Chairman and CEO Steve Davis said the company met its fiscal 2011 adjusted operating income guidance, despite challenging conditions in both the restaurant and food products segments throughout the year.

"As expected, both of our restaurant concepts demonstrated sequential quarterly same-store sales improvement throughout the year, including our first positive quarter of same-store sales in two-and-a-half years at Bob Evans Restaurants," Davis said. "We also optimized our portfolio of restaurants by closing several underperforming stores, which we expect will improve our long-term profitability.

"Despite a 35.5 percent year-over-year increase in sow costs, we also generated a 170-basis point improvement in the food products segment's adjusted operating margins, from 6.4 percent in fiscal 2010 to 8.1 percent in fiscal 2011, due to better management of sales promotions and cost-reduction initiatives implemented during the year," he added.

The company reported consolidated operating income of $88.5 million, or 5.3 percent of net sales, in fiscal 2011. The full-year results include the negative net pretax impact of $19.4 million. Excluding the $19.4 million negative net impact of these charges, the company's fiscal 2011 reported consolidated operating income of $88.5 million would have been approximately $107.9 million, or 6.4 percent of net sales.

The company reported consolidated operating income of $106.4 million, or 6.2 percent of net sales, in fiscal 2010.

The food products segment's net sales were $320.0 million in fiscal 2011, up 1.3 percent compared to $315.7 million in fiscal 2010. Comparable pounds sold decreased 8 percent compared to fiscal 2010. More than offsetting the impact of the decrease in comparable pounds sold was a $30.7 million, or 43.4 percent, year-over-year decrease in promotional discounts provided to retailers, along with increased authorizations of new products in key national accounts. (Promotional discounts and other selling allowances affect the income statement as a reduction to the net sales line.) Also contributing to the year-over-year sales increase was a pricing increase implemented at the end of the first quarter.

The food products segment's cost of sales was 54.7 percent of net sales in fiscal 2011 compared to 55.4 percent of net sales in fiscal 2010. The improvement was due to significantly higher net selling prices per pound sold, partly offset by a 35.5 percent year-over-year increase in sow costs, which averaged $57.17 per hundredweight in fiscal 2011 compared to $42.18 in fiscal 2010. The year-over-year rise in sow costs resulted in an increase of about $16 million in cost of sales for the food products segment compared to fiscal 2010.

Source: Bob Evans Farms Inc.