UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 4, 2009
Bob Evans Farms, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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0-1667
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31-4421866
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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3776 South High Street, Columbus, Ohio
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43207
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(Address of principal executive offices)
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(Zip Code)
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(614) 491-2225
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (
see
General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
Results of Operations and Financial Condition.
On February 4, 2009, Bob Evans Farms, Inc. (the “Company”) issued a news release announcing
preliminary financial results for the fiscal 2009 third quarter ended January 23, 2009. A copy of
this news release is furnished as Exhibit 99 to this Current Report on Form 8-K and is incorporated
herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K, including the information
contained in Exhibit 99, is being furnished and shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the
liability of that Section, nor shall such information be deemed to be incorporated by reference in
any registration statement or other document filed under the Securities Act of 1933 or the Exchange
Act, except as otherwise explicitly stated in such filing.
Item 2.06.
Material Impairments
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The Company is required for accounting purposes to assess the carrying value of goodwill and
other intangible assets annually or whenever circumstances indicate that a decline in value may
have occurred. Based on the consolidated Company’s stock valuation relative to its book value, a
revised store development plan for Mimi’s Café, and continued declining same-store sales at Mimi’s
Café, the Company determined that indicators of potential impairment were present during the third
quarter of fiscal 2009. As a result, the Company, with the assistance of an independent,
third-party valuation specialist, assessed the carrying value of acquired goodwill and intangible
assets with indefinite lives for impairment, in accordance with Statement of Financial Accounting
Standards (SFAS) No. 142 “Goodwill and Other Intangible Assets.” The measurement of impairment of
goodwill and indefinite life intangibles consists of two steps, which require the Company to
determine the fair value of its reporting units and to allocate reporting unit fair value to the
individual assets and liabilities. On January 29, 2009, management reviewed preliminary results of
this valuation and concluded that an impairment charge for impairment of the value of goodwill and
other intangible assets related to Mimi’s Café needed to be recorded. The valuation was completed
and, based on the fair market value of the Mimi’s Café business, its revised future development
plans, the overall challenging economic conditions in the primary
markets where Mimi’s Café operates, as
well as discounted future cash flow and sales projections, the Company was required to record
pre-tax non-cash impairment charges of $56.2 million for goodwill and $11.8 million for other
intangible assets (i.e., the Mimi’s Café trade name) for Mimi’s Café.
During the third quarter of fiscal 2009, the Company reviewed its long-lived assets related
to Mimi’s Café for indicators of impairment in accordance with Statement of Financial Accounting
Standards (SFAS) No. 144 “Accounting for Impairment or Disposal of Long-Lived Assets.” The
Company identified certain Mimi’s Cafés with negative cash flow, declining sales performance or
other potential indicators of impairment. The Company then compared the fair value of these
restaurants to their carrying value. Based on this analysis, on January 29, 2009, management concluded
that it was necessary to record approximately $6.4 million in pretax non-cash fixed-asset
impairment charges for six Mimi’s Café restaurants. The impairment charge represents the excess
of the carrying value of these restaurants over their fair value.
These impairment charges are not expected to result in any future cash expenditures.
2
Item 9.01.
Financial Statements and Exhibits
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(a)
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Financial Statements of Business Acquired – Not Applicable
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(b)
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Pro Forma Financial Information – Not applicable
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(c)
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Shell Company Transactions – Not Applicable
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(d)
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Exhibits:
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The following exhibits are included with this Current Report on Form 8-K:
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Exhibit No.
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Description
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99
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News release issued by Bob Evans Farms, Inc. on February 4,
2009, announcing preliminary financial results for the fiscal
2009 third quarter ended January 23, 2009
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3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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BOB EVANS FARMS, INC.
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Dated: February 4, 2009
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By:
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/s/ Donald J. Radkoski
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Donald J. Radkoski
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Chief Financial Officer, Treasurer and Assistant Secretary
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4
INDEX TO EXHIBITS
Current Report on Form 8-K
Dated February 4, 2009
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Exhibit No.
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Description
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99
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News release issued by Bob Evans Farms, Inc. on February 4,
2009, announcing preliminary financial results for the fiscal
2009 third quarter ended January 23, 2009
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5
Exhibit 99
BOB EVANS FARMS ANNOUNCES PRELIMINARY THIRD-QUARTER RESULTS; REAFFIRMS FY 2009 OPERATING
INCOME GUIDANCE
Company reaffirms adjusted operating income guidance (excluding charges) of approximately $91
million to $96 million for FY 2009
Company expects to record third-quarter pretax charges of approximately $75.3 million, including
impairment of goodwill, intangibles and fixed assets at Mimi’s Café; other charges expected for
severance / retirement costs and unusable spare parts
Company reaffirms commitment to current annual dividend rate of 64 cents per share, suspends share
repurchase program for FY 2009
COLUMBUS, Ohio – Feb. 4, 2009 – Bob Evans Farms, Inc. (NASDAQ: BOBE) today announced preliminary
financial results for the 2009 third fiscal quarter ended Friday, Jan. 23, 2009.
Third-quarter summary
The Company expects to report an operating loss of approximately $46.4 million and a net loss of
approximately $51.4 million, or $1.67 per diluted share, for the third quarter of fiscal 2009.
These results include the negative pretax impact of approximately $75.3 million in charges,
including goodwill impairment and other charges for Mimi’s Cafe. For more detail on these items,
please see “Third-quarter preliminary results” below. In the third quarter last year, reported
results included operating income of $32.7 million and net income of $20.0 million, or 61 cents
per diluted share.
Excluding the pretax charges of $75.3 million, the Company anticipates that its third-quarter
operating loss of $46.4 million this year would instead have been operating income of
approximately $28.9 million, which compares to adjusted operating income of $30.4 million in the
third quarter of fiscal 2008 (please see “Third-quarter preliminary results” for a reconciliation
of third-quarter fiscal 2008 adjusted operating income to third-quarter fiscal 2008 reported
operating income).
Fiscal year 2009 outlook
Based on its operating performance to date, the Company reaffirmed its estimate for fiscal 2009
adjusted operating income of approximately $91 million to $96 million, excluding the
aforementioned pretax charges of $75.3 million, which is equivalent to its existing earnings per
share guidance (see “Reconciliation of non-GAAP measures” below). Due to the significant impact of
the goodwill impairment charge on the Company’s effective tax rate, the Company is now providing
its guidance for the remainder of the 2009 fiscal year in terms of adjusted operating income
rather than in earnings per share.
1
Third-quarter preliminary results
The Company expects to report an operating loss of approximately $46.4 million and a net loss of
approximately $51.4 million for the third quarter of fiscal 2009. These results include the
negative impact of the following pretax charges:
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Approximately $56.2 million in non-cash charges for the impairment of goodwill related
to the acquisition of Mimi’s Café.
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Approximately $11.8 million in non-cash charges for the impairment of intangible
assets (i.e., the Mimi’s Café trade name) related to the acquisition of Mimi’s.
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Approximately $6.4 million in non-cash fixed-asset impairment charges for six
underperforming Mimi’s Café restaurants.
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Approximately $0.8 million in cash charges for severance payments and retirement
costs.
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Approximately $0.4 million in non-cash charges for unusable spare parts in the food
products division.
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These pretax charges total $75.6 million and, when combined with the positive impact of $300,000
in pretax gains from the sale of restaurant assets, net to $75.3 million. Excluding this negative
net pretax impact of $75.3 million, the Company anticipates that its third-quarter operating loss
of $46.4 million would instead have been operating income of approximately $28.9 million.
The Company’s tax provision in the third quarter of fiscal 2009 reflects the impact of the $56.2
million goodwill impairment charge, which is not tax deductible. Excluding the goodwill impairment
charge, the Company estimates its effective tax rate would have been approximately 27 percent.
In the third quarter of fiscal 2008, the Company reported operating income of $32.7 million. These
results included the favorable impact of several items, primarily:
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Pretax income of $6.6 million related to the first-time recognition of gift-certificate and
gift-card “breakage” (gift certificates and gift cards that consumers fail to redeem) at Bob
Evans Restaurants, which benefited the “Net Sales” line of the restaurant segment income
statement.
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A pretax gain of $0.1 million from the sale of real estate assets.
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Last year’s third-quarter reported results also included the negative impact of several items,
primarily the following:
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A pretax charge of $3.7 million related to nine underperforming Bob Evans Restaurants that
the Company closed in February 2008.
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A pretax charge of $0.7 million to settle a dispute with a third party.
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Excluding these items, the Company’s reported third-quarter fiscal 2008 operating income of $32.7
million would instead have been $30.4 million.
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The Company will review these results in greater detail in its Feb. 10 earnings release.
Impairment charges
The Company is required for accounting purposes to assess the carrying value of goodwill and other
intangible assets annually or whenever circumstances indicate that a decline in value may have
occurred. Based on the consolidated Company’s stock valuation relative to its book value, a
revised development plan for Mimi’s Café and continued declining same-store sales at Mimi’s Café,
the Company determined that indicators of potential impairment were present during the third
quarter of fiscal 2009. As a result, the Company, with the assistance of an independent,
third-party valuation specialist, assessed the carrying value of acquired goodwill and intangible
assets with indefinite lives for impairment, in accordance with Statement of Financial Accounting
Standards (SFAS) No. 142 “Goodwill and Other Intangible Assets.” Based on the fair market value of
the Mimi’s Café business, its revised future development plans, the overall challenging economic
conditions in the primary markets where Mimi’s operates, as well as discounted future cash flow
and sales projections, the Company recorded pretax non-cash impairment charges of $56.2 million
for goodwill and $11.8 million for other intangible assets for Mimi’s Café.
Also, in accordance with SFAS No. 144 “Accounting for Impairment or Disposal of Long-Lived
Assets,” the Company recorded $6.4 million in pretax non-cash fixed-asset impairment charges for
six Mimi’s Café restaurants. The impairment charge represents the excess of the carrying value of
these restaurants over their fair value.
Third-quarter fiscal 2009 same-store sales
Preliminary third-quarter fiscal 2009 same-store sales results for Bob Evans Restaurants and
Mimi’s Café are below. Shifts in Thanksgiving and Christmas timing benefited December same-store
sales but negatively impacted November and January same-store sales results.
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SAME-STORE SALES
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SSS Restaurants
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Nov.
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Dec.
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Jan.
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3Q FY 2009
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Bob Evans
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545
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-3.1
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%
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3.8
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-5.7
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%
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-1.3
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%
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Mimi’s Café
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102
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-10.4
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-2.0
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%
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-9.6
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%
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-6.8
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%
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COMBINED
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647
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-5.0
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%
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2.2
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%
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-6.7
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%
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-2.8
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Fiscal year 2009 outlook and capital allocation strategy
As previously mentioned, the Company reaffirmed its estimate for fiscal 2009 adjusted operating
income of approximately $91 million to $96 million, excluding the aforementioned net pretax
charges of $75.3 million, which is equivalent to its existing earnings per share guidance (see
“Disclosure regarding non-GAAP financial measures” below). Contemplated in the Company’s current
outlook is interest expense of $13.0 million, a tax rate of approximately 31 percent (excluding
the $56.2 million goodwill impairment charge, which is not tax deductible) and a diluted weighted
average share count of approximately 30.8 million for the full 2009 fiscal year.
3
This outlook relies on a number of important assumptions, including same-store sales estimates and
the risk factors discussed in the Company’s securities filings. Particular assumptions related to
the Company’s fourth-quarter performance include weather-related same-store sales challenges at
Mimi’s Café and Bob Evans Restaurants in the fourth quarter to date, as well as anticipated sow
costs higher than its current guidance of $45 to $50 per hundredweight.
The Company also announced that it has suspended its share repurchase program for the balance of
fiscal 2009. In addition, the Company expects substantively lower future capital expenditures for
restaurant development in fiscal 2010 at both Bob Evans Restaurants and Mimi’s Cafe. Specifically,
the Company expects to build no Bob Evans Restaurants and two Mimi’s Cafés in fiscal 2010.
The Company will provide more specific guidance for fiscal 2010 capital expenditures with its
year-end earnings release in June.
Chairman and Chief Executive Officer Steve Davis said the Company remains focused on allocating
capital to maximize shareholder returns. “Our decision to scale back future restaurant development
and to temporarily suspend our share repurchase program reflects our desire to conserve cash and
maintain financial flexibility,” Davis said. “However, we remain committed to our annual dividend
rate, which we recently increased more than 14 percent to 64 cents per share.”
Disclosure regarding non-GAAP financial measures
Due to the significant impact of the goodwill impairment charge on the Company’s effective tax
rate, the Company is providing its guidance for the remainder of the 2009 fiscal year in terms of
adjusted operating income rather than earnings per share. The Company uses adjusted operating
income as a measure for comparing its performance to prior periods and competitors, and believes
it is useful to investors because it provides investors and other interested parties a means to
evaluate its performance relative to its past performance, without regard to unusual charges.
Adjusted operating income is not a recognized term under GAAP. The following is a reconciliation
of 2009 estimated adjusted operating income to 2009 estimated operating income:
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Fiscal 2009 estimated reported operating income:
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$16.0 to 21.0 million
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Fiscal 2009 3Q goodwill impairment:
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$56.2 million
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Fiscal 2009 3Q trade name impairment:
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$11.8 million
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Fiscal 2009 3Q fixed asset impairment:
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$ 6.4 million
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Fiscal 2009 3Q severance and retirement:
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$ 0.8 million
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Fiscal 2009 3Q unusable spare parts:
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$ 0.4 million
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Fiscal 2009 1Q legal settlement:
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$ 0.7 million
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Fiscal 2009 YTD gains on real estate sales
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($ 1.0 million)
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Fiscal 2009 estimated adjusted operating income:
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$91 to $96 million
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4
Company to issue earnings release and host conference call
The Company will issue its third-quarter earnings release on Tuesday, Feb. 10 after the market
closes and hold its third-quarter conference call at 10 a.m. (ET) on Wednesday, Feb. 11, 2008. The
dial-in number is (800) 690-3108, access code 82408731. To access the simultaneous webcast, go to
www.bobevans.com/ir
. A fact sheet will be available on the company’s Web site in
conjunction with the earnings release. The conference call replay will be available for 48 hours,
beginning two hours after the call on Feb. 11, at (800) 642-1687, access code: 82408731. The
archived webcast will also be available on the Web site.
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans and Mimi’s
Café brand names. At the end of the third fiscal quarter (Jan. 23, 2009), Bob Evans owned and
operated 569 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast
regions of the United States, while Mimi’s Café owned and operated 140 casual restaurants located
in 23 states, primarily in California and other western states. Bob Evans Farms, Inc. 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. For more information about Bob
Evans Farms, Inc., visit the company’s Web site at
www.bobevans.com
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements in this news release that are not historical facts are forward-looking
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. We discuss these factors and events,
along with certain other risks, uncertainties and assumptions, under the heading “Risk Factors” in
Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 25, 2008 and in our other
filings with the Securities and Exchange Commission. We note these factors for investors as
contemplated by the Private Securities Litigation Reform Act of 1995. Predicting or identifying all
such risk factors is impossible. Consequently, investors should not consider any such list to be a
complete set of all potential risks and uncertainties. Forward-looking statements speak only as of
the date on which they are made, and we undertake no obligation to update any forward-looking
statement to reflect circumstances or events that occur after the date on which the statement is
made to reflect unanticipated events. All subsequent written and oral forward-looking statements
attributable to us or any person acting on behalf of the company are qualified by the cautionary
statements in this section.
Contacts:
Donald J. Radkoski
Chief Financial Officer
(614) 492-4901
David D. Poplar
Vice President of Investor Relations
(614) 492-4954
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