##### 



EXHIBIT 13.1

DESCRIPTION OF BUSINESS

Bridgford Foods Corporation and its subsidiaries manufacture and/or
distribute refrigerated, frozen and snack food products. The Company markets
its products throughout the United States and Canada. The Company sells its
products through wholesale outlets, restaurants and institutions. The products
are sold by the Companys own sales force, brokers, cooperatives, wholesalers
and independent distributors. Products are currently sold through
approximately 38,000 retail food stores in forty-eight states within the
continental United States, Hawaii and Canada that are serviced by Company-owned
service routes. Company products are also sold throughout the country to
approximately another 21,000 retail outlets and 22,000 restaurants and
institutions.

The following summary represents the approximate percentage of net sales
by class of product for each of the last five fiscal years:

|                                                  |  |      |     |      |  |      |     |      |  |      |     |  |  |  |     |  |  |  |     | 
|------------------------------------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---- | --- |  |  |  | --- |  |  |  | --- | 
|                                                  |  | 2003 |     | 2002 |  | 2001 |     | 2000 |  | 1999
|                                                  |  |      |     |      |  |      |     |      |  |     
|Products manufactured
or processed by
the Company |  |      | 70  |      |  |      | 69  |      |  |      | 69  |  |  |  | 68  |  |  |  | 69  | 
|Products manufactured
or processed
by others      |  |      | 30  |      |  |      | 31  |      |  |      | 31  |  |  |  | 32  |  |  |  | 31  | 
|                                                  |  |      |     |      |  |      |     |      |  |      |     |  |  |  |     |  |  |  |     | 
|Total                                             |  |      | 100 |      |  |      | 100 |      |  |      | 100 |  |  |  | 100 |  |  |  | 100 | 
|                                                  |  |      |     |      |  |      |     |      |  |      |     |  |  |  |     |  |  |  |     | 

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 National 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.

|                 |  |       |       |      |  |                |       |  |  |      |     | 
|---------------- |  | ----- | ----- | ---- |  | -------------- | ----- |  |  | ---- | --- | 
|Fiscal           |  |       |       |      |  |                |       |  |  | Cash
|Quarter Ended    |  | $High |       | $Low |  | Dividends Paid
|                 |  |       |       |      |  |               
|February 1, 2002 |  |       | 13.88 |      |  |                | 10.72 |  |  | $    | .07 | 
|May 3, 2002      |  |       | 13.00 |      |  |                | 10.45 |  |  | $    | .07 | 
|August 2, 2002   |  |       | 15.26 |      |  |                | 10.40 |  |  | $    | .07 | 
|November 1, 2002 |  |       | 12.35 |      |  |                | 8.58  |  |  | $    | .05 | 
|January 24, 2003 |  |       | 12.30 |      |  |                | 7.50  |  |  | $    | .05 | 
|April 18, 2003   |  |       | 11.37 |      |  |                | 6.80  |  |  | $    | .05 | 
|July 11, 2003    |  |       | 8.50  |      |  |                | 6.45  |  |  | $    | .03 | 
|October 31, 2003 |  |       | 8.34  |      |  |                | 6.85  |  |  | $    | .03 | 

ANNUAL MEETING OF SHAREHOLDERS

The 2004 annual meeting of shareholders will be held at the Four Points
Sheraton, 1500 South Raymond Avenue, Fullerton, California at 10:00 a.m. on
Wednesday, March 17, 2004.





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##### 



January 17, 2004

TO OUR SHAREHOLDERS:

Bridgford Foods continued to face many challenges in 2003. Higher raw
materials costs and strong competition in both the meat and bakery segments of
our business reduced our gross operating margins. Higher workmens
compensation insurance costs, employee pension and medical charges, in addition
to higher fuel and utility costs, added to our overall expense increases.

SALES AND EARNINGS

After reductions for promotional costs, net sales in 2003 were
$136,251,000, a 2.1% decline from sales in 2002. This small decline can be
attributed to a continuing soft economy and strong competition during our 2003
fiscal year. Our new pepperoni and sausage party bites, as shown on page 3 of
this report, have experienced excellent sales results in mass merchandise
stores, supermarket and convenience stores during 2003. Delicious new retail
heat and serve Steakhouse Style Bavarian Rolls, as displayed on the front
cover of this report, have also shown good sales potential in supermarkets.
Offerings of new Sub Roll Dough have met with enthusiastic support in the
frozen foodservice business. Also, we are now completing our new route sales
hand-held billing and inventory control system that will greatly improve our
route sales operating efficiency and information reporting.

Net income in 2003 was $1,210,000, a 6.3% increase when compared to the
prior year. Continuing high computer software development costs, employee
benefit costs and higher raw material costs all contributed to our net income
being lower than in the years immediately prior to 2002.

OPERATIONS

In 2003 we increased our capacity to manufacture products. Equipment was
added to our Statesville, North Carolina plant which enables us to better serve
our East Coast frozen food customers. Our Superior Foods division in Dallas,
Texas upgraded its manufacturing capacity to make more specialty dough
products. Our Frozen-Rite Foods division, also located in Dallas, completed
installation of its new automated frozen roll dough line. Our Chicago,
Illinois dry sausage factory added a new slicing and packaging line and
mechanized its product and equipment washing systems.

FINANCIAL MATTERS

Working capital at October 31, 2003 totaled $33,197,000, $1,416,000 (4.1%)
less than at the beginning of the year. The decrease relates primarily to
investments in property, plant and equipment ($3,092,000), cash dividend
payments ($1,665,000) and treasury stock purchases ($1,307,000). The working
capital ratio at October 31, 2003 was 3.66 to 1 compared to 3.93 to 1 a year
earlier. The Company remained free of interest bearing debt for the
seventeenth consecutive year. The Company had $10,193,000 invested in interest
bearing securities at October 31, 2003, an increase of $906,000 (9.8%) compared
to the amount invested as of the beginning of the fiscal year.

Shareholders equity totaled $52,333,000 at October 31, 2003. This
represents a decrease of $2,057,000 (3.8%) compared to the end of the prior
fiscal year. The decrease in shareholders equity primarily relates to the
$1,665,000 paid for cash dividends and to the $1,307,000 paid for treasury
stock purchases during the year. The Board of Directors reduced the rate of
the quarterly cash dividend from five cents to three cents per share beginning
in the third quarter of 2003 in recognition of the lower levels of
profitability in recent periods. The Company purchased 172,442 shares of its
common stock on the open market during the 2003
fiscal year at an average cost of $7.58 per share. Approximately 400,000
shares of stock remain available for purchase as part of the 1.5 million shares
previously authorized by the Board of Directors. Shareholders equity per
share at October 31, 2003 was $5.09, down 2.3% from the end of the prior fiscal
year.





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##### 



SUMMARY

We improved processing and distribution efficiencies in 2003. Our
management information reporting was greatly enhanced by the new computer
system developed in 2002 and 2003. It was also another difficult year for the
economy. We believe Bridgford Foods Corporation is poised for improved sales
and profit opportunities in 2004. Thank you to our shareholders, directors,
employees, customers and suppliers for their continuing support.

Respectfully submitted,

|                   |  |                  
|------------------ |  | -----------------
|Allan L. Bridgford |  | Robert E. Schulze
|Chairman           |  | President        

BRIDGFORD FOODS CORPORATION
FINANCIAL SUMMARY (in thousands, except per share amounts)
Fiscal Year Ended

|                         |  |            |         |            |  |        |         |   |  |  |        |   
|------------------------ |  | ---------- | ------- | ---------- |  | ------ | ------- | - |  |  | ------ | --
|                         |  | October 31 |         | November 1 |  | %     
|                         |  | 2003       |         | 2002       |  | Change
|                         |  |            |         |            |  |       
|Net sales                |  | $          | 136,251 |            |  | $      | 139,202 |   |  |  | (2.12  | %)
|Income before taxes      |  |            | 1,951   |            |  |        | 2,271   |   |  |  | (14.09 | ) 
|Net income               |  |            | 1,210   |            |  |        | 1,138   |   |  |  | 6.33   | % 
|Basic earnings per share |  |            | .12     |            |  |        | .11     |   |  |  | 9.09   | % 
|Cash dividends per share |  |            | .16     |            |  |        | .26     |   |  |  | (38.46 | %)
|Working capital          |  |            | 33,197  |            |  |        | 34,613  |   |  |  | (4.09  | %)
|Total assets             |  |            | 75,927  |            |  |        | 77,182  |   |  |  | (1.63  | %)
|Shareholders equity     |  |            | 52,333  |            |  |        | 54,390  |   |  |  | (3.78  | %)
|Return on equity         |  |            | 2.31    | %          |  |        | 2.09    | % |  |  | 10.51  | % 

SELECTED FINANCIAL DATA (in thousands, except per share amounts)

|                                   |  |            |         |            |  |            |         |            |  |            |         |  |  |   |         |  |  |   |         | 
|---------------------------------- |  | ---------- | ------- | ---------- |  | ---------- | ------- | ---------- |  | ---------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                   |  | October 31 |         | November 1 |  | November 2 |         | November 3 |  | October 29
|                                   |  | 2003       |         | 2002       |  | 2001(A)    |         | 2000(A)(B) |  | 1999(A)   
|                                   |  |            |         |            |  |            |         |            |  |           
|Net Sales                          |  | $          | 136,251 |            |  | $          | 139,202 |            |  | $          | 152,464 |  |  | $ | 152,764 |  |  | $ | 135,490 | 
|Net Income                         |  |            | 1,210   |            |  |            | 1,138   |            |  |            | 6,244   |  |  |   | 8,766   |  |  |   | 10,025  | 
|Basic Earnings Per Share           |  |            | .12     |            |  |            | .11     |            |  |            | .59     |  |  |   | .80     |  |  |   | .88     | 
|Current Assets                     |  |            | 45,686  |            |  |            | 46,413  |            |  |            | 50,677  |  |  |   | 53,100  |  |  |   | 57,237  | 
|Current Liabilities                |  |            | 12,489  |            |  |            | 11,800  |            |  |            | 12,652  |  |  |   | 14,631  |  |  |   | 13,477  | 
|Working Capital                    |  |            | 33,197  |            |  |            | 34,613  |            |  |            | 38,025  |  |  |   | 38,469  |  |  |   | 43,760  | 
|Property, Plant and Equipment, Net |  |            | 17,735  |            |  |            | 19,030  |            |  |            | 19,471  |  |  |   | 18,964  |  |  |   | 17,765  | 
|Total Assets                       |  |            | 75,927  |            |  |            | 77,182  |            |  |            | 81,238  |  |  |   | 82,681  |  |  |   | 85,469  | 
|Shareholders Equity               |  |            | 52,333  |            |  |            | 54,390  |            |  |            | 57,335  |  |  |   | 56,196  |  |  |   | 58,135  | 
|Cash Dividends Per Share           |  |            | .16     |            |  |            | .26     |            |  |            | .28     |  |  |   | .28     |  |  |   | .24     | 

(A)  Reclassified to give effect to EITF 01-09.

(B)  53 weeks





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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

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.
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. The impact of inflation on the Companys financial position
and results of operations has not been significant during the last three years.

RESULTS OF OPERATIONS(in thousands)

2003 compared to 2002

Sales in fiscal 2003 declined $2,951 (2.1%) when compared to the prior year.
Sales in the Companys frozen food division declined 6.9%, as a result of
continued weak demand and aggressive competition. Sales in the Companys
direct store delivery non-refrigerated meat snack division increased 1.5%,
primarily as a result of higher unit volumes. Sales in the Companys direct
store delivery Deli division also declined 3.4% due lower unit volumes. The
gross margin remained relatively consistent with the prior year at 36.7%.
Increased ingredient costs during the year were offset by lower unit overhead
due to improved volume on items processed by the company. Overall, net selling
prices remained relatively consistent with the prior fiscal year.
Selling, general and administrative expenses decreased $487 (1.1%). A
reduction in the provision for losses on accounts receivable from fiscal years
2002 to 2003 contributed to this decrease. Rising costs for employee
healthcare, workers compensation, property and liability insurance,
transportation costs, product displays and pension expense mitigated the effect
of the reduction in the loss provision on accounts receivable.
The Company benefited from an effective income tax rate of 38% in 2003 compared
to 49.9% in 2002. The rate in the prior year was abnormally high due to the
revaluation of state deferred tax assets.

2002 compared to 2001

Sales in fiscal 2002 declined $13,262 (8.7%) when compared to the prior year.
All segments of the Companys business were adversely affected by the
recession. Sales in the Companys frozen food division declined 7.3%, as a
result of continued weak demand and aggressive competition. Sales in the
Companys direct store delivery non-refrigerated meat snack division declined
10.8%, primarily as a result of the weak economy and the bankruptcy of a
significant customer. Sales in the Companys direct store delivery Deli
division also declined 5.9% due to similar factors already noted above.
The gross margin remained relatively consistent with the prior year at 36.5%.
Higher unit costs resulting from lower production volumes were offset by more
favorable pork commodity prices. Flour prices increased during the year
offsetting lower pork commodity prices.

Selling, general and administrative expenses increased $2,637 (6.3%). The
provision for losses on accounts receivable was increased by $3,750 due to the
bankruptcy of a significant customer and collectibility issues related to other
significant accounts. In addition, the Company expensed approximately $658 in
non-recurring costs associated with the implementation of the Companys new
information systems during the fiscal year. After considering these factors,
selling, general and administrative expenses decreased 4.3% due to lower sales
offset by other factors adversely affecting this category including rising
costs for employee healthcare, workers compensation, property and liability
insurance, transportation costs and pension expense. The Company expects to
continue the growth and modernization of facilities and equipment used in the
business.

Income before taxes declined 77.5% as a result of the loss of gross margin in
the amount of $4,834 and the significant factors noted above. The effective tax
rate increased to 49.9%, primarily as the result of the revaluation of deferred
tax assets due to a lower than expected state tax rate.

2001 compared to 2000

Sales in fiscal year 2001 (52 weeks) remained essentially flat when compared to
sales of the prior year (53 weeks). Average weekly sales increased
approximately 2% in fiscal 2001 compared to the prior 53-week year. The sales
increase is primarily a result of increased selling prices and changes in
product mix.
Cost of products sold remained essentially flat when compared to the prior
year. The gross margin was approximately 37% in 2001 and 2000. Commodity costs
over the course of the 2001 fiscal year were generally comparable to fiscal
year 2000.
Selling, general and administrative expenses increased $2,335 (5.9%) when
compared to the prior 53-week year. Higher costs related to advertising and
product promotions, fuel and insurance were the primary contributors to these
increases. Interest income also declined significantly which adversely
impacted these costs.

The Companys capital expansion projects remained at levels consistent
with the prior year. The effective tax rate remained consistent with the prior
year at 38%.





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##### 



LIQUIDITY AND CAPITAL RESOURCES(in thousands)

Net cash provided by operating activities was $7,929 and $3,812 in fiscal years
2003 and 2002, respectively. Gross accounts receivable balances increased $622
in 2003 and $3,134 in 2002. The balance in 2003 increased as a result of strong
fourth quarter sales compared to the prior year. The primary reason for the
increase in 2002 was the bankruptcy of a significant customer not yet written
off as of the end of the 2002 year ($2.7 million) and slower collections.
Inventories increased $471 in fiscal year 2003 due to higher unit quantities
needed to support increased sales activity beginning in the last quarter of the
fiscal year. Inventories decreased $1,603 in 2002 due to lower business levels
and lower valuations due to favorable commodity costs. Accounts payable
increased $749 in 2003 consistent with higher inventories and business activity
at the end of the fiscal year. The current portion of non-current liabilities
decreased $329 in 2003 due to lower incentive compensation accruals. Due to
adverse pension investment results in past years, the Company has significantly
increased its contributions to the defined benefit pension plan. Included in
the current portion of non-current liabilities is $1,136 related to the
anticipated contribution required in fiscal 2004. A minimum pension liability
in the amount of $2,780 has been recorded in the accompanying financial
statements as a result of adverse investment results and a lower discount rate being applied to the
accumulated benefit obligation. The net tax effected amount of this liability
is included in shareholders equity as Accumulated
comprehensive loss.

The Companys capital improvement expenditures decreased $675 in 2003 compared
to the prior year. Significant projects in process ($846) at October 31, 2003
included equipment to expand processing capabilities at the Chicago facility
($704). Cash and cash equivalents increased $1,891 in 2003 and decreased $2,669
in 2002. Net cash flow improved in 2003 as a result of lower income tax
payments and collection of amounts refundable. The decrease in 2002 was
primarily a result of capital expenditures in the amounts of $3,767.

Working capital decreased $1,416 in 2003 and $3,412 in 2002. Working capital
decreased in 2003 primarily due to the repurchase of 172,000 shares of common
stock in the aggregate amount of $1,307. Working capital decreased in 2002
primarily as a result of non-current obligations becoming current, primarily
the Companys defined benefit pension plan and supplemental executive
retirement plans which historically were classified as non-current liabilities.
The Company has remained free of interest-bearing debt for seventeen
consecutive years. The Company maintains a line of credit with Bank of America
that expires April 30, 2004. 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 compliance with all provisions of the
agreement during the 2003 fiscal year and there were no borrowings under this
line of credit during such period. Management is of the opinion that the
Companys strong financial position and its capital resources are sufficient to
provide for its operating needs and capital expenditures for fiscal 2004.

CONTRACTUAL OBLIGATIONS(in thousands)

The Company remained free of interest
bearing long-term debt for the seventeenth consecutive year and had
no other long-term debt or other contractual obligations except for
leases. The Company leases certain transportation and computer
equipment under operating leases expiring in 2006. Future minimum
lease payments are approximately $379 in the years 2004,
$304 in 2005 and $28 in 2006.





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##### 



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. Management believes its current estimates are
reasonable and based on the best information available at the time.
The Companys credit risk is diversified across a broad range of customers and
geographic regions. Losses due to credit risk have historically been
immaterial although losses in fiscal year 2002 were significant due to a
bankruptcy of a significant customer. The provision for losses on 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. One customer
comprised 14.6% of revenues in fiscal year 2003.

Revenues are recognized upon passage of title to the customer typically
upon product shipment or delivery to customers. Products are delivered to
customers primarily through its own long-haul fleet or through a company owned
direct store delivery system.

Recent Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees Of Indebtedness Of
Others. FIN 45 requires a guarantor to recognize a liability, at the inception
of the guarantee, for the fair value of obligations it has undertaken in
issuing the guarantee and also requires more detailed disclosures with respect
to guarantees. FIN 45 is effective for guarantees issued or modified after
December 31, 2002 and requires additional disclosures for existing
guarantees. This statement did not have any impact on the Companys financial
position or results of operations.

In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities. This
interpretation requires that if a business enterprise has a controlling
financial interest in a variable interest entity, the assets, liabilities and
results of the activities of the variable interest entity should be included in
consolidated financial statements of the business enterprise. This
interpretation applies immediately to variable interest entities created after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of this interpretation were effective
beginning in our third quarter of fiscal 2003. This Interpretation did not have
any impact on the Companys financial position or results of operations.

In April 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement is effective for contracts entered into
or modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. This Statement did not have any effect on the Companys
financial position, results of operations and cash flows.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure (SFAS No. 148). SFAS No.
148 amends the disclosure requirements of Statement of Financial Accounting
Standard No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), to
require disclosures in both interim and annual financial statements about the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. SFAS No. 148 also amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. As we
decided not to adopt the SFAS No. 123 fair value method of accounting for
stock-based employee compensation, the new transition alternatives of SFAS No.
148 did not have an effect on the consolidated financial statements. The pro
forma effect to net income (loss) is presented under the Stock-based
compensation paragraph above as if the fair value method had been applied.

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS No. 150 changes the accounting for certain
financial instruments that, under previous guidance, issuers could account for
as equity. The new statement requires that those instruments be classified as
liabilities in statements of financial position. Most of the guidance in SFAS
No. 150 is effective for all financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the fourth
quarter of fiscal year 2003. This Statement did not have any effect on the
Companys financial position, results of operations and cash flows.





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##### 



Consolidated Balance Sheets (in thousands)

|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |            |        |  |        | 
|--------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------------------------- | ------ | ---------- | ------ | ---------- | ------ |  | ------ | 
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        | October 31 |        | November 1
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        | 2003       |        | 2002      
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|ASSETS                                                                                              |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|Current assets:                                                                                     |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   | Cash and cash equivalents                                                                                                                                   |        | $                         | 12,196 |            |        | $          | 10,305 | 
|                                                                                                    |                                                                                                                   | Accounts receivable, less allowance for doubtful
accounts of $1,429 and $3,419, respectively and
promotional allowances of $1,847 and $1,186 , respectively |        |                           | 12,273 |            |        |            | 12,566 | 
|                                                                                                    |                                                                                                                   | Inventories                                                                                                                                                 |        |                           | 18,033 |            |        |            | 17,562 | 
|                                                                                                    |                                                                                                                   | Prepaid expenses                                                                                                                                            |        |                           | 216    |            |        |            | 244    | 
|                                                                                                    |                                                                                                                   | Refundable income taxes                                                                                                                                     |        |                           | 732    |            |        |            | 1,737  | 
|                                                                                                    |                                                                                                                   | Deferred income taxes                                                                                                                                       |        |                           | 2,236  |            |        |            | 3,999  | 
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        | Total current assets      |        |            | 45,686 |            |        |  | 46,413 | 
|Property, plant and equipment, net of
accumulated depreciation of $43,084
and $39,373, respectively |                                                                                                                   |                                                                                                                                                             | 17,735 |                           |        |            | 19,030 |           
|Other non-current assets                                                                            |                                                                                                                   |                                                                                                                                                             | 9,775  |                           |        |            | 8,740  |           
|Deferred income taxes                                                                               |                                                                                                                   |                                                                                                                                                             | 2,731  |                           |        |            | 2,999  |           
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   | $                                                                                                                                                           | 75,927 |                           |        | $          | 77,182 |           
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|Current liabilities:                                                                                |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   | Accounts payable                                                                                                                                            |        | $                         | 4,705  |            |        | $          | 3,956  | 
|                                                                                                    |                                                                                                                   | Accrued payroll, commissions and other expenses                                                                                                             |        |                           | 4,917  |            |        |            | 4,648  | 
|                                                                                                    |                                                                                                                   | Current portion of non-current liabilities                                                                                                                  |        |                           | 2,867  |            |        |            | 3,196  | 
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        | Total current liabilities |        |            | 12,489 |            |        |  | 11,800 | 
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|Non-current liabilities                                                                             |                                                                                                                   |                                                                                                                                                             | 11,105 |                           |        |            | 10,992 |           
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|Contingencies and commitments (Note 6)                                                              |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|Shareholders equity:                                                                               |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    | Preferred
stock, without par value
Authorized - 1,000 shares
Issued and outstanding  none                        |                                                                                                                                                             |        |                          |        |            |        |           |       
|                                                                                                    | Common
stock, $1.00 par value
Authorized  20,000 shares
Issued and outstanding  10,276 and
10,448, respectively |                                                                                                                                                             |        | 10,333                    |        |            |        | 10,505     |       
|                                                                                                    | Capital in excess of par value                                                                                    |                                                                                                                                                             |        | 16,340                    |        |            |        | 17,475     |       
|                                                                                                    | Retained earnings                                                                                                 |                                                                                                                                                             |        | 27,321                    |        |            |        | 27,776     |       
|                                                                                                    | Accumulated other comprehensive loss                                                                              |                                                                                                                                                             |        | (1,661                    | )      |            |        | (1,366     | )     
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   | Total shareholders equity                                                                                                                                  |        |                           | 52,333 |            |        |            | 54,390 | 
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           
|                                                                                                    |                                                                                                                   | $                                                                                                                                                           | 75,927 |                           |        | $          | 77,182 |           
|                                                                                                    |                                                                                                                   |                                                                                                                                                             |        |                           |        |            |        |           

See accompanying notes to consolidated financial statements.





---



##### 



Consolidated Statements of Income (in thousands, except share and per share
amounts)

|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|------------------------------------------------- |  | ----------------- | ---------- | ---------- |  | ---------- | ---------- |  |  | - | ---------- | 
|                                                  |  | Fiscal year ended
|                                                  |  | October 31        |            | November 1 |  | November 2
|                                                  |  | 2003              |            | 2002       |  | 2001      
|                                                  |  |                   |            |            |  |           
|Net sales                                         |  | $                 | 136,251    |            |  | $          | 139,202    |  |  | $ | 152,464    | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Cost of products sold,
excluding depreciation     |  |                   | 86,211     |            |  |            | 88,460     |  |  |   | 96,733     | 
|Selling, general and
administrative expenses      |  |                   | 43,776     |            |  |            | 44,263     |  |  |   | 41,626     | 
|Depreciation                                      |  |                   | 4,313      |            |  |            | 4,208      |  |  |   | 4,033      | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|                                                  |  |                   | 134,300    |            |  |            | 136,931    |  |  |   | 142,392    | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Income before taxes                               |  |                   | 1,951      |            |  |            | 2,271      |  |  |   | 10,072     | 
|Provision for taxes on income                     |  |                   | 741        |            |  |            | 1,133      |  |  |   | 3,828      | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Net income                                        |  | $                 | 1,210      |            |  | $          | 1,138      |  |  | $ | 6,244      | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Basic earnings per share                          |  | $                 | .12        |            |  | $          | .11        |  |  | $ | .59        | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Shares used to compute basic earnings per share   |  |                   | 10,381,477 |            |  |            | 10,448,271 |  |  |   | 10,538,091 | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Diluted earnings per share                        |  | $                 | .12        |            |  | $          | .11        |  |  | $ | .59        | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 
|Shares used to compute diluted earnings per
share |  |                   | 10,381,477 |            |  |            | 10,488,683 |  |  |   | 10,595,105 | 
|                                                  |  |                   |            |            |  |            |            |  |  |   |            | 

Consolidated Statements of Shareholders Equity (in thousands)

|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             |        |   |   |        |        |  
|------------------------- | ------------------------------------ |  | ------------ | ---- | ------ | - | --------- | ---- | ------------ | - | -------- | ------ | ------------- | - | ------------- | ------ | ----- | -- | ----------- | ------ | - | - | ------ | ------ | -
|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    | Accumulated |        |   |   |       
|                          |                                      |  |              |      |        |   |           |      |              |   | Capital  |        |               |   |               |        | other |    | Total      
|                          |                                      |  | Common stock |      |        |   |           |      | in excess of |   | Retained |        | comprehensive |   | shareholders
|                          |                                      |  | Shares       |      | Amount |   | par value |      | earnings     |   | loss     |        | equity       
|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |              
|Balance, November 3, 2000 |                                      |  | 10,615       |      |        | $ | 10,672    |      |              | $ | 19,459   |        |               | $ | 26,065        |        |       |    |             |        |   | $ | 56,196 |       
|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             |        |   |   |        |       
|                          | Net income                           |  |              |      |        |   |           |      |              |   |          |        |               |   |               | 6,244  |       |    |             |        |   |   |        | 6,244  |  
|                          | Cash dividends paid ($.28 per share) |  |              |      |        |   |           |      |              |   |          |        |               |   |               | (2,954 | )     |    |             |        |   |   |        | (2,954 | )
|                          | Shares repurchased and retired       |  |              | (167 | )      |   |           | (167 | )            |   |          | (1,984 | )             |   |               |        |       |    |             |        |   |   |        | (2,151 | )
|Balance, November 2, 2001 |                                      |  | 10,448       |      |        | $ | 10,505    |      |              | $ | 17,475   |        |               | $ | 29,355        |        |       |    |             |        |   | $ | 57,335 |       
|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             |        |   |   |        |       
|                          | Net income                           |  |              |      |        |   |           |      |              |   |          |        |               |   |               | 1,138  |       |    |             |        |   |   |        | 1,138  |  
|                          | Cash dividends paid ($.26 per share) |  |              |      |        |   |           |      |              |   |          |        |               |   |               | (2,717 | )     |    |             |        |   |   |        | (2,717 | )
|                          | Other comprehensive loss             |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             | (1,366 | ) |   |        | (1,366 | )
|Balance, November 1, 2002 |                                      |  | 10,448       |      |        | $ | 10,505    |      |              | $ | 17,475   |        |               | $ | 27,776        |        |       | ($ | 1,366       | )      |   | $ | 54,390 |       
|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             |        |   |   |        |       
|                          | Net income                           |  |              |      |        |   |           |      |              |   |          |        |               |   |               | 1,210  |       |    |             |        |   |   |        | 1,210  |  
|                          | Shares repurchased and retired       |  |              | (172 | )      |   |           | (172 | )            |   |          | (1,135 | )             |   |               |        |       |    |             |        |   |   |        | (1,307 | )
|                          | Cash dividends paid ($.16 per share) |  |              |      |        |   |           |      |              |   |          |        |               |   |               | (1,665 | )     |    |             |        |   |   |        | (1,665 | )
|                          | Other comprehensive loss             |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             | (295   | ) |   |        | (295   | )
|Balance, October 31, 2003 |                                      |  | 10,276       |      |        | $ | 10,333    |      |              | $ | 16,340   |        |               | $ | 27,321        |        |       | ($ | 1,661       | )      |   | $ | 52,333 |       
|                          |                                      |  |              |      |        |   |           |      |              |   |          |        |               |   |               |        |       |    |             |        |   |   |        |       

See accompanying notes to consolidated financial statements.





---



##### 



Consolidated Statements of Cash Flows (in thousands)

|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |        |   |        |        |  
|--------------------------------------------------------------------------------- | ------------------------------------------- | - | ----------------------------------------- | --------------------------------- | - | ----------------- | ------ | ---------- | - | ---------- | ------ | ------ | - | ------ | ------ | -
|                                                                                  |                                             |   |                                           |                                   |   | Fiscal year ended
|                                                                                  |                                             |   |                                           |                                   |   | October 31        |        | November 1 |   | November 2
|                                                                                  |                                             |   |                                           |                                   |   | 2003              |        | 2002       |   | 2001      
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |           
|Cash flows from operating activities:                                             |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|Net income                                                                        |                                             | $ | 1,210                                     |                                   |   | $                 | 1,138  |            |   | $          | 6,244  |       
|Adjustments to reconcile net income to net
cash provided by operating activities: |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  | Depreciation                                |   |                                           | 4,313                             |   |                   |        | 4,208      |   |            |        | 4,033  |  
|                                                                                  | Provision for losses on accounts receivable |   |                                           | 915                               |   |                   |        | 3,750      |   |            |        | 275    |  
|                                                                                  | Loss (gain) on sale of assets               |   |                                           | 48                                |   |                   |        | (3         | ) |            |        | (10    | )
|Changes in operating assets and liabilities:                                      |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  | Accounts receivable                         |   |                                           | (622                              | ) |                   |        | (3,134     | ) |            |        | (915   | )
|                                                                                  | Inventories                                 |   |                                           | (471                              | ) |                   |        | 1,603      |   |            |        | (974   | )
|                                                                                  | Prepaid expenses                            |   |                                           | 28                                |   |                   |        | 620        |   |            |        | (336   | )
|                                                                                  | Income taxes, net                           |   |                                           | 1,005                             |   |                   |        | 304        |   |            |        | (1,831 | )
|                                                                                  | Deferred income taxes, net                  |   |                                           | 1,970                             |   |                   |        | (1,548     | ) |            |        | 327    |  
|                                                                                  | Other non-current assets                    |   |                                           | (1,075                            | ) |                   |        | 570        |   |            |        | (813   | )
|                                                                                  | Accounts payable                            |   |                                           | 749                               |   |                   |        | (1,766     | ) |            |        | (648   | )
|                                                                                  | Accrued payroll, advertising and other      |   |                                           | 269                               |   |                   |        | (552       | ) |            |        | (395   | )
|                                                                                  | Current portion of non-current liabilities  |   |                                           | (329                              | ) |                   |        | 1,466      |   |            |        | (46    | )
|                                                                                  | Non-current liabilities                     |   |                                           | (81                               | ) |                   |        | (2,844     | ) |            |        | (603   | )
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  |                                             |   | Net cash provided by operating activities |                                   |   | 7,929             |        |            |   | 3,812      |        |        |   | 4,308  |       
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|Cash used in investing activities:                                                |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  | Proceeds from sale of assets                |   |                                           | 26                                |   |                   |        | 3          |   |            |        | 60     |  
|                                                                                  | Additions to property, plant and equipment  |   |                                           | (3,092                            | ) |                   |        | (3,767     | ) |            |        | (4,590 | )
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  |                                             |   | Net cash used in investing activities     |                                   |   | (3,066            | )      |            |   | (3,764     | )      |        |   | (4,530 | )     
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|Cash used in financing activities:                                                |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  |                                             |   | Shares repurchased                        |                                   |   | (1,307            | )      |            |   |            |        |        |   | (2,151 | )     
|                                                                                  |                                             |   | Cash dividends paid                       |                                   |   | (1,665            | )      |            |   | (2,717     | )      |        |   | (2,954 | )     
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|                                                                                  |                                             |   |                                           | Cash used in financing activities |   |                   | (2,972 | )          |   |            | (2,717 | )      |   |        | (5,105 | )
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|Net increase (decrease) in cash and cash
equivalents                              |                                             |   | 1,891                                     |                                   |   |                   | (2,669 | )          |   |            | (5,327 | )     
|Cash and cash equivalents at beginning of year                                    |                                             |   | 10,305                                    |                                   |   |                   | 12,974 |            |   |            | 18,301 |       
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|Cash and cash equivalents at end of year                                          |                                             | $ | 12,196                                    |                                   |   | $                 | 10,305 |            |   | $          | 12,974 |       
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       
|Cash paid for income taxes                                                        |                                             | $ | 3                                         |                                   |   | $                 | 1,789  |            |   | $          | 5,108  |       
|                                                                                  |                                             |   |                                           |                                   |   |                   |        |            |   |            |        |       

See accompanying notes to consolidated financial statements.





---



##### 



NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (amounts in
thousands):

The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All intercompany
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 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. Management believes its current estimates are
reasonable and based on the best information available at the time.

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 historically been
immaterial although losses in fiscal year 2002 were significant. 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 provision for losses on 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. One customer comprised 14.6%
of revenues in fiscal year 2003.

Business segments

The
Company and its subsidiaries operate in one business segment - the
processing and/or distributing of refrigerated, frozen and snack food products.

Fiscal year

The Company maintains its accounting records on a 52-53 week fiscal basis.
Fiscal years 2001, 2002 and 2003 include 52 weeks each.

Revenues

Revenues are recognized upon passage of title to the customer typically
upon product shipment or delivery to customers. Products are primarily
delivered to customers through its own fleet or through a company owned Direct
Store Delivery System. These costs, $6,877, $6,755 and $6,025 for 2003, 2002
and 2001, respectively, are included in Selling, general and administrative
expenses in the accompanying statements.

Cash equivalents

The Company considers all investments with original maturities of three
months or less to be cash equivalents. Cash equivalents include treasury bills
of $10,193 at October 31, 2003 and $9,287 at November 1, 2002.

Inventories

Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market.

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 income 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 the
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.

The Company assesses the recoverability of its long-lived assets on an
annual basis or whenever adverse events or changes in circumstances or business
climate indicate that expected undiscounted future cash flows related to such
long-lived assets may not be sufficient to support the net book value of such
assets. If undiscounted cash flows are not sufficient to support the recorded
assets, the Company recognizes an impairment to reduce the carrying value of
the applicable long-lived assets to their estimated fair value.

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.

Stock-based compensation

Statement of Financial Accounting Standards (SFAS No. 123), Accounting
for Stock-Based Compensation, encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans based on
the fair market value of options granted. The Company has chosen to account
for stock based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Accordingly, compensation for stock
options is measured as the excess, if any, of the fair market value of the
Companys stock price at the date of grant as determined by the Board of
Directors over the amount an employee must pay to acquire the stock.

The following balances are reflected as of October 31, 2003:

|         |  |                     |         |              |  |           |     |                     |  |       |    |  |  |          |         |  |  |   |    | 
|-------- |  | ------------------- | ------- | ------------ |  | --------- | --- | ------------------- |  | ----- | -- |  |  | -------- | ------- |  |  | - | -- | 
|         |  | Options Outstanding |         |              |  |           |     | Options Exercisable
|         |  |                    
|         |  |                     |         |              |  | Weighted  |     | Weighted            |  |       |    |  |  | Weighted
|         |  |                     |         |              |  | average   |     | average             |  |       |    |  |  | average 
|Exercise |  |                     |         |              |  | remaining |     | exercise            |  |       |    |  |  | exercise
|price    |  | Shares              |         | life (years) |  | price     |     | Shares              |  | price
|         |  |                     |         |              |  |           |     |                     |  |      
|$10      |  |                     | 250,000 |              |  |           | 5.5 |                     |  | $     | 10 |  |  |          | 250,000 |  |  | $ | 10 | 





---



##### 



The Company adopted the disclosure requirements of Statement of Financial
Accounting Standards No. 123 (FAS 123). As permitted by FAS 123, the Company
measures compensation cost in accordance with APB 25. Had compensation cost
for the Companys Stock Option Plan been determined based on the fair value of
the options consistent with FAS 123, the Companys net income and earnings per
share would have been reduced to the pro forma amounts indicated below (in
thousands, except per share amounts):

|               |  |             |  |   |       |      |  |      |       |      |  |   |       |  |  | 
|-------------- |  | ----------- |  | - | ----- | ---- |  | ---- | ----- | ---- |  | - | ----- |  |  | 
|               |  |             |  |   |       | 2003 |  | 2002 |       | 2001
|               |  |             |  |   |       |      |  |      |       |     
|Net Income     |  | As reported |  | $ | 1,210 |      |  | $    | 1,138 |      |  | $ | 6,244 | 
|               |  | Pro forma   |  | $ | 1,136 |      |  | $    | 991   |      |  | $ | 6,007 | 
|Basic Earnings |  |             |  |   |       |      |  |      |       |      |  |   |       |  |  | 
|Per Share      |  | As reported |  | $ | .12   |      |  | $    | .11   |      |  | $ | .59   | 
|               |  | Pro forma   |  | $ | .11   |      |  | $    | .09   |      |  | $ | .57   | 

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 subsidiary 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 income in the period the transaction occurred.

Comprehensive income (loss)

Comprehensive income 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 consists of net
income and the additional minimum pension liability adjustment. Accumulated
other comprehensive loss consists of the additional minimum pension liability
adjustment. During fiscal years 2003 and 2002 the Company recognized a minimum pension
liability in accordance with the provisions of SFAS No. 87 Employers
Accounting for Pensions and SFAS No. 130 Reporting Comprehensive Income.
The impact of this transaction has been recorded as a component of
shareholders equity, net of tax. No effect has been given to this transaction
in the statement of cash flows. Total comprehensive income (loss) for fiscal years 2003, 2002, and
2001 were calculated as follows (in thousands):

|                                        |  |      |       |      |  |      |       |   |  |   |       | 
|--------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | 
|                                        |  | 2003 |       | 2002 |  | 2001
|                                        |  |      |       |      |  |     
|Net income                              |  | $    | 1,210 |      |  | $    | 1,138 |   |  | $ | 6,244 | 
|Additional pension liability
adjustment |  | ($   | 295   | )    |  | ($   | 1,366 | ) |  | $ | 0     | 
|                                        |  |      |       |      |  |      |       |   |  |   |       | 
|Comprehensive income (loss)             |  | $    | 915   |      |  | ($   | 228   | ) |  | $ | 6,244 | 

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. Management believes its current estimates are
reasonable and based on the best information available at the time.

The Companys credit risk is diversified across a broad range of customers and
geographic regions. Losses due to credit risk have historically been
immaterial although losses in fiscal year 2002 were significant. The provision
for losses on 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. One customer comprised 14.6% of revenues in fiscal year 2003.

Revenues are recognized upon passage of title to the customer typically
upon product shipment or delivery to customers. Products are delivered to
customers primarily through its own fleet or through a company owned Direct
Store Delivery System.

Recent accounting pronouncements

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees Of Indebtedness Of
Others. FIN 45 requires a guarantor to recognize a liability, at the inception
of the guarantee, for the fair value of obligations it has undertaken in
issuing the guarantee and also requires more detailed disclosures with respect
to guarantees. FIN 45 is effective for guarantees issued or modified after
December 31, 2002 and requires additional disclosures for existing guarantees.
This statement did not have any impact on the Companys financial position or
results of operations.

In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities. This
interpretation requires that if a business enterprise has a controlling
financial interest in a variable interest entity, the assets, liabilities and
results of the activities of the variable interest entity should be included in





---



##### 



consolidated financial statements of the business enterprise. This
interpretation applies immediately to variable interest entities created after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of this interpretation were effective
beginning in our third quarter of fiscal 2003. This Interpretation did not have
any impact on the Companys financial position or results of operations.

In April 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement is effective for contracts entered into
or modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003. This Statement did not have any effect on the Companys
financial position, results of operations and cash flows.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure (SFAS No. 148). SFAS No.
148 amends the disclosure requirements of Statement of Financial Accounting
Standard No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), to
require disclosures in both interim and annual financial statements about the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. SFAS No. 148 also amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. As we
decided not to adopt the SFAS No. 123 fair value method of accounting for
stock-based employee compensation, the new transition alternatives of SFAS No.
148 did not have an effect on the consolidated financial statements. The pro
forma effect to net income (loss) is presented under the Stock-based
compensation paragraph above as if the fair value method had been applied.

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS No. 150 changes the accounting for certain
financial instruments that, under previous guidance, issuers could account for
as equity. The new statement requires that those instruments be classified as
liabilities in statements of financial position. Most of the guidance in SFAS
No. 150 is effective for all financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the fourth
quarter of fiscal year 2003. This Statement did not have any effect on the
Companys financial position, results of operations and cash flows.

NOTE 2 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS:

|                                                                                                  |  |                |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | -
|                                                                                                  |  | (in thousands)
|                                                                                                  |  | 2003           |         | 2002
|                                                                                                  |  |                |         |     
|Inventories:                                                                                      |  |                |         |      |  |   |         |  
|Meat, ingredients and supplies                                                                    |  | $              | 3,229   |      |  | $ | 4,187   |  
|Work in process                                                                                   |  |                | 1,850   |      |  |   | 1,940   |  
|Finished goods                                                                                    |  |                | 12,954  |      |  |   | 11,435  |  
|                                                                                                  |  |                |         |      |  |   |         |  
|                                                                                                  |  | $              | 18,033  |      |  | $ | 17,562  |  
|                                                                                                  |  |                |         |      |  |   |         |  
|Property, plant and equipment:                                                                    |  |                |         |      |  |   |         |  
|Land                                                                                              |  | $              | 1,840   |      |  | $ | 1,807   |  
|Buildings and improvements                                                                        |  |                | 13,065  |      |  |   | 13,059  |  
|Machinery and equipment                                                                           |  |                | 36,170  |      |  |   | 34,350  |  
|Transportation equipment                                                                          |  |                | 9,744   |      |  |   | 9,187   |  
|                                                                                                  |  |                |         |      |  |   |         |  
|                                                                                                  |  |                | 60,819  |      |  |   | 58,403  |  
|Accumulated depreciation                                                                          |  |                | (43,084 | )    |  |   | (39,373 | )
|                                                                                                  |  |                |         |      |  |   |         |  
|                                                                                                  |  | $              | 17,735  |      |  | $ | 19,030  |  
|                                                                                                  |  |                |         |      |  |   |         |  
|Projects in process totaled $846 and $985 at October 31, 2003 and November 1,
2002, respectively.
|                                                                                                 
|Other non-current assets:                                                                         |  |                |         |      |  |   |         |  
|Cash surrender value benefits                                                                     |  | $              | 9,316   |      |  | $ | 8,541   |  
|Intangible asset                                                                                  |  |                | 159     |      |  |   | 199     |  
|Others                                                                                            |  |                | 300     |      |  |   | 0       |  
|                                                                                                  |  |                |         |      |  |   |         |  
|                                                                                                  |  | $              | 9,775   |      |  | $ | 8,740   |  
|                                                                                                  |  |                |         |      |  |   |         |  
|Accrued payroll, advertising and other expenses:                                                  |  |                |         |      |  |   |         |  
|Payroll, vacation, payroll taxes and employee benefits                                            |  | $              | 3,225   |      |  | $ | 3,073   |  
|Accrued advertising and broker commissions                                                        |  |                | 673     |      |  |   | 707     |  
|Property taxes                                                                                    |  |                | 382     |      |  |   | 381     |  
|Others                                                                                            |  |                | 637     |      |  |   | 487     |  
|                                                                                                  |  |                |         |      |  |   |         |  
|                                                                                                  |  | $              | 4,917   |      |  | $ | 4,648   |  
|                                                                                                  |  |                |         |      |  |   |         |  
|Non-current liabilities:                                                                          |  |                |         |      |  |   |         |  
|Incentive compensation                                                                            |  | $              | 1,256   |      |  | $ | 2,038   |  
|Accrued pension                                                                                   |  |                | 5,203   |      |  |   | 4,420   |  
|Other accrued retirement plans                                                                    |  |                | 4,326   |      |  |   | 4,214   |  
|Post retirement healthcare                                                                        |  |                | 320     |      |  |   | 320     |  
|                                                                                                  |  |                |         |      |  |   |         |  
|                                                                                                  |  | $              | 11,105  |      |  | $ | 10,992  |  
|                                                                                                  |  |                |         |      |  |   |         |  

NOTE 3 - RETIREMENT AND OTHER BENEFIT PLANS:

The Company has noncontributory-trusteed defined benefit retirement plans
for sales, administrative, supervisory and certain other employees. 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 plans Unfunded Current Liability.

Net pension cost consisted of the following (in thousands):

|                                                    |  |      |        |      |  |      |        |   |  |   |        |  
|--------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                    |  | 2003 |        | 2002 |  | 2001
|                                                    |  |      |        |      |  |     
|Cost of benefits earned
during the year             |  | $    | 1,177  |      |  | $    | 1,055  |   |  | $ | 827    |  
|Interest cost on projected
benefit obligation       |  |      | 1,523  |      |  |      | 1,312  |   |  |   | 1,142  |  
|Actual return on plan assets                        |  |      | (1,768 | )    |  |      | 1,127  |   |  |   | 1,372  |  
|Deferral of unrecognized
(loss) gain on plan assets |  |      | 660    |      |  |      | (2,286 | ) |  |   | (2,609 | )
|Amortization of unrecognized
(gain) loss            |  |      | 226    |      |  |      | 8      |   |  |   | (88    | )
|Amortization of transition
asset (15.2 years)       |  |      | (76    | )    |  |      | (76    | ) |  |   | (76    | )
|Amortization of unrecognized
prior service costs    |  |      | 41     |      |  |      | 41     |   |  |   | 36     |  
|                                                    |  |      |        |      |  |      |        |   |  |   |        |  
|Net pension cost                                    |  | $    | 1,783  |      |  | $    | 1,181  |   |  | $ | 604    |  
|                                                    |  |      |        |      |  |      |        |   |  |   |        |  





---



##### 



The 1987 transition asset is being amortized using the straight-line method
over the average remaining service period of active plan participants at the
date of adoption of the plan. At October 31, 2003, 0.93 years of amortization
remained. The discount rate in determining the projected benefit obligation
was 6.25% for fiscal year 2003 and 6.75% for fiscal year 2002 and 7% for fiscal
year 2001. The expected long-term rate of return used in determining the
projected benefit obligation for fiscal years 2003, 2002 and 2001 was 8%. The
assumed rate of future compensation increases for fiscal years 2003 and 2002
was 3.75% and 4.00% for fiscal year 2001.

Plan assets are primarily invested in marketable equity securities,
corporate and government debt securities and are administered by an investment
management company. Adverse investment results have been experienced in recent
years. In addition, the discount rate used to value the projected benefit
obligation was lowered to 6.25% compared to 6.75% in the prior fiscal year.
These factors resulted in an additional minimum liability that has been
recorded as a reduction of shareholders equity in the accompanying balance
sheet.

The funded status of the plan is as follows:

|                                                                                                               |  |                |         |      |  |      |        |   |  |   |        |  
|-------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                                                               |  | (in thousands)
|                                                                                                               |  | 2003           |         | 2002 |  | 2001
|                                                                                                               |  |                |         |      |  |     
|Plan assets at fair
market value                                                                               |  | $              | 16,296  |      |  | $    | 13,898 |   |  | $ | 14,464 |  
|                                                                                                               |  |                |         |      |  |      |        |   |  |   |        |  
|Actuarial present value of
benefit obligations:                                                                |  |                |         |      |  |      |        |   |  |   |        |  
|Accumulated benefits based
on current salary levels,
including vested benefits of
$19,492, $17,770 and $15,272 |  |                | 22,635  |      |  |      | 19,259 |   |  |   | 16,523 |  
|Additional benefits based on
estimated future salary levels                                                    |  |                | 4,855   |      |  |      | 2,766  |   |  |   | 2,321  |  
|                                                                                                               |  |                |         |      |  |      |        |   |  |   |        |  
|Projected benefit obligation                                                                                   |  |                | 27,490  |      |  |      | 22,025 |   |  |   | 18,844 |  
|                                                                                                               |  |                |         |      |  |      |        |   |  |   |        |  
|Projected benefit obligation
in excess of plan assets                                                          |  |                | (11,194 | )    |  |      | (8,127 | ) |  |   | (4,380 | )
|Unrecognized prior service
costs                                                                               |  |                | 159     |      |  |      | 199    |   |  |   | 162    |  
|Unrecognized loss on plan assets                                                                               |  |                | 7,544   |      |  |      | 5,295  |   |  |   | 1,972  |  
|Unrecognized net transition
asset                                                                              |  |                | (68     | )    |  |      | (143   | ) |  |   | (219   | )
|Additional accrued minimum liability                                                                           |  |                | (2,780  | )    |  |      | (2,584 | ) |  |   |       |  
|                                                                                                               |  |                |         |      |  |      |        |   |  |   |        |  
|Accrued pension cost                                                                                           |  | $              | (6,339  | )    |  | $    | (5,360 | ) |  | $ | (2,465 | )
|                                                                                                               |  |                |         |      |  |      |        |   |  |   |        |  

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. Total benefit expense recorded under these plans for fiscal
years 2003, 2002 and 2001 were $71, $377 and $393 respectively. Benefits
payable related to these plans and included in other non-current liabilities in
the accompanying financial statements were $4,326 and $4,214 at October 31,
2003 and November 1, 2002, 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 $9,316 and $8,541 at October 31, 2003 and
November 1, 2002, respectively.

The Company provides an incentive compensation plan for certain key
executives, which is based upon the Companys pretax income and return on
shareholders equity. The payment of these amounts is generally deferred over
a five-year period. The total amount payable related to this arrangement was
$2,468 and $3,718 at October 31, 2003 and November 1, 2002, respectively.
Future payments are approximately $1,212, $691, $364, $135 and $66 for fiscal
years 2004 through 2008, respectively.

Postretirement health care benefits in the approximate amount of $320 are
included in non-current liabilities at October 31, 2003 and November 1, 2002.

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. 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 generally
granted at a fair market value determined by the Board of Directors subject to
the following:





---



##### 





| | 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.                 

As of October 29, 1999, 275,000 options were outstanding at an exercise
price of $10.00 per share. During fiscal year 2000, 25,000 options with a
weighted average exercise price of $10.00 were cancelled. As of October 31,
2003, 250,000 options were outstanding at an exercise price of $10.00 per
share.

The fair value of compensatory stock options was estimated using the
Black-Scholes option-pricing model using the following weighted average
assumptions at the date of issuance:

|                              |  |           |      |  
|----------------------------- |  | --------- | ---- | -
|Risk-free interest rate       |  |           | 5.34 | %
|Expected years until exercise |  | 6.0 years
|Expected stock volatility     |  |           | 40.0 | %
|Expected dividends            |  |           | 2.20 | %

NOTE 4 - INCOME TAXES:

The provision for taxes on income includes the following:

|          |         |   |                |        |      |   |       |       |   |   |       |       | 
|--------- | ------- | - | -------------- | ------ | ---- | - | ----- | ----- | - | - | ----- | ----- | 
|          |         |   | (in thousands)
|          |         |   | 2003           |        | 2002 |   | 2001 
|          |         |   |                |        |      |   |      
|Current:  |         |   |                |        |      |   |       |       |   |   |       |      
|          | Federal |   | $              | (1,137 | )    |   | $     | 1,073 |   |   | $     | 2,830 | 
|          | State   |   |                | (92    | )    |   |       | 145   |   |   |       | 671   | 
|          |         |   |                |        |      |   |       |       |   |   |       |      
|          |         |   | (1,229         | )      |      |   | 1,218 |       |   |   | 3,501 |      
|          |         |   |                |        |      |   |       |       |   |   |       |      
|Deferred: |         |   |                |        |      |   |       |       |   |   |       |      
|          | Federal |   |                | 1,930  |      |   |       | (398  | ) |   |       | 292   | 
|          | State   |   |                | 40     |      |   |       | 313   |   |   |       | 35    | 
|          |         |   |                |        |      |   |       |       |   |   |       |      
|          |         |   | 1,970          |        |      |   | (85   | )     |   |   | 327   |      
|          |         |   |                |        |      |   |       |       |   |   |       |      
|          |         | $ | 741            |        |      | $ | 1,133 |       |   | $ | 3,828 |      
|          |         |   |                |        |      |   |       |       |   |   |       |      

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

|                                                                    |                                                       |   |                |    |      |   |       |    |  |   |       |     | 
|------------------------------------------------------------------- | ----------------------------------------------------- | - | -------------- | -- | ---- | - | ----- | -- |  | - | ----- | --- | 
|                                                                    |                                                       |   | (in thousands)
|                                                                    |                                                       |   | 2003           |    | 2002 |   | 2001 
|                                                                    |                                                       |   |                |    |      |   |      
|Provision for federal
income taxes at
the applicable
statutory rate |                                                       | $ | 663            |    |      | $ | 772   |    |  | $ | 3,424 |    
|Increase in
provision resulting from:                               |                                                       |   |                |    |      |   |       |    |  |   |       |    
|                                                                    | state income taxes,
net of federal income
tax benefit |   |                | 52 |      |   |       | 60 |  |   |       | 376 | 
|Effect of change in state statutory rate                            |                                                       |   |               |    |      |   | 270   |    |  |   |      |    
|Other, net                                                          |                                                       |   | 26             |    |      |   | 31    |    |  |   | 28    |    
|                                                                    |                                                       |   |                |    |      |   |       |    |  |   |       |    
|                                                                    |                                                       | $ | 741            |    |      | $ | 1,133 |    |  | $ | 3,828 |    
|                                                                    |                                                       |   |                |    |      |   |       |    |  |   |       |    

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

|                                 |                             |   |                |       |      |   |        |       | 
|-------------------------------- | --------------------------- | - | -------------- | ----- | ---- | - | ------ | ----- | 
|                                 |                             |   | (in thousands)
|                                 |                             |   | 2003           |       | 2002
|                                 |                             |   |                |       |     
|Receivables allowance            |                             | $ | 543            |       |      | $ | 1,679  |      
|Inventory capitalization         |                             |   | 388            |       |      |   | 307    |      
|Incentive compensation           |                             |   | 436            |       |      |   | 574    |      
|Franchise tax                    |                             |   | (7             | )     |      |   | 97     |      
|Employee benefits                |                             |   | 929            |       |      |   | 1,417  |      
|Other                            |                             |   | (53            | )     |      |   | (75    | )    
|                                 |                             |   |                |       |      |   |        |      
|                                 | Current tax assets, net     |   | $              | 2,236 |      |   | $      | 3,999 | 
|                                 |                             |   |                |       |      |   |        |      
|Incentive compensation           |                             | $ | 477            |       |      | $ | 775    |      
|Pension and health care benefits |                             |   | 3,683          |       |      |   | 3,440  |      
|Depreciation                     |                             |   | (1,429         | )     |      |   | (1,216 | )    
|                                 |                             |   |                |       |      |   |        |      
|                                 | Non-current tax assets, net |   | $              | 2,731 |      |   | $      | 2,999 | 
|                                 |                             |   |                |       |      |   |        |      

No valuation allowance was provided against deferred tax assets in the
accompanying statements.

NOTE 5 - LINE OF CREDIT (in thousands):

Under the terms of a revolving line of credit with Bank of America, the
Company may borrow up to $2,000 through April 30, 2004. 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 compliance with all provisions of the
agreement during the year. There were no borrowings under this line of credit
during the year.

NOTE 6  CONTINGENCIES AND COMMITMENTS (in thousands):

The Company leases certain transportation and computer equipment under
operating leases expiring in 2006. The terms of the transportation lease
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 $400 in fiscal year 2003, $358 in fiscal year 2002
and $340 in fiscal year 2001. Contingent payments were $168 in fiscal year
2003, $130 in fiscal year 2002 and $110 in fiscal years 2001. Future minimum
lease payments are approximately $379 in the years 2004, $304 in 2005 and $28
in 2006.





---



##### 



Report of Independent
AuditorsPricewaterhouseCoopers LLP
To the Board of Directors and Shareholders of Bridgford Foods Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, shareholders equity and cash flows
present fairly, in all material respects, the financial position of Bridgford
Foods Corporation and its subsidiaries at October 31, 2003 and November 1,
2002, and the results of their operations and their cash flows for each of the
three years in the period ended October 31, 2003, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Companys management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLPOrange County, California
December 19, 2003





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##### 



|                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Directors                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Officers                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | General Offices                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Allan L. Bridgford
Chairman
Hugh Wm. Bridgford
Paul A. Gilbert
Senior Vice President,
Investment Advisement
Firm

Richard A. Foster
Retired (formerly
President, Interstate
Electronics Corporation)
Steven H. Price
Property Management
Robert E. Schulze
Norman V. Wagner II
Retired (formerly
President, Signal
Landmark Properties,
Inc.)
Paul R. Zippwald
Retired (formerly
Regional Vice
President, Bank of
America) |  | Allan L. Bridgford
Chairman, Board of
Directors and member
ofthe Executive
Committee
Robert E. Schulze
President and member
of the Executive
Committee
Hugh Wm. Bridgford
Chairman, Executive
Committee
and Vice President
William L. Bridgford
Vice President and
Secretary
Raymond F. Lancy
Chief Financial
Officer, Vice
President, Treasurer
and Assistant Secretary
Daniel R. Yost
Vice President
John V. Simmons
Vice President
Chris Cole
Vice President |  | Bridgford Foods Corporation
1308 North Patt Street
P.O. Box 3773
Anaheim, California 92803
Phone (714) 526-5533
www.bridgford.comMajor Operating Facilities
Chicago, Illinois
Dallas, Texas
Statesville, North CarolinaTransfer Agent and Registrar
Mellon Investor
Services
85 Challenger Road
Ridgefield Park, NJ 07760
Phone (800) 356-2017
www.melloninvestor.comIndependent Accountants
PricewaterhouseCoopers LLP
Orange County, California