Note 1 - Summary of Significant Accounting Policies:

The unaudited condensed consolidated financial statements of Bridgford Foods Corporation (the "Company", "we", "our", "us") for the twelve and thirty-six weeks ended July 10, 2015 and July 11, 2014 have been prepared in conformity with the accounting principles described in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2014 (the "Annual Report") and include all adjustments considered necessary by management for a fair presentation of the interim periods. This report should be read in conjunction with the Annual Report. Due to seasonality and other factors, interim results are not necessarily indicative of the results for the full year. Recent accounting pronouncements and their effect on the Company are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

The October 31, 2014 balance sheet within these interim condensed consolidated financial statements was derived from the audited fiscal 2014 financial statements.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results may vary from these estimates. Some of the estimates needed to be made by management include the allowance for doubtful accounts, promotional and returns allowances, inventory reserves, the estimated useful lives of property and equipment, and the valuation allowance for the Company’s deferred tax assets. Actual results could materially differ from these 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 which vary from our current estimates. Market conditions and the volatility in stock markets may cause significant changes in the measurement of our pension fund liabilities and the performance of our life insurance policies in future periods.

During the second quarter of fiscal 2015, the Company re-evaluated the loss rates used to estimate the liability for self-insured workers compensation based on company specific historical claims and loss experience. As a result, the Company recorded a reduction in cost of sales of $233, a reduction in selling, general and administrative expenses of $137 and thus reduced its liability by $370 during the thirty-six weeks ended July 10, 2015. This change in accounting estimate increased net income by $370 or $0.04 per share.

We participate in “multiemployer” pension plans administered by labor unions on behalf of their employees. We pay monthly contributions to union trust funds, a portion of which is used to fund pension benefit obligations to plan participants. 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. 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 statement of operations. The ultimate amount of the withdrawal liability is dependent upon several factors including the funded status of the plan and contributions made by other participating companies.

During fiscal 2014, we withdrew from the Western Conference of Teamsters Pension Plan and recorded an estimated pension expense and a corresponding non-current liability of $798 related to this plan. During the quarter ended July 10, 2015, the Company received a notice and demand for payment in the amount of $798. The payment amount may be paid in one lump sum or monthly installments at the discretion of the Company. In addition, the Company can request a fund review or, if desired, the determination may be disputed through arbitration. The Company expects the full outstanding amount to be paid by October 2015 this liability and was reclassified as a current liability in the accompanying balance sheet. The ultimate amount paid may differ from this estimate due to the factors stated above. We continue to participate in other multiemployer union plans; we currently do not intend to withdraw from such plans. In the event of a full or partial withdrawal from these plans, the impact to our financial statements could be material.

Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll, advertising and other expenses. The carrying amount of these instruments approximate fair market value due to their short term maturity. At July 10, 2015, the Company had accounts in excess of the Federal Deposit Insurance Corporation insurance coverage limit.

The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. The Company grants payment terms to a significant number of customers that are diversified over a wide geographic area. The Company monitors the payment histories of its customers and maintains an allowance for doubtful accounts which is reviewed for adequacy on a quarterly basis. The Company does not require collateral from its customers.

The table below shows customers that accounted for more than 20% of consolidated accounts receivable (“AR”) or 10% of consolidated revenues for the thirty-six weeks ended July 10, 2015 and July 11, 2014, respectively.

Customer Concentration > 20% of AR or 10% Sales *

	Wal-Mart						Dollar General
	Sales			AR			Sales			AR
July 10, 2015		31.9	%		45.5	%		8.6	%		13.3	%
July 11, 2014		27.0	%		22.8	%		10.1	%		28.3	%

* = No other customer accounted for more than 20% of consolidated accounts receivable or 10% of consolidated revenues for the thirty-six weeks ended July 10, 2015 or the thirty-six weeks ended July 11, 2014.

Subsequent events

Management has evaluated events subsequent to July 10, 2015 through the date that the accompanying condensed consolidated financial statements were filed with the Securities and Exchange Commission for transactions and other events which may require adjustments of and/or disclosure in such financial statements.

Basic and diluted earnings per share

Basic and diluted earnings per share are calculated based on the weighted average number of shares outstanding for all periods presented. No stock options, warrants, or convertible securities were outstanding as of July 10, 2015 or July 11, 2014, respectively.