Bob Evans Farms, Inc.
Mar 1, 2016

Bob Evans Reports Fiscal 2016 Third-Quarter Results

NEW ALBANY, Ohio, March 01, 2016 (GLOBE NEWSWIRE) -- Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced its financial results for the fiscal 2016 third quarter ended Friday, January 22, 2016.  On a GAAP basis, the Company reported net income of $12.9 million, or $0.62 per diluted share, compared with net income of $5.9 million, or $0.25 per diluted share, in the corresponding period last year.  On a non-GAAP basis, net income was $12.9 million, or $0.62 per diluted share, compared with net income of $14.3 million, or $0.60 per diluted share, in the corresponding period last year.  

Third-quarter fiscal 2016 commentary
President and Chief Executive Officer Saed Mohseni said, "BEF Foods delivered another strong quarter with 33 percent year-over-year non-GAAP operating income growth and continued double-digit pounds-sold growth of both its refrigerated side-dish and sausage product lines.  During its transformation over the last several years, BEF Foods' plant network has been optimized as nine production facilities have been reduced to four.  Furthermore, its sales mix has become more profitable and its margin structure has become more stable as our higher-margin, nationally-distributed refrigerated side-dish product line continues to grow faster than our regional sausage business which is subject to more input cost volatility.  BEF Foods continues to successfully execute its strategy of replacing lower-margin food service sales with higher-margin branded retail sales.  With our refrigerated side dish manufacturing facility operating near peak capacity this past holiday season, I am pleased to report the expansion of our Lima, Ohio, plant is on-schedule and on-budget.  We expect to bring the new capacity on-line this summer in preparation to meet holiday demand later this calendar year.

"While BEF Foods' performance reflects the impact of a successful transformation process, Bob Evans Restaurants is earlier in its turnaround.  A third-quarter same-store sales decline of 3.6 percent reflects a 6.5 percent decline in transactions, partially offset by 2.9 percent of pricing and favorable menu mix.  We expected sales challenges as we rationalize our pricing and discounting strategies and work to improve the guest experience.  However, we are encouraged by the results of our recent efforts to significantly improve the quality of our breakfast offerings, along with implementing new initiatives to elevate the guest experience and redefine the price-value relationship at Bob Evans Restaurants.  Earlier this year, a few months after launching our upgraded breakfast menu, Bob Evans Restaurants was named ‘Favorite Breakfast Chain' by Market Force Information®.  We are moving in the right direction and there is much more to come. Breakfast sales have stabilized and we are working to implement similar improvements across all dayparts.  

"At the corporate level, we continued to make progress with our real estate monetization initiatives as we closed on a $30 million mortgage of our corporate support center early in the fourth quarter and reached an agreement for a $200 million sale-leaseback of up to 145 restaurant properties that we expect to close by the end of the fiscal year.  Additionally, we have realized nearly $12 million of cost savings fiscal year-to-date, as part of our three-year plan to reduce annual corporate and other expenses by $35 million.  We expect to achieve total fiscal 2016 savings of $18 million, equating to an annual savings rate of nearly $30 million."

Third-quarter fiscal 2016 Bob Evans Restaurants segment summary
Bob Evans Restaurants' net sales were $238.6 million, a decline of $11.8 million, or 4.7 percent, compared to net sales of $250.4 million in the corresponding period last year. Same-store sales declined 3.6 percent in the quarter, with the balance of the net sales decline due to net restaurant closures.  Bob Evans opened one new restaurant during the third quarter and has closed 20 restaurants fiscal year-to-date. 

Same-Store Sales
(SSS) Restaurants
NovemberDecemberJanuary3Q FY '16
540-3.2%-4.3%-3.4%-3.6%


Bob Evans Restaurants' GAAP operating income was $14.5 million, compared to GAAP operating income of $14.2 million in the corresponding period last year.  Bob Evans Restaurants' non-GAAP operating income was $14.5 million, or 6.1 percent of sales, compared to $16.8 million, or 6.7 percent of sales, in the prior year, a decline of $2.3 million.  The decline resulted from an approximately $3.9 million margin impact of lower sales combined with the net impact of a $0.4 million increase in food cost rate; a $2.3 million increase in labor and benefit cost rate driven primarily by an increase in average hourly wage rates, partially offset by a reduction in health insurance costs and direct labor hours; a $0.8 million decline in other operating expenses driven primarily by lower utility costs; a $2.3 million decline in S,G&A costs (excluding property gains) due primarily to a decline in severance and bonus compensation costs; a $1.0 million decline in depreciation expense; and a $0.2 million gain net of impairment on the sale of nonoperating restaurants

Third-quarter fiscal 2016 BEF Foods segment summary
BEF Foods' net sales were $107.9 million, an increase of $1.1 million, or 1.0 percent, compared to $106.8 million in the corresponding period last year.  Pounds sold increased 8.8 percent while average net selling price per pound declined 7.8 percent compared to the prior year period.  The decline in average net selling price reflects an increased sales mix of lower-priced side-dish products relative to sausage, as well as reduced net sausage pricing (through increased trade spending) to remain price-competitive in a lower sow cost environment.  From a net sales perspective, a 16.1 percent increase in side-dish pounds sold and an 11.1 percent increase in sausage pounds sold were partially offset by an $8.2 million increase in trade spending (reduces net sales) and a 10.8 percent decline in foodservice pounds sold.  

BEF Foods' GAAP operating income was $20.6 million, compared to $15.3 million in the year ago period.  BEF Foods' non-GAAP operating income was $20.6 million, or 19.1 percent of sales, compared to $15.5 million, or 14.5 percent of sales, in the prior year, an improvement of $5.1 million.  The improvement resulted from approximately $3.4 million of favorable sales mix, and $2.3 million resulting from decreased S,G&A costs, plant efficiencies, and sales leverage; partially offset by $0.6 million of increased net sow cost ($8.2 million of increased trade spending  partially offset by $7.6 million of sow cost favorability).

Third-quarter fiscal 2016 Corporate and Other summary
Corporate and Other's GAAP operating costs were $17.0 million, compared to $21.8 million in the year ago period.  Corporate and Other's non-GAAP operating costs were $17.0 million, compared to $14.5 million in the prior year, an increase of $2.5 million due to $1.5 million of increased S,G&A costs associated with increased bonus and stock compensation and ERP support costs, partially offset by cost savings; and $1.0 million resulting from increased depreciation and amortization expense related to ERP capital expenditures.

Third-quarter fiscal 2016 net interest expense - The Company's GAAP net interest expense of $2.4 million was flat compared to the prior-year period.  The borrowing rate on the Company's outstanding debt was 2.18 percent at the end of the quarter, compared to 2.42 percent at the end of the prior-year period.   

Third-quarter fiscal 2016 taxes - The Company's provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company recognized GAAP and non-GAAP tax expense of 17.6 percent for the quarter, as compared to a GAAP benefit of 12.4 percent and non-GAAP expense of 3.6 percent for the prior-year period.  This increase reduced third-quarter diluted non-GAAP earnings per share by approximately $0.11.  The increase in the tax rate was driven primarily by the impact of yearly variances in the forecasted annual rate, as well as discrete items booked in the third quarter of fiscal year 2015.  The year-to-date non-GAAP tax rate was approximately 25 percent, reflecting the Company's annual non-GAAP estimated tax rate.  Due primarily to recent federal legislation providing a five-year extension to the Work Opportunity Tax Credit (WOTC) program, the year-to-date tax rate was reduced by approximately 230 basis points. 

Third-quarter fiscal 2016 balance sheet highlights - The Company's cash balance and revolver borrowings at the end of the quarter were $7.7 million and $492.9 million, respectively, compared to $3.8 million and $444.4 million, respectively, in the prior year.  The Company was in compliance with its debt covenants at the end of the quarter.  The increase in borrowings was primarily the result of share repurchases, capital expenditures, and dividend payments; partially offset by operating cash flow and proceeds from the sale of nonoperating restaurant properties.  The Company's leverage ratio as defined in its credit agreement was 3.15 at the end of the quarter, a decrease from 3.69 in the prior-year period.  The impact of share repurchases, net of interest cost, increased third-quarter diluted non-GAAP earnings per share by approximately $0.05.  

Fiscal year 2016 outlook
Chief Administrative and Chief Financial Officer Mark Hood said, "We are increasing our non-GAAP diluted EPS guidance range from $1.85 to $2.00, to $1.90 to $2.00.  This change reflects third quarter performance that exceeded our estimates along with an updated outlook for BEF Foods' and Bob Evans Restaurants' operating performance during the fourth quarter.  We expect sow costs net of trade spending to be a headwind compared to the fourth quarter of fiscal 2015 and we continue to expect restaurant same-store sales growth will decline by low-single digits. 

"As noted previously, our guidance includes the estimated impact of monetization of our corporate support center and select industrial properties, but does not include the impact of a potential restaurant real estate transaction which we believe will close late in the fourth quarter and have only a small impact on fiscal year 2016 results." 

Summary of performance drivers:  fiscal 2016 guidance versus fiscal 2015

 1Q (actual)2Q (actual)3Q (actual) 
4Q 
Full
Year
sss% 2016 (guidance) -0.3% -3.2% -3.6%negative
low-single
digits
-2.5% to -2.0%
sss% 2015 (actual) -2.0% -0.1% 3.8% 2.1% 0.9%
sow costs (per hundredweight) 2016 (guidance)$38.75 $53.31 $41.53 $48 $45 
sow costs (per hundredweight) 2015 (actual)$87.87 $78.82 $67.79 $43.02 $69.41 


Guidance MetricFY ‘16
Consolidated net salesapproximately $1.34 billion
Bob Evans Restaurants same-store sales-2.5% to -2.0%
Bob Evans Restaurants commodity pricingapproximately flat
BEF Foods net sales$380 to $390 million
Capital expenditures$70 to $74 million
ERP implementation (included in S,G&A)$2.0 to $2.5 million
Depreciation and amortization$81 to $84 million
Net interest expense$10 to $11 million
Tax rateapproximately 25%
Diluted weighted-average share count21.5 million shares
Non-GAAP earnings per diluted share$1.90 to $2.00
  

This outlook is subject to a number of factors beyond the Company's control, including the risk factors discussed in the Company's fiscal 2015 Annual Report on Form 10‑K and its other subsequent filings with the Securities and Exchange Commission

Investor Conference Call
The Company will host a conference call to discuss its third-quarter fiscal 2016 results at 10 a.m. (ET) on Wednesday, March 2, 2016.  The dial-in number is (855) 468-0551, access code 48270452.  A replay will be available at (800) 585-8367, access code 48270452.

A simultaneous webcast will be available at http://investors.bobevans.com/events.cfm. The archived webcast will also be available on the Web site.

(1)Non-GAAP Financial Measures
The Company uses non-GAAP financial measures to monitor and evaluate the ongoing performance of the Company.  The Company believes the additional measures are useful to investors for financial analysis.  Excluding these items reflects operating results that are more indicative of the Company's ongoing operating performance and improve comparability to prior periods.  However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.  Reconciliations to the applicable GAAP financial measures are included in the attached schedules. 

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 24, 2015, 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.  Any strategic transaction with respect to our restaurant real estate remains subject to closing conditions and there can be no assurance of such a closing.  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 of the statement 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.

About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name.  At the end of the third fiscal quarter (January 22, 2016), Bob Evans Restaurants owned and operated 548 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names.  For more information about Bob Evans Farms, Inc., visit www.bobevans.com

BOBE-E
Source: Bob Evans Farms, Inc.


Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Third quarter Fiscal 2016, Three months ended January 22, 2016 compared to the corresponding period a year ago:
        
(in thousands, except per share amounts)    Basic EPS Diluted EPS
 Three Months Ended Three Months Ended Three Months Ended
 January 22,
2016
 January 23,
2015
 January 22,
2016
  January 23,
2015
 January 22,
2016
 January 23,
2015
Operating Income (Loss) as Reported           
Bob Evans Restaurants$14,453  $14,153         
BEF Foods20,609  15,274         
Corporate and Other(17,002) (21,754)        
Operating Income18,060  7,673         
Net interest expense2,367  2,406         
Income Before Income Taxes15,693  5,267         
Provision (benefit) for income taxes2,762  (653)        
Net Income as reported12,931  5,920  $ 0.62 $0.25 $0.62 $0.25
            
Adjustments           
Bob Evans Restaurants           
Impairments  1,672         
Severance/Restructuring  781         
Activism, Strategic Initiatives and Other  168         
   2,621         
BEF Foods           
Severance/Restructuring  189         
   189         
Corporate and Other            
Severance/Restructuring  302         
Loss on Sale of Assets  1,728         
Activism, Strategic Initiatives and Other  1,386         
CEO Separation  3,836         
   7,252         
Total adjustments           
Impairments  1,672         
Severance/Restructuring  1,272         
Loss on Sale of Assets  1,728         
Activism, Strategic Initiatives and Other  1,554         
CEO Separation  3,836         
   10,062         
Non-GAAP operating income  (loss)            
Bob Evans Restaurants14,453  16,774         
BEF Foods20,609  15,463         
Corporate and Other(17,002) (14,502)         
Total non-GAAP operating income18,060  17,735         
Adjustments to net interest expense  471         
Non-GAAP net interest expense2,367  2,877          
Non-GAAP  Income Before Taxes15,693  14,858         
Adjustments to income tax provision (benefit)  1,194         
Non-GAAP Provision for Income Taxes2,762  541         
Non-GAAP Net Income$12,931  $14,317  $0.62 $0.61 $0.62 $0.60
            
Weighted Average Shares Outstanding    20,692 23,515 20,803 23,746


Third quarter Fiscal 2016, Three months ended January 22, 2016 compared to the corresponding period a year ago:
   
(in thousands) Three Months Ended
  Consolidated Results Bob Evans Restaurants
  January 22,
2016
 % of
Sales
 January 23,
2015
 % of
Sales
 January 22,
2016
  % of
Sales
  January 23,
2015
  % of
Sales
Operating income as reported                      
                 
Net Sales $346,505    $357,177    $238,608    $250,389   
Cost of sales 118,581  34.2% 124,544  34.9% 66,255  27.8% 69,134  27.6%
Operating wage and fringe benefit expenses 106,607   30.8% 109,116  30.5% 95,792  40.1% 98,317  39.3%
Other operating expenses 53,592  15.5% 54,804  15.3% 40,731  17.1% 41,882  16.7%
Selling, general and administrative expenses 29,005  8.4% 38,965  11.0% 6,938  2.9% 10,589  4.2%
Depreciation and amortization expense 19,856  5.7% 20,403  5.7% 13,635  5.7% 14,642  5.8%
Impairments 804  0.2% 1,672  0.5% 804  0.3% 1,672  0.7%
Total as reported 18,060  5.2% 7,673  2.1% 14,453  6.1% 14,153  5.7%
                 
Adjustments                
                 
Net Sales                 
Cost of sales                
Operating wage and fringe benefit expenses     (230)       (230)  
Other operating expenses     (378)       (378)  
Selling, general and administrative expenses     (7,782)       (341)  
Depreciation and amortization expense                
Impairments     (1,672)       (1,672)  
Total Adjustments     10,062        2,621   
                 
Non-GAAP operating income                 
                 
Net Sales 346,505     357,177    238,608    250,389   
Cost of sales 118,581  34.2% 124,544  34.9% 66,255  27.8% 69,134  27.6%
Operating wage and fringe benefit expenses 106,607  30.8% 108,886  30.5% 95,792  40.1% 98,087  39.2%
Other operating expenses 53,592  15.5% 54,426  15.2% 40,731  17.1% 41,504  16.6%
Selling, general and administrative expenses 29,005  8.4 % 31,183  8.7% 6,938  2.9% 10,248   4.1%
Depreciation and amortization expense 19,856  5.7% 20,403  5.7% 13,635  5.7% 14,642  5.8%
Impairments 804  0.2%   % 804  0.3%   %
Total non-GAAP operating income $18,060  5.2% $17,735  5.0% $14,453  6.1%  $16,774  6.7%


(in thousands)Three Months Ended
 BEF Foods Corporate and Other
 January 22,
2016
 % of
Sales
 January 23,
2015
 % of
Sales
 January 22,
2016
 January 23,
2015
Operating income (loss) as reported           
             
Net Sales$107,897    $106,788    $  $ 
Cost of sales52,326  48.5% 55,410  51.9%    
Operating wage and fringe benefit expenses10,815  10.0% 10,799  10.1%    
Other operating expenses12,861  11.9% 12,922  12.1%    
Selling, general and administrative expenses7,473  7.0% 8,021  7.5% 14,595  20,355 
Depreciation and amortization expense3,813  3.5% 4,362  4.1% 2,407  1,399 
Impairments  %   %    
Total as Reported20,609  19.1% 15,274  14.3% (17,002) (21,754)
            
Adjustments           
             
Net Sales            
Cost of sales            
Operating wage and fringe benefit expenses           
Other operating expenses           
Selling, general and administrative expenses    (189)     (7,252)
Depreciation and amortization expense           
Impairments            
Total adjustments    189      7,252 
            
Non-GAAP operating income (loss)           
            
Net Sales107,897    106,788       
Cost of sales52,326  48.5% 55,410  51.9%    
Operating wage and fringe benefit expenses10,815  10.0% 10,799  10.1%    
Other operating expenses12,861  11.9% 12,922  12.1%    
Selling, general and administrative expenses7,473  7.0% 7,832  7.3% 14,595  13,103 
Depreciation and amortization expense3,813  3.5% 4,362  4.1% 2,407  1,399 
Impairments  %   %     
Total non-GAAP operating income (loss)$20,609  19.1% $15,463  14.5% $(17,002) $(14,502)


Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Third quarter Fiscal 2016, Nine months ended January 22, 2016, compared to the corresponding period a year ago:
        
(in thousands, except per share amounts)    Basic EPS Diluted EPS
 Nine Months Ended Nine Months Ended Nine Months Ended
 January 22,
2016
 January 23,
2015
 January 22,
2016
 January 23,
2015
 January 22,
2016
 January 23,
2015
Operating Income (Loss) as Reported           
Bob Evans Restaurants$37,585  $49,709         
BEF Foods50,443  24,675         
Corporate and Other(50,272) (57,635)        
Operating Income37,756  16,749         
Net interest expense7,856  6,225         
Income Before Income Taxes29,900  10,524         
Provision (benefit) for income taxes6,258  (419)        
Net Income as reported23,642  10,943  $1.08  $0.47  $1.08  $0.46 
            
Adjustments           
Bob Evans Restaurants           
Impairments  3,249          
Severance/Restructuring318  872         
Activism, Strategic Initiatives and Other  469         
Litigation Reserves10,500           
 10,818  4,590         
BEF Foods           
Severance/Restructuring  855         
Loss on Sale of Assets3,606           
Activism, Strategic Initiatives and Other  17         
 3,606  872         
Corporate and Other           
Severance/Restructuring  494         
Loss on Sale of Assets  1,846         
Activism, Strategic Initiatives and Other   7,333         
CEO Separation  3,836         
   13,509         
Total adjustments           
Impairments  3,249         
Severance/Restructuring318  2,221         
Loss on Sale of Assets3,606  1,846         
Activism, Strategic Initiatives and Other  7,819         
CEO Separation  3,836         
Litigation Reserves10,500           
 14,424  18,971         
Non-GAAP operating income (loss)           
Bob Evans Restaurants48,403  54,299         
BEF Foods54,049  25,547         
Corporate and Other(50,272) (44,126)        
Total non-GAAP operating income52,180  35,720         
Adjustments to net interest expense(480) 1,374         
Non-GAAP net interest expense7,376  7,599         
Non-GAAP Income Before Taxes44,804  28,121         
Adjustments to income tax provision (benefit)4,712  3,288         
Non-GAAP Provision for Income Taxes10,970  2,869         
Non-GAAP Net Income$33,834  $25,252  $1.55  $1.08  $1.54  $1.06 
            
Weighted Average Shares Outstanding     21,845  23,487  21,989  23,717 


Third quarter Fiscal 2016, Nine months ended January 22, 2016, compared to the corresponding period a year ago:
  
(in thousands)Nine Months Ended
 Consolidated Results Bob Evans Restaurants
 January 22,
2016
 % of
Sales
 January 23,
2015
 % of
Sales
 January 22,
2016
  % of
Sales
 January 23,
2015
 % of
Sales
Operating income as reported               
                
Net Sales$993,239    $1,016,796    $708,018    $731,691   
Cost of sales317,611  32.0% 354,723  34.9% 189,447   26.8% 196,509  26.9%
Operating wage and fringe benefit expenses315,894  31.8% 319,158  31.4% 284,714  40.2% 287,991  39.4%
Other operating expenses161,407  16.3% 162,713  16.0% 123,732  17.5% 126,677  17.3%
Selling, general and administrative expenses99,366  9.9% 100,353  9.9% 30,806  4.3% 25,015  3.4%
Depreciation and amortization expense60,116  6.1% 59,851  5.9% 40,645  5.7% 42,541  5.8%
Impairments1,089  0.1% 3,249  0.3% 1,089  0.2% 3,249  0.4%
Total as reported$37,756  3.8%  $16,749  1.6% $37,585  5.3% $49,709  6.8%
                
Adjustments               
                
Net Sales$    $    $     $   
Cost of sales               
Operating wage and fringe benefit expenses    (259)       (259)  
Other operating expenses    (642)        (642)  
Selling, general and administrative expenses(14,424)   (14,821)   (10,818)   (440)  
Depreciation and amortization expense               
Impairments    (3,249)       (3,249)  
Total Adjustments$14,424    $18,971    $10,818    $4,590   
                
Non-GAAP operating income               
                
Net Sales$993,239    $1,016,796    $708,018    $731,691   
Cost of sales317,611  32.0% 354,723  34.9% 189,447  26.8% 196,509  26.9%
Operating wage and fringe benefit expenses315,894  31.8% 318,899  31.4% 284,714  40.2% 287,732  39.3%
Other operating expenses161,407  16.3% 162,071  15.9% 123,732  17.5% 126,035  17.2%
Selling, general and administrative expenses84,942  8.4% 85,532  8.4% 19,988  2.8% 24,575  3.4%
Depreciation and amortization expense60,116  6.1% 59,851  5.9% 40,645   5.7% 42,541  5.8%
Impairments1,089  0.1%   % 1,089  0.2%   %
Total non-GAAP operating income$52,180  5.3% $35,720  3.5% $48,403  6.8% $54,299  7.4%


(in thousands)Nine Months Ended
 BEF Foods Corporate and Other
 January 22,
2016
 % of
Sales
 January 23,
2015
 % of
Sales
 January 22,
2016
 January 23,
2015
Operating income (loss) as reported           
            
Net Sales$285,221    $285,105    $  $ 
Cost of sales128,164  44.9% 158,214  55.5%    
Operating wage and fringe benefit expenses31,180  10.9% 31,167  10.9%    
Other operating expenses37,675  13.2% 36,036  12.6%    
Selling, general and administrative expenses25,353  9.0% 22,053  7.8% 43,208  53,285 
Depreciation and amortization expense12,406  4.3% 12,960  4.5% 7,064  4,350 
Impairments  %   %    
Total as Reported$ 50,443  17.7% $24,675  8.7% $(50,272) $(57,635)
            
Adjustments           
            
Net Sales$    $    $  $ 
Cost of sales           
Operating wage and fringe benefit expenses           
Other operating expenses           
Selling, general and administrative expenses(3,606)   (872)     (13,509)
Depreciation and amortization expense            
Impairments            
Total adjustments$3,606    $872     $  $13,509 
            
Non-GAAP operating income (loss)           
             
Net Sales$285,221    $285,105    $  $ 
Cost of sales128,164  44.9% 158,214   55.5%    
Operating wage and fringe benefit expenses31,180  10.9% 31,167  10.9%    
Other operating expenses37,675  13.2% 36,036  12.6%    
Selling, general and administrative expenses21,747  7.8% 21,181  7.5% 43,208  39,776 
Depreciation and amortization expense12,406  4.3% 12,960  4.5% 7,064  4,350 
Impairments  %   %    
Total non-GAAP operating income (loss)$54,049  18.9% $25,547  9.0% $(50,272) $(44,126 )


(in thousands, except per share amounts)Three Months Ended Nine Months Ended
 January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
 January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
Net Sales$346,505  $357,177   $993,239  $1,016,796  
Cost of sales118,581 34.2%124,544 34.9% 317,611 32.0%354,723 34.9%
Operating wage and fringe benefit expenses106,607 30.8%109,116 30.5% 315,894 31.8%319,158 31.4%
Other operating expenses53,592 15.5%54,804 15.3% 161,407 16.3%162,713 16.0%
Selling, general and administrative expenses29,005 8.4%38,965 11.0% 99,366 9.9%100,353 9.9%
Depreciation and amortization expense19,856 5.7%20,403 5.7% 60,116 6.1%59,851 5.9%
Impairments804 0.2 %1,672 0.5% 1,089 0.1%3,249 0.3%
Operating Income18,060 5.2%7,673 2.1%  37,756 3.8%16,749 1.6%
Net interest expense2,367 0.7%2,406 0.7% 7,856 0.8%6,225 0.6%
Income Before Income Taxes15,693 4.5%5,267 1.5% 29,900 3.0%10,524 1.0%
Provision (Benefit) for income taxes2,762 0.8%(653)(0.2)% 6,258 0.6%(419)%
Net Income$12,931 3.7%$5,920 1.7% $23,642 2.4%$10,943 1.1%
Earnings Per Share — Net Income         
Basic$0.62   $0.25   $1.08  $0.47  
Diluted$0.62  $0.25   $1.08  $0.46  
          
Cash Dividends Paid Per Share $0.34  $0.31   $0.96  $0.93  
          
Weighted Average Shares Outstanding         
Basic20,692  23,515   21,845  23,487  
Dilutive shares111  231   144  230  
Diluted20,803  23,746   21,989  23,717  
          
Shares outstanding at quarter end20,126  23,402       


Consolidated Balance Sheets   
    
(in thousands, except par values) January 22, 2016 April 24, 2015
Assets   
Current Assets   
Cash and equivalents$7,680  $6,358 
Accounts receivable, net28,827  26,100 
Inventories23,275  24,620 
Deferred income taxes16,974  16,117 
Federal and state income taxes receivable4,530  23,722 
Prepaid expenses and other current assets8,235  5,035 
Current assets held for sale12,221   22,243 
Total Current Assets101,742  124,195 
Property, Plant and Equipment1,564,698  1,585,882 
Less accumulated depreciation799,768  756,015 
Net Property, Plant and Equipment764,930  829,867 
Other Assets   
Deposits and other5,093  3,756 
Notes receivable20,420  18,544 
Rabbi trust assets20,534  32,302 
Goodwill and other intangible assets19,868  19,986 
Non-current deferred tax assets2,326  2,326 
Long-term assets held for sale  1,611 
Total Other Assets68,241  78,525 
Total Assets$934,913  $1,032,587 
Liabilities and Stockholders' Equity   
Current Liabilities   
Current portion of long-term debt$417  $409 
Accounts payable28,238  30,019 
Accrued property, plant and equipment purchases3,283  4,820 
Accrued non-income taxes17,832  14,951 
Accrued wages and related liabilities22,851  34,529 
Self-insurance reserves21,644  18,900 
Deferred gift card revenue18,659  13,714 
Current reserve for uncertain tax provision1,481  1,594 
Other accrued expenses43,059  34,156 
Total Current Liabilities157,464  153,092 
Long-Term Liabilities   
Deferred compensation17,607  22,481 
Reserve for uncertain tax positions2,807  2,767 
Deferred income taxes18,546  17,825 
Deferred rent and other8,309  5,755 
Credit facility borrowings and other long-term debt495,626  450,676 
Total Long-Term Liabilities542,895  499,504 
Stockholders' Equity    
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at January 22, 2016, and April 24, 2015426  426 
Capital in excess of par value241,156  235,958 
Retained earnings838,564  836,362 
Treasury stock, 22,512 shares at January 22, 2016, and 19,231 shares at April 24, 2015, at cost(845,592) (692,755)
Total Stockholders' Equity234,554  379,991 
Total Liabilities and Stockholders' Equity$934,913  $1,032,587 


Consolidated Statements of Cash Flows
  
 Nine Months Ended
 January 22, 2016 January 23, 2015
Operating activities:    
Net income$23,642  $10,943 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization60,116  59,851 
Impairments1,089  3,249 
Loss on disposal of fixed assets820  1,624 
Loss (Gain) on rabbi trust assets1,768  (204)
(Gain) Loss Deferred compensation(1,146) 1,953 
Share based compensation4,656  2,158 
Accretion on long-term note receivable(1,539) (1,374)
Deferred income taxes(136) (4,596)
Amortization of deferred financing costs1,762  749  
Cash provided by (used for) assets and liabilities:   
Accounts receivable(2,727) 2,585 
Inventories1,345  (166)
Prepaid expenses and other current assets1,555  (267)
Accounts payable(1,781) 505 
Federal and state income taxes19,119  4,279 
Accrued wages and related liabilities(6,633) 3,583 
Self-insurance2,744  1,125 
Accrued non-income taxes2,881  (3,320)
Deferred gift card revenue4,945  5,250 
Other assets and liabilities5,001  (6,927)
Net cash provided by operating activities117,481   81,000 
Investing activities:   
Purchase of property, plant and equipment(48,663) (58,921)
Proceeds from sale of property, plant and equipment 64,065  9,696 
Liquidation of rabbi trust assets5,245   
Deposits and other(582) (246)
Net cash provided by (used in) investing activities20,065  (49,471)
Financing activities:   
Cash dividends paid(21,132) (21,711)
Gross proceeds from credit facility borrowings and other long-term debt506,626  316,253 
Gross repayments of credit facility borrowings and other long-term debt(461,668) (327,995)
Payments of debt issuance costs(2,517) (1,279)
Purchase of treasury stock(156,654)  
Proceeds from share-based compensation214  478 
Cash paid for taxes on share-based compensation(1,177) (1,790)
Excess tax benefits from share-based compensation84  513 
Net cash used in financing activities(136,224) (35,531)
Net decrease in cash and equivalents1,322  (4,002)
Cash and equivalents at the beginning of the period6,358  7,826 
Cash and equivalents at the end of the period$7,680  $3,824 


Summary of Operating Efficiency Savings Fiscal 2016 year to date (dollars in millions)
        
 Consolidated Bob Evans Restaurants BEF Foods Corporate and Other
S,G&A       
Wage-Related$7.4  $3.1  $0.7  $3.6 
Non Wage-Related1.3  0.7    0.6 
Total S,G&A8.7  3.8  0.7  4.2 
        
Non-S,G&A       
Wage-Related0.3    0.3   
Non Wage-Related2.7    2.7   
Total Non-S,G&A3.0    3.0   
        
Year to date total$11.7  $3.8  $3.7  $4.2 


Bob Evans Restaurants' openings and closings, by quarter
                 
Fiscal Year Beginning
Total
 Q1 Q2 Q3 Q4* Full Year* Closings Ending
Total*
2016 567     1    1 20  548
2015 561 1    2  4   7 1  567
2014 560 1  1  1  1  4 3  561
2013 565 2        2 7   560
2012 563   2    2  4 2  565
*Includes estimate for remaining quarters in fiscal 2016


Bob Evans Third-quarter Fiscal 2016 Same-Store Sales Day Part Performance - Total Chain
       
Day Part On-Premises Off-Premises Total
Breakfast (0.8)% 6.5% 0.1%
Lunch (4.5)% (2.3)% (4.1)%
Dinner (8.2)% (2.2)% (6.8)%
Total (4.3)% (0.3)% (3.6)%


Bob Evans Restaurants' same-store sales analysis (18-month core; 540 restaurants)
      
 Fiscal 2016 Fiscal 2015* Fiscal 2014*
 Total Pricing /
Mix
 Transactions Total Pricing /
Mix
 Transactions Total Pricing /
Mix
 Transactions
May(0.3)% 3.9% (4.2)% (1.9)% 1.3% (3.1)% (0.5)% 2.8% (3.4)%
June(0.9)% 4.4% (5.3)% (1.2)% 1.2% (2.4)% (0.4)% 2.8%  (3.1)%
July0.3% 5.8% (5.5)% (2.7)% 0.9% (3.6)% (1.2)% 2.2% (3.3)%
Q1(0.3)% 4.8% (5.0)% (2.0)% 1.1% (3.2)% (0.7)% 2.6% (3.2)%
                  
August(1.3)% 3.3% (4.6)% (2.4)% 2.0% (4.4)% (0.8)% 3.0% (3.7)%
September(3.8)% 2.9% (6.6)% 1.7% 2.6% (0.9)% (2.2)% 2.6% (4.8)%
October(4.4)% 1.5%  (5.8)% 0.4% 2.5%  (2.1)% (2.6)% 1.6%  (4.3)%
Q2(3.2)% 2.5% (5.7)% (0.1)% 2.4% (2.4)% (1.9)% 2.3% (4.2)%
                  
November (3.2)% 2.5% (5.6)% 2.9%  2.8% —% 1.7% 2.8% (1.1)%
December(4.3)% 3.4% (7.7)% 3.9% 1.3% 2.6% (3.5)% 2.8% (6.3)%
January (3.4)% 3.1% (6.5)%  5.2% 2.3% 2.9%  (4.7)% 4.2% (8.8)%
Q3(3.6)% 2.9% (6.5)% 3.8% 2.2% 1.6% (1.7)% 3.3% (5.0)%
                  
February      2.4% 3.1% (0.6)% (6.7)% 3.0% (9.8)%
March      0.9% 2.9% (2.0)% (4.1)% 2.1% (6.3)%
April      2.3% 4.0% (1.7)% (2.6)% 1.8% (4.4)%
Q4      2.1% 3.4% (1.3)% (4.3)% 2.3% (6.6)%
                  
Fiscal Year(2.4)%  3.4% (5.7)% 0.9% 2.3% (1.4)% (2.1)% 2.6% (4.7)%
                           
* Prior year data presentation reflects Company's current same store sales methodology.


Bob Evans Restaurants key restaurant sales data 
 Bob Evans Restaurants
Average annual store sales ($) - FY15$1,730,000 
  
Q3 FY2016 day part mix (%): 
Breakfast32%
Lunch38%
Dinner30%
  
Q3 FY2016 dine-in check average per guest ($): 
Breakfast$9.31 
Lunch$9.73 
Dinner$9.65 
  
Q3 FY2016 dine-in check average per guest ($):$9.56 
Q3 FY2016 dine-in check average per ticket ($):$18.62 
Q3 FY2016 carry-out check average per ticket ($):$15.78 


BEF Foods historical sow cost review (average cost per hundredweight)
Fiscal Year Q1 Q2 Q3 Q4 Average
2016 $38.75  $53.31  $41.53    $44.84 
2015 $87.87  $78.82  $67.79  $43.02  $69.41 
2014 $63.24  $77.33  $72.36  $78.47  $73.23 
2013 $54.19  $43.22  $58.73  $59.07  $53.87 
2012 $57.06  $67.82  $60.56  $60.41  $61.58 
           
BEF Foods total pounds sold review (inclusive of pounds sold to Bob Evans Restaurants)
Fiscal Year Q1 Q2 Q3 Q4  Average
2016  0.4%  5.7%  9.4%    5.5 %
2015  (6.1)%  (4.5)%   5.5%  0.9%  (0.9)%
2014  13.0%  0.2%  (11.1)%  (6.9)%  (2.4)%
2013  7.2%  16.1%  13.1%  21.4%  14.6%
2012  (2.7)%  3.1%  0.9%  (1.3)%  0.1%
           
BEF Foods total pounds sold, by category       
Fiscal 2016          
Category Q1 Q2 Q3 Q4  
Sides  49.6%  50.7%  50.9%    
Sausage  22.0%  22.3%   26.6%    
Food Service - External  14.1%  12.5%  10.4%    
Food Service - Intersegment  6.2%  6.6%  6.0%    
Frozen  4.6%  4.5%  3.1%    
Other  3.5%  3.4%   3.0%    
           
Fiscal 2015          
Category Q1 Q2 Q3 Q4  
Sides  42.5%  46.9%  48.0%  49.8%  
Sausage  19.3%  20.5%  26.2%  23.7%  
Food Service - External  24.0%  18.0%  12.8%  11.8%  
Food Service - Intersegment  6.0%  6.0%  5.5%  5.8%  
Frozen  4.6%  5.0%  4.1%   4.8%  
Other  3.6%  3.6%  3.4%  4.1%  


BEF Foods net sales review (dollars in thousands)  
 Q3 FY16Q3 FY15
Gross sales$  134,555 $  125,327 
Less: promotions 25,448  17,047 
Less: discounts 698  775 
Less: returns and slotting 512  717 
Net sales$  107,897 $  106,788 
       
 YTD 2016YTD 2015
Gross sales$  342,287 $  324,805 
Less: promotions 52,373  35,039 
Less: discounts 2,531  2,677 
Less: returns and slotting 2,162  1,984 
Net sales$  285,221 $  285,105 
       
Contact:

Scott C. Taggart

Vice President, Investor Relations

(614) 492-4954

Source: Bob Evans Farms, Inc.

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