000611 Bob Evans Farms Announces Financial Results

Columbus, OH - Bob Evans Farms, Inc. announced financial results for the fourth fiscal quarter and year ended April 28, 2000.

While Bob Evans Restaurants completed its third consecutive year of increased same-store sales and operating profits, consolidated earnings per share were lower for both the quarter and the year, which reflected significantly higher raw material costs in the company's food products segment. Earnings per share for the quarter were $0.31, compared with $0.34 a year earlier. For the full year, diluted earnings per share were $1.38, one cent below the company's record fiscal 1999 performance. Substantial stock repurchases during the year positively impacted the fiscal 2000 results. Net sales of $239.0 million for the quarter and $964.6 million for the year, which were essentially unchanged from the year-earlier periods, were affected by the divestiture of two food products businesses in April 1999. In addition, fiscal 1999 was a 53-week year.

In the restaurant segment, which accounts for 75% of the company's net sales and earnings, same-store sales rose 2.6% for the quarter and 3.4% for the year, following increases of approximately 5% in both fiscal 1998 and 1999. The segment's total sales and operating income were up 6% and 3%, respectively, for both the quarter and the year. While food costs were lower, labor and other operating expenses rose as a percentage of sales for the year; although a slight reprieve from labor costs was realized in the fourth quarter.

The company met its fiscal 2000 objective of opening 26 new Bob Evans Restaurants, and completed the year with 441 units. Plans for fiscal 2001 call for 30 new restaurants, as well as continued aggressive remodeling and rebuilding activity. The company also expects to introduce its Carry Home Kitchen format, which is aimed at building dessert and carryout sales, into all restaurants by this fall.

“Though we continue to face challenges on the cost side of the ledger, we are pleased with the ongoing sales momentum in our restaurant business,” said Stewart K. Owens, president and chief executive officer. “Our time-tested formula combining a varied, high-quality menu; excellent customer service; and strong seasonal merchandising programs continues to drive customer traffic at Bob Evans Restaurants.”

The food products segment reported lower operating income for both the quarter and the year, primarily as a result of considerably lower-than-average raw material costs in fiscal 1999 compared to above-average costs in fiscal 2000. Hog costs in the company's sausage business averaged $44.00 per hundredweight in the fourth quarter, up more than 60% from $27.00 a year ago. Promotional activity was reduced significantly, which helped profitability, but affected comparable pounds sold (down 3% from comparable products, principally sausage). The segment's operating income was off 48% for the quarter. For the year, comparable pounds sold rose 2%, but average hog costs were 35% higher, which pulled operating income down 32%.

Owens commented, “Our principal focus in the food products business is on consistently executing strategies which position the company for long-term growth and strong cash generation, regardless of short-term trends in the hog market. While the segment's financial results fell short of its record fiscal 1999 levels, we again increased our number of pounds sold, successfully introduced a number of new products and expanded our marketing territories.”

During the fourth quarter, the company repurchased approximately 1.5 million common shares, boosting total share repurchases for the fiscal year to five million. At year end, there were about 35.5 million Bob Evans Farms shares outstanding. The board of directors recently authorized the repurchase of up to an additional two million shares during fiscal 2001.

Owens concluded, “We are far from satisfied with Bob Evans' fiscal 2000 financial results, even though our performance was affected in part by events outside of our control. At the same time, we remain confident that the key elements of our proven long-term strategy - high-quality, homestyle products; excellent customer service; and prudent growth to leverage the premier Bob Evans brand on both sides of the business - will continue to build value for stockholders in the years ahead.”

On May 8, 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 was payable June 1, 2000, to stockholders of record at the close of business on May 19, 2000.

Bob Evans Farms, Inc. currently owns and operates 443 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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