held on March 18,
2009 is incorporated herein by reference.

Item 12.Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Information
set forth in the sections entitled Principal Shareholders and Management and
Proposal 1  Election of Directors contained in the Companys definitive proxy
statement for the 2009 Annual Meeting of Shareholders to be held on March 18,
2009 is incorporated herein by reference.

Equity Compensation Plan
Information

The
following table sets forth information regarding outstanding options, warrants
and rights and shares reserved for future issuance under the Companys existing
compensation plans as of October 31, 2008. The Companys sole shareholder
approved equity compensation plan is the 1999 Stock Incentive Plan. The Company
does not have any non-stockholder approved equity compensation
plans.

|                                |  | Number of
      securities to    |  |                              |       | Number of
      securities remaining        
|------------------------------- |  | -------------------------------- |  | ---------------------------- | ----- | --------------------------------------------
|                                |  | be issued
      upon exercise of |  |                              |       | available
      for future issuance under   
|                                |  | outstanding
      options,       |  | Weighted-average exercise    |       | equity
      compensation plans as of       
|                                |  | warrants and
      rights as of  |  | price of outstanding         |       | October 31,
      2008 (excluding securities
|                                |  | October 31,
      2008           |  | options, warrants and rights |       | reflected in
      column (a))              
|Plan Category                   |  | (a)                              |  | (b)                          |       | (c)                                         
|Equity compensation plans       |  |                                  |  |                              |       |                                             
|approved by security            |  |                                  |  |                              |       |                                             
|holders                         |  | 250,000                          |  | $                            | 10.00 |                                             
|Equity
      compensation plans |  |                                  |  |                              |       |                                             
|not approved by security        |  |                                  |  |                              |       |                                             
|holders                         |  |                                 |  |                              |      |                                             
|Total                           |  | 250,000                          |  | $                            | 10.00 |                                             

18

---

Item 13.Certain
Relationships and Related Transactions, and Director Independence (not in
thousands)

Information
set forth in the section entitled Certain Relationships and Related Party
Transactions contained in the Companys definitive proxy statement for the 2009
Annual Meeting of Shareholders to be held on March 18, 2009 is incorporated
herein by reference.

The Company
is considered a controlled company within the meaning of Rule 4350(c)(5) of
the National Association of Securities Dealers (NASD) and is therefore
exempted from various NASD rules pertaining to certain independence
requirements of its directors. Nevertheless, the Board of Directors has
determined that Messrs. Andrews, Foster, Schulze, Scott and Zippwald, who
together comprise the Audit Committee, are all independent directors within
the meaning of Rule 4200 of the Nasdaq Marketplace Rules.

The
Company's general legal counsel is the son of the senior chairman of the board
of directors. For these services, he currently is paid a fee of $1,350 for each
meeting attended. Total fees paid under this arrangement for fiscal year 2008
were $14,975. In addition, legal services are performed on behalf of the Company
and billed by a firm in which he is a partner. Total fees billed under this
arrangement for fiscal year 2008 were approximately $63,000.

Item 14.Principal
Accountant Fees and Services

Information set forth in the
sections entitled Principal Accountant Fees and Services and Policy on Audit
Committee Pre-Approval of Audit Services And Permissible Non-Audit Services of
Independent Accountants contained in the Companys definitive proxy statement
for the Annual Meeting of Shareholders to be held on March 18, 2009 is
incorporated herein by reference.

PART IV

Item 15.Exhibits and
Financial Statement Schedules

(a)(1)Financial Statements. The following
documents are filed as a part of this report:

|                                                                                                                                           |  | Page
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Managements Report on Internal Control Over Financial
      Reporting                                                                     |  | 22  
|Report of
      Independent Registered Public Accounting Firm                                                                              |  | 23  
|Consolidated Balance Sheets as of October 31, 2008 and November 2,
      2007                                                              |  | 24  
|Consolidated
      Statements of Operations for years ended October 31, 2008 and November 2,
      2007                                    |  | 25  
|Consolidated Statements
      of Shareholders Equity and Comprehensive Income for years October 31,
      2008 and       November 2, 2007 |  | 26  
|Consolidated
      Statements of Cash Flows for years ended October 31, 2008 and November 2,
      2007                                    |  | 27  
|Notes to Consolidated Financial Statements                                                                                                 |  | 28  
|                                                                                                                                          
|(2)Financial Statement
      Schedule                                                                                                      |  |     
|                                                                                                                                          
|The following financial statement is filed herewith:                                                                                       |  |     
|                                                                                                                                          
|Schedule II - Valuation and Qualifying Accounts                                                                                            |  | 41  

19

---

(3)Exhibits

(a)The
exhibits below are filed or incorporated herein by reference.

|Exhibit |      |            
|------- | ---- | -----------
|Number  |      | Description
|        | 3.5  |            
|        |      |            
|        | 3.6  |            
|        |     
|        | 3.7  |            
|        |     
|        | 3.8  |            
|        |     
|        | 10.1 |            
|        |     
|        | 10.2 |            
|        |     
|        | 10.3 |            
|        |     
|        | 10.4 |            
|        |     
|        | 21.1 |            
|        |     
|        | 23.1 |            
|        |     
|        | 24.1 |            
|        |     
|        | 31.1 |            
|        |     
|        | 31.2 |            
|        |     
|        | 32.1 |            
|        |     
|        | 32.2 |            

* Each of these Exhibits constitutes a
management contract, compensatory plan or arrangement.

20

---

SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

BRIDGFORD FOODS
CORPORATIONRegistrant

By:
    /s/ WILLIAM L. BRIDGFORDWilliam L.
      BridgfordChairman


Date: January 28, 2009

POWER OF
ATTORNEY

We, the undersigned directors and officers
of Bridgford Foods Corporation, do hereby constitute and appoint William L.
Bridgford and Raymond F. Lancy, or either of them, with full power of
substitution and resubstitution, our true and lawful attorneys and agents, to do
any and all acts and things in our name and behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, or their substitutes, may deem necessary or advisable to enable
said corporation to comply with the Securities Exchange Act of 1934, as amended,
and any rules, regulations and requirements of the Securities and Exchange
Commission in connection with this Annual Report on Form 10-K, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names and in the capacities indicated below, any and all
amendments; and we do hereby ratify and confirm all that the said attorneys and
agents, or either of them, shall do or cause to be done by virtue
hereof.

Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated

|Signature                        |  | Title                               |  | Date                  
|-------------------------------- |  | ----------------------------------- |  | ----------------------
|                                
|/s/   WILLIAM L.
      BRIDGFORD |  | Chairman                            |  | January 28,
      2009
|William L.
      Bridgford       |  | (Principal
      Executive Officer) |  |                       
|                                
|/s/   ALLAN L.
      BRIDGFORD   |  | Senior
      Chairman               |  | January 28,
      2009
|Allan L.
      Bridgford         |  |                                     |  |                       
|                                
|/s/   HUGH WM.
      BRIDGFORD   |  | Vice President
      and Director   |  | January 28,
      2009
|Hugh Wm.
      Bridgford         |  |                                     |  |                       
|                                
|/s/   JOHN V.
    SIMMONS        |  | President                           |  | January 28,
      2009
|John V.
      Simmons            |  |                                     |  |                       
|                                
|/s/   RAYMOND F.
    LANCY       |  | Chief
      Financial Officer       |  | January 28,
      2009
|Raymond F.
      Lancy           |  | (Principal
      Financial Officer) |  |                       
|                                
|/s/   TODD C.
    ANDREWS        |  | Director                            |  | January 28,
      2009
|Todd C.
      Andrews            |  |                                     |  |                       
|                                
|/s/   RICHARD A.
      FOSTER    |  | Director                            |  | January 28,
      2009
|Richard A.
      Foster          |  |                                     |  |                       
|                                
|/s/   ROBERT E.
      SCHULZE    |  | Director                            |  | January 28,
      2009
|Robert E.
      Schulze          |  |                                     |  |                       
|                                
|/s/   D. GREGORY
    SCOTT       |  | Director                            |  | January 28,
      2009
|D. Gregory
      Scott           |  |                                     |  |                       
|                                
|/s/   PAUL R.
    ZIPPWALD       |  | Director                            |  | January 28,
      2009
|Paul R.
      Zippwald           |  |                                     |  |                       

21

---

Managements Report on Internal
Control Over Financial Reporting

The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The Companys internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.

Management
conducted an evaluation of the effectiveness of the internal controls over
financial reporting based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management
assessed the effectiveness of the Companys internal control over financial
reporting as of October 31, 2008. Based on managements assessment and those
criteria, management believes that the internal control over financial reporting
as of October 31, 2008 was effective.

Managements
internal control report was not subject to attestation by the Companys
independent registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
managements report.

There has
been no change in the Companys internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal
quarter covered by this Report that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial
reporting.

22

---

Report Of Independent Registered
Public Accounting Firm

To the Board of Directors and
ShareholdersBridgford Foods
Corporation

We have audited the accompanying
consolidated balance sheets of Bridgford Foods Corporation (the Company) as of
October 31, 2008 and November 2, 2007 and the related consolidated statements of
operations, shareholders equity and comprehensive income and cash flows for the
fiscal years ended October 31, 2008 and November 2, 2007. In connection with our
audits of the consolidated financial statements, we also have audited the
supplementary information included in Schedule II. These consolidated financial
statements and the financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
consolidated financial statements and the financial statement schedule based on
our audits.

We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the
consolidated financial position of the Company as of October 31, 2008 and
November 2, 2007, and the consolidated results of its operations and its cash
flows for the fiscal years ended October 31, 2008 and November 2, 2007 in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.

As discussed in Note 1 to the consolidated
financial statements, effective November 2, 2007, the Company adopted Statement
of Financial Accounting Standards No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements
No. 87, 88, 106 and 132(R).

As discussed in Notes 1 and 4 to the
consolidated financial statements, effective November 3, 2007, the Company
adopted FASB Interpretation No. 48 Accounting for Uncertainty in Income
Taxes.

/s/ HASKELL & WHITE LLP

Irvine, CaliforniaJanuary 28,
2009

23

---

BRIDGFORD FOODS
CORPORATIONCONSOLIDATED BALANCE SHEETSOctober 31, 2008 and November 2, 2007(in thousands, except per share amounts)

|                                                                                                                                                                                      |  | 2008 |        | 2007
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ----
|ASSETS                                                                                                                                                                                |  |      |        |     
|Current
      assets:                                                                                                                                                                 |  |      |        |     
|Cash and cash equivalents                                                                                                                                                             |  | $    | 6,092  |     
|Accounts receivable, less allowance for doubtful accounts of $397
      and
      $482,              respectively and promotional allowances of $2,015 and
      $1,980, respectively |  |      | 8,867  |     
|Inventories                                                                                                                                                                           |  |      | 16,052 |     
|Prepaid expenses                                                                                                                                                                      |  |      | 442    |     
|Refundable income taxes                                                                                                                                                               |  |      | 464    |     
|Deferred income taxes, less valuation allowance of $2,422 at
      October 31, 2008                                                                                                   |  |      |       |     
|Total current assets                                                                                                                                                                  |  |      | 31,917 |     
|                                                                                                                                                                                      |  |      |        |     
|Property, plant and equipment, net of accumulated depreciation of
      $53,740 and       $53,840,
      respectively                                                                 |  |      | 9,775  |     
|Other
      non-current assets                                                                                                                                                        |  |      | 10,263 |     
|Deferred income taxes, less valuation allowance of $6,193 at
      October 31, 2008                                                                                                   |  |      |       |     
|Total
      assets                                                                                                                                                                    |  | $    | 51,955 |     
|                                                                                                                                                                                     
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                  |  |      |        |     
|Current
      liabilities:                                                                                                                                                            |  |      |        |     
|Accounts payable                                                                                                                                                                      |  | $    | 3,073  |     
|Accrued payroll, advertising and other expenses                                                                                                                                       |  |      | 6,850  |     
|Current portion of non-current liabilities                                                                                                                                            |  |      | 1,555  |     
|Total current liabilities                                                                                                                                                             |  |      | 11,478 |     
|Non-current liabilities                                                                                                                                                               |  |      | 7,943  |     
|Total
      liabilities                                                                                                                                                               |  |      | 19,421 |     
|                                                                                                                                                                                     
|Contingencies and commitments (Notes 3, 5 and 6)                                                                                                                                      |  |      |        |     
|                                                                                                                                                                                     
|Shareholders equity:                                                                                                                                                                 |  |      |        |     
|Preferred stock, without par value                                                                                                                                                    |  |      |        |     
|Authorized - 1,000 shares Issued and outstanding 
      none                                                                                                                         |  |      |       |     
|Common stock, $1.00 par value                                                                                                                                                         |  |      |        |     
|Authorized - 20,000 shares: Issued and outstanding 
      9,435 in 2008
      and                     9,889 in 2007                                                                  |  |      | 9,492  |     
|Capital in excess of par value                                                                                                                                                        |  |      | 11,204 |     
|Retained earnings                                                                                                                                                                     |  |      | 14,298 |     
|Accumulated other comprehensive loss                                                                                                                                                  |  |      | (2,459 | )   
|Total shareholders equity                                                                                                                                                            |  |      | 32,535 |     
|                                                                                                                                                                                      |  | $    | 51,955 |     

See accompanying notes to consolidated
financial statements.

24

---

BRIDGFORD FOODS
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONSFor the years ended October 31, 2008 and November 2,
2007(in thousands, except share and
per share amounts)

2008
    
    2007Net sales
    
    $
    120,990
    
    
    $
    125,091Cost of products
      sold, excluding depreciation
    
    
    80,323
    
    
    
    81,126Selling, general and administrative expenses
    
    
    43,252
    
    
    
    41,249Depreciation
    
    
    3,283
    
    
    
    3,389126,858
    
    
    
    125,764(Loss) before
      taxes
    
    
    (5,868
    )
    
    
    (673
    )Provision (benefit) for taxes on income
    
    
    6,579
    
    
    
    (381
    )Net (loss)
    
    $
    (12,447
    )
    
    $
    (292
    )Basic (loss) per share
    
    $
    (1.30
    )
    
    $
    (0.03
    )Shares used to
      compute basic (loss) per share
    
    
    9,577,286
    
    
    
    9,928,107Diluted (loss) per share
    
    $
    (1.30
    )
    
    $
    (0.03
    )Shares used to
      compute diluted (loss) per share
    
    
    9,577,286
    
    
    
    9,928,107


See accompanying notes to consolidated
financial statements.

25

---

CONSOLIDATED STATEMENTS OF
SHAREHOLDERS EQUITYAND COMPREHENSIVE INCOMEFor the years ended October 31,
2008 and November 2, 2007(in
thousands)

|                                             |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  | Accumulated |        |   |  |  
|-------------------------------------------- |  | ------ | ----- | ------ |  | --------- | ------ | -------- |  | ------------- | ------ | -------- |  | ------------- | ------- | ------------- |  | ----------- | ------ | - |  | -
|                                             |  |        |       |        |  |           |        |          |  | Capital in    |        |          |  |               |         | **other**     |  | Total      
|                                             |  |        |       |        |  |           |        |          |  | excess of     |        | Retained |  | comprehensive |         | shareholders
|                                             |  | Shares |       | Amount |  | par value |        | earnings |  | income (loss) |        | equity  
|Balance, November 3, 2006                    |  |        | 9,958 |        |  | $         | 10,015 |          |  | $             | 14,235 |          |  | $             | 27,129  |               |  | $           | (1,193 | ) |  | $
|Shares
      repurchased and retired         |  |        | (69   | )      |  |           | (69    | )        |  |               | (446   | )        |  |               |         |               |  |             |        |   |  |  
|Net loss                                     |  |        |       |        |  |           |        |          |  |               |        |          |  |               | (292    | )             |  |             |        |   |  |  
|Other
      comprehensive net income (loss): |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|Unrealized loss on                           |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|investment (Note 1)                          |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             | (6     | ) |  |  
|Net Change in pension                        |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|liability prior to SFAS                      |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|158 adoption                                 |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             | 1,163  |   |  |  
|SFAS 158 adoption                            |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             | (567   | ) |  |  
|Comprehensive
      income                   |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|Balance, November 2, 2007                    |  |        | 9,889 |        |  |           | 9,946  |          |  |               | 13,789 |          |  |               | 26,837  |               |  |             | (603   | ) |  |  
|Adoption of Fin 48                           |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|(Note 4)                                     |  |        |       |        |  |           |        |          |  |               |        |          |  |               | (92     | )             |  |             |        |   |  |  
|Shares repurchased and
      retired         |  |        | (454  | )      |  |           | (454   | )        |  |               | (2,585 | )        |  |               |         |               |  |             |        |   |  |  
|Net loss                                     |  |        |       |        |  |           |        |          |  |               |        |          |  |               | (12,447 | )             |  |             |        |   |  |  
|Other comprehensive net income (loss):       |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|Unrealized loss on                           |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|investment (Note 1)                          |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             | (106   | ) |  |  
|Net change in defined                        |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|benefit plans                                |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             | (2,093 | ) |  |  
|Net change in other benefit plans            |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             | 343    |   |  |  
|Comprehensive
      loss                     |  |        |       |        |  |           |        |          |  |               |        |          |  |               |         |               |  |             |        |   |  |  
|Balance, October 31,
2008                    |  |        | 9,435 |        |  | $         | 9,492  |          |  | $             | 11,204 |          |  | $             | 14,298  |               |  | $           | (2,459 | ) |  | $

See accompanying notes to consolidated
financial statements.

26

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BRIDGFORD FOODS
CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended October 31,
2008 and November 2, 2007(in
thousands)

|                                                                                                  |  | 2008 |         | 2007
|------------------------------------------------------------------------------------------------- |  | ---- | ------- | ----
|Cash flows from operating activities:                                                             |  |      |         |     
|Net (loss)                                                                                        |  | $    | (12,447 | )   
|Adjustments to reconcile net (loss) to net cash (used in) provided
      by operating activities: |  |      |         |     
|Depreciation                                                                                      |  |      | 3,283   |     
|(Recovery) on losses on accounts receivable                                                       |  |      | (194    | )   
|(Gain) on sale of property, plant and equipment                                                   |  |      | (27     | )   
|Deferred income taxes, net                                                                        |  |      | (2,107  | )   
|Tax Valuation Allowance                                                                           |  |      | 8,615   |     
|Changes in operating assets and liabilities:                                                      |  |      |         |     
|Trading securities                                                                                |  |      | ---     |     
|Accounts receivable                                                                               |  |      | (111    | )   
|Inventories                                                                                       |  |      | 2,281   |     
|Prepaid expenses                                                                                  |  |      | 524     |     
|Income taxes receivable                                                                           |  |      | 33      |     
|Other non-current assets                                                                          |  |      | 928     |     
|Accounts payable                                                                                  |  |      | 96      |     
|Accrued payroll, advertising and other expenses                                                   |  |      | 1,504   |     
|Current portion of non-current liabilities                                                        |  |      | (2,116  | )   
|Non-current liabilities                                                                           |  |      | (656    | )   
|Net cash (used) provided by operating
      activities                                            |  |      | (394    | )   
|Cash used in investing activities:                                                                |  |      |         |     
|Proceeds from sale of property, plant and
      equipment                                         |  |      | 69      |     
|Additions to property, plant and equipment                                                        |  |      | (1,880  | )   
|Net
      cash used in investing activities                                                       |  |      | (1,811  | )   
|Cash used in financing activities:                                                                |  |      |         |     
|Shares repurchased                                                                                |  |      | (3,039  | )   
|Net
      cash used in financing activities                                                       |  |      | (3,039  | )   
|Net (decrease)
      increase in cash and cash equivalents                                        |  |      | (5,244  | )   
|                                                                                                 
|Cash and cash equivalents at beginning of year                                                    |  |      | 11,336  |     
|Cash and cash
      equivalents at end of year                                                    |  | $    | 6,092   |     
|                                                                                                 
|Supplemental disclosure of cash flow information:                                                 |  |      |         |     
|Cash paid for
      income taxes                                                                  |  | $    | ---     |     

See accompanying notes to consolidated
financial statements.

27

---

BRIDGFORD FOODS
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(amounts in
thousands except share amounts, per share amounts, time periods and
percentages)

NOTE 1-The Company and Summary of Significant Accounting
Policies:

The
consolidated financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly owned. All inter-company transactions have
been eliminated.

Use of estimates and
assumptions

The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported revenues and expenses during the respective
reporting periods. Actual results could differ from those estimates. Amounts
estimated related to liabilities for self-insured workers compensation,
employee healthcare and pension benefits and impairment of deferred tax assets
are especially subject to inherent uncertainties and these estimated liabilities
may ultimately settle at amounts not originally estimated. Management believes
its current estimates are reasonable and based on the best information available
at the time.

Under the
provisions of Statement of Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets (SFAS 144), the Company
is required to test long-lived assets for recoverability whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. If an impairment is indicated, the Company must measure the fair
value of assets in accordance with SFAS 144 to determine if and when adjustments
are to be recorded.

Concentrations of credit
risk

The
Companys credit risk is diversified across a broad range of customers and
geographic regions. Losses due to credit risk have recently been immaterial. The
carrying amount of cash equivalents, accounts and other receivables, accounts
payable and accrued liabilities approximate fair market value due to the short
maturity of these instruments. The Company maintains cash balances at financial
institutions, which may at times exceed the amounts insured by the Federal
Deposit Insurance Corporation of $250 per institution through December 31, 2009.
However, management does not believe there is significant credit risk associated
with these financial institutions. The provision for doubtful accounts
receivable is based on historical trends and current collectibility risk. The
Company has significant amounts receivable with a few large, well known
customers which, although historically secure, could be subject to material risk
should these customers operations suddenly deteriorate. Sales to Wal-Mart®
comprised 10.2% of revenues in fiscal year 2008 and 14.2% of accounts receivable
was due from Wal-Mart® at October 31, 2008. Sales to Wal-Mart® comprised 14.6% of
revenues in fiscal year 2007 and 12.4 % of accounts receivable was due from
Wal-Mart® at November 2, 2007.

Business segments

The Company
and its subsidiaries operate in two business segments - the processing and
distribution of frozen foods, and the processing and distribution of
refrigerated and snack food products.

Fiscal year

The Company
maintains its accounting records on a 52-53 week fiscal basis. Fiscal years 2008
and 2007 included 52 weeks.

Revenues

Revenues are
recognized upon passage of title to the customer, typically upon product
pick-up, shipment or delivery to customers. Products are delivered to customers
primarily through the Companys own long-haul fleet or through a Company owned
direct store delivery system. These delivery costs, $6,915 and $6,375 for 2008
and 2007, respectively, are included in selling, general and administrative
expenses in the accompanying consolidated financial statements. The Company
records promotional and returns allowances based on recent and historical
trends.

Cash equivalents

The Company
considers all investments with original maturities of three months or less to be
cash equivalents. Cash equivalents include money market funds and treasury bills
of 6,092 at October 31, 2008 and $11,336 at November 2, 2007.

28

---

Investments

In accordance with SFAS No. 115
Accounting for Certain Investments in Debt and Equity Securities, the Company
classifies certain equity securities as available for sale and measures them at
market value (fair value). The Company accounts for the investments in
securities received by customers as part of a bankruptcy settlements as
available for sale by recording unrealized gains or losses in other
comprehensive income as a component of stockholders' equity. The Company does
not have any investments categorized as trading or held to maturity as of
October 31, 2008 or November 2, 2007.

Available for
      sale securities:
    
    2008
    
    
    ****2007****Market value of investment in securities
    
    250
    
    
    281Acquisition
      value of investments in securities
    
    430
    
    
    291Unrealized (loss) on
      investment
    
    (180
    )
    
    (10
    )


Inventories

Inventories are valued at the lower
of cost (which approximates actual cost on a first-in, first-out basis) or
market. Costs related to warehousing, transportation and distribution to
customers are considered when computing market value. Inventories include the
cost of raw materials, labor and manufacturing overhead. The Company regularly
reviews inventory quantities on hand and writes down any excess or obsolete
inventories to net realizable value. An inventory reserve is created when
potentially slow-moving or obsolete inventories are identified in order to
reflect the appropriate inventory value. Changes in economic conditions,
production requirements, and lower than expected customer demand could result in
additional obsolete or slow-moving inventory that cannot be sold or must be sold
at reduced prices and could result in additional reserve provisions.

Property, plant and
equipment

Property, plant and equipment are
carried at cost less accumulated depreciation. Major renewals and betterments
are charged to the asset accounts while the cost of maintenance and repairs is
charged to expense as incurred. When assets are sold or otherwise disposed of,
the cost and accumulated depreciation are removed from the respective accounts
and the resulting gain or loss is credited or charged to income. Depreciation is
computed on a straight-line basis over 10 to 20 years for buildings and
improvements, 5 to 10 years for machinery and equipment, and 3 to 5 years for
transportation equipment.

Income taxes

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

The Company provides tax reserves
for federal, state, local and international exposures relating to audit results,
tax planning initiatives and compliance responsibilities. The development of
these reserves requires judgments about tax issues, potential outcomes and
timing and are determined in accordance with FASB Interpretation No. 48 (See
Note 4 to the financial statements). Although the outcome of these tax audits is
uncertain, in managements opinion adequate provisions for income taxes have
been made for potential liabilities emanating from these reviews. If actual
outcomes differ materially from these estimates, they could have a material
impact on the Companys results of operations.

Stock-based
compensation

The Company measures and recognizes
compensation expense for all share-based payments to employees, including grants
of employee stock options, in the financial statements based on the fair value
at the date of the grant. The Company has not issued, awarded, granted or
entered into any stock-based payment agreements since April 29,
1999.

Basic and diluted earnings per
share

Basic earnings per share is
calculated based on the weighted average number of shares outstanding for all
periods presented. Diluted earnings per share is calculated based on the
weighted average number of shares outstanding plus shares issuable on conversion
or exercise of all potentially dilutive securities (stock options).

Foreign currency
transactions

The Companys foreign branch located
in Canada enters into transactions that are denominated in a foreign currency.
The related transaction gains and losses arising from changes in exchange rates
are not material and are included in selling, general and administrative
expenses in the consolidated statement of operations in the period the
transaction occurred.

29

---

Comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity (net
assets) of a business enterprise during the period from transactions and other
events and circumstances from non-owner sources. Comprehensive income (loss)
consists of net income (loss), the additional minimum pension liability
adjustment and unrealized gains on equity securities. The Companys cost basis
in the stock is equal to the fair market value at the date of issuance. During
fiscal year 2007, the Company recognized the net change in the minimum pension
liability prior to the adoption of SFAS 158 as well as the impact of SFAS 158
adoption on the Companys defined benefit pension plan and post retirement
healthcare plan. No effect has been given to these transactions in the
consolidated statement of cash flows.

Critical accounting
policies

The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported revenues and expenses during the respective
reporting periods. Actual results could differ from those estimates. Amounts
estimated related to liabilities for pension costs, self-insured workers
compensation and employee healthcare are especially subject to inherent
uncertainties and these estimated liabilities may ultimately settle at amounts
not originally estimated. Management believes its current estimates are
reasonable and based on the best information available at the time.

Under the
provisions of Statement of Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets (SFAS 144), the Company
is required to test long-lived assets for recoverability whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. If an impairment is indicated, the Company must measure the fair
value of assets in accordance with SFAS 144 to determine if and when adjustments
are to be recorded.

The
Companys credit risk is diversified across a broad range of customers and
geographic regions. Losses due to credit risk have recently been immaterial. The
provision for doubtful accounts receivable is based on historical trends and
current collectibility risk. The Company has significant amounts receivable with
a few large, well known customers which, although historically secure, could be
subject to material risk should these customers operations suddenly
deteriorate. The Company monitors these customers closely to minimize the risk
of loss. Sales to Wal-Mart® comprised 10.2% of revenues in fiscal year 2008 and
14.2% of accounts receivable was due from Wal-Mart® at October 31, 2008. Sales
to Wal-Mart® comprised 14.6% of revenues in fiscal year 2007 and 12.4 % of
accounts receivable was due from Wal-Mart® at November 2, 2007.

Revenues are
recognized upon passage of title to the customer upon product pick-up, shipment
or delivery to customers as determined by applicable contracts. Products are
delivered to customers through the Companys own fleet or through a
Company-owned direct store delivery system.

The Company
records the cash surrender or contract value for life insurance policies as an
adjustment of premiums paid in determining the expense or income to be
recognized under the contract for the period.

The above
listing is not intended to be a comprehensive list of all the Companys
accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in the United States, with no need for managements judgment in their
application. There are also areas in which managements judgment in selecting
any available alternative would not produce a materially different
result.

Recently Issued Accounting
Pronouncements and Regulations

In July
2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes, (FIN 48), an interpretation of FASB Statement No. 109,
Accounting for Income Taxes, (FASB 109). FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements
in accordance with FASB 109. This Interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The cumulative
effect of applying FIN 48 is to be reported as an adjustment to the opening
balance of retained earning in the year of adoption. As a result of the
implementation of FIN 48, the Company recorded a decrease of $92 to opening
retained earnings at November 3, 2007, with an offsetting increase to accrued
FIN 48 liability. This entire amount would reduce the Companys effective income
tax rate if the asset is recognized in future reporting periods. The Company
does not anticipate a significant change to the total amount of unrecognized tax
benefits within the next 12 months.

30

---

In September
2006, the FASB issued Statement of Accounting Standards No. 157, Fair Value
Measurements (SFAS 157). This Statement defines fair value, provides a
framework for measuring fair value, and expands the disclosures required for
fair value measurements. SFAS 157 applies to other accounting pronouncements
that require fair value measurements; it does not require any new fair value
measurements. SFAS 157 is effective for financial statements for fiscal years
beginning after November 15, 2007. However, on December 14, 2007 the FASB issued
proposed FASB Staff Position (FSP) SFAS 157-b (FSP 157-b), which partially
delays the effective date of SFAS 157 to fiscal years beginning after November
15, 2008 and interim periods within those years. The Company does not expect
this statement will have a material impact on the Companys results of
operations or financial position upon adoption.

In September 2006, the FASB issued
SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and
132(R). SFAS 158 requires employers to recognize the over- or under-funded
status of defined benefit plans and other postretirement plans in the statement
of financial position and to recognize changes in the funded status in the year
in which the changes occur through comprehensive income. In addition, SFAS 158
requires employers to measure the funded status of plans as of the date of the
year-end statement of financial position. The recognition and disclosure
provisions of SFAS 158 became effective for the Companys fiscal year ending
November 2, 2007 while the requirement to measure plan assets and benefit
obligations as of a companys year-end date is effective for fiscal years ending
after December 15, 2008 (effective for the Companys fiscal year ending October
30, 2009). The impact of the Companys initial adoption of SFAS 158 is disclosed
in Note 3 to theConsolidated Financial
Statements.

In February
2007, the FASB issued Statement of Financial Accounting Standards No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159).
SFAS 159 expands opportunities to use fair value measurement in financial
reporting and permits entities to choose to measure many financial instruments
and certain other items at fair value. This Statement is effective for fiscal
years beginning after November 15, 2007, or the Companys fiscal year ending
October 30, 2009. The Company does not expect this statement will have a
material impact on its results of operations or financial position.

In December
2007, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 141R, Business Combinations (SFAS 141R).
SFAS 141R establishes principles and requirements for how an acquirer in a
business combination: 1) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; 2) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and 3) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS 141R
is effective for business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. Therefore, the Company expects to adopt SFAS 141R for any
business combinations entered into beginning in fiscal 2010.

In December
2007, the FASB issued Statement of Financial Accounting Standards No. 160,
Noncontrolling Interests in Consolidated Financial Statements (SFAS 160).
SFAS 160 amends Accounting Research Bulletin No. 51, Consolidated Financial
Statements to establish accounting and reporting standards for noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity and should be reported as equity
in the consolidated financial statements, rather than in the liability or
mezzanine section between liabilities and equity. SFAS 160 also requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and the noncontrolling interest. SFAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008; therefore, the Company expects to adopt
SFAS 160 at the beginning of fiscal 2010. Adoption of SFAS 160 is not expected
to have a material impact on the Companys financial position.

In May 2008,
the FASB issued SFAS No. 162, Hierarchy of Generally Accepted Accounting
Principles (SFAS 162). This statement is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements of
nongovernmental entities that are presented in conformity with GAAP. This
statement will be effective 60 days following the U.S. Securities and Exchange
Commissions approval of the Public Company Accounting Oversight Board amendment
to AU Section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles. The adoption of this Statement is not expected
to have a material impact on the Companys consolidated financial position or
results of operations.

31

---

In December 2008, the FASB issued
FASB Staff Position FSP 132(R)-1, "Employers Disclosures about Postretirement
Benefit Plan Assets", which provides additional guidance on an employers'
disclosures about plan assets of a defined benefit pension or other
postretirement plan. This interpretation is effective for financial statements
issued for fiscal years ending after December 15, 2009. The Company plans to
adopt this interpretation in fiscal 2010. The adoption of this interpretation
will increase the disclosures in the financial statements related to the assets
of our defined benefit pension plans.

NOTE 2-Composition of Certain Financial Statement
Captions:

|                                                             |  | 2008 |         |   | 2007 |  
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | -
|Inventories:                                                 |  |      |         |   |      |  
|Meat,
      ingredients and supplies                         |  | $    | 4,086   |   |      | $
|Work in process                                              |  |      | 2,322   |   |      |  
|Finished
      goods                                         |  |      | 9,644   |   |      |  
|                                                             |  | $    | 16,052  |   |      | $
|                                                             |  |      |         |   |      |  
|Property, plant and equipment:                               |  |      |         |   |      |  
|Land                                                         |  | $    | 1,840   |   |      | $
|Buildings and improvements                                   |  |      | 13,440  |   |      |  
|Machinery and
      equipment                                |  |      | 40,796  |   |      |  
|Asset impairment reserve                                     |  |      | (176    | ) |      |  
|Transportation
      equipment                               |  |      | 7,368   |   |      |  
|Construction in process                                      |  |      | 247     |   |      |  
|                                                             |  |      | 63,515  |   |      |  
|Accumulated depreciation                                     |  |      | (53,740 | ) |      |  
|                                                             |  | $    | 9,775   |   |      | $
|                                                            
|Other non-current assets:                                    |  |      |         |   |      |  
|Cash surrender
      value benefits                          |  | $    | 10,253  |   |      | $
|Intangible asset                                             |  |      | 10      |   |      |  
|                                                             |  | $    | 10,263  |   |      | $
|                                                             |  |      |         |   |      |  
|Accrued payroll, advertising and other expenses:             |  |      |         |   |      |  
|Payroll,
      vacation, payroll taxes and employee benefits |  | $    | 4,793   |   |      | $
|Accrued advertising and broker commissions                   |  |      | 1,031   |   |      |  
|Property
      taxes                                         |  |      | 356     |   |      |  
|Others                                                       |  |      | 670     |   |      |  
|                                                             |  | $    | 6,850   |   |      | $
|                                                            
|Current portion of non-current liabilities:                  |  |      |         |   |      |  
|Incentive
      compensation                                 |  | $    | 129     |   |      | $
|Accrued pension cost                                         |  |      | 916     |   |      |  
|Other accrued
      retirement plans                         |  |      | 510     |   |      |  
|Post retirement healthcare                                   |  |      | 0       |   |      |  
|                                                             |  | $    | 1,555   |   |      | $
|                                                            
|Non-current liabilities:                                     |  |      |         |   |      |  
|Incentive
      compensation                                 |  | $    | 241     |   |      | $
|Accrued pension cost                                         |  |      | 3,354   |   |      |  
|Other accrued
      retirement plans                         |  |      | 3,542   |   |      |  
|Post retirement healthcare                                   |  |      | 806     |   |      |  
|                                                             |  | $    | 7,943   |   |      | $

32

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NOTE 3-Retirement and Other Benefit Plans:

Adoption of SFAS No.
158

Effective November 2, 2007, the
Company adopted SFAS 158, which requires the recognition in pension obligations
and accumulated other comprehensive income of actuarial gains or losses, prior
service costs or credits and transition assets or obligations previously
deferred under the reporting requirements of SFAS 87, SFAS 106 and SFAS 132(R).
The following table reflects the effects of initial adoption of SFAS 158 on the
Consolidated Balance Sheet as of November 2, 2007.

|                                                 |  | Before         |        |   |             |   |      |              | After          |  
|------------------------------------------------ |  | -------------- | ------ | - | ----------- | - | ---- | ------------ | -------------- | -
|                                                 |  | Application of |        |   |             |   |      |              | Application of |  
|                                                 |  | SFAS No. 158   |        |   | Adjustments |   |      | SFAS No. 158 |               
|Deferred income taxes current                    |  | $              | 1,494  |   |             | $ | (4   | )            |                | $
|Deferred income
      taxes                      |  |                | 3,524  |   |             |   | 356  |              |                |  
|Total assets                                     |  |                | 67,299 |   |             |   | 348  |              |                |  
|Current
      liabilities                        |  |                | 11,913 |   |             |   | (11  | )            |                |  
|Non-current liabilities                          |  |                | 4,850  |   |             |   | 926  |              |                |  
|Accumulated
      other comprehensive (loss)     |  |                | (36    | ) |             |   | (567 | )            |                |  
|Total shareholders equity                       |  |                | 50,536 |   |             |   | (567 | )            |                |  
|Total
      liabilities and shareholders equity |  | $              | 67,299 |   |             | $ | 348  |              |                | $

Noncontributory-Trusteed Defined
Benefit Retirement Plans for Sales, Administrative, Supervisory and Certain
Other Employees

The Company has
noncontributory-trusteed defined benefit retirement plans for sales,
administrative, supervisory and certain other employees. In the third quarter of
fiscal 2006, the Company froze future benefit accruals under this plan for
employees classified within the administrative, sales or supervisory job
classifications or within any non-bargaining class. The benefits under these
plans are primarily based on years of service and compensation levels. The
Companys funding policy is to contribute annually the maximum amount deductible
for federal income tax purposes, without regard to the plans unfunded current
liability. The measurement date for the plan is the Companys fiscal year
end.

Net pension cost consisted of the
following:

2008
    
    
    2007Service cost
    
    $
    148
    
    
    $
    170Interest
      cost
    
    
    1,948
    
    
    
    1,856Expected return on plan assets
    
    
    (2,300
    )
    
    
    (1,892
    )Amortization of
      unrecognized loss
    
    
    
    
    
    
    Amortization of transition asset (15.2 years)
    
    
    
    
    
    
    Amortization of
      unrecognized prior service costs
    
    
    1
    
    
    
    2Net pension (gain) cost
    
    $
    (203
    )
    
    $
    136


Net pension cost is determined using
assumptions as of the beginning of each fiscal year. Weighted average
assumptions for the fiscal years are as follows:

2008
    
    
    2007Discount rate
    
    8.00
    %
    
    6.25
    %Rate of increase in salary levels
    
    N/A
    
    
    N/AExpected return on plan assets
    
    8.00
    %
    
    8.25
    %


33

---

The benefit obligation, plan assets,
and funded status of these plans as of the fiscal years ended are as
follows:

2008
    
    
    2007Change in benefit obligations:Benefit obligations -
      beginning of year
    
    $
    31,371
    
    
    $
    30,469Service cost
    
    
    148
    
    
    
    170Interest cost
    
    
    1,948
    
    
    
    1,856Actuarial (gain)
loss
    
    
    (6,807
    )
    
    
    (245
    )Benefits paid
    
    
    (841
    )
    
    
    (879
    )Curtailments
    
    
    
    
    
    
    Plan amendments
    
    
    
    
    
    
    Benefit obligations - end of
      year
    
    
    25,819
    
    
    
    31,371Change in plan
      assets:Fair value of plan assets -
      beginning of year
    
    
    27,806
    
    
    
    23,279Employer
    contributions
    
    
    2,467
    
    
    
    2,439Actual return on plan
      assets
    
    
    (7,884
    )
    
    
    2,967Benefits paid
    
    
    (841
    )
    
    
    (879
    )Fair value of plan assets -
      end of year
    
    
    21,548
    
    
    
    27,806Funded status of
      the plans
    
    
    (4,271
    )
    
    
    (3,565
    )Unrecognized prior service costs
    
    
    8
    
    
    
    10Unrecognized net
      actuarial loss
    
    
    3,954
    
    
    
    576Accrued pension cost
    
    $
    (309
    )
    
    $
    (2,979
    )


The accumulated benefit obligation
was $25,819 and $31,371 at October 31, 2008 and November 2, 2007,
respectively.

The benefit obligation is determined
using assumptions as of the end of each fiscal year. Weighted average
assumptions as of the fiscal years ended are as follows:

2008
    
    2007Discount rate
    
    8.00
    %
    
    6.25
    %Rate of increase
      in salary levels
    
    N/A
    
    
    N/A


The discount rate used to value the
projected benefit obligation was 8.00% for fiscal year 2008. SFAS No. 158
Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plans amended paragraph 44 of SFAS No. 87 Employers Accounting for Pensions
to require that an internal rate of return analysis be included in the discount
rate selection process. The discount rates were based on Citigroup Pension
Liability Index as of October 31, 2008.

Plan assets
are primarily invested in marketable equity securities, corporate and government
debt securities and are administered by an investment management company. The
plans long-term return on assets is based on the weighted-average of the plans
investment allocation as of the measurement date and the published historical
returns for those types of asset categories, taking into consideration inflation
rate forecasts. The compensation increase assumption is based upon historical
patterns of salary increases and managements expectation of future salary
increases for plan participants. The expected Company contribution to the plan
in fiscal year 2009 is $916.

The actual allocations as of the
fiscal years ended and target allocation for plan assets are as
follows:

Target
    
    
    
    
    TargetAsset
    
    
    
    
    AssetAsset Class
    
    2008
    
    Allocation
    
    2007
    
    AllocationLarge Cap Equities
    
    34.7
    %
    
    40.0
    %
    
    40.6
    %
    
    40.0
    %Mid Cap
      Equities
    
    6.5
    %
    
    10.0
    %
    
    9.6
    %
    
    10.0
    %Small Cap Equities
    
    3.8
    %
    
    5.0
    %
    
    4.3
    %
    
    5.0
    %International
      (including Non-U.S. Fixed Income)
    
    10.8
    %
    
    20.0
    %
    
    21.2
    %
    
    20.0
    %Fixed Income
    
    6.2
    %
    
    0.0
    %
    
    0.0
    %
    
    0.0
    %Other
      (Government/Corporate, Bonds)
    
    29.0
    %
    
    25.0
    %
    
    24.2
    %
    
    25.0
    %Cash
    
    9.0
    %
    
    0.0
    %
    
    0.1
    %
    
    0.0
    %Total
    
    100.0
    %
    
    100.0
    %
    
    100.0
    %
    
    100.0
    %


34

---

Expected payments for the pension
benefits are as follows:

OtherPension
    
    PostretirementBenefits
    
    BenefitsFiscal 2009
    
    $
    1,106
    
    $
    515Fiscal
      2010
    
    $
    1,145
    
    $
    515Fiscal 2011
    
    $
    1,200
    
    $
    515Fiscal
      2012
    
    $
    1,307
    
    $
    515Fiscal 2013
    
    $
    1,427
    
    $
    516Fiscal
      2014-2018
    
    $
    9,164
    
    $
    1,474


Net amounts recognized as of the end
of each fiscal year are as follows:

2008
    
    
    2007Accrued benefit cost
    
    $
    (4,271
    )
    
    $
    (3,565
    )Intangible
      asset
    
    
    8
    
    
    
    10Accumulated other comprehensive income
    
    
    3,954
    
    
    
    576$
    (309
    )
    
    $
    (2,979
    )


Non-Qualified Supplemental Retirement
Plan for Certain Key Employees

In fiscal
year 1991, the Company adopted a non-qualified supplemental retirement plan for
certain key employees. Benefits provided under the plan are equal to 60% of the
employees final average earnings, less amounts provided by the Companys
defined benefit pension plan and amounts available through Social Security.
Effective January 1, 1991 the Company adopted a deferred compensation savings
plan for certain key employees. Under this arrangement, selected employees
contribute a portion of their annual compensation to the plan. The Company
contributes an amount to each participants account by computing an investment
return equal to Moodys Average Seasoned Bond Rate plus 2%. Employees receive
vested amounts upon death, termination or attainment of retirement age. No
benefit expense was recorded under these plans for fiscal years 2008 and 2007.
Benefits payable related to these plans and included in other non-current
liabilities in the accompanying financial statements were $3,541 and $3,692 at
October 31, 2008 and November 2, 2007, respectively. In connection with this
arrangement the Company is the beneficiary of life insurance policies on the
lives of certain key employees. The aggregate cash surrender value of these
policies, included in non-current assets, was $10,254 and $11,181 at October 31,
2008 and November 2, 2007, respectively.

Incentive Compensation Plan for Certain
Key Executives

The Company
provides an incentive compensation plan for certain key executives, which is
based upon the Companys pretax income. The payment of these amounts is
generally deferred over a five-year period. The total amount payable related to
this arrangement was $369 and $488 at October 31, 2008 and November 2, 2007,
respectively. Future payments are approximately $129, $98, $79, $46 and $17 for
fiscal years 2009 through 2013, respectively.

Postretirement Health Care Benefits for
Selected Executive Employees

The Company
provides postretirement health care benefits for selected executive employees.
Net periodic postretirement benefit cost is determined using assumptions as of
the beginning of each fiscal year.

Net periodic postretirement benefit
cost consisted of the following:

2008
    
    2007Service cost
    
    $
    15
    
    $
    15Interest
      cost
    
    
    72
    
    
    70Return on plan assets
    
    
    0
    
    
    0Amortization of
      unrecognized loss
    
    
    0
    
    
    0Amortization of prior service cost
    
    
    75
    
    
    75Amortization of
      actuarial loss
    
    
    2
    
    
    10Net periodic postretirement
      benefit cost
    
    $
    164
    
    $
    170


35

---

Weighted average assumptions for the
fiscal years ended October 31, 2008 and November 2, 2007 are as
follows:

2008
    
    2007Discount rate
    
    8.00
    %
    
    6.25
    %Medical trend
      rate next year
    
    9.00
    %
    
    9.00
    %Ultimate trend rate
    
    5.00
    %
    
    5.00
    %Year ultimate
      trend rate is achieved
    
    2016
    
    
    2011


The table below shows the estimated
effect of a 1% increase in health care cost trend rate on the
following:

2008
    
    2007Interest cost plus service cost
    
    $
    10
    
    $
    10Accumulated
      postretirement benefit obligation
    
    $
    67
    
    $
    111


The table below shows the estimated
effect of a 1% decrease in health care cost trend rate on the
following:

2008
    
    
    2007Interest cost plus service cost
    
    $
    (8
    )
    
    $
    (9
    )Accumulated
      postretirement benefit obligation
    
    $
    (57
    )
    
    $
    (94
    )


The benefit obligation and funded
status of this plan as of the fiscal year ended October 31, 2008 is as
follows:

2008
    
    
    2007Change in accumulated postretirement benefit obligation:Benefit obligations -
      beginning of year
    
    $
    1,196
    
    
    $
    1,159Service
      cost
    
    
    15
    
    
    
    15Interest
      cost
    
    
    72
    
    
    
    70Actuarial
      (gain) loss
    
    
    (465
    )
    
    
    (44
    )Benefits
      paid
    
    
    (12
    )
    
    
    (4
    )Plan
      amendments
    
    
    
    
    
    
    Benefit
      obligations - end of year
    
    $
    806
    
    
    
    1,196Funded status of the plans
    
    
    806
    
    
    
    1,196Unrecognized
      prior service costs
    
    
    (224
    )
    
    
    (298
    )Unrecognized net actuarial loss
    
    
    324
    
    
    
    (144
    )Unrecognized net
      transition asset
    
    
    
    
    
    
    Accrued postretirement benefit cost
    
    
    N/A
    
    
    
    N/AUnrecognized
      amounts in other comprehensive income (SFAS 158)
    
    
    (100
    )
    
    
    442Postretirement benefit
      liability
    
    $
    806
    
    
    $
    1,196


Expected payments for the
postretirement benefits are as follows:

PostretirementBenefitsFiscal 2009
    $
    63Fiscal
      2010
    $
    64Fiscal 2011
    $
    65Fiscal
      2012
    $
    65Fiscal 2013
    $
    65Fiscal
      2014-2018
    $
    304


Stock Incentive Plan

The
Companys 1999 Stock Incentive Plan (the Plan) was approved by the Board of
Directors on January 11, 1999 and 275,000 options were granted on April 29,
1999. During fiscal year 2000, 25,000 options were canceled. Under the Plan, the
maximum aggregate number of shares which may be optioned and sold is 900,000
shares of common stock, subject to adjustment upon changes in capitalization or
merger. Generally, options granted under the plan vest in annual installments
over four years following the date of grant (as determined by the Board of
Directors) subject to the optionees continuous service. Options expire ten
years from the date of grant with the exception of an incentive stock option
granted to an optionee who owns stock representing more than 10% of the voting
power of all classes of stock of the Company, in which case the term of the
option is five years. Options generally terminate three months after termination
of employment or one year after termination due to permanent disability or
death. Options are granted at a fair market value determined by the Board of
Directors subject to the following:

36

---

| | a.) |  | With respect to options granted
      to an employee or service provider who, at the time of grant owns stock
      representing more than 10% of the voting power of all classes of stock of
      the Company; the per share exercise price shall be no less than 110% of
      the fair market value on the date of grant.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    
| | b.) |  | With respect to options granted
      to an employee or service provider other than described in the preceding
      paragraph, the exercise price shall be no less than 100% for incentive
      stock options and 85% for non-statutory stock options of the fair market
      value on the date of grant.                 
| |    
| |     |  | No options have been granted,
      exercised, canceled or forfeited for the last five fiscal
  years.                                                                                                                                                                                                                       

The following balances are active as
of October 31, 2008 (exercise prices stated on a per share basis):

|                    |    |        |         |                        |    |                  | Options Exercisable |        |  |                                       |  |  
|------------------- | -- | ------ | ------- | ---------------------- | -- | ---------------- | ------------------- | ------ |  | ------------------------------------- |  | -
|Options Outstanding |    |        |         | Weighted
      average |    | Weighted average |                     |        |  |                                       | 
|Exercise price      |    | Shares |         | remaining life
(years) |    | exercise price   |                     | Shares |  | Weighted average exercise
      price
|$                   | 10 |        | 250,000 |                        | .5 |                  | $                   | 10     |  | 250,000                               |  | $

The following balances are active as
of November 2, 2007:

|                    |    |        |         |                        |     |                  | Options Exercisable |        |  |                                       |  |  
|------------------- | -- | ------ | ------- | ---------------------- | --- | ---------------- | ------------------- | ------ |  | ------------------------------------- |  | -
|Options Outstanding |    |        |         | Weighted
      average |     | Weighted average |                     |        |  |                                       | 
|Exercise price      |    | Shares |         | remaining life
(years) |     | exercise price   |                     | Shares |  | Weighted average exercise
      price
|$                   | 10 |        | 250,000 |                        | 1.5 |                  | $                   | 10     |  | 250,000                               |  | $

401(K) Plan for Sales, Administrative,
Supervisory and Certain Other Employees

During the fiscal year ended
November 3, 2006, the Company implemented a qualified 401(K) retirement plan
(the Plan) for its sales, administrative, supervisory and certain other
employees. During fiscal years 2008 and 2007, the Company made total
contributions to the Plan in the amounts of $414 and $470,
respectively.

NOTE 4-Income Taxes:

The provision (benefit) for taxes on
income includes the following:

2008
    
    2007Current:Federal
    
    $
    1
    
    $
    37State
    
    
    70
    
    
    13671
    
    
    173Deferred:Federal
    
    
    5,557
    
    
    (432
    )State
    
    
    951
    
    
    (122
    )6,508
    
    
    (554
    )$
    6,579
    
    $
    (381
    )


The total tax provision (benefit)
differs from the amount computed by applying the statutory federal income tax
rate to income (loss) before income taxes as follows:

2008
    
    
    2007(Benefit) provision for federal income taxes at the applicable
      statutory rate
    
    $
    (1,995
    )
    
    $
    (229
    )(Decrease)
      increase in provision resulting from state income taxes, net of
      federalincome tax benefit
    
    
    (372
    )
    
    
    (47
    )Research & development tax credit
    
    
    (15
    )
    
    
    (25
    )Non-taxable life
      insurance gain
    
    
    315
    
    
    
    (211
    )Valuation allowance
    
    
    8,615
    
    
    
    ---Other,
      net
    
    
    31
    
    
    
    131$
    6,579
    
    
    $
    (381
    )


37

---

Deferred
income taxes result from differences in the bases of assets and liabilities for
tax and accounting purposes.

|                                       |  | 2008 |        | 2007
|-------------------------------------- |  | ---- | ------ | ----
|Receivables allowances                 |  | $    | 360    |     
|Inventory
      reserves               |  |      | 451    |     
|Incentive compensation                 |  |      | 45     |     
|State
      taxes                      |  |      | 24     |     
|Employee benefits                      |  |      | 1,479  |     
|Other                                  |  |      | 63     |     
|Valuation allowance                    |  |      | (2,422 | )   
|Current tax assets,
      net          |  | $    | ---    |     
|Incentive compensation                 |  | $    | 96     |     
|Pension and
      health care benefits |  |      | 2,983  |     
|Depreciation                           |  |      | (125   | )   
|Net operating
      loss carry-forward |  |      | 3,239  |     
|Valuation allowance                    |  |      | (6,193 | )   
|Non-current tax assets,
      net      |  | $    | ---    |     

Under the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", ("FAS 109"), Management is required to evaluate whether a
valuation allowance should be established against its deferred tax assets based
on the consideration of all available evidence using a "more likely than not"
standard. Realization of deferred tax assets is dependent upon taxable income in
prior carryback years, estimates of future taxable income, tax planning
strategies, and reversals of existing taxable temporary differences. FAS 109
provides that forming a conclusion that a valuation allowance is not needed is
difficult when there is negative evidence such as cumulative losses in recent
years or losses expected in early future years. As a result of significant
losses in fiscal 2008 and losses in recent years, the Company concluded that a
valuation reserve should be recorded in the 3rdquarter of 2008. A partial
reserve was recognized after consideration of tax planning strategies at July
11, 2008. Significant fourth quarter losses and further deterioration of
economic conditions including further decreases in building and real estate
values resulted in a change in the tax planning strategies at October 31, 2008.
As a result, management believes it is more likely than not that the deferred
tax assets will not be realized and has recorded a full valuation allowance on
all deferred tax assets during the fourth quarter of fiscal 2008.

As of
October 31, 2008, the Company had net operating loss carryforwards of
approximately $8,055 and $7,417 for federal andstate purposes, respectively. These loss
carryforwards will expire at various dates from 2011 through 2027.

In July
2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes, (FIN 48), an interpretation of FASB Statement No. 109,
Accounting for Income Taxes, (FASB 109). FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements
in accordance with FASB 109. This Interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The cumulative
effect of applying FIN 48 was reported as an adjustment to the opening balance
of retained earnings during fiscal year beginning November 3, 2007.

As of
October 31, 2008, the Company has provided a liability of $97 for unrecognized
tax benefits related to various federal and state income tax matters. The
cumulative effect of applying FIN 48 has been recorded as a decrease of $92 to
opening retained earnings with an offsetting increase to accrued FIN 48
liability. This entire amount would reduce the Companys effective income tax
rate if the asset is recognized in future reporting periods. The Company has not
identified any new unrecognized tax benefits.

A reconciliation of the beginning
and ending amount of unrecognized tax benefits is as follows:

Balance at
      November 3, 2007
    $
    
    
    92Additions based on tax positions
      related to the current year
    
    
    
    ---Additions for tax
      positions of prior years
    
    
    
    5Reductions for tax positions of
      prior years
    
    
    
    ---Settlements
    
    
    
    ---Balance at
      October 31, 2008
    $
    
    
    97


38

---

The Company
will recognize any future accrued interest and penalties related to unrecognized
tax benefits in income tax expense. As of October 31, 2008, the Company had
approximately $4 in accrued interest and penalties which is included as a
component of the $97 unrecognized tax benefit noted above.

The Company
is subject to U.S. federal income tax, and is currently under audit by the
Internal Revenue Service for the years ended October 31, 2002 through 2006. The
Company's federal income tax returns are open to audit under the statute of
limitations for the years ended October 31, 2004 through 2007. The Company's
statute of limitations for its years ended October 31, 2002 and 2003 have been
extended to October 31, 2009. The Company believes the appropriate provisions
for all outstanding issues have been made for all years under audit.

The Company
is subject to income tax in California and various other state taxing
jurisdictions. The Companys state income tax returns are open to audit under
the statute of limitations for the years ended October 31, 2003 through 2007.
The Company is currently under examination by New York and Texas. No specific
issues regarding these examinations have been formally presented by the states
conducting these examinations.

The company
does not anticipate a significant change to the total amount of unrecognized tax
benefits within the upcoming fiscal year.

NOTE 5-Line of Credit:

Under the
terms of a revolving line of credit with Bank of America, the Company may borrow
up to $2,000 through April 30, 2010. The interest rate is at the banks
reference rate unless the Company elects an optional interest rate. The
borrowing agreement contains various covenants, the more significant of which
require the Company to maintain certain levels of shareholders equity and
working capital. The Company was in violation of the shareholders equity
covenant which was subsequently waived and modified per an amendment to the
agreement (dated as of January 9, 2009). The company is currently in compliance
with all provisions of the agreement. There were no borrowings under this line
of credit during the year.

NOTE 6-Contingencies and Commitments:

The Company
leases certain transportation and computer equipment under operating leases. The
terms of the transportation leases provide for annual renewal options and
contingent rental payments based upon mileage and adjustments of rental payments
based on the Consumer Price Index. Minimum rental payments were $425 in fiscal
year 2008 and $415 in fiscal year 2007. Contingent payments were approximately $
124 in fiscal year 2008 and $120 in fiscal year 2007. Future minimum lease
payments are approximately $425 in the each of the years 2009 through 2012 and
$405 in 2013 and thereafter.

NOTE 7-Segment Information:

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

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

39

---

The following segment information is for
the years ended October 31, 2008 and November 2, 2007:

|                                              |  |             |        |                | Refrigerated |        |   |             |   |        |        |  |   |        |   |  |  
|--------------------------------------------- |  | ----------- | ------ | -------------- | ------------ | ------ | - | ----------- | - | ------ | ------ |  | - | ------ | - |  | -
|                                              |  | Frozen Food |        | and Snack Food |              |        |   |             |   |        |        |  |   |        |   | 
|2008                                          |  | Products    |        | Products       |              | Other  |   | Elimination |   | Totals
|Sales                                         |  | $           | 52,868 |                | $            | 68,122 |   |             | $ |       |        |  | $ |       |   |  | $
|Intersegment
      sales                      |  |             |       |                |              | 1,487  |   |             |   |       |        |  |   | (1,487 | ) |  |  
|Net sales                                     |  |             | 52,868 |                |              | 69,609 |   |             |   |       |        |  |   | (1,487 | ) |  |  
|Cost of products
      sold, excluding        |  |             |        |                |              |        |   |             |   |        |        |  |   |        |   |  |  
|depreciation                                  |  |             | 34,990 |                |              | 46,820 |   |             |   |       |        |  |   | (1,487 | ) |  |  
|Selling, general and administrative           |  |             |        |                |              |        |   |             |   |        |        |  |   |        |   |  |  
|expenses                                      |  |             | 15,720 |                |              | 27,532 |   |             |   |       |        |  |   |       |   |  |  
|Depreciation                                  |  |             | 784    |                |              | 2,192  |   |             |   | 307    |        |  |   |       |   |  |  
|Gain on sale of equity securities             |  |             |       |                |              |       |   |             |   |       |        |  |   |       |   |  |  
|                                              |  |             | 51,494 |                |              | 76,544 |   |             |   | 307    |        |  |   | (1,487 | ) |  |  
|Income (loss)
      before taxes              |  |             | 1,374  |                |              | (6,935 | ) |             |   | (307   | )      |  |   |       |   |  |  
|Provision
      (benefit) for taxes on income |  |             | 141    |                |              | (1,319 | ) |             |   | 7,757  |        |  |   |       |   |  |  
|Net
      income (loss)                       |  | $           | 1,233  |                | $            | (5,616 | ) |             | $ | (8,064 | )      |  | $ |       |   |  |  
|Total assets                                  |  | $           | 11,657 |                | $            | 23,400 |   |             | $ | 16,898 |        |  | $ |       |   |  | $
|Additions to property, plant and              |  |             |        |                |              |        |   |             |   |        |        |  |   |        |   |  |  
|equipment                                     |  | $           | 255    |                | $            | 1,505  |   |             | $ | 120    |        |  | $ |       |   |  | $
|                                             
|                                              |  |             |        |                | Refrigerated |        |   |             |   |        |        |  |   |        |   |  |  
|                                              |  | Frozen Food |        | and Snack Food |              |        |   |             |   |        |        |  |   |        |   | 
|2007                                          |  | Products    |        | Products       |              | Other  |   | Elimination |   |        | Totals
|Sales                                         |  | $           | 49,401 |                | $            | 75,690 |   |             | $ |       |        |  | $ |       |   |  | $
|Intersegment
      sales                      |  |             |       |                |              | 1,834  |   |             |   |       |        |  |   | (1,834 | ) |  |  
|Net sales                                     |  |             | 49,401 |                |              | 77,524 |   |             |   |       |        |  |   | (1,834 | ) |  |  
|Cost of products
      sold, excluding        |  |             |        |                |              |        |   |             |   |        |        |  |   |        |   |  |  
|depreciation                                  |  |             | 30,169 |                |              | 52,791 |   |             |   |       |        |  |   | (1,834 | ) |  |  
|Selling, general and administrative           |  |             |        |                |              |        |   |             |   |        |        |  |   |        |   |  |  
|expenses                                      |  |             | 14,571 |                |              | 26,678 |   |             |   |       |        |  |   |       |   |  |  
|Depreciation                                  |  |             | 1,008  |                |              | 2,381  |   |             |   |       |        |  |   |       |   |  |  
|Gain on sale of equity securities             |  |             |       |                |              |       |   |             |   |       |        |  |   |       |   |  |  
|                                              |  |             | 45,748 |                |              | 81,850 |   |             |   |       |        |  |   | (1,834 | ) |  |  
|Income (loss)
      before taxes              |  |             | 3,653  |                |              | (4,326 | ) |             |   |       |        |  |   |       |   |  |  
|Provision
      (benefit) for taxes on income |  |             | 1,347  |                |              | (1,728 | ) |             |   |       |        |  |   |       |   |  |  
|Net income
      (loss)                       |  | $           | 2,306  |                | $            | (2,598 | ) |             | $ |       |        |  | $ |       |   |  |  
|Total assets                                  |  | $           | 12,003 |                | $            | 26,348 |   |             | $ | 29,296 |        |  | $ |       |   |  | $
|Additions to property, plant and              |  |             |        |                |              |        |   |             |   |        |        |  |   |        |   |  |  
|equipment                                     |  | $           | 274    |                | $            | 1,247  |   |             | $ | 66     |        |  | $ |       |   |  | $

NOTE 8-Unaudited Interim Financial Information

Not applicable to smaller reporting
company.

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BRIDGFORD FOODS
CORPORATIONSCHEDULE
IIVALUATION AND QUALIFYING
ACCOUNTS(in
thousands)

|                                  |  | Allowance for Doubtful
      Accounts
|--------------------------------- |  | -------------------------------------
|                                  |  |                                      
|                                  |  | Balance at                           
|                                  |  | Beginning                            
|                                  |  | of year                              
|Year ended October 31, 2008       |  | $                                    
|Year ended
      November 2, 2007 |  | $                                    
|                                 
|                                  |  | Promotional Allowances               
|                                  |  | Balance at                           
|                                  |  | Beginning                            
|                                  |  | of year                              
|Year ended October 31, 2008       |  | $                                    
|Year ended
      November 2, 2007 |  | $                                    
|                                 
|                                  |  | Tax Valuation Allowances             
|                                  |  | Balance at                           
|                                  |  | Beginning                            
|                                  |  | of year                              
|Year ended October 31, 2008       |  | $                                    

41

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