030216 Bob Evans Record Third Quarter Results

Columbus, OH - Bob Evans Farms, Inc. announced financial results for the fiscal third quarter and nine months ended Jan. 24, 2003. Diluted earnings per share for the quarter were $0.47, above the company's guidance and up from $0.46 a year ago, when earnings had risen 39%. The results reflect improved profitability despite slower sales growth in the restaurant segment, as well as increased pounds sold and continued favorable raw material costs in the food products segment.

Net income for the third quarter was $16.7 million, or $0.47 per share on a diluted basis, compared with $16.3 million, or $0.46 per share, in the corresponding period last year. Net sales for the quarter were $271.3 million, up 3% from $262.8 million a year ago.

For the first nine months of fiscal 2003, net income was $57.4 million, or $1.60 per share, up 20% from $47.8 million, or $1.35 per share, excluding a net non-recurring gain which added $0.07 per share to reported results in the second quarter of fiscal 2002. Reported net income for last year's first nine months, including the net non-recurring gain, was $50.1 million, or $1.42 per share. Net sales for the first nine months of fiscal 2003 were $825.9 million, up 3% from a year ago.

In the restaurant segment, same-store sales for the quarter were down 1.7% from a year ago. Average menu prices were up 3.1%, in part reflecting selected price increases taken in November. Total restaurant sales increased 3% for the quarter, and the segment's operating income rose 13%. Higher labor and insurance costs partly offset the positive impact of lower cost of sales.

"We believe our restaurants are performing relatively well in the face of very difficult year-to-year comparisons," said Stewart K. Owens, chairman of the board and chief executive officer. "In the third fiscal quarter last year, we enjoyed unusually mild weather across our markets. Our same-store sales for that quarter increased 5.2%, while operating income jumped 38%. Due to more normal winter weather this year, as well as an increasingly competitive industry environment, fueled in particular by drastic price cutting in the quick-service segment, and difficult economic conditions, Bob Evans Restaurants reported same-store sales declines, but has continued to improve its profitability."

Raw material costs remained very favorable in the food products segment during the third quarter. Hog costs averaged approximately $27.00 per hundredweight, compared with $32.00 a year earlier. Pounds sold from comparable products (principally sausage) were up 5%. The segment's reported sales increased 2%, reflecting increased promotional activity and lower net selling prices, on average. Owens continued, "Profitability in our core sausage business remains at a cyclically high level, though year-to- year comparisons have flattened out as we expected.

"In view of the company's continued strong performance overall in the third quarter, we are raising our earnings per share target for fiscal 2003 to a range of $2.07 to $2.09, compared with $1.84 (excluding non-recurring items) in fiscal 2002. For the fourth quarter, that implies earnings of approximately $0.47 to $0.49 per share, compared with $0.49 a year ago."

Owens concluded, "Notwithstanding the cyclical ups and downs on both sides of our business, we continue to pursue our proven long-term growth strategies. We plan to open approximately 29 restaurants in fiscal 2003, with plans for a larger number for next year - - all owned and operated by the company to ensure that our customers consistently enjoy a dining experience that meets their high standards. On the food products side, we will continue our disciplined approach to new products and line extensions that leverage the Bob Evans brand."

The company repurchased 239,600 shares of Bob Evans common stock during the quarter, boosting the year-to-date total to 680,100 shares. As of Jan. 24, 2003, the company's balance sheet remained strong, with $556.6 million in stockholders' equity and only $39.5 million in total debt.

On Feb. 4, 2003, the Bob Evans Farms, Inc. board of directors declared a quarterly cash dividend of 11 cents ($0.11) per share on the company's outstanding common stock. The dividend is payable March 3, 2003, to stockholders of record at the close of business on Feb. 14, 2003.

Bob Evans Farms, Inc. owns and operates 509 full-service, family restaurants in 22 states. Bob Evans Restaurants are primarily located in the Midwest, mid-Atlantic and Southeast regions of the United States, while Owens Restaurants operate in Texas. The company is also a leading producer and distributor of pork sausage and a variety of complementary homestyle convenience food items under the Bob Evans and Owens brand names.

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