BRID Bridgford Foods Corp - 10-K

Item 1A. Risk Factors

In addition to the other matters set forth in this Report, the continuing operations and the price of our common stock are subject to the following risks, each of which could materially adversely affect our business, financial condition, and results of operations. The risks described below are only the risks that we currently believe are material to our business. However, additional risks not presently known, or risks that are currently believed to be immaterial, may also impair our business operations.

We are subject to general risks in the food industry, including, among other things, risk relating to changes in consumer preferences and product contamination as well as general economic conditions, any of which, if realized, could negatively impact our operating results and financial position.

The food industry, and the markets within the food industry in which we compete, are subject to various risks, including the following: evolving consumer preferences, nutritional and health-related concerns, federal, state, and local food inspection and processing controls, consumer product liability claims, risks of product tampering, and the availability and expense of liability insurance. The meat and poultry industries are subject to scrutiny due to the association of meat and poultry products with recent outbreaks of illness, and on rare occasions even death, caused by food borne pathogens. Outbreaks of disease and other events, which may be beyond our control, could significantly affect demand for and consumer perception of our food products and result in negative publicity that may have an adverse effect on our ability to market our products successfully. Product recalls are also sometimes required in the food industry to withdraw contaminated or mislabeled products from the market. Additionally, the failure to identify and react appropriately to changes in consumer trends, demands and preferences could lead to, among other things, reduced demand, and price reduction for our products. Changes in consumer eating habits may also result in the enactment or amendment of laws and regulations that impact the sourcing, ingredients, and nutritional content of our food products. Finally, we may be adversely affected by changes in domestic or foreign economic conditions, including tariffs, inflation or deflation, interest rates, availability of capital markets, consumer spending rates, and energy availability and costs (including fuel surcharges). We have been experiencing high levels of inflations the past few years, which has had varying impacts on our business. Such prolonged periods of inflation decrease consumers’ discretionary spending, which negatively impacts our results of operations. These and other general risks related to the food industry, if realized by us, could have a significant adverse effect on demand for our products, as well as the costs and availability of raw materials, ingredients, and packaging materials, thereby negatively affecting our operating results and financial position.

Climate change and related climate change regulations, including with respect to greenhouse gas effects, may negatively affect our results of operations.

Climate change and rising global temperatures may contribute to changing weather patterns, droughts, heavier or more frequent storms and wildfires, and increased frequency and severity of natural disasters. If such climate change has a negative impact on agricultural productivity, we may have decreased availability or less favorable pricing for the raw materials necessary for our operations. Increased frequency or duration of extreme weather conditions could cause disruptions in our operations and supply chain, or impact demand for our products.

Increasing concern over climate change also may result in additional legal or regulatory requirements designed to manage greenhouse gas emissions, climate risks, and resulting environmental impacts. If such requirements are enacted, we could experience significant cost increases in our operations and supply chain.

Further, such requirements may obligate us to make climate-related disclosures and set goals for reducing our carbon footprint. While we are committed to mitigating our impact on the environment and managing greenhouse gas emissions, there can be no assurance that we will accomplish such goals. If we fail to achieve any such goals related to climate change or the related expectations from stakeholders and consumers are not met, the resulting negative publicity could adversely impact our results of operations in part as a consequence of changes in consumer preferences for our products.

Fluctuations in commodity prices and the availability of raw materials could negatively impact our financial results.

We purchase large quantities of commodity pork, beef, and flour. Historically, market prices for products we process have fluctuated in response to a number of factors, including changes in the United States government farm support programs, changes in international agricultural and trading policies, weather, and other conditions during the growing and harvesting seasons. Our operating results are heavily dependent upon the prices paid for raw materials, as well as the available supply of commodities. Commodity costs have and may continue to fluctuate due to political and economic conditions, including the ongoing conflicts between Ukraine and Russia, Isreal and Palestine as well as increased tariffs. The marketing of our value-added products does not lend itself to instantaneous changes in selling prices. In addition, if we increase prices to offset higher costs, we could experience lower demand for our products and sales volumes. Conversely, decreases in our commodity and other input costs may create pressure on us to decrease our prices. Changes in selling prices are relatively infrequent and do not compare with the volatility of commodity markets. If there is a lag between when costs increase and when we are able to increase selling prices, our profits margins may suffer. Production and pricing of commodities, on the other hand, are determined by constantly changing market forces of supply and demand over which we have limited or no control. Such factors include, among other things, weather patterns throughout the world, outbreaks of disease, the global level of supply inventories and demand for grains and other feed ingredients, as well as agricultural and energy policies of domestic and foreign governments. While fluctuations in significant cost structure components, such as ingredient commodities and fuel prices, have had a significant impact on profitability over the last two years, the impact of general price inflation on our financial position and results of operations has been significant. However, current inflationary market conditions may have a negative impact on future earnings. Future volatility of general price inflation or deflation and raw material cost and availability could adversely affect our financial results.

We are subject to extensive government regulations and failure to comply with such regulations could negatively impact our financial results.

Our operations are subject to extensive inspection and regulation by the USDA, FDA and by other federal, state, and local authorities regarding the processing, packaging, storage, transportation, distribution, and labeling of products that are manufactured, produced, and processed by us. Our processing facilities and products are subject to continuous inspection by the USDA and/or other federal, state, and local authorities. The USDA has issued strict regulations concerning the control of listeria monocytogenes in ready-to-eat meat and poultry products and contamination by food borne pathogens such as E. coli and salmonella and implemented a system of regulation known as the HACCP program. The HACCP program requires all meat and poultry processing plants to develop and implement sanitary operating procedures and other program requirements. OSHA oversees safety compliance and establishes certain employer responsibilities to help assure safe and healthful working conditions and keep the workplace free of recognized hazards or practices likely to cause death or serious injury. We believe that we are currently in compliance with governmental laws and regulations and that we maintain necessary permits and licenses relating to our operations.

A failure to obtain or a loss of necessary permits and licenses could delay or prevent us from meeting current product demand and could adversely affect our operating performance. Furthermore, we are routinely subject to new or modified laws, regulations, and accounting standards. If found to be out of compliance with applicable laws and regulations in these or other areas, we could be subject to civil remedies, including fines, injunctions, recalls, or asset seizures, as well as potential criminal sanctions, any of which could have a significant adverse effect on our financial results.

We depend on our key management, the loss of which could negatively impact our operations.

Our executive officers and certain other key employees have been primarily responsible for the development and expansion of our business, and the loss of the services of one or more of these individuals could adversely affect us. Our success will be dependent in part upon our continued ability to recruit, motivate, and retain qualified personnel. We cannot assure that we will be successful in this regard. We have no employment or non-competition agreements with key personnel. However, we have consulting agreements with each of (1) our former Vice President and current director Allan L. Bridgford Sr., (2) our former Chief Financial Officer and current director Raymond F. Lancy, (3) our former Director and President of Bridgford Food Processing Corporation Allan Bridgford Jr, (4) our former President and current director John V. Simmons, and (5) our former President of Dallas-Superior Foods Division Blaine K. Bridgford.

We depend on our major customers, and any loss of such customers could have a negative impact on our profitability.

Sales to Wal-Mart® comprised 33.5% of revenues in fiscal year 2025 and 8.2% of total accounts receivable was due from Wal-Mart® as of October 31, 2025. Sales to Dollar General® comprised 14.2% of revenues in fiscal year 2025 and 28.8% of total accounts receivable was due from Dollar General® as of October 31, 2025. Many of our customers, such as supermarkets, warehouse clubs, and food distributors, have consolidated in recent years. Such consolidation has produced large, sophisticated customers with increased buying power who are more capable of operating with reduced inventories while demanding lower pricing and increased promotional programs. These customers also may use their shelf space for their own private label products. Failure to respond to these trends could reduce our volume and cause us to lower prices or increase promotional spending on our product lines, which could adversely affect our profitability.

Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.

We have historically experienced some level of ordinary course of business turnover of employees. A number of factors have had and may continue to have adverse effects on the labor force available to us, including reduced employment pools, federal unemployment subsidies, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration. Labor shortages and increased turnover rates within our team members have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate our production facilities or otherwise operate at full capacity. An overall or prolonged labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our operations, results of operations, liquidity, or cash flows.

Disputes with labor unions could have an adverse impact on our operations and financial results.

As of October 31, 2025, approximately 293 of our employees were covered by collective bargaining agreements. We depend on the availability of, and good relations with, our teams’ members. If we fail to maintain good relations, we may experience strikes or work stoppages, which could have a material adverse impact on our operations, results of operations, liquidity, or cash flows.

Our business and reputation could suffer if we experience security breaches and other disruptions to our information technology infrastructure.

We are dependent on information technology systems, some of which are managed by third parties, to process, transmit, and store electronic information and to manage or support a variety of business processes and activities, including distribution, invoicing, and collection of payment. We also collect and store confidential data from our customers and suppliers in data centers, which are owned by third parties and maintained on their information technology networks. These complex systems are an important part of ongoing operations. Any failure of these systems could disrupt our operations and could have a material adverse effect on our business, results of operations, and financial condition. Further, despite our internal controls and security measures, there can be no assurance that we will be able to evade cyberattacks, disruptions, or security breaches. We have implemented cyber-security initiatives to mitigate our exposure to these risks, but these measures may not be adequate Although we have not suffered any significant cyber incidents that resulted in material business impact, we have from time to time been, and expect to continue to be, the target of malicious cyber threat actors.

With approximately 80% of our stock beneficially owned by the Bridgford family, there are risks that they can exert significant influence or control over our corporate matters.

Members of the Bridgford family beneficially own, in the aggregate, approximately 80% of our outstanding stock. In addition, two members of the Bridgford family currently serve on the Board of Directors and two members of the Bridgford family serve on the Executive Committee. As a result, members of the Bridgford family have the ability to exert substantial influence or actual control over our management and affairs and over substantially all matters requiring action by our shareholders, including amendments to by-laws, election and removal of directors, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. This concentration of ownership may also delay or prevent a change in control otherwise favored by our other shareholders and could depress our stock price. Additionally, as a result of the Bridgford family’s significant ownership of the outstanding voting stock, we have relied on the “controlled company” exemption from certain corporate governance requirements of the NASDAQ stock market. Therefore, among other things, we have elected not to implement the rule that provides for a nominating committee to identify and recommend nominees to the Board of Directors and have instead elected to have the full Board of Directors perform such function. However, we have not elected to rely on the exemption with respect to our compensation committee, which is made up entirely of independent directors and has sole authority to determine the compensation of our executive officers, including our Chairman of the Board.

We participate in Multiemployer Pension Plans which could negatively impact our operations and profitability.

We participate in “multiemployer” pension plans administered by labor unions on behalf of their employees. We make monthly contributions for healthcare and pension benefit obligations. The contribution amount may change depending upon the ability of participating companies to fund these pension liabilities as well as the actual and expected returns on pension plan assets. Volatility in the capital markets or interest rates can impact the market value of plan assets and cause volatility in the net periodic benefit cost and our future funding requirements. The exact amount of cash contributions made to the pension plans in any year is dependent upon a number of factors, including minimum funding requirements. In addition, should we withdraw from the union and cease participation in a union plan, federal law could impose a penalty for additional contributions to the plan. The penalty would be recorded as an expense in the consolidated statements of operations. The ultimate amount of withdrawal liability is dependent upon several factors including the funded status of the plan and contributions made by other participating companies. We continue to participate in other multiemployer union plans. In the event of a full or partial withdrawal from these plans, the impact on our financial statements could be material.

Eminent domain and land risk regulations could negatively impact our financial results and financial position.

We own real property on which we operate our processing and/or our distribution operations. As is the case with any owner of real property, we may be subject to eminent domain proceedings that can impact the value of investments we have made in real property as well as potentially disrupt our business operations. If subject to eminent domain proceedings or other government takings, we may not be adequately compensated.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For a complete understanding, this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements contained in this Report.

Certain statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 (refer to Part I, Item 1. Business for more information).

Results of Operations (dollars in thousands)

Fiscal Year Ended October 31, 2025 (52 weeks) Compared to Fiscal Year Ended November 1, 2024 (52 weeks)

Net Sales-Consolidated

Net sales in fiscal year 2025 increased $7,341 (3.3%) when compared to the prior fiscal year. The changes in net sales were comprised as follows:

Impact on Net Sales-Consolidated

Percent Change (%)

Total ($)

Selling price per pound

Unit sales volume in pounds

Returns activity

Promotional activity

Increase in net sales

Net Sales-Frozen Food Products Segment

Net sales in the Frozen Food Products segment in fiscal year 2025 decreased $363 (0.6%) compared to the prior fiscal year. The changes in net sales were comprised as follows:

Impact on Net Sales-Frozen Food Products

Selling price per pound

Unit sales volume in pounds

Returns activity

Promotional activity

Decrease in net sales

The slight decrease in net sales of frozen food products in fiscal year 2025 primarily relates to lower unit sales volume in pounds partially offset by higher selling prices per pound. Institutional frozen food products dollar sales, including sheet dough and rolls, decreased 2.1% resulting in lower net sales compared to last year, which was not fully offset by a retail dollar sales volume increase of 1.8%. Consumers are purchasing more from retail stores while visits to foodservice establishments have decreased compared to the 2024 fiscal year. In addition, production of frozen food products was temporarily reduced to accommodate necessary repairs on a spiral freezer that has since been completed. Returns activity remained consistent compared to the prior fiscal year. Promotional activity was higher as a percentage of sales and higher in dollars during fiscal year 2025.

Net Sales-Snack Food Products Segment

Net sales in the Snack Food Products segment in fiscal year 2025 increased $7,704 (4.7%) compared to the prior fiscal year. The changes in net sales were comprised as follows:

Impact on Net Sales-Snack Food Products

Selling price per pound

Unit sales volume in pounds

Returns activity

Promotional activity

Increase in net sales

Net sales of snack food products increased in fiscal year 2025 due to higher selling prices per pound and to a lesser extent higher unit sales volume in pounds. The weighted average selling price per pound increased compared to fiscal year 2024 due to price increases on select products with negative or lower margins. We believe demand increased primarily due to a shift in consumer spending habits toward purchasing less expensive private-label snack foods including meat product purchases in order to reduce their expenses. Returns activity increased compared to the prior fiscal year. Promotional activity was lower than in fiscal year 2024.

Cost of Products Sold and Gross Margin-Consolidated

Cost of products sold from continuing operations increased on a consolidated basis by $19,106 (11.4%) during fiscal year 2025 compared to the prior fiscal year. The gross margin decreased from 25.2% to 19.3% during fiscal year 2025 compared to the prior fiscal year.

Change in Cost of Products Sold by Segment

Consolidated

Commodity $

(Decrease) Increase

Frozen Food Products Segment

Snack Food Products Segment

Total

Cost of Products Sold and Gross Margin–Frozen Food Products Segment

Cost of products sold in the Frozen Food Products segment increased by $1,398 (3.3%) in fiscal year 2025 compared to the prior fiscal year. Higher gross overhead, including increased costs for temporary labor and utilities, were the primary contributing factors to this increase. The cost of purchased flour decreased approximately $208 compared to the prior fiscal year. However, this decline was not enough to offset the increase in gross overhead and direct distribution costs. The gross margin percentage decreased from 27.4% to 24.5% during fiscal year 2025 compared to the prior fiscal year.

Cost of Products Sold and Gross Margin-Snack Food Products Segment

Cost of products sold in the Snack Food Products segment increased by $17,708 (14.2%) in fiscal year 2025 compared to the prior fiscal year with approximately $6,261 of this increase attributable to higher meat commodity costs resulting from higher pressure on the commodity market. We increased our net realizable value reserve by $170 during the fiscal year 2025 in consideration of pending price increases to customers to help mitigate the record increases in meat commodity costs. We maintain a net realizable reserve of $1,637 on products as of October 31, 2025, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product. We also faced increased utilities, labor and insurance costs further contributing to the growth in costs. The gross margin percentage decreased from 24.4% to 17.5% during fiscal year 2025 compared to the prior fiscal year.

Selling, General and Administrative Expenses-Consolidated

Selling, general and administrative expenses (“SG&A”) in fiscal year 2025 increased $1,012 (1.6%) when compared to the prior fiscal year. The increase in this category did not directly correspond to the change in sales.

The table below summarizes the primary expense variances in this category:

October 31, 2025

(52 Weeks)

November 1, 2024

(52 Weeks)

Expense (Decrease)

Increase

Product advertising

Pension cost

Vehicle repairs and maintenance

Outside consultants

Provision for bad debt

Healthcare cost

Travel expenses

Insurance expenses

Outside storage

Fuel

Other SG&A

Total - SG&A

Product advertising decreased mainly due to renegotiation of commission percentages with brokers in the Frozen Food Products segment and decreased fees paid under brand licensing agreements in the Snack Food Products segment during fiscal year 2025. The increase in pension cost was a result of lower values in pension plan assets caused by the performance of the underlying markets that support them. Vehicle repairs and maintenance have decreased compared to the prior fiscal year period mainly due to regularly replacing fleet vehicles as they age. Outside consulting costs increased due to higher advisory services including cost analysis and reduction assistance, legal fees, inspection and product testing fees. The increase in the provision for bad debt was mainly the result of recent slowing in certain customer payments beyond terms. Healthcare costs have increased due to unfavorable claim trends. Travel expenses increased due to participation in food shows and in-person business meetings. The decrease in insurance expenses was driven by exiting unfavorable insurance policies early to take advantage of more competitive pricing. Outside storage decreased primarily as a result of the need for less warehouse capacity to store products before shipment to the direct-store-delivery warehouses and customers. The decrease in fuel expense was driven by per gallon fuel price decreases compared to the prior fiscal year as a result of lower cost trends in petroleum markets. None of the changes individually or as a group of expenses in “Other SG&A” were significant enough to merit separate disclosure. The major components comprising the increase of “Other SG&A” expenses were higher workers’ compensation costs, computer maintenance and office supplies.

Selling, General and Administrative Expenses-Frozen Food Products Segment

SG&A expenses in the Frozen Food Products segment decreased by $442 (3.1%) during fiscal year 2025 compared to the prior fiscal year. The overall decrease in SG&A expenses was due to lower product advertising, including broker commissions, partially offset by higher healthcare costs and travel expenses.

Selling, General and Administrative Expenses- Snack Food Products Segment

SG&A expenses in the Snack Food Products segment increased by $1,454 (3.0%) during fiscal year 2025 compared to the prior fiscal year. Most of the increase was due to higher consulting fees, healthcare costs, higher provision for bad debt and higher travel expenses partially offset by lower product advertising.

(Gain) loss on Sale of Property, Plant and Equipment

(Gains) and losses on the sale of property, plant and equipment were due to the ordinary disposal of assets located in both the Frozen Food Products segment, ($7) and $96, for fiscal years 2025 and 2024, respectively, and Snack Food Products segments, ($136) and $50, for fiscal years 2025 and 2024, respectively.

Income Taxes

Income tax for fiscal years 2025 and 2024 was as follows:

October 31, 2025

November 1, 2024

Benefit on income taxes

Effective tax rate

We recorded a tax benefit of $4,692 and tax provision of $1,311, for fiscal years 2025 and 2024, respectively, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective tax rate was 26.0% and 27.9% for fiscal years 2025 and 2024, respectively. In addition, the effective tax rates for fiscal years 2025 and 2024 were impacted by such items as non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies and state income taxes. (Refer to Note 4 of Notes to Consolidated Financial Statements included within this Report for more information).

Liquidity and Capital Resources (dollars in thousands)

The principal source of operating cash flows is cash receipts from the sale of our products, net of costs to manufacture, store, market and deliver such products. We evaluate cash and cash equivalents related to borrowing capacity and short-term and long-term investments. We normally fund our operations from cash balances and cash flow generated from operations. Recent losses may necessitate short-term or long-term borrowing to fund inventory purchases to meet customer orders. We are focused on restoring profitability to the Company by driving topline revenue growth and reducing costs. In line with this focus, the Company is in discussions with and has begun production of customer products under private-label arrangements with the goal of increasing product sales volume. We have implemented multiple price increases on our products to help offset some of the higher costs for meat commodities and are focused on reducing selling, general and administrative expenses. Market data indicates that due to higher inflation and rising costs for basic needs, consumers are increasingly turning to private-label products to reduce their expenses. The Company intends to reorganize its direct-store-delivery route system in response to lower sales volume through that distribution channel, including reducing the number of routes, storage units and vehicles while maintaining superior service to our customers. The Company is also seeking bids for its production materials to drive increased competition among its vendors while maintaining quality inputs at the best possible price. As of October 31, 2025, we had $1,121 of current debt on equipment loans, $42,277 of net working capital and $5,500 available under our revolving line of credit with Wells Fargo Bank, N.A. (“Wells Fargo”) described below.

On July 23, 2025, we entered into an amended and restated credit agreement (the “Amended Credit Agreement”), with Wells Fargo. The Amended Credit Agreement amended, restated and superseded our prior credit agreement, dated November 30, 2024, with Wells Fargo that was set to expire by its terms on November 30, 2025. Under the terms of the Amended Credit Agreement and the revolving line of credit note established thereby, we may borrow up to $7,500 from time to time until July 31, 2026. As of October 31, 2025, the Company was in violation of the quick ratio covenant of the Amended Credit Agreement which was waived by Wells Fargo on December 12, 2025. The Company is otherwise in compliance with all other covenants under the Amended Credit Agreement. If we are unable to meet the financial covenant requirements of the Amended Agreement, it may impact our liquidity. Refer to Note 5 - Line of Credit and Borrowing Agreements to the Consolidated Financial Statements included within this Report for further information.

All of our operating segments have been impacted by inflation, including higher costs for labor, freight and specific materials related to product manufacturing and delivery. We expect this trend to continue throughout fiscal year 2026. Additionally, commodity costs, including meat and flour costs, have and may continue to fluctuate due to both political and economic conditions, including the ongoing conflicts between Ukraine and Russia, and Israel and Palestine, as well as increased tariffs. Despite these higher commodity costs, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity or other costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, general price inflation or deflation, higher raw materials costs, labor shortages or supply chain issues could adversely affect the Company’s financial results and its liquidity. Higher product prices could potentially lower demand for our products and decrease volume. Management believes there are various options available to generate additional liquidity to repay debt or fund operations such as mortgaging real estate, should that be necessary. Our ability to increase liquidity will depend upon, among other things, our business plans, the performance of operating divisions, and the economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, or generate positive cash flow necessary to fund operations, we may not be able to compete successfully, which could negatively impact our business, operations, and financial condition. With the cash expected to be generated from the Company’s operations, we anticipate that we will maintain sufficient liquidity to operate our business for at least the next twelve months. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.

Cash flows (used in) operating activities:

October 31, 2025

(52 Weeks)

November 1, 2024

(52 Weeks)

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Provision for (recoveries on) losses on accounts receivable

(Reduction in) provision for promotional allowances

(Gain) loss on sale of property, plant and equipment

Deferred income taxes, net

Changes in assets and liabilities

Net cash used in operating activities

For the fifty-two weeks ended October 31, 2025, net cash used in operating activities was $5,692, a decrease of $5,195 in cash flows compared to the fifty-two weeks ended November 1, 2024. The increase in net cash used in operating activities primarily relates to a net loss of $13,359, a decrease in deferred income taxes of $4,594 and an increase in inventory of $3,734, partially offset by a decrease in accounts receivable of $6,493 due to accelerated payments from customers. During fiscal year 2025, we did not contribute towards our defined benefit pension plan. Plan funding strategies may be adjusted depending upon economic conditions, investment options, tax deductibility, or legislative changes in funding requirements.

Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 68 days for the fifty-two weeks ended October 31, 2025, and 84 days for the fifty-two weeks ended November 1, 2024.

For the fifty-two weeks ended November 1, 2024, net cash used in operating activities was $497. The result was primarily related to net loss of $3,381, an increase in refundable income taxes of $1,240 and an increase of other non-current assets of $3,320, partially offset by a decrease in inventory of $7,235 due to selling down inventory finished goods to adjust to lower consumer demand. During fiscal year 2024, we did not contribute towards our defined benefit pension plan.

Cash flows used in investing activities:

October 31, 2025

(52 Weeks)

November 1, 2024

(52 Weeks)

Proceeds from sale of property, plant and equipment

Additions to property, plant and equipment

Net cash used in investing activities

Additions to property, plant and equipment include the acquisition of equipment, upgrading of facilities to maintain operating efficiency and investments in cost effective technologies to lower costs. In general, we capitalize the cost of additions and improvements and expense the cost for repairs and maintenance. We may also capitalize costs related to improvements that extend the useful life, increase capacity, or improve the efficiency of existing machinery and equipment. Specifically, capitalization of upgrades of facilities to maintain operating efficiency include acquisitions of machinery and equipment used on packaging lines, vehicles and refrigeration equipment used to process food products.

The table below highlights the additions to property, plant and equipment for the fifty-two weeks ended:

October 31, 2025

(52 Weeks)

November 1, 2024

(52 Weeks)

Building and leasehold improvements

Furniture and fixture

Temperature control

Processing equipment

Packaging lines

Vehicles for sales and/or delivery

Quality control and communication systems

Computer software and hardware

Forklifts

Change in projects in process

Additions to property, plant and equipment

Expenditures for additions to property, plant and equipment during the fifty-two weeks ended October 31, 2025, include projects in process of $2,683 related to the production facilities in Chicago and Statesville.

Cash flows used in financing activities:

October 31, 2025

(52 Weeks)

November 1, 2024

(52 Weeks)

Payment of financing lease obligations

Proceeds from bank borrowings

Repayments of bank borrowings

Net cash used in financing activities

Our stock repurchase program was approved by the Board of Directors in November 1999 and was expanded in June 2005. Under the stock repurchase program we were authorized, at the discretion of management and the Board of Directors, to purchase up to an aggregate of 2,000,000 shares of our common stock on the open market. As of the end of fiscal year 2025, 120,113 shares remained authorized for repurchase under the program.

The Company leased three long-haul trucks received during fiscal year 2019. The six-year leases for these trucks would have expired in fiscal year 2025. We returned one long-haul truck on June 22, 2023, for a loss of $12 and returned the remaining two long-haul trucks on July 11, 2024, for a loss of $90, in an effort to reduce the overall cost of delivering products as we transitioned deliveries to common carriers. All long-haul trucks under this lease agreement have been returned as of October 31, 2025.

The Company leased one refrigerated truck received on May 10, 2024, for a net present value of $166. The seven-year lease for this truck will expire in fiscal year 2031. Amortization of equipment as a finance lease was $24 during the fifty-two weeks ended October 31, 2025.

Equipment Note Payable

The following table reflects major components of our line of credit and borrowing agreements as of October 31, 2025, and November 1, 2024, respectively.

October 31, 2025

November 1, 2024

Revolving credit facility

Equipment notes:

3.68% note due 04/16/27, out of lockout 04/17/22

Total debt

Less current debt

Total long-term debt

Revolving Credit Facility

On July 23, 2025, we entered into the Amended Credit Agreement with Wells Fargo. The Amended Credit Agreement amended, restated and superseded our prior credit agreement with Wells Fargo that was set to expire by its terms on November 30, 2025. Under the terms of the Amended Credit Agreement and the revolving line of credit note it established, we may borrow up to $7,500 from time to time up until July 31, 2026, at an interest rate equal to the daily simple secured overnight financing rate plus 2.5% (6.77% at October 31, 2025), or if unavailable, the prime rate, in each case as determined by the bank. The revolving line of credit has an unused commitment fee of 0.35% of the available loan amount, payable on a quarterly basis. We borrowed $2,000 under this line of credit on May 20, 2025, which remained unpaid as of October 31, 2025. Amounts may be repaid and reborrowed during the term of the note. Accrued interest is payable on the first day of each month and the outstanding principal balance and remaining interest are due and payable on July 31, 2026.

Loan Covenants

The Wells Fargo Loan Agreements and the Amended Credit Agreement contain various affirmative and negative covenants that limit the use of funds and define other provisions of the loans. Material financial covenants are listed below, and the capitalized terms are defined in the applicable agreements:

Total Liabilities divided by Tangible Net Worth not greater than 2.0 to 1.0 at each fiscal quarter end,

Quick Ratio not less than 1.25 to 1.0 at each fiscal quarter end,

Net income after taxes of not less than $1.00 on a quarterly basis, determined as of each fiscal quarter end, commencing on January 30, 2026.

As of October 31, 2025, the Company was in violation of the quick ratio covenant which was subsequently waived by Wells Fargo (per letter dated December 12, 2025). As of October 31, 2025, the Company was in compliance with all other covenants under the Wells Fargo Loan Agreements.

Aggregate contractual maturities of debt in future fiscal years are as follows as of October 31, 2025:

Fiscal Years

Debt Payable

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements within the meaning of Item 303(b) of Regulation S-K.

Contractual Obligations

Except as described above, we had no other debt or other contractual obligations within the meaning of Item 303(b) of Regulation S-K, as of October 31, 2025.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the respective reporting periods. Actual results could differ from those estimates. Amounts estimated related to liabilities for self-insured workers’ compensation, employee healthcare and pension benefits are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts not originally estimated. We record promotions, return allowances, bad debt and inventory allowances based on recent and historical trends. Management believes its current estimates are reasonable and based on the best information available at the time. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected.

Disclosure concerning our policies on credit risk, revenue recognition, cash surrender or contract value for life insurance policies, deferred income tax and the recoverability of our long-lived assets are provided in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in this Report.

Recently Issued Accounting Pronouncements and Regulations

Various accounting standard-setting bodies have been active in soliciting comments and issuing statements, interpretations, and exposure drafts. For information on new accounting pronouncements and the impact, if any, on our financial position or results of operations, see Note 1 of the Notes to the Consolidated Financial Statements included within this Report.