000229 Bob Evans Farms Announces Financial Results

Columbus, OH - Bob Evans Farms, Inc. announced financial results for the third fiscal quarter and nine-month period ended Jan. 28, 2000, both of which included one less week than the corresponding periods a year earlier.

For the quarter, diluted earnings per share were $0.33, below the record results of $0.34 a year ago. Net sales were $236.3 million, compared with $250.5 million a year ago, which reflects both the extra week in fiscal 1999 and the divestiture of two food products businesses. For the nine-month period, net sales were $725.7 million compared with $730.2 million, and diluted earnings per share were $1.07, up from $1.05 a year ago. Earnings per share for the quarter and the nine months benefited from reductions of 9% and 6%, respectively, in average diluted shares outstanding as a result of the company's stock repurchase program.

Excluding the extra week, Bob Evans Restaurants' same-store sales were up 3.0% for the quarter, the 13th consecutive quarterly increase. The segment's reported sales and operating income each rose 1% from a year ago, though the gains would have been higher without the extra week a year ago. While labor- related expenses remained high, reductions in other operating expenses and a menu price increase implemented in November enabled the segment to achieve an operating margin equal to a year ago.

“We are pleased with the continued sales growth and somewhat improved profitability trend in our restaurant business,” said Daniel E. Evans, chairman of the board and chief executive officer. “While adverse winter weather appears to be affecting sales early in the fourth fiscal quarter, we continue to focus on excellent customer service, our increased restaurant expansion pace, and the accelerated rollout of our Carry Home Kitchen program, which is strengthening carryout and dessert sales.”

In the food products segment, reported sales were 21% lower and operating income 35% lower for the quarter reflecting the extra week of operations and record-low hog costs a year ago, as well as the divestitures mentioned. Live hog costs in the company's sausage business averaged $34.00 per hundredweight, compared with $21.00, and have moved above $45.00 in recent weeks. Promotional expenditures were reduced as planned during the quarter, which reduced unit volume by 2% (from comparable products, primarily sausage), though profitability benefited.

Evans commented, “Although we have raised the benchmark suggested retail price for our one-pound roll sausage to $3.19 from $2.99, the recent increase in hog costs, if sustained in the weeks ahead, will reduce the food products segment's operating income for the fourth quarter. While we cannot control the cyclicality of the raw materials cost in our sausage business, we remain very comfortable with its cash generation capability on a trendline basis. We will continue building the long-term value of the Bob Evans brand in the grocery sector through the addition of selected new products, some of which do not include sausage as an ingredient, but which fit with our homestyle image and capitalize on the strong presence of Bob Evans Restaurants in our marketing territories.”

Evans added, “It is possible, due to the increase in hog costs, and to a lesser extent, the impact of winter weather, that earnings per share for the fourth quarter will be somewhat less than the record $0.34 reported in the same quarter a year ago.”

During the third quarter, the company repurchased approximately 1.5 million common shares, which boosts year-to-date repurchases to 3.5 million and reduces total shares outstanding to about 37.0 million. Reflecting the stock repurchase program and increased capital expenditures, total debt rose to $81.1 million as of Jan. 28, 2000, compared with stockholders' equity of $440.2 million.

On Feb. 7, 2000, the board of directors declared a quarterly cash dividend of nine cents ($0.09) per share on the company's outstanding common stock. The dividend is payable March 1, 2000, to stockholders of record at the close of business on Feb. 18, 2000.

Bob Evans Farms Inc. currently owns and operates 433 full-service, family restaurants principally in the East North Central, mid-Atlantic and Southern United States. The company is also a leading producer of pork sausage under the Bob Evans and Owens Country Sausage brand names.

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