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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended April 26, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-1667
Bob Evans Farms, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 31-4421866
- ----------------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3776 South High Street, Columbus, Ohio 43207
- ----------------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 491-2225
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock with $.01 par value
--------------------------------
(Title of class)
The Exhibit Index begins at page 24.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Based upon the last quoted sale price reported on the Nasdaq stock market on
July 12, 2002, the aggregate market value of the registrant's common stock held
by non-affiliates on that date was $956,719,233.16.
35,697,189 shares of the registrant's common stock with $.01 par value were
outstanding at July 12, 2002.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the registrant's annual report to stockholders for
the fiscal year ended April 26, 2002, are incorporated by
reference into Part II of this Annual Report on Form 10-K.
2. Portions of the registrant's definitive proxy statement for
its annual meeting of stockholders to be held on Sept. 9,
2002, are incorporated by reference into Part III of this
Annual Report on Form 10-K.
2
PART I
ITEM 1. BUSINESS.
---------
Bob Evans Farms, Inc. was incorporated on Nov. 4, 1985, under the laws of the
State of Delaware. It is the successor by merger to Bob Evans Farms, Inc., an
Ohio corporation incorporated in 1957.
Bob Evans Farms, Inc. wholly owns BEF Holding Co., Inc. The subsidiaries owned
by BEF Holding Co., Inc. include Bob Evans Farms, Inc., an Ohio corporation
("BEF Ohio"); Owens Country Sausage, Inc. ("Owens"); and BEF Aviation Co., Inc.
("Aviation"). BEF Ohio wholly owns Bob Evans Transportation Company, LLC
("Transportation") and BEF IN Holding Co., Inc. ("BEF IN Holding"). BEF Ohio is
the limited partner and BEF IN Holding is the general partner of Bob Evans
Restaurants of Indiana, L.P. ("BEF Indiana"). BEF Indiana wholly owns Bob Evans
Restaurants of Michigan, Inc. ("Michigan Restaurants"). Michigan Restaurants
wholly owns Bob Evans Restaurants, Inc. ("Restaurants"). Restaurants wholly owns
BEF RE Holding Co., Inc. ("RE Holding"). RE Holding majority owns BEF REIT, Inc.
Bob Evans Farms, Inc. and its direct and indirect subsidiaries are collectively
referred to as the "company."
The company's business is divided into two principal industry segments: the
ownership and operation of a chain of full-service, family restaurants located
in 22 states and the manufacture, distribution and sale of fresh and fully
cooked pork products and other complementary food products in 30 states.
RESTAURANT SEGMENT OPERATIONS
- -----------------------------
GENERAL
The company operates a total of 495 full-service, family restaurants under the
Bob Evans Restaurant, Bob Evans Restaurant & General Store and Owens Restaurant
names. The company experienced a same-store sales increase of 3.2 percent in
fiscal 2002 as compared to a 2.6 percent increase during fiscal 2001 in its
restaurant segment.
All of the company's family restaurants feature a wide variety of homestyle menu
offerings designed to appeal to its diverse customer base, primarily families.
Breakfast entrees, including traditional items and unique specialty offerings,
are served all day. The restaurants are typically open from 6 a.m. until 10 p.m.
Sunday through Thursday, with extended closing hours on Friday and Saturday for
most locations. Average guest checks for breakfast, lunch and dinner are $6.02,
$6.73 and $7.16, respectively. Approximately 65 percent of total revenues from
restaurant operations are generated from 6 a.m. to 4 p.m., with the balance
generated from 4 p.m. to closing. Sales on Saturday and Sunday account for
approximately 39 percent of a typical week's revenues.
The company's restaurants are supplied with food and other inventory items
(other than sausage products and related meat items) by five independent food
and non-food distributors twice a week. Sausage products and other Bob Evans
meat items are supplied by the company to each restaurant by the company's
driver-salesmen, with the exception of the restaurants located in
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Florida, Massachusetts, Mississippi, New York, North Carolina and South Carolina
and parts of Missouri which are supplied by the aforementioned food
distributors.
The following table sets forth the number, type and location of restaurants
operated by the company as of the end of the 2002 fiscal year.
RESTAURANTS IN OPERATION AT APRIL 26, 2002
- ----------------------- --------------- ------------ ---------- ---------------
Traditional General Owens Total
Stores Restaurants
- ----------------------- --------------- ------------ ---------- ---------------
Delaware 5 5
- ----------------------- --------------- ------------ ---------- ---------------
Florida 30 30
- ----------------------- --------------- ------------ ---------- ---------------
Illinois 18 18
- ----------------------- --------------- ------------ ---------- ---------------
Indiana 54 54
- ----------------------- --------------- ------------ ---------- ---------------
Iowa 1 1
- ----------------------- --------------- ------------ ---------- ---------------
Kansas 3 3
- ----------------------- --------------- ------------ ---------- ---------------
Kentucky 18 18
- ----------------------- --------------- ------------ ---------- ---------------
Maryland 19 19
- ----------------------- --------------- ------------ ---------- ---------------
Massachusetts 1 1
- ----------------------- --------------- ------------ ---------- ---------------
Michigan 48 48
- ----------------------- --------------- ------------ ---------- ---------------
Mississippi 1 1
- ----------------------- --------------- ------------ ---------- ---------------
Missouri 16 1 17
- ----------------------- --------------- ------------ ---------- ---------------
New Jersey 2 2
- ----------------------- --------------- ------------ ---------- ---------------
New York 13 13
- ----------------------- --------------- ------------ ---------- ---------------
North Carolina 14 14
- ----------------------- --------------- ------------ ---------- ---------------
Ohio 167 2 169
- ----------------------- --------------- ------------ ---------- ---------------
Pennsylvania 28 1 29
- ----------------------- --------------- ------------ ---------- ---------------
South Carolina 4 1 5
- ----------------------- --------------- ------------ ---------- ---------------
Tennessee 2 1 3
- ----------------------- --------------- ------------ ---------- ---------------
Texas 9 9
- ----------------------- --------------- ------------ ---------- ---------------
Virginia 12 12
- ----------------------- --------------- ------------ ---------- ---------------
West Virginia 23 1 24
- ----------------------- --------------- ------------ ---------- ---------------
TOTAL 479 7 9 495
- ----------------------- --------------- ------------ ---------- ---------------
During fiscal 2002, the company opened 27 new restaurants. The majority of these
new restaurants are located in the company's core markets. However, the company
also expanded its restaurant operations by opening restaurants in newer
marketing areas, such as Kansas City, Mo., and Raleigh-Durham, N.C.
From time to time, restaurants are evaluated and closed due to a changing
market, poor performance or a change in access or building safety. During the
2002 fiscal year, one traditional Bob Evans Restaurant was closed in
Gainesville, Fla., due to its inability to perform to company expectations.
4
The company has typically opened restaurants in areas where a strong consumer
awareness and acceptance of its sausage products have been established over the
years. It has deviated from this practice only in Florida, Massachusetts,
Mississippi, North Carolina and South Carolina, where the company's
driver-salesmen do not distribute Bob Evans Sausage.
SEASONALITY
Certain restaurants located near major interstate highways generally experience
increased revenues during the summer travel season.
RESTAURANT EXPANSION
During fiscal 2003, the company plans to build and open approximately 30 new
restaurants, about one-third of which will be constructed in the company's most
established markets. Future restaurant growth will depend on the availability of
sites at prices that are projected to meet or exceed the company's desired
returns, as well as growth trends in consumer demand for mid-scale, family style
restaurants. During fiscal 2003, the company plans to rebuild eight restaurants
and remodel 56 restaurants to various degrees, including major remodels and
expansions to minor equipment and decor updates. The restaurant remodel/rebuild
plan, which requires significant capital expenditures, demonstrates the
company's commitment to customer service and satisfaction. Restaurant capital
expenditures for fiscal 2003 are estimated to be consistent with last year at
approximately $97 million.
CARRYOUT BUSINESS
During fiscal 2002, carryout business in the company's restaurants accounted for
approximately 5.4 percent of the total revenues generated by the restaurant
segment. To increase carryout business and customer satisfaction, the company
continues to include Carry Home Kitchen, an enhanced carryout area, in all new
locations. Through dedicated staffing and facilities, Carry Home Kitchens not
only better serve carryout customers, but also increase eat-in dessert sales as
a result of the awareness generated by the added dessert case. The company's
restaurants do not have a drive-through service for carryout business. Plans for
fiscal 2003 are to continue to expand carryout business by increasing marketing
programs and consumer awareness.
RETAIL SALES OF GOODS
The company offers retail items for sale on a limited basis in its traditional
restaurants' Corner Cupboard area and on a much larger scale in its seven Bob
Evans Restaurants & General Stores. The Corner Cupboard retail areas provide
select offerings of the gifts, retail food items and other novelties available
in Bob Evans Restaurants & General Stores. Given the success of this program,
the company plans to include Corner Cupboard retail areas in all new and rebuilt
restaurants. The company also introduced retail Corner Cupboard areas in 47
existing units during fiscal 2002 and plans to add an additional 13 in existing
units during fiscal 2003, which will bring the total to approximately 265.
5
COMPETITION
The company's restaurant segment is engaged in an intensely competitive
business. The company's restaurants compete for favorable expansion sites and
customers with both local and national family, casual and fast-food restaurant
chains, as well as with individual restaurant operators. The line continues to
blur between family and casual restaurants. In the strictest sense, Bob Evans
Restaurants continue to operate in the family dining segment. However, with
attractive portions and lower price points, Bob Evans Restaurants are
increasingly challenging our casual dining competitors in terms of food quality
and value perceptions. Competition in the restaurant industry lies in
price/value, menu variety, relevance and brand image. The company's restaurant
segment sales are not a significant factor in the overall restaurant business in
the company's market areas.
LABOR AND FRINGE BENEFIT EXPENSE
Labor and fringe benefit expense in the restaurant segment accounted for 38.8
percent of sales in fiscal 2002 as compared to 40.0 percent in fiscal 2001, both
of which are high from a historical perspective. The decrease in fiscal 2002 is
largely attributable to management initiatives that included reducing overtime,
better scheduling and redirecting benefit dollars. The company also benefited
from reduced pressures in the labor market due to the economy's softness, and
the company expects a similar labor market during fiscal 2003. Congress is
currently considering increases to the minimum wage rate which could
significantly impact the company's labor costs.
SOURCES AND AVAILABILITY OF RAW MATERIALS
Menu mix in the restaurant segment is varied enough that raw materials
historically have been readily available. However, some food products may be in
short supply during certain seasons and raw material prices often fluctuate
according to availability. Cost of sales accounted for approximately 24.8
percent of restaurant segment sales during fiscal 2002, in comparison with 25.1
percent during fiscal 2001. Restaurant segment food costs were impacted by menu
price increases, raw material prices and sales mix. The company does not
currently anticipate that food costs will fluctuate significantly during its
2003 fiscal year.
MARKETING
The company spent approximately $32.9 million marketing the restaurant segment
during its 2002 fiscal year. Approximately 65 percent of the marketing dollars
were spent on television, radio, print and outdoor advertising to maintain and
build brand awareness. The remaining 35 percent of dollars were spent primarily
on in-store merchandising/menus, kids' marketing programs and local-store
marketing. The company typically limits the use of coupons to certain outlying
markets to encourage trial with new or infrequent customers. The company expects
marketing expense as a percent of sales for fiscal 2003 to be consistent with
fiscal 2002 levels.
RESEARCH AND DEVELOPMENT
The company is continuously testing new food items in its search for new and
improved menu offerings to appeal to its customer base and to satisfy changing
eating trends. Product
6
development has been concentrated on unique homestyle options, as well as
quality enhancements to some of the company's best-selling items to keep the
menu fresh and relevant. The company's Breakfast Savors and Lunch Savors
programs, which are designed to drive weekday sales, continue to be updated with
new items to maintain their success. During fiscal 2002, the company tested a
new children's program which was introduced in early fiscal 2003. The program
included new menu items, as well as new entertaining educational activities
provided by Weekly Reader, a leading publisher of classroom periodicals for
elementary and secondary schools. Research and development expenses, to date,
have not been material.
TRADEMARKS, SERVICE MARKS AND LICENSES
The company maintains various trademarks and service marks in connection with
its family restaurant operations, such as Bob Evans Carry Home Kitchen,
Breakfast Savors, Lunch Savors and Sunshine Skillet. These trademarks and
service marks are renewed periodically and the company believes that they
adequately protect the various products and services to which they relate. The
operations of the restaurant segment of the company are not dependent upon any
patents, franchises or concessions.
FOOD PRODUCTS SEGMENT OPERATIONS
- --------------------------------
PRINCIPAL PRODUCTS AND PROCUREMENT METHODS
The company's traditional business in its food products segment is the
production, distribution and sale of approximately 40 varieties of fresh, smoked
and fully cooked pork sausage and ham products under the brand names of Bob
Evans, Owens Country Sausage and Country Creek Farm. The company continues to
devote time and effort on both new product development and sales of its pork
sausage and ham products to institutional and foodservice purchasers. In
addition to the company's well-known meat offerings, the company also sells a
number of other complementary food items in the frozen and refrigerated areas of
grocery stores. During fiscal 2002, the company expanded Bob Evans food products
offerings by introducing Pizza Burrito; Sausage, Egg and Cheese Large
SnackWiches; Wildfire Chicken with Rice entree; and Chicken and Noodles, Chicken
Pot Pie and Lasagna with Meat Sauce family-sized entrees. Several items in the
Bob Evans and Owens product lines, including SnackWiches, are microwaveable
convenience items for meals and snacks.
Specialty items for the company's institutional and foodservice customers are
made to their specifications and include sausage links and patties, sausage
gravy and biscuit sandwiches. Although foodservice sales do not generate margins
as high as sales of branded items, they provide the company with incremental
volume in its production plants. During fiscal 2002 and fiscal 2001, foodservice
sales accounted for approximately 8 percent of the company's food products
sales. Foodservice sales are expected to remain relatively constant in fiscal
2003.
7
Previously, the company produced and sold liquid-smoke flavorings through its
Hickory Specialties, Inc. subsidiary. In October 2001, the company sold Hickory
Specialties to sharpen the focus on the company's core strengths in the food and
restaurant businesses.
Percentage of Food Products Segment Revenues
FISCAL YEAR ENDED
----------------------------------------------
APRIL 26, 2002 APRIL 27, 2001 APRIL 28, 2000
-------------- -------------- --------------
Sales of Bob Evans 76% 71% 71%
Products
Sales of Owens 21% 24% 24%
Country Sausage
Products
Sales of Hickory 3% 5% 5%
Specialties Products*
*On Oct. 5, 2001, the company sold Hickory Specialties, Inc. to an unrelated
third party.
The company's retail pork sausage products are produced in the company's six
processing plants located in Xenia, Bidwell and Springfield, Ohio; Hillsdale,
Mich.; Galva, Ill.; and Richardson, Texas. The Bidwell, Springfield, Hillsdale
and Richardson plants also manufacture the products sold to foodservice
distributors. In the fall of 2002, the company expects to open its first
distribution center near Springfield, Ohio. The distribution center will serve
as a hub for the company's direct store distribution system.
The company procures live hogs at prevailing market prices from terminals, local
auctions, country markets and corporate and family farms in Illinois, Indiana,
Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Carolina, Ohio,
Oklahoma, Pennsylvania, South Dakota, West Virginia, Wisconsin and Texas. Live
hogs procured in these markets are purchased by an employee of the company. Live
hogs are then transported overnight directly from the various markets and farms
from which they were purchased to five of the company's processing plants where
they are slaughtered and processed into various pork sausage products. These
products, in turn, are shipped daily from the processing plants for distribution
to the company's customers. The company generally has not experienced difficulty
in procuring live hogs for its pork sausage products. The company has not
traditionally contracted in advance for the purchase of live hogs, although it
is currently evaluating contract pricing and may do so with limited quantities
in fiscal 2003.
8
DISTRIBUTION METHODS
Products distributed under the Bob Evans brand name are distributed to retail
customers in two ways:
(1) Primarily, the direct store delivery system is used for the retail
distribution of the sausage and other refrigerated products bearing the
Bob Evans brand name. Ninety-one driver-salesmen, driving company-owned
refrigerated trucks, deliver the company's products directly to more
than 5,870 grocery stores.
(2) On a smaller scale, the company uses alternate distribution methods for
its sausage and frozen food products through warehouses and
distributors, which makes the products available to approximately 4,000
additional grocery stores.
The marketing territory for Bob Evans brand products includes Delaware, the
District of Columbia, Illinois, Indiana, Maryland, Michigan and Ohio as well as
portions of Alabama, Georgia, Kansas, Kentucky, Iowa, Missouri, New Jersey, New
York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, West
Virginia and Wisconsin.
Owens Country Sausage products are distributed to more than 5,500 retail
customers in two ways:
(1) Company-owned transport trucks deliver directly to most major
supermarket chain warehouse distribution centers in the Owens' market
areas. Thereafter, the products are shipped to individual grocery
stores.
(2) Ten driver-salesmen, driving company-owned refrigerated trucks, and
various broker networks deliver products to grocery stores.
The marketing territory for Owens brand products includes Arizona, Arkansas,
Colorado, Louisiana, New Mexico, Oklahoma and Texas, and portions of Kansas,
Mississippi and Nevada.
Distribution to the company's foodservice customers is accomplished through food
brokers and distributors.
INVENTORY LEVELS
Most of the company's food products are highly perishable and require proper
refrigeration. Shelf life of the products ranges from 18 to 45 days for
refrigerated products. Due to the highly perishable nature and short shelf life
of the company's food products, the company's processing plants normally process
only enough product to fill existing orders. Therefore, the company maintains
minimal inventory levels because such products are generally manufactured only
to meet existing demand and are delivered to retail outlets within a three-day
period after processing.
9
TRADEMARKS AND SERVICE MARKS
The company maintains various trademarks and service marks in connection with
its food products operations, such as SnackWiches, Hotz and Border Breakfast,
that identify various Bob Evans Farms and Owens Country Sausage products. These
trademarks and service marks are renewed periodically and the company believes
that they adequately protect the brand names of the company. The operations of
the food products segment of the company are not dependent upon any patents,
licenses, franchises or concessions.
COMPETITION
The sausage business is highly competitive. The company competes primarily on
the basis of the price and quality of its sausage products. Bob Evans uses
high-quality ingredients to manufacture products that reflect the company's
homestyle image and heritage. The company is in direct competition with a large
number and variety of producers and wholesalers of similar products, including
companies active both locally and nationally. Although many such competitors
have substantially greater financial resources and higher sales volumes, the
company believes that sales of its products constitute a significant portion of
sales of sausage of comparable price and quality in the majority of its core
market areas.
SEASONALITY
More pounds of fresh sausage are typically sold during the colder months from
October through April. The company continues to promote products for outdoor
grilling in an attempt to create more volume during the summer months.
MARKETING
During the 2002 fiscal year, the company spent approximately $10.3 million
marketing its food products under the Bob Evans and Owens brand names.
Approximately 85 percent of this amount was spent on broadcast media programs to
maintain and build brand awareness and the remaining 15 percent was spent on
consumer promotion efforts to encourage trial of the company's food products.
DEPENDENCE ON A SINGLE CUSTOMER
Bob Evans and Owens products are available to more than 50 percent of the
population of the continental United States through more than 15,370 retail
grocery stores. The company's food products segment is not dependent upon a
single customer or group of affiliated customers.
SALES ON CREDIT; AGED PRODUCT
The company typically allows seven- to 30-day terms on the sales of its food
products. The company has not experienced any significant bad debt problems, nor
has the return of aged product had a significant effect on the company.
10
SOURCES AND AVAILABILITY OF RAW MATERIALS
The company is dependent upon the availability of live hogs to produce its pork
sausage and ham products. Historically, the company has not experienced
shortages in the number of hogs available at prevailing market prices. The live
hog market is highly cyclical in terms of the number of hogs available and the
current market price. The live hog market is also dependent upon supply and
demand for pork products and corn production, since corn is the major food
supply for hogs.
EXPANSION OF DISTRIBUTION AREA
The company has no current plans to expand the distribution area for its food
products in fiscal 2003.
PROFIT MARGINS RELATED TO SAUSAGE PRODUCTION
Profit margins relating to sausage production are normally more favorable during
periods of lower live hog costs. During fiscal 2002, hog prices averaged $37.84
per hundredweight as compared to $39.51 per hundredweight during fiscal 2001.
The company believes live hog costs may decrease during fiscal 2003 in
comparison to fiscal 2002 levels.
GENERAL
- -------
EMPLOYEES
The company employed 38,723 persons in the restaurant segment and 1,267 persons
in the food products segment as of April 26, 2002.
COMPLIANCE WITH ENVIRONMENTAL PROTECTION REQUIREMENTS
The company does not anticipate that compliance with federal, state and local
provisions which have been enacted or adopted to regulate the discharge of
materials into the environment, or which otherwise relate to the protection of
the environment, will have a material effect upon the capital expenditures,
earnings or the competitive position of the company.
SALES, OPERATING PROFIT AND IDENTIFIABLE ASSETS
The following table sets forth information regarding revenues, operating profit
and identifiable assets of the company's restaurant segment and food products
segment for each of the last three fiscal years.
11
FISCAL YEAR ENDED
(Dollars in thousands)
April 26, April 27, April 28,
2002 2001 2000
----------------- --------------- ---------------
Sales:
- -----
Restaurant Operations: $870,257 $805,957 $750,851
Intersegment Sales of
Food Products: $ 30,814 $ 30,074 $ 28,612
Food Products (excluding
intersegment sales): $191,589 $201,551 $197,068
Operating Profit:
- ----------------
Restaurant Operations: $ 85,009 $ 68,663 $ 67,877
Food Products: $ 18,854 $ 14,803 $ 17,610
Identifiable Assets:
- -------------------
Restaurant Operations: $626,318 $574,430 $519,168
Food Products: $ 60,713 $ 73,025 $ 75,311
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this Annual Report on Form 10-K which are not
statements of historical fact are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). In
addition, certain statements in future filings by the company with the
Securities and Exchange Commission, in press releases and in oral and written
statements made by or with the approval of the company which are not statements
of historical fact constitute forward-looking statements within the meaning of
the Act. Examples of forward-looking statements include statements of plans and
objectives of the company or its management or board of directors; statements
regarding future economic performance; and statements of assumptions underlying
such statements. Words such as "believes," "anticipates," "expects" and
"intends" and similar expressions are intended to, but are not the exclusive
means of, identifying those statements.
Forward-looking statements involve various important assumptions, risks and
uncertainties. Actual results may differ materially from those predicted by the
forward-looking statements because of various factors and possible events,
including, without limitation, changes in hog costs, the possibility of severe
weather conditions where the company operates its restaurants, the availability
and cost of acceptable new restaurant sites, shortages of restaurant labor,
acceptance of the company's restaurant concepts into new geographic areas, and
other risks disclosed from time to time in the company's securities filings and
press releases. There is also the risk that the company may incorrectly analyze
these risks or that the strategies developed by the company to address them will
be unsuccessful.
Forward-looking statements speak only as of the date on which they are made, and
the company undertakes no obligation to update any forward-looking statement to
reflect circumstances or
12
events after the date on which the statement is made to reflect unanticipated
events. All subsequent written and oral forward-looking statements attributable
to the company or any person acting on behalf of the company are qualified by
the cautionary statements in this section.
ITEM 2. PROPERTIES.
----------
The company owns its principal executive offices located at 3776 S. High St.,
Columbus, Ohio. The company also owns a 937-acre farm located in Rio Grande,
Ohio, and a 30-acre farm located in Richardson, Texas. The two farm locations
support the company's heritage and image through educational and recreational
tourist activities.
RESTAURANT SEGMENT
Of the 495 restaurants operated by the company, 437 are owned by the company and
58 are leased from unaffiliated persons. All lease agreements contain either
multiple renewal options or options to purchase.
FOOD PRODUCTS SEGMENT
The food products segment has six sausage-manufacturing plants located in
Bidwell, Springfield, and Xenia, Ohio; Richardson, Texas; Hillsdale, Mich.; and
Galva, Ill. All of these properties are owned by the company. The company
believes that its manufacturing facilities have adequate capacity to serve their
intended purpose at this time and in the foreseeable future.
The company owns regional sales offices in Westland, Mich., and Tyler, Texas. In
addition, the company leases various other locations throughout its marketing
territory which serve as regional and divisional sales offices.
ITEM 3. LEGAL PROCEEDINGS.
------------------
There are no pending legal proceedings to which the registrant or any of its
subsidiaries is a party or to which any of their respective properties are
subject, except routine legal proceedings to which they are parties incident to
their respective businesses. None of such proceedings are considered by the
registrant to be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
Not applicable.
13
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following table sets forth the executive officers of the registrant and
certain information with respect to each executive officer as of July 12, 2002.
Unless otherwise indicated, each person has held his or her principal occupation
for more than five years. The executive officers are appointed by and serve at
the pleasure of the board of directors.
Principal Occupations for Past Five Years and Other
Name Age Information
- ---- --- ----------------------------------------------------
Stewart K. Owens 47 Chairman of the Board, Chief Executive Officer, President
and Chief Operating Officer since 2001; President, Chief
Executive Officer and Chief Operating Officer from 2000 to
2001; President and Chief Operating Officer from 1995 to
2000; 12 years as an officer of the registrant.
Donald J. Radkoski 47 Chief Financial Officer, Treasurer and Secretary since 2000;
Chief Financial Officer and Treasurer from 1994 to 2000; 14
years as an officer of the registrant.
Larry C. Corbin 60 Executive Vice President of Restaurant Division since 1995;
28 years as an officer of the registrant.
Roger D. Williams 51 Executive Vice President of Food Products Division since
1997; 22 years as an officer of the registrant.
Mary L. Cusick 46 Senior Vice President of Investor Relations and Corporate
Communications since 2000; Vice President of Corporate
Communications from 1990 to 2000; 12 years as an officer of
the registrant.
Tod P. Spornhauer 36 Controller and Vice President of Finance since 1998;
Controller from 1996 to 1998; 3 years as an officer of the
registrant.
14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
---------------------------------------------------------------------
In accordance with General Instruction G(2), the information called for in Item
201 (a) through (c) of Regulation S-K is incorporated herein by reference to
Note H, Quarterly Financial Data (Unaudited), located on page 23 of the
registrant's Annual Report to Stockholders for the fiscal year ended April 26,
2002, ("the registrant's 2002 Annual Report to Stockholders").
ITEM 6. SELECTED FINANCIAL DATA.
------------------------
In accordance with General Instruction G(2), the financial information for
fiscal years 1998 through 2002 contained under the subcaption Consolidated
Financial Review, located on page 13 of the registrant's 2002 Annual Report to
Stockholders, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATION.
-------------
In accordance with General Instruction G(2), the information contained under the
caption Management's Discussion and Analysis of Selected Financial Information,
located on pages 26 through 29 of the registrant's 2002 Annual Report to
Stockholders, is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
----------------------------------------------------------
As noted in Note A, Summary of Significant Accounting Policies, located on page
18 of the registrant's 2002 Annual Report to Stockholders, the company does not
use derivative financial instruments for speculative purposes. The company
maintains its cash and cash equivalents in financial instruments with maturities
of three months or less when purchased.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
The financial statements and the auditor's report thereon included on pages 13
through 25 of the registrant's 2002 Annual Report to Stockholders are
incorporated herein by reference.
The Quarterly Financial Data (Unaudited) included in Note H of the notes to
consolidated financial statements, located on page 23 of the registrant's 2002
Annual Report to Stockholders, is also incorporated herein by reference.
15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE.
---------------------
No response required.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------
In accordance with General Instruction G(3), the information contained under the
captions "ELECTION OF DIRECTORS" and "SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE" in the company's definitive proxy statement relating to
the annual meeting of stockholders to be held on Sept. 9, 2002, is incorporated
herein by reference. The information regarding executive officers required by
Item 401 of Regulation S-K is included in Part I hereof under the caption
"Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
In accordance with General Instruction G(3), the information contained under the
captions "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS" and "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" in the registrant's definitive
proxy statement relating to the annual meeting of stockholders to be held on
Sept. 9, 2002, is incorporated herein by reference. Neither the report of the
compensation committee of the registrant's board of directors on executive
compensation nor the performance graph included in the registrant's definitive
proxy statement for the annual meeting of stockholders to be held on Sept. 9,
2002, shall be deemed to be incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
------------------------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
In accordance with General Instruction G(3), the information contained under the
caption "EQUITY COMPENSATION PLAN INFORMATION" and "STOCK OWNERSHIP" in the
registrant's definitive proxy statement relating to the annual meeting of
stockholders to be held on Sept. 9, 2002, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
In accordance with General Instruction G(3), the information contained under the
captions "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" and "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" in the registrant's definitive
proxy statement relating to the annual meeting of stockholders to be held on
Sept. 9, 2002, is incorporated herein by reference.
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
---------------------------------------------------------------
(a)(1) FINANCIAL STATEMENTS
For a list of all financial statements included with this Annual Report
on Form 10-K, see the "List of Financial Statements" at page 23.
(a)(2) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have
been omitted.
(a)(3) EXHIBITS
Exhibits filed with this Annual Report on Form 10-K are attached hereto.
For a list of such exhibits, see the "Index to Exhibits" at page 24. The
following table provides certain information concerning executive
compensation plans and arrangements required to be filed as exhibits to
this Annual Report on Form 10-K.
17
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Exhibit
Number Description Location
- ------ ----------- --------
10(a) Change in Control Agreement, Attached hereto.
effective May 1, 2002, between
Stewart K. Owens and Bob Evans Farms,
Inc.
10(b) Change in Control Agreement, Attached hereto.
effective May 1, 2002, between Donald
J. Radkoski and Bob Evans Farms,
Inc.; and Schedule A to Exhibit 10(b)
identifying other substantially
identical agreements between Bob
Evans Farms, Inc. and certain
executive officers of Bob Evans
Farms, Inc.
10(c) Letter Agreement, dated June 20, Attached hereto.
2001, between Howard J. Berrey and
Bob Evans Farms, Inc.
10(d) Bob Evans Farms, Inc. 1989 Stock Incorporated herein by reference to
Option Plan for Nonemployee Directors Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Aug. 23, 1989.
(Registration No. 33-30665)
10(e) Bob Evans Farms, Inc. 1991 Incentive Incorporated herein by reference to
Stock Option Plan Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Sept. 13, 1991.
(Registration No. 33-42778)
10(f) Bob Evans Farms, Inc. 1992 Incorporated herein by reference to
Nonqualified Stock Option Plan Exhibit 10(j) to the Registrant's
(effective for options granted prior Annual Report on Form 10-K for its
to May 1, 2002) fiscal year ended April 24, 1992.
(File No. 0-1667)
10(g) Bob Evans Farms, Inc. Long Term Incorporated herein by reference to
Incentive Plan for Managers Exhibit 10(k) to the Registrant's
(effective for performance awards Annual Report on Form 10-K for its
granted prior to May 1, 2002) fiscal year ended April 30, 1993.
(File No. 0-1667)
10(h) Bob Evans Farms, Inc. 1994 Long Term Incorporated herein by reference to
Incentive Plan (effective for options Exhibit 10(n) to the Registrant's
and other awards granted prior to May Annual Report on Form 10-K for its
1, 2002) fiscal year ended April 29, 1994.
(File No. 0-1667)
18
Exhibit
Number Description Location
- ------ ----------- --------
10(i) Bob Evans Farms, Inc. 1998 Incorporated herein by reference to
Supplemental Executive Retirement Exhibit 10(l) to the Registrant's
Plan (effective for awards granted Annual Report on Form 10-K for its
prior to May 1, 2002) fiscal year ended April 24, 1998.
(File No. 0-1667)
10(j) Bob Evans Farms, Inc. 1998 Directors Incorporated herein by reference to
Compensation Plan (effective May 1, Exhibit 10(m) to the Registrant's
1998 through May 6, 2002) Annual Report on Form 10-K for its
fiscal year ended April 24, 1998.
(File No. 0-1667)
10(k) Bob Evans Farms, Inc. 1998 Stock Incorporated herein by reference to
Option and Incentive Plan (effective Exhibit 4(f) to the Registrant's
for options and other awards granted Registration Statement on Form S-8
prior to May 1, 2002) filed March 22, 1999. (Registration No.
333-74829)
10(l) Bob Evans Farms, Inc. Dividend Incorporated herein by reference to the
Reinvestment and Stock Purchase Plan Registrant's Registration Statement on
Form S-3 filed March 19, 1999.
(Registration No. 333-74739)
10(m) Bob Evans Farms, Inc. and Affiliates Incorporated herein by reference to
Executive Deferral Program Exhibit 10(k) to the Registrant's
(effective, as amended, through April Annual Report on Form 10-K for its
30, 2002) fiscal year ended April 27, 2001.
(File No. 0-1667)
10(n) First Amendment to Bob Evans Farms, Incorporated herein by reference to
Inc. and Affiliates Executive Exhibit 10(l) to the Registrant's
Deferral Program Annual Report on Form 10-K for its
fiscal year ended April 27, 2001.
(File No. 0-1667)
10(o) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1992 Nonqualified Stock
Option Plan (effective for options
granted after May 1, 2002)
10(p) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1993 Long Term Incentive
Plan for Managers (effective for
performance awards granted after May
1, 2002)
10(q) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1994 Long Term Incentive
Plan (effective for options and other
awards granted after May 1, 2002)
19
Exhibit
Number Description Location
- ------ ----------- --------
10(r) Bob Evans Farms, Inc. and Affiliates Attached hereto.
2002 Second Amended and Restated
Supplemental Executive Retirement Plan
(effective for awards granted after May
1, 2002)
10(s) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1998 Stock Option and
Incentive Plan (effective for options
and other awards granted after May 1,
2002)
10(t) Bob Evans Farms, Inc. and Affiliates Attached hereto.
Second Amended and Restated Executive
Deferral Program (effective May 1, 2002)
10(u) Bob Evans Farms, Inc. Compensation Attached hereto.
Program for Directors (effective May
7, 2002)
(b) REPORTS ON FORM 8-K
The registrant filed no current reports on Form 8-K during the last
quarter of the period covered by this report.
(c) EXHIBITS
Exhibits filed with this Annual Report on Form 10-K are attached hereto.
For a list of such exhibits, see the "Index to Exhibits" at page 24.
(d) FINANCIAL STATEMENT SCHEDULES
None.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Bob Evans Farms, Inc.
July 15, 2002 By: /s/ Donald J. Radkoski
--------------------------------------
Donald J. Radkoski
Chief Financial Officer, Treasurer
and Secretary (Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the company and in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Stewart K. Owens Chairman of the Board July 15, 2002
- -------------------------------
Stewart K. Owens
/s/ Larry C. Corbin Director July 15, 2002
- -------------------------------
Larry C. Corbin
/s/ Daniel E. Evans Director July 15, 2002
- -------------------------------
Daniel E. Evans
/s/ Daniel A. Fronk Director July 15, 2002
- -------------------------------
Daniel A. Fronk
21
/s/ Michael J. Gasser Director July 15, 2002
- -------------------------------
Michael J. Gasser
/s/ E.W. (Bill) Ingram III Director July 15, 2002
- -------------------------------
E.W. (Bill) Ingram III
/s/ Cheryl L. Krueger-horn Director July 15, 2002
- -------------------------------
Cheryl L. Krueger-Horn
/s/ G. Robert Lucas Director July 15, 2002
- -------------------------------
G. Robert Lucas
/s/ Robert E.H. Rabold Director July 15, 2002
- -------------------------------
Robert E.H. Rabold
/s/ Donald J. Radkoski Chief Financial Officer,
- ------------------------------- Treasurer and Secretary July 15, 2002
Donald J. Radkoski (Chief Accounting Officer)
22
BOB EVANS FARMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED APRIL 26, 2002
INDEX TO FINANCIAL STATEMENTS
Page(s) in 2002
Annual Report to
Description Stockholders
----------- ------------
Consolidated Balance Sheets at April 26, 2002, and April 27, 2001........................... 14
Consolidated Statements of Income for the fiscal years ended April 26, 2002; April 27,
2001; and April 28, 2000............................................................. 15
Consolidated Statements of Stockholders' Equity for the fiscal years ended
April 26, 2002; April 27, 2001; and April 28, 2000................................... 16
Consolidated Statements of Cash Flows for the fiscal years ended April 26, 2002; April 27,
2001; and April 28, 2000............................................................. 17
Notes to Consolidated Financial Statements.................................................. 18 - 24
Report of Ernst & Young LLP, Independent Auditors........................................... 25
23
BOB EVANS FARMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED APRIL 26, 2002
INDEX TO EXHIBITS
Exhibit
Number Description Location
- ------ ----------- --------
3(a) Certificate of Incorporation of the Incorporated herein by reference to
Registrant (filed with the Delaware Exhibit 3 (a) to the Registrant's
Secretary of State on Nov. 4, 1985) Annual Report on Form 10-K for its
fiscal year ended April 24, 1987.
(File No. 0-1667)
3(b) Certificate of Amendment of Incorporated herein by reference to
Certificate of Incorporation of the Exhibit 3(b) to the Registrant's Annual
Registrant dated Aug. 26, 1987 (filed Report on Form 10-K for its fiscal year
with the Delaware Secretary of State ended April 28, 1989.
on Sept. 4, 1987) (File No. 0-1667)
3(c) Certificate of Adoption of Amendment Incorporated herein by reference to
to Certificate of Incorporation of Exhibit 3(c) to the Registrant's Annual
the Registrant dated Aug. 9, 1993 Report on Form 10-K for its fiscal year
(filed with the Delaware Secretary of ended April 29, 1994.
State on Aug. 10, 1993) (File No. 0-1667)
3(d) Restated Certificate of Incorporation Incorporated herein by reference to
of Registrant reflecting amendments Exhibit 3(d) to the Registrant's Annual
through Aug. 10, 1993. Note: filed Report on Form 10-K for its fiscal year
for purposes of SEC reporting ended April 29, 1994.
compliance only - this document has (File No. 0-1667)
not been filed with the Delaware
Secretary of State
3(e) Amended and Restated By-Laws of the Incorporated herein by reference to
Registrant Exhibit 3(e) to the Registrant's Annual
Report on Form 10-K for its fiscal year
ended April 28, 2000.
(File No. 0-1667)
4 Agreement to furnish instruments Incorporated herein by reference to
defining rights of holders of Exhibit 4 to the Registrant's Annual
long-term debt Report on Form 10-K for its fiscal year
ended April 27, 2001.
(File No. 0-1667)
10(a) Change in Control Agreement, Attached hereto.
effective May 1, 2002, between
Stewart K. Owens and Bob Evans Farms,
Inc.
24
Exhibit
Number Description Location
- ------ ----------- --------
10(b) Change in Control Agreement, Attached hereto.
effective May 1, 2002, between Donald
J. Radkoski and Bob Evans Farms,
Inc.; and Schedule A to Exhibit 10(b)
identifying other substantially
identical agreements between Bob
Evans Farms, Inc. and certain
executive officers of Bob Evans
Farms, Inc.
10(c) Letter Agreement, dated June 20, Attached hereto.
2001, between Howard J. Berrey and
Bob Evans Farms, Inc.
10(d) Bob Evans Farms, Inc. 1989 Stock Incorporated herein by reference to
Option Plan for Nonemployee Directors Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Aug. 23, 1989.
(Registration No. 33-30665)
10(e) Bob Evans Farms, Inc. 1991 Incentive Incorporated herein by reference to
Stock Option Plan Exhibit 4(d) to the Registrant's
Registration Statement on Form S-8,
filed Sept. 13, 1991.
(Registration No. 33-42778)
10(f) Bob Evans Farms, Inc. 1992 Incorporated herein by reference to
Nonqualified Stock Option Plan Exhibit 10(j) to the Registrant's
(effective for options granted prior Annual Report on Form 10-K for its
to May 1, 2002) fiscal year ended April 24, 1992.
(File No. 0-1667)
10(g) Bob Evans Farms, Inc. Long Term Incorporated herein by reference to
Incentive Plan for Managers effective Exhibit 10(k) to the Registrant's
for performance awards granted prior Annual Report on Form 10-K for its
to May 1, 2002) fiscal year ended April 30, 1993.
(File No. 0-1667)
10(h) Bob Evans Farms, Inc. 1994 Long Term Incorporated herein by reference to
Incentive Plan (effective for options Exhibit 10(n) to the Registrant's
and other awards granted prior to May Annual Report on Form 10-K for its
1, 2002) fiscal year ended April 29, 1994.
(File No. 0-1667)
10(i) Bob Evans Farms, Inc. 1998 Incorporated herein by reference to
Supplemental Executive Retirement Exhibit 10(l) to the Registrant's
Plan (effective for awards granted Annual Report on Form 10-K for its
prior to May 1, 2002) fiscal year ended April 24, 1998.
(File No. 0-1667)
10(j) Bob Evans Farms, Inc. 1998 Directors Incorporated herein by reference to
Compensation Plan (effective May 1, Exhibit 10(m) to the Registrant's
1998 through May 6, 2002) Annual Report on Form 10-K for its
fiscal year ended April 24, 1998.
(File No. 0-1667)
25
Exhibit
Number Description Location
- ------ ----------- --------
10(k) Bob Evans Farms, Inc. 1998 Stock Incorporated herein by reference to
Option and Incentive Plan (effective Exhibit 4(f) to the Registrant's
for options and other awards granted Registration Statement on Form S-8
prior to May 1, 2002) filed March 22, 1999. (Registration No.
333-74829)
10(l) Bob Evans Farms, Inc. Dividend Incorporated herein by reference to the
Reinvestment and Stock Purchase Plan Registrant's Registration Statement on
Form S-3 filed March 19, 1999.
(Registration No. 333-74739)
10(m) Bob Evans Farms, Inc. and Affiliates Incorporated herein by reference to
Executive Deferral Program Exhibit 10(k) to the Registrant's
(effective, as amended, through April Annual Report on Form 10-K for its
30, 2002) fiscal year ended April 27, 2001.
(File No. 0-1667)
10(n) First Amendment to Bob Evans Farms, Incorporated herein by reference to
Inc. and Affiliates Executive Exhibit 10(l) to the Registrant's
Deferral Program Annual Report on Form 10-K for its
fiscal year ended April 27, 2001.
(File No. 0-1667)
10(o) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1992 Nonqualified Stock
Option Plan (effective for options
granted after May 1, 2002)
10(p) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1993 Long Term Incentive
Plan for Managers (effective for
performance awards granted after May
1, 2002)
10(q) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1994 Long Term Incentive
Plan (effective for options and other
awards granted after May 1, 2002)
10(r) Bob Evans Farms, Inc. and Affiliates Attached hereto.
2002 Second Amended and Restated
Supplemental Executive Retirement Plan
(effective for awards granted after May
1, 2002)
10(s) Bob Evans Farms, Inc. First Amended Attached hereto.
and Restated 1998 Stock Option and
Incentive Plan (effective for options
and other awards granted after May 1,
2002)
10(t) Bob Evans Farms, Inc. and Affiliates Attached hereto.
Second Amended and Restated Executive
Deferral Program (effective May 1, 2002)
26
Exhibit
Number Description Location
- ------ ----------- --------
10(u) Bob Evans Farms, Inc. Compensation Attached hereto.
Program for Directors (effective May
7, 2002)
13 Registrant's Annual Report to Attached hereto.
Stockholders for the fiscal year ended
April 26, 2002 (Not deemed filed except
for portions thereof which are specifically
incorporated by reference into this
Annual Report on Form 10-K)
21 Subsidiaries of the Registrant Attached hereto.
23 Consent of Ernst & Young, LLP Attached hereto.
27