BRIDGFORD FOODS CORP

Previous wording

Certain statements included within in this Report, and the information and documents incorporated by reference with this Report, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report or incorporated by reference into this Report are forward-looking statements. These statements include, among other things, any predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our business strategy; statements concerning industry trends; statements regarding anticipated demand for our products, or the products of our competitors; statements relating to manufacturing forecasts; statements relating to forecasts of our liquidity position or available cash resources; statements regarding operational challenges, including as a result of global supply chain disruptions and labor shortages; statements regarding inflationary pressures and the resulting impact on our results of operations; statements regarding new regulations related to federal income tax and the impact on our financial statements and cash flow; statements regarding the impact of the adoption of recent accounting pronouncements on our business; and statements relating to the assumptions underlying any of the foregoing. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof (although not all forward-looking statements contain these words).

Current wording

Certain statements included within in this Report, and the information and documents incorporated by reference with this Report, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report or incorporated by reference into this Report are forward-looking statements. These statements include, among other things, any predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our business strategy; statements concerning industry trends; statements regarding anticipated demand for our products, or the products of our competitors; statements relating to manufacturing forecasts; statements relating to forecasts of our liquidity position or available cash resources; statements regarding operational challenges, including as a result of global supply chain disruptions and labor shortages; statements regarding inflationary pressures, including increased costs for labor and freight, and the resulting impact on our results of operations; statements regarding new regulations related to federal income tax and the impact on our financial statements and cash flow; statements regarding the impact of the adoption of recent accounting pronouncements on our business; and statements relating to the assumptions underlying any of the foregoing. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof (although not all forward-looking statements contain these words).

Previous wording

Current accounting principles require that our pension benefit obligation be measured using an internal rate of return (“IRR”) analysis to be included in the discount rate selection process. The IRR calculation for the Retirement Plan for Employees of Bridgford Foods Corporation is measured annually and based on the Citigroup Pension Discount Rate. The Citigroup Pension Discount Rate as of July 31, 2024, was 5.22% as compared to 5.96% as of November 3, 2023. The discount rate applied can significantly affect the value of the projected benefit obligation as well as the net periodic benefit cost.

Current wording

Current accounting principles require that our pension benefit obligation be measured using an internal rate of return (“IRR”) analysis to be included in the discount rate selection process. The IRR calculation for the Retirement Plan for Employees of Bridgford Foods Corporation is measured annually and based on the Citigroup Pension Discount Rate. The Citigroup Pension Discount Rate as of January 31, 2025, was 5.57% as compared to 5.16% as of November 1, 2024. The discount rate applied can significantly affect the value of the projected benefit obligation as well as the net periodic benefit cost.

Previous wording

The table below shows customers that accounted for more than 20% of consolidated accounts receivable or 10% of consolidated sales for the twelve weeks ended July 12, 2024, and July 7, 2023, respectively.

Current wording

The table below shows customers that accounted for more than 20% of consolidated accounts receivable (“AR”) or 10% of consolidated sales for the twelve weeks ended January 24, 2025, and January 26, 2024, respectively.

Previous wording

Revenues are recognized in accordance with ASC 606 –Revenue from Contracts with Customers upon passage of title to the customer, typically upon product pick-up, shipment, or delivery to customers. Products are delivered to customers primarily through our own long-haul fleet, common carrier, or through a Company owned direct store delivery system.

Current wording

Revenues are recognized in accordance with ASC 606 –Revenue from Contracts with Customers upon passage of title to the customer, typically upon product pick-up, shipment, or delivery to customers. Products are delivered to customers primarily through common carrier, or through a Company owned direct-store-delivery system.

Previous wording

Our Frozen Food Products segment primarily manufactures and distributes biscuits, bread dough items, roll dough items and shelf stable sandwiches. All items within this segment are considered similar products and have been aggregated at this level. Our frozen food business covers the United States. Products produced by the Frozen Food Products segment are generally supplied to food service and retail distributors who take title to the product upon shipment receipt through Company-leased long-haul vehicles or third-party logistic providers/carriers. We leverage relationships with regional sales managers, and we maintain a network of independent food service and retail brokers covering most of the United States. Brokers are compensated on a commission basis. We believe that our brokers, in close cooperation with our regional sales managers, are a valuable asset providing significant new product and customer opportunities. Regional sales managers perform several significant functions for us, including identifying and developing new business opportunities and providing customer service and support to our distributors and end purchasers often with the assistance of our broker partners.

Current wording

Our Frozen Food Products segment primarily manufactures and distributes biscuits, bread dough items, roll dough items and shelf stable sandwiches. All items within this segment are considered similar products and have been aggregated at this level. Our frozen food business covers the United States. We have shifted away from Company-leased long-haul vehicles toward less costly transportation methods such as common carriers. Products produced by the Frozen Food Products segment are generally supplied to food service and retail distributors who take title to the product upon shipment receipt through third-party logistic providers/carriers. We leverage relationships with regional sales managers, and we maintain a network of independent food service and retail brokers covering most of the United States. Brokers are compensated on a commission basis. We believe that our brokers, in close cooperation with our regional sales managers, are a valuable asset providing significant new products and customer opportunities. Regional sales managers perform several significant functions for us, including identifying and developing new business opportunities and providing customer service and support to our distributors and end purchasers often with the assistance of our broker partners.

Previous wording

Our Snack Food Products segment primarily distributes products manufactured by us. All items within this segment are considered similar products and have been aggregated at this level. The dry sausage division includes products such as jerky, meat snacks, sausage, and pepperoni products. Our Snack Food Products segment sells approximately 160 different items through a direct-store-delivery network and customer-owned distribution centers serving approximately 20,000 supermarkets, mass merchandise and convenience retail stores located in 50 states. These customers are comprised of large retail chains and smaller “independent” operators.

Current wording

Our Snack Food Products segment primarily distributes products manufactured by us. All items within this segment are considered similar products and have been aggregated at this level. The dry sausage division includes products such as jerky, meat snacks, salami, sausage, and pepperoni products. During the first quarter of fiscal year 2025, our snack food products division sold approximately 170 different items through customer-owned distribution centers and a direct-store-delivery network serving approximately 21,000 supermarkets, mass merchandise and convenience retail stores located in all 50 states.

Previous wording

Products produced or distributed by the Snack Food Products segment are supplied to customers through either direct-store-delivery or direct delivery to customer warehouses. Product delivered using the Company-owned fleet direct to the store is considered a direct-store-delivery sale. In this case, we provide the service of setting up and maintaining the display and stocking our products. Products delivered to customer warehouses are distributed to the retail store and stocked by the customer where it is then sold to the end consumer.

Current wording

Products produced or distributed by the Snack Food Products segment are supplied to customers through either direct delivery to customer warehouses or direct-store-delivery to retail locations. We utilize customer managed warehouse distribution centers to lower distribution cost. Products delivered to the customer’s warehouse are then distributed to the store where they are resold to the end consumer. Our direct-store-delivery system focus emphasizes high quality service and supply of our premium branded products to our customers. We also provide the service of setting up and maintaining the display and restocking our products.

Previous wording

Net sales decreased by $4,926 (9.1%) to $49,263 in the third twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The changes in net sales were comprised as follows:

Current wording

Net sales decreased by $2,297 (4.2%) to $52,545 in the first twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024. The changes in net sales were comprised as follows:

Previous wording

Net sales for the Frozen Food Products segment increased due to higher selling prices per pound partially offset by lower unit sales volume in pounds compared to the same period in the prior year. Other institutional Frozen Food Products dollar sales, including sheet dough and rolls, increased 11% and retail dollar sales volume decreased by 9%. We believe sales increased due to continued willingness by consumers to visit foodservice establishments despite inflationary conditions. Returns activity decreased slightly compared to the same twelve-week period in the 2023 fiscal year. Promotional activity was higher during the fiscal year 2024 period.

Current wording

Net sales for the Frozen Food Products segment increased slightly due to higher selling prices per pound partially offset by lower unit sales volume in pounds compared to the same period in the prior year. Other institutional Frozen Food Products dollar sales, including sheet dough and rolls, increased 3% and retail dollar sales volume decreased by 3% resulting in relatively consistent net sales compared to the same period last year. Consumers continue to be willing to visit foodservice establishments despite inflationary conditions. Returns activity increased slightly compared to the same twelve-week period in the 2024 fiscal year. Promotional activity was lower during the fiscal year 2025 period.

Previous wording

Net sales of Snack Food Products decreased due to lower unit sales volume in pounds through our direct-store-delivery distribution channel and lower selling prices per pound during the third quarter of fiscal year 2024. We believe demand decreased primarily due to inflationary pressures on consumer spending habits as consumers have pulled back on snack foods including meat product purchases. The weighted average selling price per pound decreased compared to the same twelve-week period in the prior fiscal year due to changes in product mix. Returns activity decreased compared to the same twelve-week period in the 2023 fiscal year. Promotional activity was higher than the same twelve-week period in fiscal year 2023 due to programs related to changes in packaging sizes.

Current wording

Net sales of Snack Food Products decreased due to lower unit sales volume in pounds through our direct-store-delivery distribution channel partially offset by higher selling prices per pound during the first quarter of fiscal year 2025. We believe demand decreased primarily due to inflationary pressures on consumer spending habits as consumers have pulled back on snack foods including meat product purchases. Market data indicates that, due to higher inflation and rising costs for basic needs, consumers are increasingly turning to private-label products to reduce their expenses. The weighted average selling price per pound increased compared to the same twelve-week period in the prior fiscal year due to price increases on select products with lower or negative margins. Returns activity increased compared to the same twelve-week period in the 2024 fiscal year. Promotional activity was lower than the same twelve-week period in fiscal year 2024 due to lower sales volume in pounds.

Previous wording

Cost of products sold in the Frozen Food Products segment decreased by $139 (1.6%) to $8,670 in the third twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023. The cost of purchased flour decreased based on global economic conditions for approximately $114 in the third twelve-week period of fiscal year 2024 compared to the same twelve-week period in fiscal year 2023. The gross margin increased to 24.7% in the third twelve-weeks of fiscal year 2024 compared to 18.8% in the same twelve-week period in fiscal year 2023. Gross overhead increased as a result of continued upward pressures on input costs impacted by inflation.

Current wording

Cost of products sold in the Frozen Food Products segment increased by $298 (2.9%) to $10,584 in the first twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024. The cost of purchased flour decreased by approximately $65 based on global economic conditions in the first twelve-week period of fiscal year 2025 compared to the same twelve-week period in fiscal year 2024. The cost of eggs has increased by $33 compared to the prior year period due to concerns over the avian influenza and available inventory from suppliers. The gross margin decreased to 27.2% in the first twelve-weeks of fiscal year 2025 compared to 28.6% in the same twelve-week period in fiscal year 2024. Gross overhead increased as a result of higher healthcare expenses and temporary labor costs.

Previous wording

Cost of products sold in the Snack Food Products segment decreased by $720 (2.4%) to $29,369 in the third twelve-week period of the 2024 fiscal year compared to the same twelve-week period in fiscal year 2023 due to lower sales volume in our direct store delivery distribution channel. The cost of significant meat commodities increased partially due to a limited supply of cattle ready for market by approximately $1,171 in the third twelve-week period of fiscal year 2024 compared to the same period in fiscal year 2023. The gross margin decreased to 22.2% in the third twelve-weeks of fiscal year 2024 compared to 30.6% in the same twelve-week period in fiscal year 2023. We increased our net realizable value reserve by $991 during the twelve weeks ended July 12, 2024, in consideration of higher meat commodity costs and lower gross margins. We maintain a net realizable reserve of $1,343 on products as of July 12, 2024, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product.

Current wording

Cost of products sold in the Snack Food Products segment increased by $558 (2.0%) to $29,076 in the first twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024 due to higher meat commodity costs. The cost of significant meat commodities increased partially due to a limited supply of cattle ready for market by approximately $845 in the first twelve-week period of fiscal year 2025 compared to the same period in fiscal year 2024. The gross margin decreased to 23.5% in the first twelve-weeks of fiscal year 2025 compared to 29.5% in the same twelve-week period in fiscal year 2024. We decreased our net realizable value reserve by $54 during the twelve weeks ended January 24, 2025, in consideration of changes in product mix to meet customer orders. We maintain a net realizable reserve of $1,413 on products as of January 24, 2025, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product. Freight costs increased by $492 during the first twelve-week period of the 2025 fiscal year compared to the same twelve-week period in the prior year.

Previous wording

Selling, general and administrative expenses (“SG&A”) decreased by $212 (1.4%) to $14,445 in the third twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:

Current wording

Selling, general and administrative expenses (“SG&A”) decreased by $114 (0.8%) to $14,913 in the first twelve-week period of fiscal year 2025 compared to the same twelve-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:

Previous wording

Lower sales commissions due to lower sales volume in pounds resulted in lower wages and bonus expenses in the third twelve weeks of the 2024 fiscal year compared to the same period in the prior fiscal year. The increase in the provision for bad debt was mainly the result of recent slowing in certain customer payments beyond terms. The decrease in insurance expenses was driven by exiting unfavorable insurance policies early to take advantage of more competitive pricing. Outside consulting costs increased due to higher legal fees, advisory services, inspection and product testing fees. Rental costs for storage units that house inventory decreased due to a sell down of inventory to meet lower demand in the direct store delivery route system. None of the changes individually or as a group of expenses in “Other SG&A” were significant enough to merit separate disclosure. The major components comprising the increase of “Other SG&A” expenses were higher product advertising and legal expenses partially offset by lower repairs and maintenance costs on production equipment.

Current wording

The provision for bad debt increased due to the credit losses related to the bankruptcy filing of one of our customers, Big Lots, in the amount of $364. Lower sales commissions due to lower sales volume in pounds resulted in lower wages and bonus expenses in the first twelve weeks of the 2025 fiscal year compared to the same period in the prior fiscal year. The decrease in insurance expenses was driven by exiting unfavorable insurance policies early to take advantage of more competitive pricing. None of the changes individually or as a group of expenses in “Other SG&A” were significant enough to merit separate disclosure. The major components comprising the decrease of “Other SG&A” expenses were lower vehicle repairs and lower product advertising partially offset by higher outside consulting fees.

Previous wording

SG&A expenses in the Frozen Food Products segment increased by $163 (5.6%) to $3,063 in the third twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. The overall increase in SG&A expenses was due to an increase in product advertising and healthcare expenses.

Current wording

SG&A expenses in the Frozen Food Products segment decreased by $71 (2.1%) to $3,370 in the first twelve-week period of fiscal year 2025 compared to the same twelve-week period in the prior fiscal year. The overall decrease in SG&A expenses was due to a decrease in insurance expense and lower product advertising partially offset by higher healthcare expenses and outside consulting fees.

Previous wording

SG&A expenses in the Snack Food Products segment decreased by $375 (3.2%) to $11,382 in the third twelve-week period of fiscal year 2024 compared to the same twelve-week period in the prior fiscal year. Most of the decrease was due to lower wages and bonuses and decreased fees paid under brand licensing agreements partially offset by higher product advertising and healthcare expenses.

Current wording

SG&A expenses in the Snack Food Products segment decreased by $43 (0.4%) to $11,543 in the first twelve-week period of fiscal year 2025 compared to the same twelve-week period in the prior fiscal year. Most of the decrease was due to lower wages and bonuses and decreased fees paid under brand licensing agreements partially offset by higher healthcare and office supply expense.

Previous wording

We recorded a benefit for income taxes of $752 for the twelve-week period ended July 12, 2024, and a provision for income taxes of $258 for the twelve-week period ended July 7, 2023, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory rate of approximately 26.4% due to non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies, and state income taxes.

Current wording

We recorded a benefit for income taxes of $453 for the twelve-week period ended January 24, 2025, and a provision for income taxes of $510 for the twelve-week period ended January 26, 2024, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory rate of approximately 26.4% due to non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies, and state income taxes.

Previous wording

The principal source of operating cash flows is cash receipts from the sale of our products, net of costs to manufacture, store, market and deliver such products. We normally fund our operations from cash balances and cash flow generated from operations. Additionally, we have maintained a revolving line of credit with Wells Fargo Bank, N.A. pursuant to the terms of the credit agreement dated March 1, 2018, as amended to date. On November 30, 2023, we entered into a fifth amendment to the credit agreement with Wells Fargo Bank, N.A., and also executed a new revolving line of credit note pursuant to the amendment. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2024. As of July 12, 2024, we had $1,075 of current debt on equipment loans, $64,180 of net working capital and $7,500 available under our revolving line of credit with Wells Fargo Bank, N.A. Refer to Note 6 to the Condensed Consolidated Financial Statements included within this Report for further information. The Company was in compliance with all loan covenants as of July 12, 2024.

Current wording

The principal source of operating cash flows is cash receipts from the sale of our products, net of costs to manufacture, store, market and deliver such products. We evaluate cash and cash equivalents related to borrowing capacity and short-term and long-term investments. We normally fund our operations from cash balances and cash flow generated from operations. Recent losses may necessitate short-term or long-term borrowing to fund inventory purchases to meet customer orders. We are most focused on restoring profitability to the Company by driving top-line revenue growth and reducing costs. In line with this focus, the Company is in discussions with several companies regarding private-label product arrangements with the goal of increasing product sales volume. Market data indicates that due to higher inflation and rising costs for basic needs, consumers are increasingly turning to private-label products to reduce their expenses. The Company is also seeking bids on its production materials to drive increased competition among its vendors while maintaining quality inputs at the best possible price. Additionally, we have maintained a revolving line of credit with Wells Fargo Bank, N.A. pursuant to the terms of the credit agreement dated March 1, 2018, as amended to date (the “Credit Agreement”). On November 30, 2024, we entered into a sixth amendment to the Credit Agreement, as amended, and also executed a revolving line of credit note pursuant to the amendment. The revolving line of credit note replaces the existing note that expired by its terms on November 30, 2024. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2025. Refer to Note 6 – Equipment Notes Payable and Financial Arrangements to the Condensed Consolidated Financial Statements included within this Report for further information. As of January 24, 2025, we had $1,091 of current debt on equipment loans, $59,735 of net working capital and $7,500 available under our revolving line of credit with Wells Fargo Bank, N.A. Additionally as of January 24, 2025, the Company was in violation of the Fixed Charge Coverage Ratio covenant of the Credit Agreement, which was subsequently waived for the fiscal quarter ended January 24, 2025 (per letter dated March 6, 2025).

Previous wording

All of our operating segments have been impacted by inflation, including higher costs for labor, freight and specific materials related to product manufacturing and delivery. We expect this trend to continue through the remainder of fiscal year 2024. Additionally, commodity costs, including meat and flour costs, have and may continue to fluctuate due to both political and economic conditions, including the ongoing conflict between Ukraine and Russia. Despite higher commodity costs like we experienced in fiscal year 2022 and again in the first and second quarters of fiscal 2024, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity or other costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, general price inflation or deflation, raw materials costs, labor shortages or supply chain issues could adversely affect the Company’s financial results and its liquidity. Higher product prices could potentially lower demand for our product and decrease volume. Management believes there are various options available to generate additional liquidity to repay debt or fund operations such as mortgaging real estate, should that be necessary. Our ability to increase liquidity will depend upon, among other things, our business plans and the performance of operating divisions and economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, or generate positive cash flow necessary to fund operations, we may not be able to compete successfully, which could negatively impact our business, operations, and financial condition. With the cash expected to be generated from the Company’s operations, we anticipate that we will maintain sufficient liquidity to operate our business for at least the next twelve months. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.

Current wording

All of our operating segments have been impacted by inflation, including higher costs for labor, freight and specific materials related to product manufacturing and delivery. We expect this trend to continue through the remainder of fiscal year 2025. Additionally, commodity costs, including meat and flour costs, have and may continue to fluctuate due to both political and economic conditions, including the ongoing conflict between Ukraine and Russia and Israel and Palestine. Despite higher commodity costs like we experienced in fiscal year 2022 and again in fiscal year 2024, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity or other costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, general price inflation or deflation, higher raw materials costs, labor shortages or supply chain issues could adversely affect the Company’s financial results and its liquidity. Higher product prices could potentially lower demand for our products and decrease volume. Management believes there are various options available to generate additional liquidity to repay debt or fund operations such as mortgaging real estate, should that be necessary. Our ability to increase liquidity will depend upon, among other things, our business plans, the performance of operating divisions, and economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, or generate positive cash flow necessary to fund operations, we may not be able to compete successfully, which could negatively impact our business, operations, and financial condition. With the cash expected to be generated from the Company’s operations, we anticipate that we will maintain sufficient liquidity to operate our business for at least the next twelve months. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.

Previous wording

Cash flows from operating activities for the thirty-six weeks ended:

Current wording

Cash flows from operating activities for the twelve weeks ended:

Previous wording

For the thirty-six weeks ended July 12, 2024, net cash provided by operating activities was $3,202, $3,107 less cash used than during the same period in fiscal year 2023. The increase in net cash provided by operating activities primarily relates to a decrease in inventory of $5,661 and a decrease in accounts receivable of $2,809, partially offset by a net loss of $2,730, an increase in refundable income taxes of $2,452 and an increase in other non-current assets of $2,704. During the thirty-six-week period ended July 12, 2024, we did not contribute towards our defined benefit pension plan. Plan funding strategies may be adjusted depending upon economic conditions, investment options, tax deductibility, or recent legislative changes in funding requirements.

Current wording

For the twelve weeks ended January 24, 2025, net cash used in operating activities was $4,604, which was $3,901 more cash used than during the same period in fiscal year 2024. The increase in net cash used by operating activities primarily relates to an increase in inventory of $2,914 and an increase in prepaid expenses and other current assets of $1,760, a decrease in accounts payable of $1,641 and a net loss of $1,113 partially offset by a decrease in accounts receivable of $1,455. During the twelve-week period ended January 24, 2025, we did not contribute towards our defined benefit pension plan. Plan funding strategies may be adjusted depending upon economic conditions, investment options, tax deductibility, or recent legislative changes in funding requirements.

Previous wording

Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 85 days for the thirty-six-week period ended July 12, 2024. The increase in the cash conversion cycle from 84 days for the thirty-six-week period ended July 7, 2023 was minimal and overall was consistent with performance in the prior fiscal year period.

Current wording

Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 74 days for the twelve-week period ended January 24, 2025. The decrease in the cash conversion cycle from 84 days to 74 days for the twelve-week period ended January 26, 2024, was due to lower average days in inventory compared to the same period in the prior year.

Previous wording

Cash flows from investing activities for the thirty-six weeks ended:

Current wording

Cash flows from investing activities for the twelve weeks ended:

Previous wording

The table below highlights additions to property, plant and equipment for the thirty-six weeks ended:

Current wording

The table below highlights additions to property, plant and equipment for the twelve weeks ended:

Previous wording

Cash flows from financing activities for the thirty-six weeks ended:

Current wording

Cash flows from financing activities for the twelve weeks ended:

Previous wording

On November 30, 2023, we entered into a fifth amendment to the credit agreement with Wells Fargo Bank, N.A. dated March 1, 2018, as amended, and also executed a revolving line of credit note pursuant to the amendment. The revolving line of credit note replaces the existing note that expired by its terms on November 30, 2023. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2024, at an interest rate equal to (a) the daily simple secured overnight financing rate plus 2.0%, or if unavailable, or (b) the prime rate, in each case as determined by the bank. The line of credit has an unused commitment fee of 0.35% of the available loan amount, payable on a quarterly basis. Amounts may be repaid and reborrowed during the term of the note. Accrued interest is payable on the first day of each month and the outstanding principal balance and remaining interest are due and payable on November 30, 2024.

Current wording

On November 30, 2024, we entered into a sixth amendment to the credit agreement with Wells Fargo Bank, N.A. dated March 1, 2018, as amended, and also executed a revolving line of credit note pursuant to the amendment. The revolving line of credit note replaces the existing note that expired by its terms on November 30, 2024. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2025, at an interest rate equal to (a) the daily simple secured overnight financing rate plus 2.0%, or if unavailable, (b) the prime rate, in each case as determined by the bank. The line of credit has an unused commitment fee of 0.35% of the available loan amount, payable on a quarterly basis. Amounts may be repaid and reborrowed during the term of the note. Accrued interest is payable on the first day of each month and the outstanding principal balance and remaining interest are due and payable on November 30, 2025.

Previous wording

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures. The amendments enhance disclosures of significant segment expenses by requiring to disclose significant segment expenses regularly provided to the chief operating decision maker (CODM), extend certain annual disclosures to interim periods, and permit more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is currently evaluating the guidance and its impact to the financial statements.

Current wording

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures. ASU No. 2023-07 enhances disclosures of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM), extending certain annual disclosures to interim periods, and permitting more than one measure of segment profit or loss to be reported under certain conditions. ASU No. 2023-07 is effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is currently evaluating the guidance and its impact on the financial statements.

Previous wording

In March 2024, the SEC adopted rules to develop standardized climate-related disclosures by publicly traded companies including the emission of greenhouse gases. The rules are currently effective for the Company in the fiscal years beginning in 2027. However, as a result of pending legal challenges, the actual timing of effectiveness of the rules and applicable phase-in periods, as well as whether portions of the rules remain in effect after the legal challenges, are uncertain. The Company is currently evaluating the guidance and its impact on the financial statements.

Current wording

In March 2024, the SEC adopted rules to develop standardized climate-related disclosures by publicly traded companies, including the emission of greenhouse gases. The rules are currently effective for the Company in the fiscal year beginning in 2027. However, as a result of pending legal challenges, the actual timing of effectiveness of the rules and applicable phase-in periods, as well as whether portions of the rules will remain in effect after the legal challenges, are uncertain. The Company is currently evaluating the guidance and its impact on the financial statements.