UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January~~July 2728, 2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number 0-1667

Bob Evans Farms, Inc.

(Exact name of registrant as specified in its charter)



Delaware		31-4421866
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8111 Smith’s Mill Road, New Albany, Ohio 43054

(Address of principal executive offices Zip Code)

(Registrant’s telephone number, including area code) (614) 491-2225

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”,” “large accelerated filer,” ~~and~~ “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ ~~Smaller reporting company ¨~~ (Do not check if a smaller reporting company) Smaller reporting company ¨ Emerging growth company ¨

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~March~~August 325, 2017, the registrant had 19,~~779~~942,~~603~~367 shares of its common stock, $.01 par value, outstanding.

-1-

BOB EVANS FARMS, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	3
ITEM 1. UNAUDITED FINANCIAL STATEMENTS	3
CONSOLIDATED BALANCE SHEETS	3
CONSOLIDATED STATEMENTS OF NET INCOME	4
CONSOLIDATED STATEMENTS OF CASH FLOWS	5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28
ITEM 4. CONTROLS AND PROCEDURES	28
PART II—OTHER INFORMATION	29
ITEM 1. LEGAL PROCEEDINGS	29
ITEM 1A. RISK FACTORS	29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	30
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	30
ITEM 4. MINE SAFETY DISCLOSURES	30
ITEM 5. OTHER INFORMATION	30
ITEM 6. EXHIBITS	30
SIGNATURES	31
INDEX TO EXHIBITS	32




PART I – FINANCIAL INFORMATION	3
ITEM 1. UNAUDITED FINANCIAL STATEMENTS	3
CONSOLIDATED BALANCE SHEETS	3
CONSOLIDATED STATEMENTS OF NET INCOME	4
CONSOLIDATED STATEMENTS OF CASH FLOWS	5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	23
ITEM 4. CONTROLS AND PROCEDURES	23
PART II—OTHER INFORMATION	24
ITEM 1. LEGAL PROCEEDINGS	24
ITEM 1A. RISK FACTORS	24
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4. MINE SAFETY DISCLOSURES	24
ITEM 5. OTHER INFORMATION	24
ITEM 6. EXHIBITS	24
SIGNATURES	25
INDEX TO EXHIBITS	26

-2-

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BOB EVANS FARMS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amount)

	UnauditedJanuary 27, 2017			April 29, 2016
	UnauditedJuly 28, 2017			April 28, 2017
Assets
Current Assets
Cash and equivalents	$	215,~~430~~275		$	11210,~~609~~886
Accounts receivable, net	2934,~~258~~910			2428,~~613~~071
Inventories	1922,~~455~~170			17,~~093~~210
Federal and state income taxes receivable	93,~~338~~297			—2,895
Prepaid expenses and other current assets	39,~~967~~152			56,~~716~~833
Current assets held for sale	~~499~~3,~~943~~334			483,~~707~~334
Total Current Assets	~~564~~88,~~391~~138			~~107~~269,~~738~~229
Property, plant and equipment	~~236~~290,~~855~~780			~~219~~244,~~103~~554
Less accumulated depreciation	~~103~~128,~~505~~172			89113,~~851~~814
Net Property, Plant and Equipment	~~133~~162,~~350~~608			~~129~~130,~~252~~740
Other Assets
Deposits and other	21,~~518~~970			32,~~841~~118
Notes receivable, net	—			20,886
Rabbi trust assets	22,724			22,353
Rabbi trust assets	21,540			20,662
Goodwill	101,299			19,634
Goodwill and other intangible assets	19,712			19,829
Other intangible assets, net	34,629			39
Non-current deferred tax assets	24,878			29,002
Deferred income tax assets	5,291			5,131
Non-current assets held for sale	—			469,164
Total Other Assets	165,913			49,275
Total Other Assets	68,648			563,384
Total Assets	$	416,659		$	449,244
Total Assets	$	766,389		$	800,374
Liabilities and Stockholders’ Equity
Current Liabilities
Current portion of long-term debt	$	3,425		$	~~3,419~~428
Accounts payable	1420,~~941~~080			1513,~~841~~424
Accrued property, plant and equipment purchases	~~1,743~~684			41,~~024~~283
Accrued non-income taxes	111,~~040~~678			143,~~474~~353
Accrued wages and related liabilities	125,~~830~~222			16,~~370~~404
Self-insurance reserves	95,~~263~~510			117,~~288~~878
Current taxes payable	—32,308			927,~~473~~954
Current reserve for uncertain tax provision	1,481			1,481
Other accrued expenses	1511,~~566~~916			1317,~~280~~905
Current liabilities held for sale	128,764			75,907
Total Current Liabilities	79,304			90,110
Total Current Liabilities	199,053			165,557
Non-Current Liabilities
Long-Term Liabilities
Deferred compensation	18,621			17,277
Deferred compensation	18,147			17,761
Reserve for uncertain tax positions	1,810			1,795
Reserve for uncertain tax positions	2,392			2,752
Deferred income tax liabilities	17,868			50
Other non-current liabilities	~~921~~29,656			~~377~~6,097
Long-term deferred gain	2,252			2,432
Credit facility borrowings and other non-current debt	92,168			2,267
Credit facility borrowings and other long-term debt	326,626			335,638
Total Non-Current Liabilities	160,123			27,486
Non-current liabilities held for sale	—			59,413
Total Long-Term Liabilities	350,338			418,373
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at January 27, 2017, and April 29, 2016	426			426
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at July 28, 2017, and April 28, 2017	426			426
Capital in excess of par value	~~248~~258,~~144~~169			~~244~~260,~~304~~619
Retained earnings	~~829~~780,~~356~~208			~~832~~931,~~323~~315
Treasury stock, 22,869 shares at January 27, 2017, and 22,881 shares at April 29, 2016, at cost	(860,928		)	(860,609		)
Treasury stock, 22,707 shares at July 28, 2017, and 22,842 shares at April 28, 2017, at cost	(861,571		)	(860,712		)
Total Stockholders’ Equity	~~216~~177,~~998~~232			~~216~~331,~~444~~648
Total Liabilities and Stockholders' Equity	$	~~766~~416,~~389~~659		$	~~800~~449,~~374~~244

The accompanying notes are an integral part of the financial statements.

-3-

CONSOLIDATED STATEMENTS OF NET INCOME

UNAUDITED

(in thousands, except per share amounts)

	Three Months Ended					~~Nine Months Ended~~
	January 27, 2017			January 22, 2016		January 27, 2017		January 22, 2016
	July 28, 2017			July 29, 2016
Net Sales	$	~~112~~109,~~820~~265		$	~~107~~85,~~897~~941	$	~~294,919~~	$	~~285,221~~
Cost of sales	48,933			52,326		127,171		128,164
Cost of goods sold	75,851			57,420
Operating wage and fringe benefit expenses	11,150			10,822		31,132		31,198
Gross Margin	33,414			28,521
Other operating expenses	15,826			12,846		44,372		37,640
Operating expenses:
Selling, general and administrative expenses	14,201			15,453		39,179		49,512
Advertising and marketing costs	3,063			3,239
Depreciation and amortization expense	6,333			5,026		17,191		15,966
Selling costs	4,447			3,713
Impairments	(744		)	—		15,256		—
Distribution costs	5,364			3,949
Operating Income	17,121			11,424		20,618		22,741
General and administrative costs	8,561			9,316
Net interest expense	2,139			2,367		4,961		7,856
Amortization of intangible assets	901			39
Income from Continuing Operations Before Income Taxes	14,982			9,057		15,657		14,885
Impairment, restructuring and other exit costs	—			—
Provision for income taxes	5,144			2,641		5,377		4,608
Total operating expenses	22,336			20,256
Income from Continuing Operations	9,838			6,416		10,280		10,277
Operating Income	11,078			8,265
(Loss) Income from Discontinued Operations, net of Income Taxes	(1,617		)	6,515		7,323		13,365
Net interest expense	460			1,487
Net Income	$	8,221		$	12,931	$	17,603	$	23,642
Income from Continuing Operations Before Income Taxes	10,618			6,778
Earnings Per Share — Income from Continuing Operations
Provision for income taxes	3,569			2,202
Basic	$	0.50		$	0.31	$	0.52	$	0.47
Income from Continuing Operations	7,049			4,576
Diluted	$	0.49		$	0.31	$	0.51	$	0.47
Income from Discontinued Operations, net of Income Taxes	—			4,586
Earnings Per Share — (Loss) Income from Discontinued Operations
Net Income	$	7,049		$	9,162
Basic	$	(0.09	)	$	0.31	$	0.37	$	0.61
Earnings Per Share — Income from Continuing Operations
Diluted	$	(0.08	)	$	0.31	$	0.37	$	0.61
Basic	$	0.35		$	0.23
Earnings Per Share — Net Income
Diluted	$	0.35		$	0.23
Basic	$	0.41		$	0.62	$	0.89	$	1.08
Earnings Per Share — Income from Discontinued Operations
Diluted	$	0.41		$	0.62	$	0.88	$	1.08
Basic	$	—		$	0.23
Cash Dividends Paid Per Share	$	0.34		$	0.34	$	1.02	$	0.96
Diluted	$	—		$	0.23
Weighted Average Shares Outstanding
Earnings Per Share — Net Income
Basic	~~19,847~~$	0.35		~~20,692~~$	0.46	~~19,836~~		~~21,845~~
Dilutive shares	221			111		219		144
Diluted	$	0.35		$	0.46
Diluted	20,068			20,803		20,055		21,989
Cash Dividends Paid Per Share	$	7.84		$	0.34
Weighted Average Shares Outstanding
Basic	20,162			19,792
Dilutive shares	56			172
Diluted	20,218			19,964

The accompanying notes are an integral part of the financial statements.

-4-

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(in thousands)

	Nine Months Ended
	Three Months Ended
	January 27, 2017			January 22, 2016
	July 28, 2017			July 29, 2016
Operating activities:
Net income	$	177,~~603~~049		$	239,~~642~~162
Income from discontinued operations	7,323			13,365
Income from continuing operations	10,280			10,277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	177,~~191~~446			1517,~~966~~574
Impairments	15,256			—
(Gain) Loss on disposal of fixed assets	(28		)	276
Loss on disposal of fixed assets	34			3,439
Gain on rabbi trust assets	(372		)	(281		)
(Gain) Loss on rabbi trust assets	(878		)	1,768
Loss on deferred compensation	662			279
Loss (Gain) on deferred compensation	1,433			(1,146		)
Share-based compensation	297			1,440
Share-based compensation	3,151			2,235
Accretion on long-term note receivable	—			(558		)
Accretion on long-term note receivable	(1,133		)	(1,539		)
Deferred income taxes	—			184
Deferred income taxes	4,124			(136		)
Amortization of deferred financing costs	77			406
Amortization of deferred financing costs	1,033			1,762
Cash provided by (used for) assets and liabilities:
Accounts receivable	(~~4,645~~831		)	(31,~~405~~130		)
Inventories	(21,~~362~~744		)	~~2,532~~(846		)
Prepaid expenses and other current assets	(1,~~749~~550		)	1(2,~~162~~084		)
Accounts payable	~~(900~~4,432		)	~~(970~~81		)
Federal and state income taxes	~~(19~~3,~~171~~260		)	19(13,~~119~~520		)
Accrued wages and related liabilities	(311,~~540~~611		)	2(10,~~956~~156		)
Self-insurance	(2,~~025~~825		)	~~2,312~~(530		)
Accrued non-income taxes	(31,~~434~~675		)	2(1,~~005~~263		)
Other assets and liabilities	8,330			4,395
Deferred revenue	—			(1,354		)
Net cash provided by operating activities	24,493			62,732
Other assets and liabilities	(6,606		)	(5,584		)
Net cash used in operating activities	(4,019		)	(7,904		)
Investing activities:
Purchase of property, plant and equipment	(23,669		)	(23,989		)
Acquisition of Pineland Farms Potato Company	(115,811		)	—
Proceeds from sale of property, plant and equipment	95			50,539
Purchase of property, plant and equipment	(3,887		)	(18,985		)
Liquidation of rabbi trust assets	—			5,245
Proceeds from sale of property, plant and equipment	7			2,109
Deposits and other	~~371~~85			(~~566~~206		)
Net cash (used in) provided by investing activities	(23,203		)	31,229
Net cash used in investing activities	(119,606		)	(17,082		)
Financing activities:
Cash dividends paid	(20156,~~182~~224		)	(216,~~132~~724		)
Gross proceeds from credit facility borrowings and other long-term debt	~~277~~90,~~894~~000			~~506~~97,~~626~~272
Gross repayments of credit facility borrowings and other long-term debt	(~~286,964~~102		)	(~~461~~71,~~668~~784		)
Payments of debt issuance costs	—			(2,517		)
Cash paid for taxes on share-based compensation	(5,660		)	(640		)
Purchase of treasury stock	—			(156,654		)
Excess tax benefits from share-based compensation	—			(1,632		)
Proceeds from share-based compensation	—			214
Net cash (used in) provided by financing activities	(71,986		)	16,492
Cash paid for taxes on share-based compensation	(702		)	(1,177		)
Net cash used in operations	(195,611		)	(8,494		)
Excess tax benefits from share-based compensation	(1,688		)	84
Cash and equivalents at the beginning of the period	210,886			12,896
Net cash used in financing activities	(31,642		)	(136,224		)
Cash and equivalents at the end of the period	$	15,275		$	4,402
Net cash used in operations	(30,352		)	(42,263		)
Net cash provided by operating activities of discontinued operations	36,565			54,781
Net cash used in investing activities of discontinued operations	(15,392		)	(11,165		)
Net cash provided by discontinued operations	21,173			43,616
Cash and equivalents at the beginning of the period	11,609			4,994
Cash and equivalents at the end of the period	$	2,430		$	6,347

The accompanying notes are an integral part of the financial statements.

-5-

BOB EVANS FARMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Summary of Significant Accounting Policies

Unaudited Consolidated Financial Statements: The accompanying unaudited consolidated financial statements of Bob Evans Farms, Inc. (“Bob Evans”) and its subsidiaries (collectively, Bob Evans and its subsidiaries are referred to as “the Company,” “we,” “us” and “our”) are presented in accordance with the requirements of this Quarterly Report on Form 10-Q and, consequently, do not include all of the disclosures normally required by U.S. generally accepted accounting principles or those normally made in our Annual Report on Form 10-K filing. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of our financial position and results of operations have been included. The consolidated financial statements are not necessarily indicative of the results of operations for a full fiscal year. The information in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in ~~the~~our Annual Report on Form 10-K for the fiscal year ended April 2928, ~~2016~~2017. Throughout the Unaudited Consolidated Financial Statements and Notes to the Consolidated Financial Statements, dollars are in thousands, except share and per-share amounts.

Description of Business: We produce and distribute a variety of complementary home-style, refrigerated side -dish convenience food items and pork sausage under the Bob Evans ®, Owens ®, ~~and~~ Country Creek ® and Pineland ® brand names. These food products are available throughout the United States at grocery retailers. We also manufacture and sell similar products to food-service accounts, including Bob Evans Restaurants and other restaurants. ~~The~~ ~~revenue from sales to Bob Evans Restaurants are eliminated in consolidation.~~

OnIn ~~January 24,~~the fourth quarter of fiscal 2017, we ~~entered~~completed ~~into~~the asale ~~definitive~~of ~~agreement~~the ~~for~~Bob Evans Restaurants business (the ~~sale~~"Restaurants ofBusiness") to Bob Evans Restaurants toLLC, a Delaware limited liability company formed by affiliates of Golden Gate Capital Opportunity Fund, L.P. ~~All~~ ~~assets~~(the ~~being~~"Buyer") ~~sold~~in ~~and~~accordance ~~liabilities~~with ~~being~~the ~~conveyed~~Asset ~~are~~Membership ~~presented~~Interest asPurchase ~~"Held~~Agreement ~~for~~entered ~~Sale"~~into on ~~the~~January ~~Consolidated~~24, ~~Balance~~2017 ~~Sheets~~(the "Restaurants Transaction"). ~~Additionally,~~For ~~for~~ all periods presented in our Consolidated Statements of Net Income, all sales, costs, expenses, gains and income taxes attributable to ~~Bob~~our ~~Evans~~Restaurants Business as well as the Restaurants Transaction have been ~~aggregated~~reported under the ~~captions~~caption "Income from Discontinued Operations, Net of Income Taxes." ~~Cash~~Refer ~~flows~~to ~~used in or provided by Bob Evans Restaurants have been aggregated in the Consolidated Statement of Cash Flows as part of discontinued operations. See~~ Note 23 ~~- Discontinued Operations and Assets Held~~ for ~~Sale for~~ additional information.

~~Prior~~On toMay ~~the decision to sell our restaurant business~~1, ~~we had two reporting segments~~2017, ~~Bob~~the ~~Evans~~Company ~~Restaurants~~completed ~~and~~its ~~BEF~~acquisition ~~Foods. BEF Foods sells food products throughout~~ ("the ~~retail~~Acquisition") ~~grocery~~of ~~and~~Pineland ~~food~~Farms ~~service~~Potato ~~channels~~Company, ~~including~~Inc., toa ~~Bob~~Maine ~~Evans~~Corporation ~~Restaurants~~("Pineland"). ~~Corporate~~The ~~and~~acquisition ~~other~~increases ~~costs~~our ~~related~~side-dish toproduction ~~shared~~capacity ~~services~~and ~~functions~~provides ~~were~~us ~~not~~with ~~allocated to our reporting segments. As a result of~~ the ~~decision~~capability to ~~sell~~produce ~~our~~and ~~Restaurants~~sell ~~business,~~diced ~~which~~and isshredded ~~now~~potato ~~classified~~products asin ~~discontinued~~both ~~operations,~~the weretail ~~now~~and ~~have~~food-service ~~one reporting segment~~channels. ~~Revenues~~The ~~and~~Company ~~costs~~purchased ~~related to our BEF Foods business, including indirect corporate overhead costs, are reported within results from continuing operations. All revenues~~ and ~~costs~~acquired ~~incurred~~all ~~directly in support~~ of the ~~Bob~~equity ~~Evans~~interests ~~Restaurants~~of ~~business~~Pineland ~~are~~outstanding ~~presented~~immediately inprior ~~results from discontinued operations. Prior year information has been recast~~ to ~~conform with~~ the ~~current presentation~~closing. ~~Unless~~ ~~otherwise stated, the information disclosed in footnotes accompanying the financial statements refer to continuing operations.~~ See Note 2 for additional information ~~regarding the planned sale of the Bob Evans Restaurants business~~.

~~Revenue~~ Income ~~Recognition~~Statement Reclassifications: Historically, ~~Revenue~~the iscost ~~recognized~~of ~~when~~goods ~~products~~sold ~~are~~line ~~received~~in bythe ~~our~~Consolidated ~~customers.~~Statement Weof ~~engage~~Net inIncome ~~promotional~~has ~~(sales~~primarily ~~incentive~~represented /the ~~trade~~cost ~~spend)~~of ~~programs~~materials inand has excluded depreciation expense, which was presented separately. In the ~~form~~first quarter of ~~"off-invoice"~~fiscal ~~deductions~~2018, ~~billbacks,~~we ~~cooperative~~changed ~~advertising~~the ~~and~~presentation ~~coupons~~of ~~with~~ our ~~customers~~Consolidated Statements of Net Income. ~~Costs~~The ~~associated~~changes ~~with~~were ~~these~~made ~~programs~~to ~~are~~conform ~~classified~~the asConsolidated aStatements ~~reduction~~ of ~~gross~~Net ~~sales~~Income into how management views the ~~period~~business insubsequent ~~which~~to the ~~sale~~divestiture ~~occurs~~of Bob Evans Restaurants and to better align with presentation that is consistent with our industry peers. ~~Promotional~~The ~~spending~~primary ~~for~~change ~~continuing~~was ~~operations,~~to ~~primarily~~classify ~~comprised~~all ofproduction ~~off-invoice~~costs, ~~deductions~~including plant wages, depreciation and ~~billbacks~~other plant operating costs, ~~was~~as costs of goods sold. These costs totaled $2725,~~617~~524 and $2619,~~658~~406 for the three months ended ~~January~~July 2728, 2017, and ~~January~~July 2229, 2016, respectively,. We ~~and~~also ~~$63~~have changed our income statement presentation to separately present advertising,~~238~~ selling and ~~$57~~distribution costs,~~066~~ ~~for~~consistent with how management views the ~~nine~~business. These ~~months~~changes ~~ended~~had ~~January 27,~~no ~~2017~~impact on reported operating income or net income, and ~~January 22,~~prior ~~2016,~~period ~~respectively~~amounts have been reclassified to conform to the current presentation.

~~Shipping~~Revenue ~~and Handling costs~~Recognition: ~~Expenditures~~ ~~related~~Revenue tois ~~shipping~~recognized when products toare received by our customers. ~~are~~We ~~expensed~~engage ~~when~~in ~~incurred. Shipping~~promotional ~~and~~(sales ~~handling~~incentive ~~costs~~/ ~~for~~trade ~~continuing~~spend) ~~operations~~programs ~~were~~in $4the form of "off-invoice" deductions,~~423~~ billbacks, cooperative advertising and ~~$3,680~~coupons ~~for~~with our customers. Costs associated with these programs are classified as a reduction of gross sales in the ~~three~~period ~~months~~in ~~ended~~which ~~January 27,~~the ~~2017,~~sale ~~and~~occurs. Promotional ~~January 22,~~spending ~~2016,~~for ~~respectively~~continuing operations, primarily comprised of off-invoice deductions and billbacks, was $1117,~~828~~881 and $1016,~~871~~291 for the ~~nine~~three months ended ~~January~~July 2728, 2017, and ~~January~~July 2229, 2016, respectively~~, and are recorded in the other operating expenses line of the Consolidated Statements of Net Income~~.

~~Accounts~~Cost ~~Receivable: Accounts~~of ~~receivable~~Goods ~~represents~~Sold: Cost ~~amounts~~of ~~owed~~goods tosold usincludes ~~through~~the ~~our~~cost ~~operating~~of ~~activities~~raw ~~and~~materials, ~~are~~packaging ~~presented~~materials, ~~net~~production oflabor ~~allowance~~and ~~for~~all ~~doubtful~~other ~~accounts. Accounts~~operating ~~receivable~~costs ~~consists~~associated ~~primarily~~with ofour ~~trade~~production ~~receivables~~facilities ~~from~~including ~~customer sales~~depreciation. WePrior ~~evaluate~~to the ~~collectability~~income ofstatement ~~our~~reclassification, ~~accounts~~cost ~~receivable based on a combination~~ of ~~factors. In~~goods ~~circumstances~~sold ~~where~~was wecomprised ~~are~~primarily ~~aware~~ of araw ~~specific~~material ~~customer’s~~and ~~inability~~packaging tomaterial ~~meet~~costs. Production ~~its~~labor ~~financial~~was ~~obligations~~previous toincluded ~~us,~~in weoperating ~~record~~wages aand ~~specific~~fringe ~~allowance~~benefit ~~for~~expenses, ~~bad~~production ~~debts~~related ~~against~~operating ~~amounts~~expenses ~~due~~were toincluded ~~reduce~~in ~~the~~other ~~net~~operating ~~recognized~~expenses ~~receivable~~and todepreciation ~~the~~was ~~amount~~presented weseparately ~~reasonably believe will be collected. In addition, we recognize allowances for bad debts based~~ on the ~~length~~Consolidated Statements of ~~time~~Net ~~receivables~~Income. ~~are past due with allowance percentages, based~~

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onAdvertising ~~our~~and ~~historical~~Marketing ~~experiences,~~Costs: Advertising ~~applied~~and onmarketing acosts ~~graduated~~are ~~scale~~primarily ~~relative~~comprised toof ~~the~~media ~~age~~advertising ofand ~~the~~consumer ~~receivable~~research ~~amounts~~costs. IfMedia ~~circumstances~~advertising ~~such~~is asexpensed ~~higher~~over ~~than~~the expected ~~bad~~benefit ~~debt~~period ~~experience~~and oris anfully ~~unexpected~~expensed ~~material adverse change~~ in athe ~~major~~fiscal ~~customer’s~~year ~~ability to meet its financial obligations to us were to occur,~~ the ~~recoverability~~media offirst ~~amounts~~airs. We ~~due~~expense toall usother ~~could~~advertising ~~change~~and bymarketing acosts ~~material~~as ~~amount~~incurred. WeAdvertising ~~had~~and ~~allowance~~marketing ~~for~~expense ~~doubtful~~from ~~accounts~~continuing ofoperations was $~~259~~3,063 and $~~421~~3,239 asin ofthe ~~January~~three months ended July 2728, 2017, and ~~April~~July 29, 2016, respectively~~. Accounts~~, ~~receivable~~and ~~was~~is ~~reduced~~recorded byseparately ~~$9,549~~in ~~and~~the ~~$4,916~~Consolidated asStatements of ~~January 27,~~Net ~~2017,~~Income. Prior ~~and~~to ~~April 29,~~the ~~2016,~~changes ~~respectively~~in income statement presentation, ~~related~~advertising tocosts ~~promotional~~were ~~incentives~~included ~~that~~in ~~reduce~~other ~~what~~operating isexpenses ~~owed~~and tomarketing ~~the~~costs ~~Company~~were ~~from~~included ~~certain~~in ~~customers~~S,G&A.

~~Notes~~Distribution ~~Receivable~~Costs: As Distribution acosts ~~result~~primarily ofconsist ~~the sale~~ of ~~Mimi’s~~expenditures ~~Café~~related to Leshipping ~~Duff~~products ~~America,~~to ~~Inc.,~~our wecustomers ~~received a Promissory Note ("the Note") for $30,000. The Note had an annual interest rate of 1.5%, a term of seven years~~ and aare ~~principal~~expensed ~~and~~when ~~interest payment due in February 2020~~incurred. ~~Partial~~Distribution ~~prepayments~~costs were required prior to maturity if the buyer's business reached certain levels of EBITDA during specified periods. No partial prepayments were received on the Note. The note was originally valued using a discounted cash flow model. The Company recognized accretion income on the Note of $15,~~133~~364 and $13,~~539~~949 for the ~~nine~~three months ended ~~January~~July 2728, 2017, and ~~January~~July 2229, 2016, respectively~~. Accretion~~, ~~income~~and isare ~~reflected~~recorded ~~within~~separately on the Consolidated Statements of Net ~~Interest~~Income. These ~~Expense~~costs ~~caption~~were ofprimarily presented as other operating expenses prior to the ~~Consolidated~~first ~~Statements~~quarter of ~~Net~~fiscal ~~Income~~2018.

~~Subsequent~~Selling toCosts: Selling ~~the~~costs ~~end~~include ~~of our second quarter in fiscal 2017~~compensation, ~~management~~travel ~~determined~~and ~~that~~support ~~full~~costs ~~collectability~~for ~~under~~our ~~the~~sales ~~terms~~organization ofas ~~the~~well ~~Note~~as ~~was~~broker ~~no longer probable~~fees. AsSelling acosts ~~result,~~were ~~the Company re-evaluated the cash flows expected to be received from the Note. Based on the revised expected cash flows~~$4,447 ~~the~~and ~~Company recorded an impairment reserve of~~ $163,~~000~~713 infor the ~~second~~three ~~quarter~~months ofended ~~fiscal~~July 28, 2017 ~~which represented the difference between the previous carrying value and the revised expected cash flows. In the third quarter of fiscal 2017~~, ~~we reached an agreement with Mimi's Café~~ and ~~settled the Note. We received a payment of $7~~July 29,~~000~~ ~~which settled all of Mimi's Café outstanding obligations of the Note. At the time of settlement~~2016, ~~the carrying value of the Note was $6~~respectively,~~256.~~ ~~The settlement resulted in a gain of $744 in the third quarter of fiscal 2017~~ and ~~was~~are recorded inseparately ~~the~~on ~~Impairments line of~~ the Consolidated Statements of Net Income. These costs were previously classified in S,G&A.

~~Inventories~~Accounts Receivable: Accounts receivable represents amounts owed to us through our operating activities and are presented net of allowances for doubtful accounts and promotional incentives. Accounts receivable consist primarily of trade receivables from customer sales. We ~~value~~evaluate the collectability of our ~~inventories~~accounts atreceivable anbased ~~average~~on ~~cost~~a ~~method~~combination ~~which~~of ~~approximates~~factors. In circumstances where we are aware of a ~~FIFO~~specific ~~basis~~customer’s inability to meet its financial obligations to us, we record a specific allowance for bad debts against amounts due to reduce the ~~perishable~~net ~~nature~~recognized ofreceivable ~~that~~to ~~inventory~~the amount we reasonably believe will be collected. ~~Inventory~~ ~~includes~~In ~~raw~~addition, ~~materials~~we ~~and~~recognize ~~supplies~~allowances ~~($6~~for bad debts based on the length of time receivables are past due with allowance percentages,~~849 at~~ ~~January 27~~based on our historical experiences, ~~2017~~applied on a graduated scale relative to the age of the receivable amounts. If circumstances such as higher than expected bad debt experience or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us were to occur, the recoverability of amounts due to us could change by a material amount. We had allowances for doubtful accounts of $542 and $~~5,911~~269 as of July at28, 2017, and April 2928, ~~2016)~~2017, ~~and~~respectively. Accounts ~~finished~~receivable ~~goods~~were (reduced by $126,~~606 at~~958 ~~January~~and $8,055 as of July 2728, 2017, and ~~$11,182 at~~ April 2928, ~~2016)~~2017, respectively, related to promotional incentives that reduce what is owed to the Company from certain customers.

~~Property, Plant and Equipment~~Inventories: ~~Property, plant and equipment is recorded at cost less accumulated depreciation. The straight-line depreciation method is used.~~ ~~Depreciation~~We isvalue ~~calculated~~inventories at ~~rates adequate to amortize costs over~~ the ~~estimated~~lower ~~useful lives~~ of ~~buildings~~net ~~and~~realizable ~~improvements~~value ~~(primarily~~or 5average tocost, 25which ~~years)~~approximates ~~and~~a ~~machinery~~FIFO ~~and~~basis ~~equipment~~due (3 to ~~10 years). Improvements to leased properties are depreciated over~~ the ~~shorter~~perishable nature of ~~their~~that ~~useful lives or the initial lease terms~~inventory. ~~Total~~Inventory ~~depreciation~~includes ~~expense~~raw ~~from~~materials ~~continuing~~and ~~operations~~supplies ~~was~~ ($69,~~294~~399 at ~~and $4,986 in the three months ended January~~July 2728, 2017, and ~~January 22~~$6,037 at ~~2016~~April 28, ~~respectively,~~2017) and ~~$17,074~~finished ~~and~~goods ($1512,~~849~~771 at ~~for the nine months ended January~~July 2728, 2017, and ~~January 22~~$11,173 at ~~2016~~April 28, ~~respectively~~2017).

~~During~~Property, ~~the~~Plant ~~nine~~and ~~months ended January 27~~Equipment: Property, ~~2017~~plant and ~~January 22,~~equipment ~~2016,~~is werecorded ~~capitalized~~at ~~internal~~cost ~~labor~~less ~~costs~~accumulated ofdepreciation. The ~~$565~~straight-line ~~and~~depreciation ~~$1,106,~~method ~~respectively,~~is ~~primarily~~used. Depreciation ~~related~~is calculated at rates adequate to ~~the~~amortize ~~implementation~~costs ofover the ~~second~~estimated ~~phase~~useful lives of ~~our~~buildings ~~enterprise~~and ~~resource~~improvements ~~planning~~(primarily ~~system~~5 ~~("ERP~~to ~~System"~~25 years) and ~~other~~machinery ITand ~~projects~~equipment (primarily 3 to 10 years). Improvements ~~The~~to ~~first~~leased ~~phase~~properties are depreciated over the shorter of ~~our~~their ~~ERP~~useful ~~system~~lives ~~was~~or ~~put~~the ininitial ~~service~~lease onterms. Total ~~April~~depreciation ~~25,~~expense ~~2015~~from continuing operations was $6,545 and ~~has~~$5,095 anin ~~expected~~the ~~useful~~three ~~life~~months ofended 10July 28, ~~years.~~2017, ~~The~~and ~~second~~July 29, ~~phase~~2016, ofrespectively. Net ~~our~~assets ~~ERP~~acquired ~~system~~from ~~was~~the ~~put~~acquisition inof ~~service~~Pineland inare ~~the~~recorded ~~second~~at ~~quarter~~the ofpreliminary ~~fiscal~~estimated ~~year~~fair ~~2017~~value, ~~and~~net ~~also~~of ~~has~~estimated andepreciation ~~expected~~expense. See ~~useful~~Note ~~life~~2 offor 10additional ~~years~~information.

We evaluate property, plant and equipment held and used in the business for impairment whenever events or changes in circumstance indicate that the carrying amount of a long-lived asset may not be recoverable. Impairment is determined by comparing the estimated fair value for the asset group to the carrying amount of its assets. If impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated fair values of the assets. Assets classified as held for sale are measured at the lower of their carrying value or fair value less costs to sell. See Note 2 for additional information regarding assets classified as held for sale.

~~Goodwill and Other Intangible~~ Assets~~: Goodwill~~ ~~and~~associated ~~other~~with ~~intangible~~our ~~assets~~Richardson, ~~which~~Texas, ~~primarily~~location ~~represent~~totaling ~~the~~$3,334 ~~cost~~are inclassified ~~excess~~as ofCurrent ~~fair~~Assets ~~market~~Held ~~value~~for ofSale ~~net~~in ~~assets~~the ~~acquired,~~Consolidated ~~were~~Balance ~~$19,712~~Sheet ~~and $19,829~~ as of ~~January~~July 2728, 2017, and April 2928, ~~2016, respectively~~2017. The majority of our goodwill was acquired as part of our fiscal 2013 acquisition of Kettle Creations. Additionally, as part of this acquisition we obtained a non-compete agreement with certain executives of the former company. The Kettle Creations non-compete agreement is amortized on a straight-line basis over its estimated economic life of five years.

Goodwill: Goodwill, ~~impairment~~which ~~testing~~represents ~~involves~~the acost ~~comparison~~in excess of ~~the estimated~~ fair market value of ~~reporting~~net ~~units~~assets toacquired ~~the~~was ~~respective~~$101,299 ~~carrying~~and ~~amount. If~~$19,634 ~~the~~as ~~estimated~~of ~~fair~~July 28, ~~value~~2017 ~~exceeds~~and ~~the~~April 28, ~~carrying amount~~2017, ~~then no impairment exists~~respectively. IfThe ~~the~~increase ~~carrying~~in ~~amount~~goodwill ~~exceeds~~of ~~the~~$81,665 ~~estimated~~from ~~fair~~prior ~~value,~~year ~~then~~was aacquired ~~second~~as ~~step~~part isof ~~performed~~our toacquisition ~~determine~~of ~~the~~Pineland ~~amount~~on ofMay ~~impairment~~1, ~~if any~~2017. WeSee ~~perform~~Note ~~our~~2 ~~impairment~~for ~~test~~additional ~~using a combination of income-based and market-based approaches~~information. The ~~income-based~~remaining ~~approach~~goodwill ~~indicates~~balance ~~the~~was ~~fair~~acquired ~~value~~as part of anour ~~asset~~fiscal or2013 ~~business~~acquisition ~~based~~of onKettle ~~the cash flows it can be expected to generate over its remaining useful life~~Creations.

Goodwill is not amortized, but rather is tested for impairment during the fourth quarter each year or on a more frequent basis when indicators of impairment exist. Goodwill and indefinite lived intangible asset impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount. If the estimated fair value exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the estimated fair value, then a second step is performed to determine the amount of impairment, if any. We perform our impairment test using a combination of income-based and market-based approaches. The income-based approach indicates the fair value of an asset or business based on the cash flows it can be expected to generate over its remaining useful life. Under the market-based approach, fair value is

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~~Under the market-based approach, fair value is~~ determined by comparing our reporting ~~segments~~units to similar businesses or guideline companies whose securities are actively traded in public markets. There have been no impairments to our goodwill in the current or prior years.

~~Earnings~~Other ~~Per~~Intangible ~~Share ("EPS")~~Assets: ~~Our~~Other ~~basic~~intangible ~~EPS~~assets, ~~computation~~which isprimarily ~~based~~represent on the ~~weighted-average~~cost ~~number~~in excess of ~~shares~~fair ofmarket ~~common~~value ~~stock~~of ~~outstanding~~net ~~during~~assets ~~the~~acquired, ~~period~~were ~~presented. Our~~$34,629 ~~diluted~~and ~~EPS~~$39 ~~calculation~~as ~~reflects~~of ~~the~~July 28, ~~assumed~~2017 ~~vesting~~and ofApril 28, ~~restricted~~2017, ~~shares~~respectively. As ~~and~~part ~~market-based~~of ~~performance~~the ~~shares~~Pineland acquisition, ~~the~~we ~~exercise~~acquired ~~and~~identifiable ~~conversion~~intangible ofassets ~~outstanding~~associated ~~employee~~with ~~stock~~the ~~options~~Pineland trade name and ~~the~~customer ~~settlement~~relationships. The ofPineland ~~share-based~~trade ~~obligations~~name ~~recorded~~and ascustomer ~~liabilities~~relationships onare ~~the~~being ~~Consolidated~~amortized ~~Balance~~on ~~Sheet~~a ~~(see~~straight-line ~~Note~~basis 6over ~~for~~their ~~more~~estimated ~~information),~~economic ~~net~~useful life of ~~the~~20 ~~impact~~years ofand ~~anti-dilutive~~10 ~~shares~~years, respectively.

~~The~~As ~~numerator~~part inof ~~calculating~~the ~~both~~fiscal ~~basic~~2013 ~~and~~Kettle ~~diluted~~Creations ~~EPS~~acquisition, ~~for~~we ~~each~~obtained ~~period~~a isnon-compete ~~reported~~agreement ~~net~~with ~~income,~~certain ~~income~~executives ~~from~~of ~~continuing~~the ~~operations~~former orcompany. ~~income~~The ~~from~~Kettle ~~discontinued~~Creations ~~operations. The~~non-compete ~~denominator~~agreement iswas ~~based~~amortized on a straight-line basis over its estimated economic life of five years which ended during the ~~following~~first ~~weighted-average~~quarter ~~shares~~of ~~outstanding:~~fiscal 2018.

	Three Months Ended		Nine Months Ended
(in thousands)	January 27, 2017	January 22, 2016	January 27, 2017	January 22, 2016
Basic	19,847	20,692	19,836	21,845
Dilutive shares	221	111	219	144
Diluted	20,068	20,803	20,055	21,989

We recorded $901 of amortization expense associated with intangible assets in the three months ended July 28, 2017. As of July 28, 2017, other intangible assets were comprised of the following:

In the three months and nine months ended January 27, 2017, 249,860 and 270,119 shares of common stock were excluded from the diluted EPS calculations because they were anti-dilutive. In the three months and nine months ended January 22, 2016, 249,684 and 240,974 shares of common stock were excluded from the diluted EPS calculations because they were anti-dilutive.



(in thousands)	July 28, 2017
Customer relationships	$	32,629
Trademark	2,000
Total other intangible assets	$	34,629

~~Dividends: In~~Earnings ~~each~~Per ofShare ~~the~~("EPS"): Our ~~three~~basic ~~months~~EPS ~~ended~~computation ~~January 27,~~is ~~2017,~~based ~~and~~on ~~January 22, 2016,~~ the ~~Company~~weighted-average ~~paid~~number aof ~~quarterly~~shares ~~dividend~~of ~~equal to $0.34 per share on our outstanding~~ common stock~~. In~~ ~~the~~outstanding ~~nine~~during ~~months ended January 27, 2017, and January 22, 2016,~~ the ~~Company~~period ~~paid dividends equal to $1~~presented.02 Our ~~and~~diluted ~~$0.96,~~EPS ~~respectively,~~calculation ~~per~~reflects ~~share~~the onassumed ~~our~~vesting ~~outstanding~~of ~~common~~restricted ~~stock. Individuals~~shares ~~that hold awards for unvested~~ and ~~outstanding restricted stock units,~~ market-based performance ~~share~~shares, ~~units and outstanding deferred stock awards are entitled to receive dividend equivalent rights equal to~~ the ~~per-share~~exercise ~~cash~~and ~~dividends~~conversion ~~paid~~of on outstanding ~~units. Dividend~~employee ~~equivalent~~stock ~~rights~~options ~~are~~and ~~forfeitable until~~ the ~~underlying~~settlement of share-~~units from which they were derived vest. Share-~~based ~~dividend~~obligations ~~equivalents are~~ recorded as aliabilities ~~reduction~~on tothe ~~retained~~Consolidated ~~earnings~~Balance Sheet, ~~with~~net anof ~~offsetting~~the ~~increase~~impact ~~to capital in excess~~ of ~~par~~anti-dilutive ~~value~~shares. ~~Refer~~See toNote ~~table~~7 ~~below:~~for more information.

The numerator in calculating both basic and diluted EPS for each period is reported net income. The denominator is based on the following weighted-average shares outstanding:

	Nine Months Ended
	Three Months Ended
(in thousands)	~~January~~July 2728, 2017		July 29, 2016	~~January 22, 2016~~
Cash dividends paid to common stockholders	$	20,182		$	21,132
Basic	20,162		19,792
Dividend equivalent rights	387			307
Dilutive shares	56		172
Total dividends	$	20,569		$	21,439
Diluted	20,218		19,964

~~Accrued~~In ~~Non-Income~~the ~~Taxes: Accrued~~three ~~non-income~~months ~~taxes~~ended ~~primarily~~July 28, ~~represent~~2017 ~~obligations for real estate~~ and ~~personal~~July 29, ~~property~~2016, ~~taxes~~29,307 asshares ~~well as sales~~ and ~~use~~313,382, ~~taxes. Accrued~~respectively, ~~non-income~~of ~~taxes~~common stock were ~~$11,040~~excluded ~~and~~from ~~$14,474~~the asdiluted ofEPS ~~January 27,~~calculations ~~2017,~~because ~~and~~they ~~April 29,~~were ~~2016, respectively~~anti-dilutive.

~~Self-Insurance Reserves~~Dividends: WeIn ~~record~~the ~~estimates~~three ~~for~~months ~~certain~~ended ~~health~~July 28, ~~workers’~~2017, ~~compensation~~the ~~and~~Company ~~general~~paid ~~insurance~~dividends ~~costs~~equal ~~that~~to ~~are~~$7.84 ~~self-insured~~per ~~programs~~share on our outstanding common stock, including a special dividend of $7.50 per share. ~~Self-insurance~~The ~~reserves~~special ~~include~~dividend ~~actuarial~~represents ~~estimates~~the majority of ~~both~~net ~~claims~~cash ~~filed~~proceeds from the Restaurants Transaction, ~~carried~~after atincome ~~their~~tax ~~expected~~payments ~~ultimate~~and the settlement ~~value,~~of ~~and~~outstanding ~~claims~~borrowings ~~incurred~~under ~~but~~our ~~not~~former ~~yet~~Credit ~~reported. Our~~Agreement, ~~liability~~which ~~represents~~was anterminated ~~estimate~~in ofconnection with the ~~ultimate~~Restaurants ~~cost~~Transaction. We ofalso ~~claims~~paid ~~incurred~~a asquarterly ofdividend ~~the~~equal ~~balance~~to ~~sheet date~~$0. ~~Self-insurance~~34 ~~reserves~~per ~~were~~share ~~$9,263~~on ~~and~~our ~~$11,288~~outstanding ascommon ofstock ~~January~~in both the three months ended July 2728, 2017, and ~~April~~July 29, 2016~~, respectively~~.

~~Deferred~~Individuals ~~gain~~that onhold ~~sale~~awards ~~leaseback~~for ~~transaction: In~~unvested ~~fiscal~~and ~~2016~~outstanding restricted stock units, weperformance ~~entered~~share ~~into~~units ~~sale~~and ~~leaseback~~outstanding ~~transactions~~deferred ~~for~~stock ~~two~~awards ofare ~~our~~entitled ~~production~~to ~~facilities. The~~receive ~~transaction~~dividend ~~included~~equivalent ~~20-year~~rights ~~initial~~equal ~~lease~~to ~~terms~~the ~~for~~per-share ~~each~~cash ~~facility~~dividends ~~with~~paid ~~additional~~on ~~renewal~~outstanding ~~periods,~~units. Dividend asequivalent ~~well~~rights asare ~~payment~~forfeitable ~~and~~until ~~performance~~the ~~guaranties. A~~underlying ~~gain~~share-units offrom ~~$2,305~~which onthey ~~the~~were ~~sale~~derived ofvest. Share-based ~~our~~dividend ~~Lima,~~equivalents ~~Ohio,~~are ~~facility~~recorded ~~was~~as ~~deferred~~a ~~and~~reduction isto ~~being~~retained ~~recognized~~earnings, onwith aan ~~straight-line~~offsetting ~~basis~~increase ~~over~~to ~~the~~capital ~~initial~~in ~~term~~excess of ~~the~~par ~~lease~~value. Refer to table below:

Advertising Costs: Media advertising is expensed at the time the media first airs. We expense all other advertising costs as incurred. Advertising expense from continuing operations was $2,067 and $1,144 in the three months ended January 27,

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2017, and January 22, 2016, respectively, and $7,682 and $5,007 for the nine months ended January 27, 2017, and January 22, 2016, respectively. Advertising costs are classified as other operating expenses in the Consolidated Statements of Net Income.



	Three Months Ended
(in thousands)	July 28, 2017		July 29, 2016
Cash dividends paid to common stockholders	$	156,224	$	6,724
Dividend equivalent rights	1,932		85
Total dividends	$	158,156	$	6,809

Accrued Non-Income Taxes: Accrued non-income taxes primarily represent obligations for real estate and personal property taxes, as well as sales and use taxes. Accrued non-income taxes were $1,678 and $3,353 as of July 28, 2017, and April 28, 2017, respectively.

Self-Insurance Reserves: We record estimates for certain health, workers’ compensation and general insurance costs that are self-insured programs. Self-insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. Our liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. In the first quarter of fiscal 2018, we corrected the classification of self-insurance reserves. We recorded an adjustment on our April 28, 2017, Consolidated Balance Sheet to classify $2,814 of our self-insurance reserves as non-current. Self-insurance reserves were $7,867 and $10,692 as of July 28, 2017, and April 28, 2017, respectively, of which $2,357 and $2,814 were classified as non-current liabilities.

Other Accrued Expenses: Other accrued expenses consisted of the following:



	Three Months Ended
(in thousands)	July 28, 2017		April 28, 2017
Legal and professional fees	$	2,528	$	10,807
Accrued customer incentives	2,520		1,912
Accrued advertising	1,376		515
Accrued broker fees	1,188		945
Other	4,304		3,726
Total other accrued expenses	$	11,916	$	17,905

Other Non-Current Liabilities: Other non-current liabilities consisted of the following:



	Three Months Ended
(in thousands)	July 28, 2017		April 28, 2017
Deferred rent	$	1,265	$	1,091
Contingent consideration ⁽¹⁾	23,903		—
Non-current deferred gain ⁽²⁾	2,131		2,192
Self-insurance reserves	2,357		2,814
Total other non-current liabilities	$	29,656	$	6,097

(1) See Note 2 for additional information.

(2) In fiscal 2016, we entered into sale leaseback transactions for two of our production facilities. The transactions included 20-year initial lease terms for each facility with additional renewal periods, as well as payment and performance guaranties. A gain of $2,305 on the sale of our Lima, Ohio, facility was deferred and is being recognized on a straight-line basis over the initial term of the lease.

Commitments and Contingencies: We occasionally use purchase commitment contracts to stabilize the potentially volatile pricing associated with certain commodity items.

We are self-insured for most casualty losses and employee health-care claims up to certain stop-loss limits per claimant. We have accounted for liabilities for casualty losses, including both reported claims and incurred, but not reported claims, based on information provided by independent actuaries. We have estimated our employee health-care claims liability through a review of incurred and paid claims history. The Company retained liabilities for health insurance and general liability claims associated with the Restaurants Business that were incurred prior to the closing of the Restaurants Transaction. We do not believe that our calculation of casualty losses and employee health-care claims liabilities would change materially under different conditions and/or different methods. However, due to the inherent volatility of actuarially determined casualty losses ~~and employee health care claims, it is reasonably possible that we could experience changes in estimated losses, which could be material to net income.~~

New Accounting Pronouncements: In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standard Board ("FASB"), the Securities and Exchange Commission (“SEC”), the Emerging Issues Task Force, the American Institute of Certified Public Accountants or any other authoritative accounting body to determine the potential impact they may have on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board ("IASB") issued new joint guidance surrounding revenue recognition. Under U.S. generally accepted accounting principles ("US GAAP"), this guidance is being introduced to the ASC as Topic 606, Revenue from Contracts with Customers ("Topic 606"), by Accounting Standards Update No. 2014-09. The new standard supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to use more judgment and make more estimates while recognizing revenue, which could result in additional disclosures to the financial statements. Topic 606 allows for either a "full retrospective" adoption or a "modified retrospective" adoption. The standard will become effective for us in fiscal 2019. We are currently evaluating which method we will use and assessing the impact this guidance will have on our consolidated financial statements with a focus on arrangements with customers.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern. The guidance requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. When management identifies such conditions or events, a footnote disclosure is required to disclose their nature, as well as management's plans to alleviate the substantial doubt to continue as a going concern. The standard will become effective for our fiscal year end 2017. We do not expect this update to have an impact on the consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. ASU 2015-11 simplifies the subsequent measurement of inventory by replacing today's lower of cost or market test with a lower of cost or net realizable test, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard will become effective for us in fiscal 2018. We do not expect this update to have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This guidance requires companies to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The new standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. The standard requires modified retrospective adoption and will become effective beginning in fiscal 2020, with early adoption permitted. We are currently evaluating this standard, including the timing of adoption and the related impact on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Compensation Accounting. ASU 2016-09 requires that excess tax benefits are recorded on the income statement as opposed to additional paid-in-capital, and treated as an operating activity on the statement of cash flows. ASU 2016-09 also allows companies to make an accounting policy election to either estimate the number of awards that are expected to vest (current U.S. GAAP) or account for forfeitures when they occur. ASU 2016-09 further requires cash paid by an employer when directly withholding shares for tax-withholding purposes to be classified as a financing activity on the statement of cash flows. The standard will become effective for us in fiscal 2018. We are currently evaluating the impact this standard will have on our consolidated financial statements.

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Inand ~~June~~employee ~~2016,~~health ~~FASB~~care ~~issued ASU No. 2016-13~~claims, ~~Financial~~it ~~Instruments~~is -reasonably ~~Credit~~possible ~~Losses. ASU~~that ~~2016-13~~we ~~introduces~~could anexperience ~~approach~~changes ~~based~~in onestimated ~~expected~~ losses, towhich ~~estimate~~could ~~credit~~be ~~losses~~material on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The standard will become effective for us in our fiscal 2021. We do not expect this standard to ~~have~~net ~~a material impact on the consolidated financial statements~~income.

New Accounting Pronouncements: In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standard Board ("FASB"), the Securities and Exchange Commission ("SEC"), the Emerging Issues Task Force, the American Institute of Certified Public Accountants or any other authoritative accounting body to determine the potential impact they may have on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board ("IASB") issued new joint guidance surrounding revenue recognition. Under US GAAP, this guidance is being introduced to the ASC as Topic 606, Revenue from Contracts with Customers ("Topic 606"), by Accounting Standards Update ("ASU") No. 2014-09. The new standard supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to use more judgment and make more estimates while recognizing revenue, which could result in additional disclosures to the financial statements. Topic 606 allows for either a "full retrospective" adoption or a "modified retrospective" adoption. The standard will become effective for us in fiscal 2019.

We are in the process of implementing the new standard, focusing on promotional arrangements with customers. We do not believe the implementation will be material to our current or historical financial statements. We are in the process of developing additional controls to ensure proper oversight of new customer relationships and promotional activity, as well as to ensure we meet all of the disclosure requirements associated with the new standard. We have not yet concluded which transition method we will elect, but anticipate we will use the modified retrospective approach.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This guidance requires companies to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The new standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. The standard requires modified retrospective adoption and will become effective for us beginning in fiscal 2020, with early adoption permitted. We are currently evaluating this standard, including the timing of adoption and the related impact on our consolidated financial statements.

In June 2016, FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The standard will become effective for us in our fiscal 2021. We do not expect this standard to have a material impact on the consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is to be applied using a retrospective transition method to each period presented. This standard will become effective for us in our fiscal 2019. We are currently evaluating the impact this standard will have on our consolidated financial statements.

2In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ~~Discontinued~~ASU ~~Operations~~2017-04 simplifies the accounting for goodwill impairments by eliminating Step 2 from the goodwill impairment test. Under the previous guidance an impairment of goodwill exists when the carrying amount of goodwill exceeds its implied fair value, whereas under the new guidance a goodwill impairment loss would be recognized if the carrying amount of the reporting unit exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and ~~Assets~~any ~~Held~~interim impairment tests for ~~Sale~~periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact this standard will have on our consolidated financial statements.

On January 24, 2017, the Company entered into an Asset and Membership Interest Purchase Agreement (the “BER Sale Agreement”) with BER Acquisition, LLC, a Delaware limited liability company formed by affiliates of Golden Gate Capital Opportunity Fund, L2.P. (the “Buyer”). Pursuant to the BER Sale Agreement, subject to the satisfaction or waiver of certain conditions, the Buyer has agreed to purchase and acquire the Company’s Bob Evans Restaurants business (the “Restaurants Business”) for an aggregate purchase price of $565,000 in cash, subject to certain adjustments set forth in the BER Sale Agreement (the “Restaurants Transaction”). ~~The buyer is also purchasing our corporate headquarters as part of the transaction.~~ Acquisitions

~~The~~On ~~Restaurants~~May ~~Transaction~~1, ~~will~~2017, bethe ~~effected~~Company bycompleted ~~(i)~~its ~~the~~acquisition ~~sale~~ of ~~the~~Pineland. The ~~Restaurants~~Acquisition ~~Business~~increases ~~assets~~our byside-dish ~~the~~production ~~Company’s~~capacity ~~affiliates~~and toprovides ~~Buyer~~us ~~and~~with ~~(ii)~~ the ~~sale~~capability byto ~~the~~produce ~~Company~~and ofsell ~~fifty~~diced ~~percent~~and ofshredded ~~the~~potato ~~equity~~products ~~interests~~ in aboth ~~newly~~the ~~formed~~retail ~~special~~and ~~purpose~~food-service ~~entity~~channels. ~~that~~The ~~will~~acquisition ~~hold~~also ~~specified~~diversifies ~~intellectual~~our ~~property~~production ~~assets~~capability ~~used~~ by ~~both~~adding ~~the~~a ~~Restaurants~~second ~~Business and~~ state-of-the-art ~~Company’s~~potato ~~BEF~~processing ~~Foods~~facility ~~food~~with ~~production~~approximately ~~business. As~~180 ~~part~~million pounds of ~~the~~annual ~~Restaurants~~capacity. ~~Transaction~~Pineland ~~the Company is~~ also ~~conveying~~owns toand ~~the~~operates ~~Buyer~~a ~~the~~900-acre ~~majority~~potato offarm ~~working~~and ~~capital~~is ~~liabilities~~surrounded ~~associated~~by ~~with~~an ~~the~~estimated ~~Restaurants Business~~55,000 ~~including~~acres ~~outstanding~~of ~~payables,~~annual ~~accrued~~potato ~~wages, and other accrued current liabilities, other than debt~~production.

OnThe ~~January 24, 2017, the~~ Company’s ~~Board~~purchased ~~of Directors unanimously approved the BER Sale Agreement~~ and ~~the~~acquired ~~transactions~~all ~~contemplated~~of ~~thereby, including~~ the ~~Restaurants Transaction. The Buyer has obtained~~ equity ~~commitments~~interests ~~for the full amount~~ of ~~the~~Pineland ~~purchase~~outstanding ~~price~~immediately inprior ~~the Restaurants Transaction from Golden Gate Capital Opportunity Fund, L.P., and the obligations of the Buyer pursuant~~ to the ~~BER Sale Agreement are not subject to any financing condition~~closing. Net ~~The closing~~ of ~~the~~working ~~Restaurants~~capital ~~Transaction~~adjustments isand ~~anticipated~~cash toacquired, ~~occur~~the onCompany orpaid ~~prior~~$115,811 toin ~~April 28~~cash, ~~2017, subject to regulatory approvals~~ and ~~other~~may ~~closing~~be ~~conditions~~required ~~set~~to ~~forth~~pay inup ~~the~~to ~~BER~~an ~~Sale Agreement.~~

The Company will continue to supply Bob Evans Restaurants with certain of its products under a multi-year supply agreement. Additionally, pursuant to a transition services agreement, the Company will supply certain services, primarily information technology related, to Bob Evans Restaurants and will receive certain human resource, tax and accounting services from Bob Evans Restaurants. These services will be provided at cost for a period up to 18 months, which can be further extended.

Results associated with the Restaurants Business are classified as income from discontinued operations, net of taxes, in our Consolidated Statements of Net Income. Prior year results have been recast to conform with the current presentation. Income from discontinued operations is comprised of the following:

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	Three Months Ended					Nine Months Ended
(in thousands)	January 27, 2017			January 22, 2016		January 27, 2017			January 22, 2016
Net Sales	$	223,126		$	238,608	$	663,307		$	708,018
Costs and expenses:
Cost of sales	59,349			66,255		170,592			189,447
Operating wage and fringe benefit expenses	92,118			95,785		272,984			284,696
Operating expenses	43,804			40,746		129,357			123,766
Selling, general and administrative expenses	19,615			13,551		45,582			49,854
Depreciation and amortization expense	12,405			14,831		36,766			44,150
Impairments	—			804		522			1,089
Operating (Loss) Income from discontinued operations	$	(4,165	)	$	6,636	$	7,504		$	15,016
Net interest expense	402			—		1,214			—
(Loss) Income from discontinued operations before income taxes	(4,567		)	6,636		6,290			15,016
(Benefit) Provision for income taxes	(2,950		)	121		(1,033		)	1,651
(Loss) Income from discontinued operations	$	(1,617	)	$	6,515	$	7,323		$	13,365

additional $25,000 in cash as potential earn-out consideration, which is subject to the achievement of certain operating EBITDA performance milestones over a consecutive 12-month period during the 24 months following the acquisition date. The following table summarizes the total preliminary purchase price allocated to the net assets acquired:

Selling, general and administrative expenses include corporate costs incurred directly in support of the Restaurants Business, including wage and benefit costs of corporate employees who will transfer with the Restaurants Business and legal and professional fees incurred and associated with the Restaurants Transaction. All other corporate costs are classified in results of continuing operations. We agreed to sell our corporate headquarters facility to the Buyer on a debt-free basis as part of the Restaurants Transaction, which requires us to settle outstanding borrowings on our Mortgage Loan prior to closing the Transaction. In accordance with ASC 205 - Presentation of Financial Statements, interest expense associated with the Mortgage Loan has been allocated to discontinued operations.



(in thousands)
Cash paid	$	115,811
Preliminary fair value of contingent consideration	23,746
Total purchase price to allocate	$	139,557

~~Assets~~The ~~being~~earn-out ~~sold~~consideration inarrangement requires the ~~Transaction~~Company ~~include~~to ~~all~~pay ~~assets~~a ~~associated~~maximum ~~with~~of $25,000 to Pineland's former shareholders, if Pineland reaches certain EBITDA performance milestones over a consecutive 12-month period during the ~~Restaurants~~24 ~~Business~~months asfollowing ~~well~~the asacquisition ~~our~~date. ~~corporate~~The ~~headquarters~~preliminary fair value of the earn-out consideration at the acquisition date was estimated to be $23,746. ~~All~~We ~~assets~~preliminarily ~~being~~estimated ~~sold~~the fair value of the earn-out consideration using a probability-weighted discounted cash flow model. The key assumptions in the discounted cash flow model were Pineland forecasted revenues and ~~liabilities~~profits ~~being~~over ~~assumed~~the by24 month period following the ~~Buyer~~acquisition ~~are~~date. ~~classified~~This asfair ~~held~~value ~~for~~measurement ~~sale~~is based on ~~our~~significant ~~Consolidated~~inputs ~~Balance~~not ~~Sheet~~observable in the market and thus represents a Level 3 measurement as defined in ASC 820. ~~Prior~~ ~~year~~Subsequent ~~balances~~adjustments ~~have~~to ~~been~~the ~~recast~~fair value of the earn-out consideration will be recorded to ~~conform~~the ~~with~~general and administrative expense line of the ~~current~~Consolidated ~~presentation~~Statements of Net Income.

The following table summarizes the estimated fair value of assets acquired and liabilities, on the acquisition date. We are in the process of obtaining a third party valuation of the assets acquired and liabilities assumed, including the earn-out consideration, and as a result the provisional measurements disclosed below are preliminary and subject to change.

Assets and liabilities classified as held for sale in our Consolidated Balance Sheets are comprised of the following:



(in thousands)	Acquisition date fair value
Accounts receivable	$	6,008
Inventory	3,216
Other assets	944
Property, plant and equipment	35,133
Identifiable intangible assets	35,491
Goodwill	81,665
Total identifiable assets acquired	$	162,457

Current liabilities assumed	5,081
Deferred tax liabilities	$	17,819

The identifiable intangible assets acquired include preliminary values of $33,466 associated with customer relationships that will be amortized over a 10-year period, and $2,025 associated with trademarks that will be amortized over a 20-year period. The trademarks were preliminarily valued using the relief-from-royalty method while the customer relationships were valued using the excess-earnings method. Key assumptions in the preliminary valuation of identifiable intangible assets included projected sales and profit margins, customer attrition rates and other third party benchmarking information. There are inherent uncertainties and management judgment required in these determinations.

The preliminary valuation of the Pineland acquisition resulted in a purchase price that exceeded the estimated fair value of net assets acquired, which was allocated to goodwill. We believe the amount of goodwill relative to the fair value of consideration relates to several factors including potential synergies related to market opportunities for our product offerings, the potential to leverage our combined sales force to attract new customers and potential synergies that will result in cost reductions for the combined company. None of the goodwill is expected to be deductible for income tax purposes.

We incurred $557 of integration costs during the three months ended July 28, 2017, primarily related to legal and professional fees associated with the acquisition of Pineland. These expenses were primarily recorded in the general and administrative expenses line of the Consolidated Statements of Net Income. The following table represents sales and operating

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income associated with the acquired Pineland business in the first quarter of fiscal 2018:

(in thousands)	~~January 27, 2017~~		~~April 29, 2016~~
Carrying amounts of major classes of assets classified as held for sale in the Consolidated Balance Sheets
Net sales (excluding intercompany sales)	$	8,583
Cash	$	1,272	$	1,287
Operating income	$	524
Accounts receivable, net	5,350		4,280
Inventories	8,055		7,905
Prepaid and other current assets	5,032		3,591
Net plant, property & equipment from discontinued operations	476,051		468,383
Net plant, property & equipment from continuing operations (1)	3,334		31,644
Other assets	849		781
Total assets classified as held for sale (1)	$	499,943	$	517,871
Carrying amounts of major classes of liabilities classified as held for sale in the Consolidated Balance Sheets	January 27, 2017		April 29, 2016
Accounts payable	$	18,242	$	21,676
Accrued property, plant and equipment purchases	2,149		1,284
Accrued non-income taxes	699		1,222
Accrued wages and related liabilities	9,664		9,988
Self-insurance reserves	9,116		8,881
Deferred gift card revenue	17,934		14,147
Other accrued expenses	13,503		18,709
Other non-current liabilities	5,673		5,474
Long-term deferred gain	51,784		53,939
Total liabilities classified as held for sale (1)	$	128,764	$	135,320

~~(1) Amounts~~Pro asForma of April 29, 2016 are classified as current and long-term in the Consolidated Balance Sheets based on the nature of the asset. Current assets held for sale as of January 27, 2017, include $3,334 associated with a former production facility in Richardson, Texas that is not part of the Restaurants Transaction. Additionally, current assets held for sale as of April 29, 2016 include $28,310 of property, plant and equipment related to closed restaurants that was previously classified as held for sale as well as $3,334 associated with the Richardson, Texas facility. Information

The following pro forma financial information presents our combined results of operations as if the acquisition of Pineland had occurred on April 30, 2016, the first day of fiscal 2017. The unaudited pro forma financial information is not necessarily indicative of what our condensed consolidated results of operations actually would have been had the acquisition been completed on April 30, 2016. In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of the combined company.

Cash classified as held for sale is petty cash held at our restaurant locations. Other non-current liabilities classified as held for sale primarily relate to our accrual of straight line rent associated with leased restaurant properties. The long-term deferred gain classified as held for sale is primarily associated with the unamortized deferred gain on the restaurant sale leaseback transaction that occurred in the fourth quarter of fiscal 2016.



(in thousands)	Q1 2017 pro forma results
Revenue (excluding intercompany sales)	$	95,094
Operating income	8,135
Income before taxes	6,428
Provision for income taxes	2,073
Net income	$	4,355

3. Discontinued ~~Long-Term Debt and Credit Arrangements~~Operations

AsIn ~~of January 27, 2017, long-term debt was comprised of~~ the ~~outstanding~~fourth ~~balance~~quarter ~~on our Revolving Credit Facility Amended and Restated Credit Agreement ("Credit Agreement")~~ of ~~$300,479,~~fiscal ~~the long term portion of our $30~~2017,~~000~~ ~~Mortgage~~we ~~Loan,~~completed the ~~long~~sale ~~term portion~~ of athe ~~$3,000~~Restaurants ~~Research~~Business ~~and~~for ~~Development Investment Loan ("R&D Loan") and~~ an ~~interest-free~~aggregate ~~loan~~purchase ofprice of $1565,000, in ~~due~~cash. 10The ~~years~~Buyer ~~from~~also ~~the~~purchased ~~date~~our ofcorporate ~~borrowing,~~headquarters ~~with imputed interest, which~~ as apart ~~result~~of ~~is discounted to $889. Refer to~~ the ~~table below:~~transaction.

(in thousands)	January 27, 2017			April 29, 2016
Credit Agreement borrowings (1)	$	300,479		$	307,000
Mortgage Loan (1)	26,777			28,963
R&D Loan (1)	1,906			2,219
Interest-free loan (1)	889			875
Total borrowings	330,051			339,057
Less current portion	(3,425		)	(3,419		)
Long-term debt	$	326,626		$	335,638

The Restaurants Transaction was effected by (i) the sale of the Restaurants Business assets by the Company’s affiliates to the Buyer and (ii) the sale by the Company of fifty percent of the equity interest in a newly formed special purpose entity that holds specified intellectual property assets used by both the Restaurants Business and the Company’s food production business. As part of the Restaurants Transaction the Company also conveyed to the Buyer the majority of working capital liabilities associated with the Restaurants Business, including outstanding payables, accrued wages, and other accrued current liabilities, other than debt.

The Company continues to supply the Restaurants Business with certain of its products under a multi-year supply agreement. Net sales to the Restaurants Business were $5,201 and $4,772 during the three months ended July 28, 2017 and July 29, 2016, respectively. Sales to the Restaurants Business in the prior year were eliminated in consolidation. Additionally, pursuant to a transition services agreement, the Company will supply certain services, primarily information technology related, to the Restaurants Business and will receive certain human resource, tax and accounting services from the Restaurants Business. These services will be provided at cost for a period up to 18 months, which can be further extended.

Results associated with the Restaurants Business are classified as income from discontinued operations, net of income taxes, in our Consolidated Statements of Net Income, and were immaterial in the first quarter of fiscal 2018. Prior year results have been recast to conform to the current presentation. Income from discontinued operations in the prior year was comprised of the following:



	Three Months Ended
(in thousands)	July 28, 2017		July 29, 2016
Net sales	$	—	$	220,376
Costs of sales	—		55,236
Other operating expenses	—		159,707
Operating income from discontinued operations	$	—	$	5,433
Net interest expense ⁽¹⁾	—		406
Income from discontinued operations before income taxes	—		5,027
Provision for income taxes	—		441
Net income from discontinued operations	$	—	$	4,586

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(1) ~~The~~ ~~Credit~~Interest ~~Agreement,~~expense ~~Mortgage~~associated ~~Loan~~with the mortgage loan on our corporate headquarters facility, ~~R&D~~which ~~Loan~~was ~~and~~sold ~~Interest-free~~to ~~loan~~the ~~mature~~Buyer inas ~~fiscal~~part ~~2019,~~of ~~2026~~the Restaurants Transaction, ~~2021~~has ~~and~~been ~~2022,~~allocated ~~respectively~~to discontinued operations.

~~Credit~~Total ~~Agreement~~operating ~~Borrowings~~and investing cash flows from discontinued operations were immaterial in the first quarter of fiscal 2018. Cash provided by operating activities from discontinued operations was $9,865 in the first quarter of fiscal 2017, while cash used in investing activities was $4,141 in the first quarter of fiscal 2017. Cash used in investing activities of discontinued operations in the first quarter of fiscal 2017 relates to $6,066 of capital expenditures, net of proceeds from the sale of closed restaurant locations.

OnLease January 2, 2014, we entered into the Credit Agreement, which represents a syndicated secured revolving credit facility. We incurred financing costs of $2,064 associated with this Credit Agreement, which are being amortized over the remaining term of the agreement using the straight line method, which approximates the effective interest method. As a result of the Third Amendment to the Credit Agreement, effective October 21, 2015, and discussed further below, up to $650,000 of borrowings are available, including a letter of credit sub-facility of $50,000, and an accordion provision that permits the Company to request an additional $300,000 for certain transactions, which could increase the revolving credit commitment to $950,000. It is secured by the stock pledges of certain material subsidiaries. Borrowings under the Credit Agreement bear interest, at the Company's option, at a rate based on LIBOR or the Base Rate, plus a margin based on the Leverage Ratio, ranging from 1.00% to 2.75% per annum for LIBOR, and ranging from 0.00% to 1.75% per annum for Base Rate. The Base Rate means, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Open Rate, plus 0.5%, (ii) the Prime Rate, or (iii) the Daily LIBOR Rate, plus 1.0%. We are also required to pay a commitment fee of 0.15% per annum to 0.25% per annum of the average unused portion of the total lender commitments then in effect. Guarantee

InAs part of the ~~first~~Restaurants Transaction, the Buyer assumed all operating leases associated with the Restaurants Business, including leases for the 143 restaurant properties that were sold as part of a sale leaseback transaction in the fourth quarter of fiscal ~~2015,~~2016. The weCompany ~~entered~~and ~~into~~BEF aFoods, ~~First~~Inc. ~~Amendment~~continue to guarantee certain payment and performance obligations associated with the ~~Credit~~lease ~~Agreement~~agreements for those restaurant properties (the "Guarantee"). ~~The~~In ~~terms~~the ofevent the ~~Credit~~Buyer ~~Agreement~~fails ~~that~~to ~~were~~meet ~~amended~~its ~~related~~payment and performance obligations under these lease agreements, the Company may be required to: ~~(a) an~~make ~~increase~~rent and other payments to the ~~Maximum~~landlord ~~Leverage~~under ~~Ratio~~the ~~for~~requirements of the ~~period~~Guarantee. Should ~~starting~~the ~~July 25~~Company, ~~2014~~as guarantor of the lease obligations, ~~through~~be required to make all lease payments due for the remaining term of the lease subsequent to July 2228, ~~2016~~2017, the ~~(b) certain~~maximum ~~restricted~~amount ~~payment~~we ~~requirements~~may ~~related~~be required to ~~share~~pay ~~repurchases~~is the annual rent amount, for the remainder of the lease term. The current annual rent on these leases is approximately $13,300, and ~~(c)~~will increase up to 1.5% annually based on indexed inflation. The lease term extends for approximately 19 more years as of July an28, ~~update~~2017, and the Company would remain a guarantor of the leases in the event the leases are extended for a renewal period. In the event that the Company is obligated to make payments under the ~~Pricing~~guarantor ~~Grid~~obligations, ~~which~~we ~~determines~~believe ~~variable~~the ~~pricing~~exposure ~~and~~is ~~fees,~~limited due to ~~reflect~~contractual ~~changes~~protections and recourse available in the ~~allowable~~master ~~maximum~~lease ~~leverage~~agreements ~~ratio~~as well as the BER Sale Agreement, including a requirement of the landlord to mitigate damages by re-letting the properties in default. WeThere ~~incurred~~have ~~financing~~not ~~costs~~been ~~of $1,279~~any ~~associated~~events ~~with~~that ~~this~~would ~~amendment,~~suggest ~~which~~that ~~are~~the ~~being~~Buyer ~~amortized~~will ~~using~~fail to continue to meet the ~~straight~~obligations ~~line~~of ~~method~~the leases. As such, ~~which~~the ~~approximates~~fair value of the ~~effective~~Guarantee ~~interest~~is ~~method~~immaterial as of July 28, 2017.

~~On May 11, 2015, we entered into a Second Amendment to the Credit Agreement~~4. ~~The~~Long-Term ~~amendment~~Debt had an effective date of April 24, 2015. The terms of the Credit Agreement were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting April 24, 2015, through the remaining term of the agreement, (b) a change in the restrictions related to payments for share repurchases, and (c) a change in the definition of the LIBOR and Daily LIBOR rates that are used to calculate interest on outstanding borrowings. We incurred fees of $1,705 associated with this amendment, which were paid in the first quarter of fiscal 2016 and amortized over the remaining term of the Credit ~~Agreement using the straight line method, which approximates the effective interest method.~~Arrangements

InAs ~~the second quarter~~ of ~~fiscal 2016~~July 28, ~~we entered into a Third Amendment to the Credit Agreement dated and effective as of October 21~~2017, ~~2015. The~~long-term ~~terms~~debt ofwas ~~the~~comprised ~~Credit Agreement were amended related to: (a) an increase~~ of ~~the level of permitted indebtedness in connection with sale and leaseback transactions of assets from~~ $~~100~~90,000 tooutstanding under our $300,000, ~~(b)~~revolving acredit ~~removal~~facility of("Credit ~~the $150~~Facility"),~~000~~ ~~share repurchase restriction during~~ the ~~2016~~long-term ~~fiscal~~portion ~~year,~~of ~~(c)~~ a ~~decrease of the size of the facility from~~ $~~750~~3,000 toResearch ~~$650,000,~~and ~~(d)~~Development aInvestment ~~modification~~Loan of("R&D ~~the~~Loan") definition of the leverage ratio to account for rent expense from leases, so that the leverage ratio will be calculated as consolidated indebtedness plus 600% of annual rent expense versus consolidated EBITDAR, and ~~(e)~~ an ~~inclusion~~interest-free ofloan ~~an add back to the leverage ratio calculation for costs related to the settlement~~ of ~~a class action lawsuit. We incurred and paid fees of~~ $~~812 associated with this amendment~~1,000, ~~which~~due ~~will~~10 beyears ~~amortized~~from ~~over~~ the ~~remaining~~date ~~term~~ of ~~the Credit Agreement using the straight line method~~borrowing, ~~which~~with ~~approximates~~imputed ~~the effective~~ interest ~~method. In addition~~, which as a result ofis ~~lowering~~discounted ~~the~~to ~~borrowing capacity on the credit facility, we expensed~~ $~~480~~898. Refer ~~of previously unamortized deferred financing costs related~~ to the ~~agreement.~~table below:

Our Credit Agreement contains financial and other various affirmative and negative covenants that are typical for financings of this type. Our Credit Agreement contains financial covenants that require us to maintain a specified minimum coverage ratio of not less than 3.00 to 1.00, and a maximum leverage ratio that may not exceed 4.00 to 1.00. As of January 27, 2017, our minimum coverage ratio was 13.01, and our leverage ratio was 2.66, as defined in our Credit Agreement. Our Credit Agreement limits repurchases of our common stock and the amount of dividends that we pay to holders of our common stock in certain circumstances. The Credit Agreement also allows for a sale leaseback of our real estate up to $300,000, of which approximately $51,000 is still available as of January 27, 2017. A breach of any of these covenants could result in a default under our Credit Agreement, in which all amounts under our Credit Agreement may become immediately due and payable, and all commitments under our Credit Agreement extend further credit may be terminated. We were in compliance with the financial covenant requirements of our Credit Agreement as of January 27, 2017.



(in thousands)	July 28, 2017			April 28, 2017
Credit Facility borrowings ⁽¹⁾	$	90,000		$	—
R&D Loan ⁽¹⁾	1,695			1,801
Interest-free loan ⁽¹⁾	898			894
Total borrowings	92,593			2,695
Less current portion	(425		)	(428		)
Long-term debt	$	92,168		$	2,267

~~As of January 27, 2017, we had $300,479 outstanding on the Credit Agreement.~~ (1) The ~~primary purposes of the~~ Credit ~~Agreement~~Facility, ~~are~~R&D ~~for~~Loan ~~trade~~ and ~~stand~~Interest-byfree ~~letters~~loan ofmature ~~credit~~ in ~~the~~fiscal ~~ordinary course of business as well as working capital~~2022, ~~refinancing~~2021 ~~of existing indebtedness, if any, capital expenditures, joint ventures~~ and ~~acquisitions~~2022, ~~stock repurchases and other general corporate purposes~~respectively.

Credit Facility Borrowings

On April 28, 2017, the Company entered into the Credit Facility, which established a syndicated secured revolving credit facility under which up to $300,000 will be available, with a letter of credit sub-facility of $20,000, and an accordion option to increase the revolving credit commitment to $400,000. All obligations under the Credit Facility are unconditionally guaranteed by the Company as well as certain wholly owned subsidiaries, and are secured by a first-priority security interest in certain property and assets of the Company, including accounts receivable, inventory, equipment, intellectual property and certain other assets, including stock pledges of certain material direct subsidiaries of the Company. The Credit Facility has a maturity date of April 28, 2022. We incurred financing costs of $1,542 associated with the Credit Facility, which are being amortized over the five-year term of the facility.

The primary purposes of the Credit Facility are for stand-by letters of credit in the ordinary course of business as well as working capital, capital expenditures, acquisitions, stock repurchases, dividends and other general corporate purposes.

-13-

~~Mortgage~~Borrowings ~~Loan~~under ~~Borrowings~~the Credit Facility bear interest, at borrower’s option, at a rate based on the Eurodollar Rate or the Base Rate, plus a margin based on the Consolidated Leverage Ratio, as detailed in the Credit Facility, ranging from 1.25% to 2.00% per annum for Eurodollar Rate, and ranging from 0.25% to 1.00% per annum for Base Rate. Base Rate means, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Rate, plus 0.50%, and (ii) Bank of America, N.A.’s “prime rate”, and (iii) the Eurodollar Rate, plus 1.0%. As of July 28, 2017, the margin on LIBOR-based loans was 1.50% per annum and the margin on Base Rate-based loans was 0.50% per annum. Commitment fees payable under the Credit Facility are also based on the Consolidated Leverage Ratio as defined in the Credit Facility and range from 0.20% per annum to 0.30% per annum of the average unused portion of the total lender commitments then in effect.

OnThe ~~February~~terms 9,of ~~2016,~~the weCredit ~~entered~~Facility ~~into~~provide afor ~~$30,000~~customary ~~mortgage~~representations ~~credit~~and ~~agreement~~warranties ~~("Mortgage~~and ~~Loan")~~affirmative ~~on our corporate headquarters facility~~covenants. The ~~Mortgage~~Credit ~~Loan~~Facility ~~represents~~contains anegative ~~credit~~covenants ~~facility~~usual ~~secured~~and bycustomary ~~our~~for ~~corporate~~a ~~headquarters~~transaction ~~real~~of ~~estate~~this ~~and building~~nature. ~~Borrowings~~ ~~under~~The ~~the~~Credit ~~Mortgage~~Agreement ~~Loan~~also ~~bear~~contains ~~interest,~~financial atcovenants ~~the~~that ~~Borrower's~~require ~~option,~~us atto maintain a ~~rate~~specified ~~based~~minimum oncoverage ~~LIBOR~~ratio orof ~~the~~not ~~Base~~less ~~Rate~~than 3.00 to 1.00, ~~plus~~and ana ~~applicable~~maximum ~~rate~~leverage ofratio ~~4.625%~~that ~~per~~may ~~annum~~not ~~for LIBOR or~~ exceed 3.~~625%~~50 to ~~per annum for the Base Rate~~1.00. ~~The~~As ~~Base~~of ~~Rate~~July 28, ~~means~~2017, ~~for~~we ~~any~~had ~~day~~$90,000 aoutstanding ~~fluctuating~~on ~~per annum rate of interest equal to~~ the ~~highest~~Credit ofAgreement ~~(a)~~and ~~the~~we ~~Federal~~were ~~Funds~~in ~~Open~~compliance ~~Rate,~~with ~~plus~~all 0covenants.~~5%,~~ ~~(b)~~A ~~the~~breach ~~Bank~~ of ~~America~~any ~~Prime~~of ~~Rate,~~these orcovenants ~~(c)~~could ~~the~~result ~~Eurodollar~~in ~~Rate,~~a ~~plus~~default ~~1.0%. We~~under ~~incurred~~our ~~financing~~Credit ~~costs of $1~~Facility,~~064~~ ~~associated~~in ~~with this borrowing,~~ which isall ~~being~~amounts ~~amortized~~under ~~over~~ the 10Credit ~~year~~Facility ~~term~~may ofbecome ~~the~~immediately ~~agreement,~~due and ispayable, ~~classified~~and asall acommitments ~~reduction~~under ofour ~~the~~Credit ~~outstanding~~Facility ~~long-term~~to ~~debt~~extend ~~liability~~further oncredit ~~our~~may ~~Consolidated~~be ~~Balance Sheet~~terminated. WeThe ~~are~~carrying ~~required~~value ~~to make quarterly payments~~ of ~~$750~~our ~~until~~Credit ~~the~~Facility ~~Mortgage~~borrowings ~~Loan's~~approximates ~~maturity~~its ~~date.~~fair ~~The~~value ~~Mortgage~~due ~~Loan~~to ~~has~~the avariable ~~maturity~~rate ~~date~~nature ofthe ~~February~~debt ~~9, 2026~~instrument.

~~The~~ ~~carrying~~As ~~values~~of July 28, 2017, we had outstanding letters of credit that totaled $7,136, all of which were utilized as part of the total amount available under our ~~borrowings~~Credit ~~approximate~~Facility. If ~~their~~certain ~~fair~~conditions ~~values~~are ~~due~~met under these arrangements, we would be required to satisfy the ~~variable~~obligations ~~rate~~in cash. Due to the nature of ~~our~~these ~~debt~~arrangements ~~instruments~~and ~~including~~based ~~our~~on ~~Credit~~historical ~~Agreement~~experience and ~~Mortgage~~future ~~Loan.~~expectations, we do not expect to make any significant payment outside of the terms set forth in these arrangements.

Our Aseffective ofinterest ~~January 27,~~rate ~~2017,~~for wethe ~~had~~Credit ~~outstanding~~Facility ~~letters~~was of2.71% ~~credit~~for ~~that~~the ~~totaled~~three ~~$13,864,~~months ofended ~~which~~July ~~$13~~28,~~564 is~~ ~~utilized~~2017, asand ~~part of the total amount available under~~ our ~~Credit~~effective ~~Agreement. If~~interest ~~certain~~rate ~~conditions~~on ~~are~~outstanding ~~met~~borrowings ~~under~~was ~~these arrangements, we would be required to satisfy the obligations in cash~~2.48% ~~Due~~for to the ~~nature~~three ofmonths ~~these~~ended ~~arrangements and based on historical experience and future expectations~~July 29, ~~we do not expect to make any significant payment outside of the terms set forth in these arrangements~~2016.

~~Our~~Net ~~combined effective~~ interest ~~rate~~expense ~~for~~during ~~the Credit Agreement and Mortgage Loan was 2.45% and 1.99% for the~~ three months ended ~~January~~July 2728, 2017, and ~~January~~July 2229, 2016, ~~respectively,~~was ~~and~~comprised ~~2.38%~~of ~~and 2.05% for~~ the ~~nine~~following: ~~months ended January 27, 2017 and January 22, 2016, respectively.~~

Interest costs of $396 and $100 for the nine months ended January 27, 2017 and January 22, 2016, were capitalized in connection with our ERP system implementations, the Line 4 expansion at our Lima production facility and other IT projects. Net interest expense during three months ended and nine months ended January 27, 2017 and January 22, 2016 was comprised of the following:



	Three Months Ended
(in thousands)	July 28, 2017			July 29, 2016
Interest expense:
Variable-rate debt ⁽¹⁾	$	447		$	1,965
Fixed-rate debt ⁽²⁾	92			396
Capitalized interest	(8		)	(198		)
Total interest expense on outstanding borrowings	531			2,163
Interest income:
Accretion on note receivable ⁽³⁾	—			(558		)
Other	(71		)	(118		)
Total interest income	(71		)	(676		)
Net interest expense from continuing operations	$	460		$	1,487

	Three Months Ended						Nine Months Ended
(in thousands)	January 27, 2017			January 22, 2016			January 27, 2017			January 22, 2016
Interest Expense:
Variable-rate debt (1)	$	1,918		$	2,618		$	5,724		$	8,027
Fixed-rate debt (2)	302			444			1,002			1,819
Capitalized interest	(81		)	(50		)	(396		)	(100		)
Total Interest Expense on outstanding borrowings	2,139			3,012			6,330			9,746
Interest income:
Accretion on note receivable (3)	—			(528		)	(1,133		)	(1,539		)
Other (4)	—			(117		)	(236		)	(351		)
Total Interest Income	—			(645		)	(1,369		)	(1,890		)
Net Interest Expense	$	2,139		$	2,367		$	4,961		$	7,856


(1)	Primarily interest expense on our Credit Facility borrowings for the three months ended July 28, 2017, and interest expense on our former credit agreement for the three months ended July 29, 2016.

(12) ~~Primarily~~Includes ~~interest~~the ~~expense~~amortization onof ~~our~~debt ~~Credit~~issuance ~~Agreement Borrowings~~costs.

(23) ~~Includes~~Accretion ~~the~~on ~~amortization~~our of$30,000 ~~debt~~note ~~issuance~~receivable, ~~costs~~obtained ~~and~~as apart ~~$480~~of ~~charge~~the insale ~~the~~of ~~second~~Mimi’s ~~quarter~~Café ofto ~~fiscal~~Le ~~2016~~Duff ~~related~~which towas settled in the ~~write~~third ~~off~~quarter of ~~unamortized~~fiscal ~~debt issuance costs~~2017.

~~(3)~~5. ~~Accretion~~Income ~~on our $30,000 note receivable, obtained as part of the sale of Mimi’s Café to Le Duff which was settled in Q3 2017 (also see Note 1 for additional information)~~Taxes

~~(4)~~The ~~Primarily~~provision ~~interest~~for income taxes is based on our current estimate of the ~~$30,000~~annual ~~note~~effective ~~receivable,~~income ~~obtained~~tax asrate ~~part~~adjusted ofto reflect the ~~sale~~impact of ~~Mimi~~discrete items. The Company’s ~~Café~~effective income tax rate from continuing operations was 33.6% for the three months ended July 28, 2017, as compared to Le32.5% ~~Duff~~for the corresponding period last year. The higher tax rates from continuing operations for the three months ended July 28, ~~which~~2017, as compared to the corresponding periods last year, was ~~settled~~driven primarily by the impact of the yearly variance in Q3the ~~2017~~forecasted annual rate related to the domestic productions activities deduction.

46. ~~Income~~Restructuring ~~Taxes~~and Severance Charges

The 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’s effective income tax rate from continuing operations was 34.3% for the three months ended January 27, 2017, as compared to 29.2% for the corresponding period last year. The Company's effective income tax rate was 34.3% for the nine months ended January 27, 2017 as compared to 31.0% for the corresponding period last year. The higher tax rates from continuing operations for the three and nine months ended January 27, 2017, as compared to the corresponding periods last year, were driven primarily by the impact of yearly variances in the forecasted annual rate related to officer's life insurance and the domestic production activities deduction.

-14-

5In the second half of fiscal 2017, we incurred severance charges related to a reduction of personnel as part of the Company's overall strategic initiatives, including the sale of the Restaurants Business. ~~Restructuring~~Severance charges associated with employees who work in shared service functions were recorded in the general and ~~Severance~~administrative ~~Charges~~line of the Consolidated Statements of Net Income, while charges associated with employees who supported the Restaurants Business were recorded in results from discontinued operations.

InLiabilities ~~the~~associated ~~second~~with ~~quarter~~severance ofcharges ~~fiscal~~as ~~2014, we closed our BEF Foods production plant in Richardson, Texas, and in the third quarter~~ of ~~fiscal 2014~~July 28, ~~we closed our BEF Foods production plants in Springfield and Bidwell~~2017, ~~Ohio. The actions to close these food production facilities~~ were ~~intended~~$618 toand ~~increase~~are ~~efficiency~~recorded ~~by consolidating production to our high capacity food production facility~~ in ~~Sulphur Springs, Texas. In each of~~ the ~~fourth~~accrued ~~quarters~~wages ~~of fiscal years 2016, 2015~~ and ~~2014, we recorded charges~~ related toliabilities aline ~~reduction~~ of ~~personnel~~the atConsolidated ~~our~~Balance ~~corporate support center~~Sheet. The ~~Restructuring~~majority ~~costs~~of ~~related~~these toliabilities ~~continuing~~are ~~operations~~expected ~~were~~to ~~primarily~~be ~~recorded~~paid in ~~the~~fiscal ~~S,G&A line of the Consolidated Statements of Net Income~~2018.

See tables below for detail of restructuring activity for the three months ended July 28, 2017, and July 29, 2016, respectively:

In the third quarter of fiscal 2017, we recorded additional charges of $4,391 related to a reduction of personnel contemplated as part of the Company's overall strategic initiatives, including the planned sale of the Restaurants Business (see Note 2 for additional information). Severance charges associated with employees who work in shared service functions were recorded in the S,G&A line of the Consolidated Statements of Net Income, while charges associated with employees who supported our restaurant business were recorded in results from discontinued operations.



(in thousands)	Restructuring charges
Balance at April 28, 2017	$	2,800
Restructuring and related severance charges incurred	—
Amounts paid	(1,881		)
Adjustments	(301		)
Balance at July 28, 2017	$	618

Liabilities associated with severance charges as of January 27, 2017, were $4,239 and are recorded in the accrued wages and related liabilities line of the Consolidated Balance Sheet.



(in thousands)	Restructuring charges
Balance at April 29, 2016	$	2,698
Restructuring and related severance charges incurred ⁽¹⁾	807
Amounts paid	(2,043		)
Adjustments	8
Balance at July 29, 2016	$	1,470

(in thousands)	Restructuring charges
Balance at April 29, 2016	$	2,698
Restructuring and related severance charges incurred (1)	4,391
Amounts paid	(2,568		)
Adjustments	(282		)
Balance at January 27, 2017	$	4,239

(1) Restructuring charges of $807 were recorded in discontinued operations for the three months ended July 29, 2016, related to charges incurred for closed restaurants.

(in thousands)	Restructuring charges
Balance at April 24, 2015	$	3,626
Restructuring and related severance charges incurred (1)	140
Amounts paid	(2,850		)
Adjustments	(568		)
Balance at January 22, 2016	$	348

7. Share-Based Compensation

The Stock Compensation Topic of the FASB ASC 718 (1"ASC 718") ~~Restructuring~~requires ~~charges~~that ofwe ~~$2,087~~measure ~~and~~the ~~$28~~cost ~~were~~of ~~recorded~~employee inservices ~~continuing~~received ~~operations~~in exchange for ~~the~~an ~~nine~~equity ~~months~~award, ~~ended~~such ~~January 27~~as stock options, ~~2017~~restricted stock awards, restricted stock units and ~~January 22,~~market-based ~~2016,~~performance ~~respectively~~share units, inbased on the ~~S,G&A~~estimated ~~line~~fair value of the ~~Consolidated~~award ~~Statements~~on ofthe ~~Net~~grant ~~Income~~date. The ~~remaining~~cost ~~charges~~is ~~were~~recognized ~~recorded~~ in the ~~results~~income statement over the vesting period of ~~discontinued~~the ~~operations~~award on a straight-line basis. Compensation cost is recognized based on the grant date fair value estimated in accordance with ASC 718.

6As of July 28, 2017, there were equity awards outstanding under the Amended and Restated Bob Evans Farms, Inc. ~~Share-Based~~2010 ~~Compensation~~Equity and Cash Incentive Plan (the “2010 Plan”). The types of awards that may be granted under the 2010 Plan include: stock options, stock appreciation rights, restricted stock awards, restricted stock units ("RSUs"), cash incentive awards, performance share units ("PSUs"), and other awards. During the three months ended July 28, 2017, the Company granted approximately 11,000 RSUs and 19,000 PSUs under the 2010 Plan. During the three months ended July 29, 2016, the Company granted approximately 74,000 RSUs and 142,000 PSUs under the 2010 Plan. With the exception of awards granted to nonemployee directors, all awards granted prior to fiscal 2018 vested on April 28, 2017.

~~The~~RSUs ~~Stock~~outstanding ~~Compensation~~under ~~Topic of~~ the ~~FASB~~2010 ~~ASC~~Plan ~~718~~vest ~~("ASC~~ratably, ~~718")~~primarily ~~requires~~over ~~that~~three weyears ~~measure the cost of employee services received in exchange~~ for anemployees ~~equity award, such as stock options, restricted stock awards, restricted stock units~~ and ~~market-based~~one ~~performance~~year ~~share~~for ~~units,~~nonemployee ~~based~~directors ~~on the estimated fair value~~ of the ~~award on the grant date~~Company. The ~~cost~~PSUs isgranted ~~recognized~~ in ~~the~~fiscal ~~income~~2018 ~~statement~~have ~~over~~performance-based ~~the~~ vesting ~~period~~conditions ofand ~~the~~were ~~award~~designed onto avest ~~straight-line~~at ~~basis with~~ the ~~exception~~end of ~~compensation~~a ~~cost~~three-year ~~related~~performance toperiod ~~awards~~if ~~for~~the ~~retirement~~vesting ~~eligible~~conditions ~~employees~~are ~~(as~~achieved. Concurrent ~~defined~~with in the ~~applicable~~adoption ~~plan~~of orASU ~~share~~2016-09, ~~grant)~~Improvements ~~which~~to isEmployee ~~recognized~~Share-Based ~~immediately~~Compensation onAccounting, the ~~grant~~Company ~~date. Compensation~~has ~~cost~~elected isto ~~recognized~~account ~~based~~for onforfeitures ~~the~~of ~~grant~~share-based ~~date~~awards ~~fair~~when ~~value~~the ~~estimated in accordance with ASC 718~~occur.

AsTotal ~~of January 27,~~share-based ~~2017,~~compensation ~~there~~expense ~~were~~associated ~~equity~~with ~~awards~~continuing ~~outstanding under the Amended and Restated Bob Evans Farms~~operations, ~~Inc.~~included ~~2010~~within ~~Equity and Cash Incentive Plan (~~the ~~“2010~~general ~~Plan”), as well as previous equity plans adopted in 2006,~~ and ~~1993. The~~administrative ~~types~~line ofon ~~awards that may be granted under~~ the ~~2010~~Consolidated ~~Plan~~Statements ~~include:~~of ~~stock~~Net ~~options~~Income, ~~stock~~was ~~appreciation~~$297 ~~rights, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), cash incentive awards, performance share units ("PSUs"),~~ and ~~other~~$723 ~~awards.~~for ~~During~~ the ~~nine~~three months ended ~~January~~July 2728, 2017, ~~the Company granted approximately 98,000 RSUs~~ and ~~142,000 PSUs under the 2010 Plan. During the nine months ended January~~July 2229, 2016, ~~the Company granted approximately 126,000 RSAs and RSUs and 70,000 PSUs under the 2010 Plan~~respectively.

~~RSAs and RSUs granted under the 2010 Plan vest ratably, primarily over three years for employees and one year for nonemployee directors of the Company~~8. ~~The~~ ~~PSUs~~Other ~~granted~~Compensation ~~in fiscal years 2016 and 2017 have market-based vesting conditions and were designed to vest at the end of a three-year performance period if they achieve those vesting conditions.~~ Plans

-15-

On January 24, 2017, the Compensation Committee of the Board of Directors approved (i) certain modifications to outstanding equity awards held by employees of the Company, including the Company’s executive officers, and (ii) the treatment of such equity awards contingent upon the completion of the Restaurants Transaction. In accordance with the authority and power granted to the Compensation Committee under the terms of the 2010 Plan, the Compensation Committee determined to accelerate the vesting of all unvested RSUs, RSAs and PSUs then outstanding under the 2010 Plan and that the performance criteria applicable to each PSU will be deemed satisfied, in each case contingent upon and effective as of the closing of the Restaurants Transaction and delivery by the participant of a written agreement with the Company containing a general release of claims and certain restrictive covenants. The Compensation Committee’s decision applied to all of the Company’s outstanding RSUs, RSAs and PSUs granted to employees that were unvested at the time of the modification.

The Compensation Committee's decision resulted in a Type III modification, defined as a change from improbable to probable vesting conditions as per ASC 718, for certain employees terminated prior to the end of the third quarter. For Type III modified stock awards, we recalculated the fair value on the modification date (January 24, 2017) and accelerated the associated unrecognized stock compensation expense. Stock compensation expense for the three months ended January 27, 2017 associated with the acceleration of the modified awards was $817. For all other employees with unvested stock awards, the acceleration of the vesting period will occur at the closing of the Restaurants Transaction. See Note 2 for additional information.

Total share-based compensation expense associated with continuing operations, included within the S,G&A line on the Consolidated Statements of Net Income, was $1,293 and $657 for the three months ended January 27, 2017, and January 22, 2016, and $3,151 and $2,235 for the nine months ended January 27, 2017, and January 22, 2016, respectively.

7. Other Compensation Plans

Defined Contribution Plan: We have a defined contribution 401(k) retirement savings plan that is available to substantially all employees who have at least 1,000 hours of service.

Nonqualified Deferred Compensation Plans: We have three nonqualified deferred compensation plans, the Bob Evans Executive Deferral Plans I and II (collectively referred to as “BEEDP”) and Bob Evans Directors’ Deferral Plan (“BEDDP”), which provide certain executives and Board of Directors members, respectively, the opportunity to defer a portion of their current year salary or stock compensation to future years. A third party manages the investments of employee deferrals. Expenses related to investment results of these deferrals are based on the change in quoted market prices of the underlying investments elected by plan participants, and are recorded within S,G&A.-15-

Obligations to participants who defer stock compensation through our deferral plans are satisfied only in Company stock. There is no change in the vesting term for stock awards that are deferred into these plans. Obligations related to these deferred stock awards are treated as "Plan A" instruments, as defined by ASC 710. These obligations are classified as equity instruments within the Capital in excess of par value line of the Consolidated Balance Sheets. No subsequent changes in fair value are recognized in the Consolidated Financial Statements for these instruments. Participants earn share-based dividend equivalents in an amount equal to the value of per-share dividends paid to common shareholders. These dividends accumulate into additional shares of common stock, and are recorded through retained earnings in the period in which dividends are paid. Vested, deferred shares are included in the denominator of basic and diluted EPS from continuing operations in accordance with ASC 260 - Earnings per Share. The dilutive impact of unvested, deferred stock awards is included in the denominator of our diluted EPS calculation from continuing operations.

Participants who defer cash compensation into our deferral plans have a range of investment options, one of which is Company stock. Obligations for participants who choose this investment election are satisfied only in shares of Company stock, while all other obligations are satisfied in cash. These share-based obligations are treated as "Plan B" instruments, as defined by ASC 710. These deferred compensation obligations are recorded as liabilities on the Consolidated Balance Sheets, in the deferred compensation line. We record compensation cost for subsequent changes in fair value of these obligations. Participants earn share-based dividend equivalents in an amount equal to the value of per-share dividends paid to common shareholders. These dividends accumulate into additional shares of common stock, and are recorded as compensation cost in the period in which the dividends are paid. At ~~January~~July 2728, 2017, our deferred compensation obligation included $1,~~089~~596 of share based obligations, which represents approximately 2022,000 shares. The dilutive impact of these shares is included in the denominator of our EPS calculation. Compensation cost (benefit) recognized on the adjustment of fair value for deferred awards was immaterial in the current and prior year.

Supplemental Executive Retirement Plan: The Supplemental Executive Retirement Plan ("SERP") provides awards to a limited number of executives in the form of nonqualified deferred cash compensation. Gains and losses related to these benefits and the related investment results are recorded within the ~~S,G&A~~general and administrative caption in the Consolidated Statements of Net Income. The SERP is frozen and no further persons can be added, and funding was reduced to a nominal amount per year for the remaining participants.

Our deferred compensation liabilities as of July 28, 2017, and April 28, 2017, consisted of the following:



(in thousands)	July 28, 2017			April 28, 2017
Liability for deferred cash obligations in BEEDP and BEDDP Plans	$	14,167		$	13,986
Liability for deferred cash obligations in SERP Plan	4,714			5,830
Liability for deferred share-based obligations in BEEDP and BEDDP Plans	1,596			1,398
Other non-current compensation arrangements	115			110
Total deferred compensation liabilities	20,592			21,324
Less current portion⁽¹⁾	(1,971		)	(4,047		)
Non-current deferred compensation liabilities	$	18,621		$	17,277

⁽¹⁾Current portion of deferred compensation is included within the accrued wages and related liabilities line on the Consolidated Balance Sheets.

The Rabbi Trust is intended to be used as a source of funds to match respective funding obligations in our nonqualified deferred compensation plans. Assets held by the Rabbi Trust are recorded on our Consolidated Balance Sheets, and include company-owned life insurance ("COLI") policies, short-term money market securities and Bob Evans common stock. The COLI policies held by the Rabbi Trust are recorded at cash surrender value on the Rabbi Trust Assets line of Consolidated Balance Sheets and totaled $22,724 and $22,353 as of July 28, 2017, and April 28, 2017, respectively. The cash receipts and payments related to the COLI proceeds are included in cash flows from continuing operating activities on the Consolidated Statements of Cash Flows and changes in the cash surrender value for these assets are reflected within the general and administrative line in the Consolidated Statements of Net Income.

-16-

~~SERP~~The isshort-term ~~frozen~~securities held by the Rabbi Trust are recorded at their carrying value, which approximates fair value, on the prepaid expenses and noother ~~further~~current ~~persons~~assets ~~can~~line beof ~~added~~the Consolidated Balance Sheets and totaled $1,289 and ~~funding~~$984 ~~was~~as ~~reduced~~of toJuly 28, a2017, ~~nominal~~and ~~amount~~April 28, ~~per~~2017, ~~year~~respectively. All ~~for~~assets held by the ~~remaining~~Rabbi ~~participants~~Trust are restricted to their use as noted above.

9. NoCommitments ~~portion of the obligations~~ and related assets with respect to our deferred compensation plans is being transferred in connection with the sale of the Restaurant Business. See Note 2 for additional information regarding the planned divestiture of the Restaurant Business. Contingencies

~~Deferred~~We ~~compensation~~are ~~liabilities~~from ~~expected~~ time-to-time beinvolved ~~satisfied~~in ~~within~~ordinary ~~the~~and ~~next~~routine 12litigation, ~~months~~typically ~~are~~involving ~~classified~~claims asfrom ~~current~~customers, ~~liabilities~~employees ~~within~~and others related to operational issues common to the ~~accrued~~food ~~wages~~manufacturing industry, and ~~related~~incidental ~~liabilities~~to ~~line~~our business. As part of the ~~Consolidated~~Restaurants ~~Balance~~Transaction, ~~Sheets~~we also retained liability for claims associated with our Restaurant Business that occurred prior to closing. ~~Our~~ Management ~~deferred~~presently ~~compensation~~believes ~~liabilities~~that asthe ultimate outcome of ~~January 27,~~these ~~2017~~proceedings, ~~and~~individually ~~April 29~~or in the aggregate, ~~2016~~will not have a material adverse effect on our financial position, ~~consisted~~cash offlows ~~the~~or ~~following:~~results of operations.

(in thousands)	January 27, 2017			April 29, 2016
Liability for deferred cash obligations in BEEDP and BEDDP Plans	$	13,592		$	12,845
Liability for deferred cash obligations in SERP plan	5,936			6,271
Liability for deferred share-based obligations in BEEDP and BEDDP Plans	1,089			673
Other noncurrent compensation arrangements	106			100
Total deferred compensation liabilities	20,723			19,889
Less current portion (1)	(2,576		)	(2,128		)
Noncurrent deferred compensation liabilities	$	18,147		$	17,761

10. Supplemental Cash Flow Information

Cash paid for income taxes and interest for the three months ended July 28, 2017, and July 29, 2016, is summarized as follows:

(1) Current portion of deferred compensation is included within the accrued wages and related liabilities line on the Consolidated Balance Sheets



	Three Months Ended
(in thousands)	July 28, 2017			July 29, 2016
Income taxes paid	$	394		$	17,701
Income taxes refunded	(98		)	(128		)
Income taxes paid, net	296			17,573
Interest paid	$	203		$	2,203

The Rabbi Trust is intended to be used as a source of funds to match respective funding obligations in our nonqualified deferred compensation plans. Assets held by the Rabbi Trust are recorded on our Consolidated Balance Sheets, and include company-owned life insurance ("COLI") policies, short-term money market securities and Bob Evans common-stock. The COLI policies held by the Rabbi Trust are recorded at cash surrender value on the Rabbi Trust Assets line of Consolidated Balance Sheets and totaled $21,540 and $20,662 as of January 27, 2017, and April 29, 2016, respectively. The cash receipts and payments related to the COLI proceeds are included in cash flows from continuing operating activities on the Consolidated Statements of Cash Flows and changes in the cash surrender value for these assets are reflected within the S,G&A line in the Consolidated Statements of Net Income.

The short-term securities held by the Rabbi Trust are recorded at their carrying value, which approximates fair value, on the prepaid expenses and other current assets line of the Consolidated Balance Sheets and totaled $1,658 and $3,290 as of January 27, 2017, and April 29, 2016, respectively. All assets held by the Rabbi Trust are restricted to their use as noted above.

8. Commitments and Contingencies

We are from time-to-time involved in ordinary and routine litigation, typically involving claims from customers, employees and others related to operational issues common to the restaurant and food manufacturing industries, and incidental to our business. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

In the fourth quarter of fiscal 2016 we settled a class-action related to alleged violations of the Fair Labor Standards Act by misclassifying assistant managers as exempt employees and failing to pay overtime compensation during the period of time the employee worked as an assistant manager. In the first quarter of fiscal 2016 we reached an agreement in principle to resolve the litigation matter and recorded a $10,500 charge. In the fourth quarter of fiscal 2016, the Court issued a Final Approval Order on the settlement and the appeals period expired, and we recorded a favorable adjustment of $3,344. The charge and adjustment are included in results from discontinued operations in our Consolidated Statements of Net Income.

Upon the closing on the sale of our Restaurants Business, the Buyer will assume the lease obligations of the Restaurants Business, including responsibility for the payment and performance obligations of leases that were included in the sale leaseback transaction of 143 of our restaurant properties in fiscal 2016. As part of the sale leaseback transaction, the Company and its wholly owned subsidiary BEF Foods, Inc. entered into payment and performance guaranties relating to the leases on such restaurant properties, which will remain in place upon the completion of the sale of our Restaurants Business. Under the terms of the guaranties the Company will remain liable for payments due under these leases if the Buyer fails to satisfy its lease obligations.

-17-

9. Supplemental Cash Flow Information

Cash paid for income taxes and interest for the nine months ended January 27, 2017, and January 22, 2016, is summarized as follows:

	Nine Months Ended
(in thousands)	January 27, 2017			January 22, 2016
Income taxes paid	$	21,412		$	412
Income taxes refunded	(351		)	(12,986		)
Income taxes paid (refunded), net	21,061			(12,574		)
Interest paid	$	7,014		$	7,755

10. Planned Acquisition

On January 24, 2017, the Company’s subsidiary BEF Foods, Inc. (“BEF Foods”) entered into a Stock Purchase Agreement (the “PFPC Agreement”) with Pineland Farms Potato Company, Inc., a Maine corporation (“PFPC”), the stockholders of PFPC party thereto (collectively, the “Sellers”), and Libra Foundation, as the Sellers’ Representative, and, solely for the purposes of guaranteeing the payment and performance obligations of BEF Foods thereunder, the Company. Pursuant to the PFPC Agreement, subject to the satisfaction or waiver of certain conditions, BEF Foods has agreed to purchase and acquire from the Sellers all of the equity interests of PFPC outstanding immediately prior to the closing (the “Acquisition”), in exchange for (i) $115,000 in cash, subject to certain adjustments set forth in the PFPC Agreement, and (ii) up to an additional $25,000 in cash as potential earn-out consideration, the payment of which is subject to the achievement of certain operating EBITDA performance milestones over a consecutive twelve-month period during the 24 months following the closing.

The Company’s Board of Directors unanimously approved the PFPC Agreement and the transactions contemplated thereby, including the Acquisition. The closing of the Acquisition is anticipated to occur at the beginning of our fiscal 2018, subject to regulatory approvals and other closing conditions set forth in the PFPC Agreement.

11. Subsequent Events

On ~~February~~August 2823, 2017, the Board of Directors approved a quarterly cash dividend of $0.34 per share, payable on ~~March~~September 2718, 2017, to shareholders of record at the close of business on ~~March~~September 134, 2017.

~~On January 24, 2017, we agreed to sell our corporate headquarters facility to the Buyer on a debt~~-free basis as part of the Restaurants Transaction. Accordingly, on January 31, 2017, subsequent to the end of our third quarter, we settled the remaining outstanding borrowings of the Mortgage Loan using additional borrowings from the Credit Agreement. We will accelerate unamortized debt issuance costs associated with the loan of $973 and recognize those costs as interest expense in the fourth quarter of fiscal 2017. 17-

-18-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General Overview

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), we use the terms “Bob Evans,” “~~company~~Company,” “we,” “us” and “our” to collectively refer to Bob Evans Farms, Inc., a Delaware corporation, and its subsidiaries. This MD&A may contain forward-looking statements that set forth our expectations and anticipated results based on management’s plans and assumptions. These statements are often indicated by words such as “expects,” “anticipates,” “believes,” “estimates,” “intends” and “plans.” Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including the assumptions, risks and uncertainties discussed herein. For more information, see "Forward Looking Statements" in our Annual Report on Form 10-K for the ~~fiscal~~ year ended April 2928, ~~2016, under the heading “Item 1A~~2017. ~~Risk Factors,” and as supplemented in our other filings with the SEC.~~

We produce and distribute a variety of complementary home-style, refrigerated side -dish convenience food items and pork sausage under the Bob Evans ®, Owens, Country Creek ® and ~~Country~~Pineland ~~Creek~~ ® brand names. These food products are available throughout the United States ~~at grocery retailers~~. We also manufacture and sell similar products to food-service accounts, including Bob Evans Restaurants and other restaurants.

~~Strategic~~Acquisition ~~Transactions~~of Pineland Farms Potato Company, Inc.

~~Planned~~On ~~Sale~~May 1, 2017, the Company completed the transaction to purchase Pineland Farms Potato Company, Inc., a Maine corporation ("Pineland"). The Company acquired all of ~~Bob~~the ~~Evans~~equity ~~Restaurants~~interests ~~Business~~of Pineland outstanding immediately prior to the closing (the “Acquisition”), in exchange for $115.8 million in cash, after working capital adjustments, and up to an additional $25.0 million in cash as potential earn-out consideration, the payment of which is subject to the achievement of certain operating EBITDA performance milestones over consecutive 12-month periods during the 24 months following the acquisition date.

OnThe ~~January 24,~~acquisition ~~2017,~~increases our side-dish production capacity and provides us the ~~Company~~capability ~~entered~~to ~~into~~produce anand ~~Asset~~sell diced and ~~Membership~~shredded ~~Interest~~potato ~~Purchase~~products ~~Agreement~~in (both the ~~“BER~~retail ~~Sale~~and ~~Agreement”)~~food-service ~~with~~channels. ~~BER~~The ~~Acquisition,~~acquisition ~~LLC,~~also adiversifies ~~Delaware~~our ~~limited~~production ~~liability~~capability ~~company~~by ~~formed~~adding bya ~~affiliates~~second state-of-the-art ~~Golden~~potato ~~Gate~~processing ~~Capital~~facility ~~Opportunity~~with ~~Fund~~approximately 180 million pounds of capacity, ~~L.P.~~50 ~~(the~~million ~~“Buyer”)~~pounds of which came on-line in April 2017. Pineland ~~Pursuant~~also toowns ~~the~~and ~~BER~~operates ~~Sale~~a ~~Agreement,~~900-acre ~~subject~~potato tofarm ~~the~~and ~~satisfaction~~is orsurrounded ~~waiver~~by ofan ~~certain~~estimated ~~conditions~~55,000 ~~the~~acres ~~Buyer~~of ~~has~~annual ~~agreed~~potato toproduction. ~~purchase~~The ~~and~~production ~~acquire~~facility's ~~the~~close ~~Company’s~~proximity ~~Bob~~to ~~Evans~~tens ~~Restaurants~~of ~~business~~thousands ~~(the~~of ~~“Restaurants~~acres ~~Business”)~~of ~~for~~potato anproduction ~~aggregate~~is ~~purchase~~anticipated ~~price~~to ofreduce ~~$565~~transportation costs.0 The ~~million~~acquisition inmitigates ~~cash,~~the ~~subject~~required tonear-term ~~certain~~capital ~~adjustments~~spending ~~set~~for ~~forth~~additional incapacity ~~the~~to ~~BER~~meet ~~Sale~~our ~~Agreement~~expected ~~(the~~sales ~~“Restaurants~~growth ~~Transaction”)~~targets in side-dish products.

~~The~~Overview ~~Restaurants Transaction will be effected by (i) the sale~~ of ~~the~~results ~~Restaurants~~from ~~Business~~continuing ~~assets~~operations byfor the ~~Company’s~~three ~~affiliates~~months toended Buyer and (ii) the sale by the Company of fifty percent of the equity interests in a newly formed special purpose entity that will hold specified intellectual property assets used by both the Restaurants Business and the Company’s BEF Foods food production business. As part of the Restaurants Transaction the Company is also conveying to the Buyer the majority of working capital liabilities associated with the Restaurants BusinessJuly 28, ~~including outstanding payables~~2017, ~~accrued~~compared ~~wages,~~to ~~and~~three ~~other~~months ~~accrued~~ended ~~current liabilities~~July 29, ~~other~~2016 ~~than debt.~~

~~The~~Net ~~Company’s~~sales ~~Board~~from continuing operations were $109.3 million in the first quarter of ~~Directors~~fiscal ~~unanimously~~2018, ~~approved~~an increase of $23.3 million or 27.1% as compared to the ~~Restaurants~~corresponding ~~Transaction~~period last year. Gross ~~The~~margin ~~Buyer~~increased ~~has~~17.2% ~~obtained~~to ~~equity~~$33.4 ~~commitments~~million ~~for~~in the ~~full~~first ~~amount~~quarter of ~~the~~fiscal ~~purchase~~2018 ~~price~~from $28.5 million in the ~~Restaurants~~first ~~Transaction~~quarter ~~from~~of ~~Golden~~the ~~Gate~~prior ~~Capital~~year. Operating ~~Opportunity~~income ~~Fund,~~was L$11.~~P.,~~1 ~~and~~million in the ~~obligations~~first quarter of ~~the~~fiscal ~~Buyer~~2018, ~~pursuant~~compared to ~~the~~$8.3 ~~BER~~million ~~Sale~~in ~~Agreement~~the ~~are~~corresponding ~~not~~period ~~subject~~last toyear, ~~any~~an ~~financing~~increase ~~condition~~of $2.8 ~~The~~million ~~closing~~or of33.7%. Results ~~the~~were ~~Restaurants~~favorably ~~Transaction~~impacted isby ~~anticipated~~higher tonet ~~occur~~sales, onpartially oroffset ~~prior~~by tolower ~~April 28,~~margins ~~2017,~~driven ~~subject~~by tohigher ~~regulatory~~sow ~~approvals~~costs and ~~other~~the ~~closing~~increase ~~conditions~~in ~~set~~sales ~~forth~~mix inof ~~the~~our ~~BER~~food-service ~~Sale~~channel ~~Agreement~~as well as higher production costs.

WePretax ~~expect~~income ~~net~~from ~~proceeds~~continuing ~~after~~operations ~~tax~~in the first quarter of ~~$475.0~~fiscal to2018 was $~~485~~10.06 million~~. We~~ ~~intend~~as tocompared ~~use the proceeds~~ to ~~settle~~$6.8 ~~all~~million ~~outstanding~~in ~~borrowings on our Credit Agreement at~~ the ~~time~~corresponding ofperiod ~~the~~last ~~Restaurants Transaction~~year. ~~Furthermore,~~The iteffective istax ~~our~~rate ~~expectation~~was ~~that~~33.6% ~~our~~in ~~Board~~the ofcurrent ~~Directors~~year ~~will~~as ~~declare~~compared ato ~~special~~32.5% ~~dividend~~in ofthe ~~approximately~~corresponding ~~$150.0 million~~period ~~(or~~last ~~approximately $7~~year.50 Earnings per diluted share) ~~representing net cash proceeds~~ from ~~the~~continuing ~~sale~~operations ofwere ~~the~~$0.35 ~~Restaurants~~as ~~Business~~compared ~~after~~to ~~repayment~~$0.23 ofin ~~debt, within 60 days following~~ the ~~consummation~~corresponding ofperiod ~~the Restaurants~~last ~~Transaction~~year.

~~Planned~~The ~~Acquisition~~table ofbelow ~~Pineland~~reflects ~~Farms~~data ~~Potato~~for ~~Company~~the three months ended July 28, ~~Inc~~2017, compared to the three months ended July 29, 2016. The information is derived from the accompanying Consolidated Statements of Net Income. The ratios presented reflect the underlying dollar values expressed as a percentage of the applicable net sales amounts.

On January 24, 2017, the Company’s subsidiary BEF Foods, Inc. (“BEF Foods”) entered into a Stock Purchase Agreement (the “PFPC Agreement”) with Pineland Farms Potato Company, Inc., a Maine corporation (“PFPC”), the stockholders of PFPC party thereto (collectively, the “Sellers”), and Libra Foundation, as the Sellers’ Representative, and, solely for the purposes of guaranteeing the payment and performance obligations of BEF Foods thereunder, the Company. Pursuant to the PFPC Agreement, subject to the satisfaction or waiver of certain conditions, BEF Foods has agreed to purchase and acquire from the Sellers all of the equity interests of PFPC outstanding immediately prior to the closing (the “Acquisition”), in exchange for (i) $115.0 million in cash, subject to certain adjustments set forth in the PFPC Agreement, and (ii) up to an additional $25.0 million in cash as potential earn-~~out consideration, the payment of which is subject to the achievement of certain operating EBITDA performance milestones over consecutive twelve~~18-~~month periods during the 24 months following the closing.~~

-19-



	Three Months Ended
(in thousands)	July 28, 2017				July 29, 2016
Net Sales	$	109,265			$	85,941
Cost of goods sold	75,851		69.4	%	57,420		66.8	%
Gross Margin	33,414		30.6	%	28,521		33.2	%

Operating Expenses:
Advertising and marketing costs	3,063		2.8	%	3,239		3.8	%
Selling costs	4,447		4.1	%	3,713		4.3	%
Distribution costs	5,364		4.9	%	3,949		4.6	%
General and administrative costs	8,561		7.9	%	9,316		10.9	%
Amortization of intangible assets	901		0.8	%	39		—	%
Impairment, restructuring and other exit costs	—		—	%	—		—	%
Total Operating Expenses	$	22,336	20.4	%	$	20,256	23.6	%

Operating Income	$	11,078	10.1	%	$	8,265	9.6	%

The Acquisition will increase our side-dish production capacity and provide us the capability to produce and sell diced and shredded potato products in both the retail and food-service channels. The acquisition will also diversify our production capability by adding a second state-of-the-art potato processing facility with 180 million pounds of capacity, 50 million pounds of which are expected to come online in April 2017. PFPC also runs a 900-acre potato farm and is surrounded by an additional 55,000+ acres of annual potato production. The production facility's close proximity to tens of thousands of acres of potato production is anticipated to reduce transportation costs. The Acquisition will mitigate the required near term capital spending for additional capacity to meet our expected sales growth targets in side-dish products.

Results: Three Months Ended January 27, 2017, as Compared to Three Months Ended January 22, 2016

Prior to the decision to sell our Restaurants Business, we had two reporting segments, Bob Evans Restaurants and BEF Foods. BEF Foods sells food products throughout the retail grocery and food service channels, including to Bob Evans Restaurants. Corporate and other costs related to shared services functions were not allocated to our reporting segments. As a result of the decision to sell our Restaurants Business, which is now classified as discontinued operations, we now have one reporting segment. Revenues and costs related to our BEF Foods business including indirect corporate overhead costs are reported within results from continuing operations. All revenues and costs incurred directly in support of the Restaurants Business are presented in results from discontinued operations. Prior year information has been recast to conform with current presentation. Unless otherwise stated, the information disclosed in Management's Discussion and Analysis refer to results from continuing operations. See Note 2 for additional information regarding the planned sale of our Restaurants Business.

Bob Evans Farms, Inc. Overview of Results from Continuing Operations

Net sales were $112.8 million in the third quarter of fiscal 2017, an increase of $4.9 million as compared to the corresponding period last year. Operating income was $17.1 million in the third quarter of fiscal 2017, an increase of $5.7 million as compared to the corresponding period last year. Results were favorably impacted by higher sales, improved margins, and lower S,G&A expenses, partially offset by increased operating expenses.

Pretax income from continuing operations in the third quarter of fiscal 2017 was $15.0 million as compared to $9.1 million in the corresponding period last year. The effective tax rate was 34.3% in the current year as compared to 29.2% in the corresponding period last year. Earnings per diluted share from continuing operations were $0.49 as compared to $0.31 in the corresponding period last year.

The table below reflects data for the three months ended January 27, 2017, compared to the three months ended January 22, 2016. The information is derived from the accompanying Consolidated Statements of Net Income. The ratios presented reflect the underlying dollar values expressed as a percentage of the applicable net sales amounts.

	Three Months Ended
	Results from Continuing Operations
(in thousands)	January 27, 2017					January 22, 2016
Net Sales	$	112,820				$	107,897
Cost of sales	48,933			43.4	%	52,326		48.5	%
Operating wage and fringe benefit expenses	11,150			9.9	%	10,822		10.0	%
Other operating expenses	15,826			14.0	%	12,846		11.9	%
Selling, general and administrative expenses	14,201			12.6	%	15,453		14.3	%
Depreciation and amortization expense	6,333			5.6	%	5,026		4.7	%
Impairments	(744		)	(0.7	)%	—		—	%
Operating Income	$	17,121		15.2	%	$	11,424	10.6	%

Sales

Net sales increased 427.61% to $~~112~~109.83 million in the ~~third~~first quarter of fiscal ~~2017~~2018 as compared to $85.9 million in the corresponding period a year ago. The ~~Total~~increase ~~pounds~~was ~~sold~~partially ~~increased~~driven by 7$8.6%, ~~including~~million aof ~~13.1%~~sales ~~increase~~from inthe ~~refrigerated~~Company's ~~side-dish~~recently ~~products,~~acquired aPineland ~~6.1%~~business, ~~increase~~as inwell ~~food~~as ~~service, a 2~~$5.8%2 ~~increase~~million inof ~~sausage~~sales ~~products,~~to ~~partially~~Bob ~~offset~~Evans byRestaurants, awhich ~~4.3%~~were ~~decrease~~eliminated in ~~frozen~~the ~~products~~prior ~~and a 27~~year.2% ~~decrease in other pounds sold.~~ The remaining increase ~~in pounds sold~~ was ~~partially~~primarily ~~offset~~driven by ahigher 2sales volumes.8% ~~decline in average net selling price~~

Pounds sold for the first quarter increased 53.3% while average net selling price per pound declined 17.1% compared to the corresponding period last year. Excluding Pineland sales and sales to Bob Evans Restaurants, pounds sold increased 14.6% while average net selling price per pound decreased 3.1%. Comparable volumes include an 18.1% increase in retail refrigerated side-dish products and a 13.0% increase in retail sausage, partially offset by an 8.3% decline in frozen products. The decline in average net selling price reflects an increased mix of food service sales as result of both the Pineland acquisition and the inclusion of sales to Bob Evans Restaurants. The following table summarizes pounds sold by category in the first quarter of fiscal 2018 and the corresponding period last year:

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	Three Months Ended
(in thousands)	July 28, 2017			July 29, 2016
Category
Refrigerated Sides ⁽¹⁾	32,071	43.5	%	26,904	55.9	%
Sausage	12,588	17.1	%	11,142	23.2	%
Food Service ⁽¹⁾	26,010	35.3	%	6,089	12.7	%
Frozen	1,898	2.6	%	2,071	4.3	%
Other	1,194	1.5	%	1,912	3.9	%
Total	73,761			48,118

~~per~~(1) ~~pound,~~Food ~~driven~~service byand anrefrigerated ~~increased~~side ~~sales~~volumes ~~mix~~in the first quarter of ~~lower-priced,~~fiscal ~~although~~2018 ~~higher-margin,~~include ~~side-dish~~13.7 ~~products~~million asand ~~well~~0.3 asmillion ~~reduced~~pounds ~~net~~sold ~~sausage~~from ~~pricing~~the ~~through~~recently ~~increased~~acquired ~~trade~~Pineland ~~spending~~business. Food service volumes in the first quarter of fiscal 2018 also include 4.6 million pounds sold to Bob Evans Restaurants.

The following table summarizes comparable sales dollars and volumes, respectively, in the first quarter of fiscal 2018 as compared to the corresponding period last year:

	Three Months Ended
	Sales Dollars						Sales Volumes
(in thousands)	~~January~~Q1 ~~27, 2017~~2018			Q1 2017		~~January 22, 2016~~	Q1 2018			Q1 2017
Category
Legacy Bob Evans Foods Sales	$	95,481		$	85,941		55,164			48,118
Refrigerated Sides	38,681		57.0	%		34,190		54.1	%
Sales to Bob Evans Restaurants	5,201			—			4,647			—
Sausage	18,346		27.0	%		17,846		28.3	%
Pineland sales (excluding intercompany)	8,583			—			13,950			—
Food Service	7,434		10.9	%		7,009		11.1	%
Total Net Sales	$	109,265		$	85,941		73,761			48,118
Frozen	1,964		2.9	%		2,053		3.3	%
Other	1,486		2.2	%		2,042		3.2	%
Total	67,911					63,140

~~Cost of Sales~~-19-

Cost of ~~sales~~Goods from continuing operations was $48.9 million, or 43.4% of net sales, in the third quarter of fiscal 2017, compared to $52.3 million, or 48.5% of net sales, in the corresponding period a year ago. The 510 basis points ("bps") decrease in cost of sales as a percentage of net sales was driven by a 250 bps impact of lower sow costs and a 120 bps impact from the increase in sales mix of higher margin refrigerated side-dish products, as well as increased plant operating efficiencies. Sow costs averaged $31.05 per hundredweight in the third quarter of fiscal 2017, compared to $41.53 per hundredweight in the corresponding period last year.Sold

~~Operating~~Cost ~~Wage~~of goods sold from continuing operations was $75.9 million, or 69.4% of net sales, in the first quarter of fiscal 2018, compared to $57.4 million, or 66.8% of net sales, in the corresponding period a year ago. The 260 basis points increase in cost of goods sold as a percentage of net sales was driven by higher sow costs and ~~Fringe~~the ~~Benefit~~increase ~~Expenses~~in sales mix of our food-service channel due to the Pineland acquisition, partially offset by lower trade spend as a percentage of sales. Sow costs averaged $55.63 per hundredweight in the first quarter of fiscal 2018, compared to $48.46 per hundredweight in the corresponding period last year, while trade promotions declined by $0.01 on a per-pound basis.

Operating wage and fringe benefit expenses (“operating wages”) from continuing operations were $11.2 million, or 9.9% of net sales, in the third quarter of fiscal 2017, compared to $10.8 million, or 10.0% of net sales, in the corresponding period last year. The 10 bps decrease in operating wages as a percentage of net sales was driven primarily by improved production wages due to plant operating efficiencies. Expenses

~~Other~~Total ~~Operating~~operating ~~Expenses~~expenses in the first quarter of fiscal 2018 were $22.3 million, or 20.4% of net sales, as compared to $20.3 million, or 23.6% of net sales in the corresponding period a year ago. Selling and distribution costs increased as compared to the prior year due to the impact of higher sales volumes. General and administrative costs decreased due to the reduction in wage and benefit costs associated with our restructuring programs in the prior year, partially offset by the impact of $0.7 million of integration and IT separation costs incurred in the first quarter. The Company also recorded $0.9 million of amortization expense primarily associated with the definite-lived intangible assets acquired as part of the Pineland business acquisition (see Note 2 for additional information).

Other operating expenses from continuing operations were $15.8 million, or 14.0% of net sales, in the third quarter of fiscal 2017, compared to $12.8 million, or 11.9% of net sales, in the corresponding period last year. The most significant components of other operating expenses are shipping and handling costs, advertising costs, warehousing and distribution costs, utilities and production supplies.

The 210 bps increase in operating expenses as a percentage of net sales was driven by a $0.9 million incremental investment in advertising costs to support and promote our brand, a $0.7 million increase in shipping and handling costs, and other higher operating costs associated with increased sales volumes.

Selling, General and Administrative Expenses

S,G&A expenses include costs of our sales organization, executive leadership, and corporate functions including information technology, finance, legal, human resources, supply chain and other corporate functions and includes costs such as ongoing IT infrastructure costs, third-party legal and professional fees and other costs. S,G&A expenses incurred directly in support of the Restaurants Business, including wage and benefit costs of corporate employees who will transfer with the Restaurants Business and legal and professional fees incurred and associated with the Restaurants Transaction are included in results from discontinued operations.

S,G&A expenses from continuing operations were $14.2 million, or 12.6% of net sales, in the third quarter of fiscal 2017, compared to $15.5 million, or 14.3% of net sales, in the corresponding period last year. The decrease in S,G&A costs was driven by $3.6 million of lower legal and professional fees, which includes a $2.2 million reduction in costs associated with the settlement of litigation. These savings were partially offset by $2.6 million of severance and benefit costs, including accelerated stock compensation costs, associated with headcount reductions in the third quarter of fiscal 2017. S,G&A costs include $9.0 million of costs related to shared services that were historically classified as corporate and other costs and were not allocated to our reporting segments. $4.7 million of those costs relate to wages and benefits of terminated associates that will no longer be in the Company's expense base in Fiscal 2018.

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Depreciation and Amortization

Depreciation and amortization expenses (“D&A”) from continuing operations were $6.3 million, or 5.6% of net sales, in the third quarter of fiscal 2017, compared to $5.0 million, or 4.7% of net sales, in the corresponding period last year. The increase is primarily driven by depreciation and amortization related to the implementation of the second phase of our ERP system which went live during the second quarter of fiscal 2017, as well as an expansion of production capacity at our Lima, Ohio facility.

Impairment

A reduction to impairment of $0.7 million was recorded in the three months ended January 27, 2017, related to a note receivable that was settled in the third quarter of fiscal 2017. Refer to Note 1 for additional information.

Interest

Net interest expense in the ~~third~~first quarter of fiscal ~~2017~~2018 was $20.15 million, compared to $21.45 million in the corresponding period last year. The decrease in interest costs was the result of lower average ~~net~~ borrowings ~~on our Credit Agreement~~ as compared to ~~last year. All borrowings and related interest expense are included in continuing operations with~~ the ~~exception~~corresponding ofperiod ~~interest~~last ~~expense associated with the $30~~year.0 million credit agreement (the "Mortgage Loan") on the corporate headquarters which is included as part of discontinued operations because the Mortgage Loan was required to be paid in connection with the sale of the Restaurants Business.

Income Taxes

The provision for income taxes is based on our current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company’s effective income tax rate on continuing operations in the ~~third~~first quarter of fiscal ~~2017~~2018 was 3433.36% compared to 2932.25% in the corresponding period a year ago. The change in tax rates as compared to the corresponding period last year was primarily driven by the yearly variances in the forecasted annual rate related to ~~officer's life insurance and~~ the domestic production activities deduction. ~~Discontinued~~ ~~operations are presented net of income tax or benefit.~~

Results from Discontinued Operations

Results associated with the Restaurants Business are classified as income from discontinued operations, net of taxes, in our Consolidated Statements of Net Income, and were immaterial in the first quarter of fiscal 2018. Prior year results have been recast to conform ~~with~~to the current presentation. Below is a summary of results for the three months ended ~~January~~July 2728, 2017, compared to the three months ended ~~January~~July 2229, 2016:

	Three Months Ended
	Results from Discontinued Operations
(in thousands)	~~January~~July 2728, 2017			~~January~~July 2229, 2016
(Loss) Income from discontinued operations before income taxes	$	(4,567	)	$	6,636
Income from discontinued operations before income taxes	$	—		$	5,027
(Benefit) Provision for income taxes	(2,950		)	121
Provision for income taxes	—			441
(Loss) Income from discontinued operations	$	(1,617	)	$	6,515
Net income from discontinued operations	$	—		$	4,586

Results from discontinued operations were negatively impacted by a 2.6% reduction in restaurant same store sales as compared to the prior year. The impact of lower same store sales in the third quarter of fiscal 2017 was partially offset by lower cost of sales year over year driven by lower commodity costs and reduced discounting. Results from discontinued operations were also impacted by $5.2 million of professional and legal fees associated with the Restaurants Transaction and $1.8 million of severance costs associated with employees who supported the Restaurants Business. The change in tax rates as compared to the prior year is driven primarily by the reduction in pretax income as well as the impact of tax credits related to hiring and tip wages. See Note 2 for additional information. -20-

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Results: Nine Months Ended January 27, 2017, as Compared to Nine Months Ended January 22, 2016

Bob Evans Farms, Inc. Overview of Results from Continuing Operations

Net sales from continuing operations were $294.9 million in the nine months ended January 27, 2017, an increase of $9.7 million as compared to the corresponding period last year. Operating income was $20.6 million in the nine months ended January 27, 2017, a decrease of $2.1 million as compared to the corresponding period last year. Results were favorably impacted by higher sales, improved margins, and lower S,G&A expenses, more than offset by impairment charges and higher operating expenses.

Pretax income in the nine months ended January 27, 2017, was $15.7 million as compared to a pretax income of $14.9 million in the corresponding period last year. The effective tax rate was 34.3% in the current year as compared to 31.0% in the corresponding period last year. Earnings per diluted share for continuing operations were $0.51 for the nine months ended January 27, 2017 as compared to $0.47 in the corresponding period last year.

The table below reflects data for the nine months ended January 27, 2017, compared to the nine months ended January 22, 2016. The information is derived from the accompanying Consolidated Statements of Net Income. The ratios presented reflect the underlying dollar values expressed as a percentage of the applicable net sales amounts.

	Nine Months Ended
	Results from Continuing Operations
(in thousands)	January 27, 2017				January 22, 2016
Net Sales	$	294,919			$	285,221
Cost of sales	127,171		43.1	%	128,164		44.9	%
Operating wage and fringe benefit expenses	31,132		10.6	%	31,198		10.9	%
Other operating expenses	44,372		15.0	%	37,640		13.2	%
Selling, general and administrative expenses	39,179		13.3	%	49,512		17.4	%
Depreciation and amortization expense	17,191		5.8	%	15,966		5.6	%
Impairments	15,256		5.2	%	—		—	%
Operating Income	$	20,618	7.0	%	$	22,741	8.0	%

Sales

Net sales from continuing operations increased 3.4% to $294.9 million, for the nine months ended January 27, 2017, compared to $285.2 million in the corresponding period last year. Total pounds sold increased by 7.0%, including a 13.1% increase in refrigerated side dish products and a 4.8% increase in sausage products. The increase in pounds sold was partially offset by a 3.4% decline in average net selling price per pound, driven by an increased sales mix of lower-priced, although higher-margin side-dish products, as well as reduced net sausage pricing through increased trade spending.

The following chart summarizes pounds sold by category in the nine months ended January 27, 2017, and the corresponding period last year:

	Nine Months Ended
(in thousands)	January 27, 2017			January 22, 2016
Category
Refrigerated Sides	97,509	56.9	%	86,200	53.8	%
Sausage	42,819	25.0	%	40,857	25.5	%
Food Service	20,031	11.7	%	20,696	12.9	%
Frozen	6,103	3.6	%	6,796	4.2	%
Other	4,934	2.8	%	5,613	3.6	%
Total	171,396			160,162

Cost of Sales

Cost of sales from continuing operations was $127.2 million, or 43.1% of net sales, in the nine months ended January 27, 2017, compared to $128.2 million, or 44.9% of net sales, in the corresponding period a year ago. The 180 bps decrease in cost of sales as a percentage of net sales was primarily driven by a 110 bps impact of lower sow costs and a 130 bps impact from the

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increase in sales mix of higher margin refrigerated side-dish products, partially offset by unfavorable plant operating variances. Sow costs averaged $40.93 per hundredweight in the nine months ended January 27, 2017, compared to $44.84 per hundredweight in the corresponding period last year.

Operating Wage and Fringe Benefit Expenses

Operating wages from continuing operations were $31.1 million, or 10.6% of net sales, in the nine months ended January 27, 2017, compared to $31.2 million, or 10.9% of net sales, in the corresponding period last year. The 30 bps decrease in operating wages as a percentage of net sales was driven primarily by improved production wages due to plant operating efficiencies.

Other Operating Expenses

Other operating expenses from continuing operations were $44.4 million, or 15.0% of net sales, for the nine months ended January 27, 2017, compared to $37.6 million, or 13.2% of net sales, in the corresponding period last year. The most significant components of other operating expenses are shipping and handling costs, advertising costs, warehousing and distribution costs, utilities and production supplies.

The 180 bps increase in operating expenses as a percentage of net sales was primarily driven by a $2.7 million incremental investment in advertising costs to support and promote our brand, $1.9 million of higher rent expense associated with the sale leaseback of two of our production facilities in the second quarter of fiscal 2016, $1.0 million of higher shipping and handling costs and other costs associated with increased sales volume, including utilities and production supplies.

Selling, General and Administrative Expenses

S,G&A expenses from continuing operations were $39.2 million, or 13.3% of net sales, for the nine months ended January 27, 2017, compared to $49.5 million, or 17.4% of net sales, in the corresponding period last year. The decrease in S,G&A costs was driven by $6.3 million of lower legal and professional fees, which includes a $2.4 million reduction in costs associated with the settlement of litigation, $3.6 million of costs incurred in the second quarter of fiscal 2016 related to the sale leaseback of two of our production facilities and $3.0 million of lower other costs, including wages and benefits associated with headcount reductions that occurred in the prior year. These savings were partially offset by $2.6 million of severance and benefit costs, including accelerated stock compensation costs, associated with headcount reductions in the third quarter of fiscal 2017. S,G&A costs include $20.6 million of costs related to shared services that were historically classified as corporate and other costs and were not allocated to our reporting segments. $8.6 million of those costs relate to wages and benefits of terminated associates that will no longer be in the Company's expense base in Fiscal 2018.

Depreciation and Amortization

Depreciation and amortization expenses (“D&A”) from continuing operations were $17.2 million, or 5.8% of net sales, for the nine months ended January 27, 2017, compared to $16.0 million, or 5.6% of net sales, in the corresponding period last year. The increase is primarily driven by depreciation and amortization related to the second phase of our ERP system which went live during the second quarter of fiscal 2017, partially offset by a reduction in depreciation associated with the sale leaseback of our Lima, Ohio, and Sulphur Springs, Texas, production facilities in the second quarter of fiscal 2016.

Impairment

Impairment charges of $15.3 million were recorded in the nine months ended January 27, 2017, related to a note receivable that was settled in the third quarter of fiscal 2017. Refer to Note 1 for additional information.

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Interest

Net interest expense for the nine months ended January 27, 2017 was $5.0 million compared to $7.9 million in the corresponding period last year. The reduction in interest costs was primarily the result of lower average net borrowings on our credit facility. All borrowings and related interest expense are included in continuing operations with the exception of interest expense associated with the Mortgage Loan on the corporate headquarters which is included as part of discontinued operations because the Mortgage Loan was required to be paid in connection with the sale of the Restaurants Business.

Income Taxes

The 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's effective income tax rate was 34.3% for the nine months ended January 27, 2017 as compared to 31.0% for the corresponding period last year. The higher tax rate as compared to last year was driven primarily by the impact of yearly variances in the forecasted annual rate related to officer's life insurance and the domestic productions activities deduction. Discontinued operations are presented net of income tax or benefit.

Results from Discontinued Operations

Results associated with our Restaurant Business are classified as income from discontinued operations, net of taxes, in our Consolidated Statements of Net Income. Prior year results have been recast to conform with current presentation. Below is a summary of results for the nine months ended January 27, 2017, compared to the nine months ended January 22, 2016:

	Nine Months Ended
	Results from Discontinued Operations
(in thousands)	January 27, 2017			January 22, 2016
Income from discontinued operations before income taxes	$	6,290		$	15,016
(Benefit) Provision for income taxes	(1,033		)	1,651
Income from discontinued operations	$	7,323		$	13,365

Results from discontinued operations were negatively impacted by a 2.9% reduction in restaurant same store sales as compared to the prior year as well as a net reduction of sales due to restaurant closures in fiscal 2016. The impact of lower sales for the nine months ended January 27, 2017 was partially offset by lower cost of sales year over year driven by lower commodity costs and reduced discounting. Results from discontinued operations were also impacted by $5.5 million of professional and legal fees associated with the intended divestiture of our Restaurants Business and $1.8 million of severance costs associated with employees who supported the Restaurants Business. The change in tax rates as compared to the prior year is driven primarily by the reduction in pretax income as well as the impact of tax credits related to hiring and tip wages. See Note 2 for additional information.

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Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operating activities, and the borrowing capacity under ~~our~~the Credit ~~Agreement and the proceeds received from sale leaseback transactions completed in fiscal 2016~~Facility.

Historically, our working capital requirements have been minimal. This favorable working capital position resulted from the relatively short trade credit terms with our BEF Foods customers as well as most of our major suppliers and distributors; and the quick turnover of our inventories. We believe that our cash flow from operations, as well as the available borrowings under our Credit Facility, will be sufficient to fund working capital requirements, anticipated acquisitions, capital expenditures, working capital requirements, dividend payments and share repurchases.

Share Repurchase Program

On ~~November~~January 1924, ~~2015~~2017, the Board of Directors increased the ~~authorization~~Company’s ofexisting ashare ~~stock~~ repurchase ~~program~~authorization to $~~250~~100.0 million~~. The~~ ~~program authorizes the Company to repurchase its outstanding common stock pursuant to plans approved by the Board under SEC Rules 10b-18~~ and ~~10b5-1,~~extended ~~and in~~ the ~~open~~authorization ~~market or~~ through ~~privately~~December negotiated transactions. In fiscal 2016 we repurchased approximately 3.9 million shares for $171.5 million. The repurchases were funded primarily through additional borrowings on our Credit Agreement31, ~~cash from operations and the net proceeds from the sale leaseback transactions of 143 restaurant properties and two production facilities~~2017. ~~Following these repurchases, there had been $78.5 million remaining on the share repurchase authorization.~~ We did not repurchase any shares ~~under the remaining authorization~~ in the first ~~nine~~three months of fiscal ~~2017~~2018. ~~On January 24, 2017, the Board of Directors increased the Company’s existing share repurchase authorization, which extends through December 31, 2017, to $100.0 million.~~

Revolving Credit ~~Agreement~~Facility ~~and other long term debt~~

~~Our~~On ~~Credit~~April Agreement contains financial and other various affirmative and negative covenants that are typical for financings of this type. It requires us to maintain a specified minimum coverage ratio and maximum leverage ratio at January 2728, 2017, ofwe ~~(1)~~entered ainto ~~minimum~~the ~~coverage~~Credit ~~ratio of not less than 3~~Facility.~~00 to 1.00; and (2) a maximum leverage ratio that may not exceed 4.00 to 1.00.~~ As of ~~January~~July 2728, 2017, ~~our leverage ratio was 2.66, and our coverage ratio was 13.01, as defined in our Credit Agreement. Our Credit Agreement also limits repurchases of our common stock and the amount of dividends that~~ we ~~pay~~had ~~to holders of our common stock in certain circumstances. The Credit Agreement also allows for a sale leaseback of our real estate of up to~~ $~~300~~90.0 million, of ~~which~~outstanding ~~approximately~~borrowings ~~$51~~under ~~million~~the ~~was~~Credit ~~still available as of January 27, 2017~~Facility. A ~~breach~~We ofexpect ~~any~~our offiscal ~~these~~2018 ~~covenants~~target ~~could~~leverage ~~result~~ratio inwill abe ~~default~~approximately ~~under our Credit Agreement~~1.0x, in which ~~all~~we ~~amounts~~believe ~~under~~provides ~~our~~considerable ~~Credit~~flexibility ~~Agreement~~to ~~may~~continue ~~become~~to ~~immediately~~grow ~~due~~ and ~~payable,~~invest ~~and~~in ~~all~~the ~~commitments under our Credit Agreement to extend further credit, terminated~~Company. WeOur ~~were~~leverage inratio ~~compliance~~is ~~with~~calculated ~~the~~as ~~financial~~total ~~covenant~~outstanding ~~requirements~~borrowings ofover our ~~Credit~~trailing ~~Agreement~~12-month ~~as of January 27~~EBITDA, ~~2017. The~~defined ~~outstanding~~as ~~borrowings~~earnings onbefore ~~our~~interest, ~~Credit~~taxes, ~~Agreement~~depreciation ~~were $300.5 million~~ and ~~$307.0~~amortization ~~million~~including asstock ~~of January 27~~compensation, ~~2017,~~adjusted ~~and~~for ~~April~~certain ~~29,~~non-recurring ~~2016, respectively~~items.

In ~~conjunction~~Our ~~with~~Credit ~~the~~Facility ~~Restaurants~~contains ~~Transaction~~financial and ~~the~~other ~~Acquisition~~various ~~discussed~~affirmative ~~above,~~and ~~management~~negative ~~intends~~covenants tothat ~~enter~~are ~~into~~typical afor ~~new~~financings ~~$300~~of this type.~~0 million~~ ~~credit~~It ~~facility~~requires ~~at,~~us orto ~~around,~~maintain ~~the~~a ~~time~~specified ofminimum ~~the~~coverage ~~closing~~ratio ofand ~~the~~maximum ~~Restaurants~~leverage ~~Transaction~~ratio. ~~and~~A ~~the~~breach ~~Acquisition. Our~~of ~~fiscal~~any ~~2018~~of ~~targeted~~these ~~leverage~~covenants ~~range~~could ~~will~~result bein ~~1.0x~~a -default ~~2.0x~~under the Credit Facility, in which weall ~~believe~~amounts ~~provides~~under ~~considerable~~our ~~flexibility~~Credit toFacility ~~continue~~may tobecome ~~grow~~immediately due and ~~invest~~payable, inand ~~the~~all ~~Company. Following~~commitments ~~the~~under ~~completion~~our ofCredit ~~these~~Facility ~~transactions~~to extend further credit, ~~the~~terminated. ~~Company~~We ~~will~~were bein ~~focused~~compliance onwith ~~sales~~the ~~and~~financial ~~profit~~covenant ~~growth~~requirements of ~~our~~the ~~food~~Credit ~~product~~Facility ~~business~~as of July 28, 2017. See Note 4 for additional information.

On February 9, 2016, we entered into the $30.0 million Mortgage Loan on our corporate headquarters in New Albany, Ohio. The Mortgage Loan had a ten-year term and was amortized over that period. The rate of interest was variable and was initially set at 5.1%. The Company and several wholly owned subsidiaries provided guaranties for the Mortgage Loan. There was $26.8 million of outstanding borrowings on the Mortgage Loan at the end of our third quarter, net of unamortized debt issuance costs. On January 31, 2017, we settled all outstanding borrowings on the Mortgage Loan using additional borrowings from the Credit Agreement.

We believe that our cash flow from operations, as well as the available borrowings under our Credit Agreement, will be sufficient to fund anticipated acquisitions, capital expenditures, working capital requirements, dividend payments and share repurchases.

We expect net proceeds after tax of $475.0 to $485.0 million. We intend to use the proceeds to settle all outstanding borrowings on our Credit Agreement at the time of the Restaurants Transaction. Furthermore, it is our expectation that our Board of Directors will declare a special dividend of approximately $150.0 million (or approximately $7.50 per share) representing net cash proceeds from the sale of the Restaurants Business after repayment of debt, within 60 days following the consummation of the Restaurants Transaction.

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Cash flows from operating activities

Net cash ~~provided~~used byin operating activities ~~from continuing operations~~ was $244.50 million ~~for~~in the ~~nine~~first ~~months~~quarter ~~ended~~of ~~January 27,~~fiscal ~~2017~~2018. Consolidated asnet ~~compared~~cash toused in operating activities was $~~62.~~7.9 million ~~for~~in the corresponding period last year~~. The~~, ~~change~~while innet ~~operating~~ cash ~~flow~~used ~~was~~in ~~driven~~operating byactivities ~~working~~from ~~capital~~continuing ~~changes,~~operations ~~including~~in ~~net income taxes paid of $21.1 million for~~ the ~~nine~~corresponding ~~months~~period ~~ended~~last ~~January 27,~~year ~~2017~~was ~~as compared to net income taxes refunded of~~ $1217.68 million. The ~~during~~change ~~the~~in ~~corresponding~~operating ~~period~~cash ~~last~~flows ~~year. These~~from ~~working~~continuing ~~capital~~operations ~~changes~~was ~~were~~driven ~~offset~~ by higher net income from continuing operations, after consideration of non-cash charges including ~~impairment~~depreciation and ~~depreciation~~stock compensation.

Cash flows from investing activities

~~Cash~~Net cash used in investing activities ~~from~~was ~~continuing~~$119.6 ~~operations~~million in the first quarter of fiscal 2018. Consolidated cash flows used in investing activities was $2317.21 million ~~for~~in the ~~nine~~corresponding ~~months~~period ~~ended~~last ~~January 27~~year, ~~2017,~~while ~~as compared to~~ cash ~~provided~~used byin investing activities of ~~$31.2~~continuing ~~million~~operations ~~for~~in the ~~nine~~corresponding ~~months~~period ~~ended~~last ~~January 22,~~year ~~2016~~$12.9 million. The change in investing cash flows from ~~investing~~continuing ~~activities~~operations was primarily due to the ~~proceeds~~Pineland ~~received~~acquisition in(see ~~fiscal~~Note ~~2016~~2 ~~from~~for ~~the~~additional ~~sale leaseback of two of our production facilities~~information). Capital expenditures from continuing operations were $233.79 million and $2412.09 million, ~~respectively,~~in ~~for~~ the ~~nine~~first ~~months~~quarter ~~ended~~of ~~January 27,~~fiscal ~~2017,~~2018 and ~~January 22~~2017, ~~2016~~respectively. In the ~~nine~~first ~~months~~quarter ~~ended~~of ~~January 27~~fiscal 2018, ~~2017~~capital expenditures primarily related to plant improvements and IT infrastructure projects, while in the corresponding period last year, capital expenditures primarily related to an additional refrigerated side -dish production line at our Lima, Ohio plant and ITthe ~~infrastructure~~second ~~projects~~phase of our ERP implementation. In fiscal ~~2017~~2018, capital expenditures ~~from continuing operations~~ are expected to approximate $3025.0 million to $3530.0 million and include expenditures for ~~those~~plant ~~items~~improvements ~~discussed~~and ~~above~~IT infrastructure projects.

Cash flows from financing activities

Cash used in financing activities ~~from continuing operations~~ was $3172.60 million ~~for~~in the ~~nine~~first ~~months~~quarter ~~ended~~of ~~January 27,~~fiscal ~~2017~~2018, as compared to cash provided by financing activities of $~~136~~16.25 million ~~for~~in the ~~nine~~corresponding ~~months~~period ~~ended~~last ~~January 22, 2016~~year. The change in cash flows from financing activities was primarily due to the ~~$156.7~~cash ~~million~~dividends paid in the first quarter of ~~repurchases~~fiscal 2018 of ~~our~~$7.84 ~~common~~per ~~stock~~share, ~~during~~which ~~the~~included ~~first~~a ~~nine~~special ~~months~~dividend of ~~fiscal~~$7.50 ~~2016~~per share paid on June 16, ~~partially~~2017, ~~offset~~using bythe ~~higher~~net ~~borrowings~~proceeds onfrom ~~our~~the ~~Credit~~Restaurants ~~Agreement~~Transaction. ~~During~~The ~~the~~cash ~~first~~used ~~nine~~to ~~months~~pay ofthese ~~fiscal~~dividends ~~year~~was ~~2017~~partially weoffset ~~paid~~by a$90.0 ~~cash~~million ~~dividend~~ of ~~$1.02~~borrowings ~~per~~on ~~share,~~our ~~while~~Credit inFacility. In the first ~~nine~~three months of fiscal ~~2016~~2017 we also paid a quarterly cash dividend of $0.9634 per share. While we expect to continue paying regular quarterly cash dividends, the declaration, amount and timing of future dividends are at the discretion of our Board of Directors.

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Contractual obligations

OnAs ~~January~~part ~~31,~~of ~~2017,~~the ~~subsequent~~Restaurants toTransaction, the ~~end~~Buyer ofassumed ~~our~~all ~~third~~operating ~~quarter,~~leases weassociated ~~settled~~with the ~~remaining~~Restaurants ~~outstanding~~Business, ~~borrowings~~including ofleases ~~the~~for ~~Mortgage~~143 ~~Loan~~restaurant ~~using~~properties ~~additional~~that ~~borrowings~~were ~~from~~sold as part of a sale leaseback transaction in the ~~Credit~~fourth ~~Agreement~~quarter of fiscal 2016. WeThe ~~will~~Company ~~accelerate~~and ~~unamortized~~BEF ~~debt~~Foods, ~~issuance~~Inc. ~~costs~~continue ~~associated~~to ~~with~~guarantee ~~the~~certain ~~loan~~payment ofand ~~$1.0~~performance ~~million~~obligations ~~and~~associated ~~recognize~~with the lease agreements for those ~~costs~~restaurant asproperties. See ~~interest~~Note ~~expense~~3 into the ~~fourth~~Consolidated ~~quarter~~Financial ofStatements ~~fiscal~~for ~~2017.~~additional information.

As part of the Restaurants Transaction, the Buyer will assume all operating leases associated with the Restaurants Business, including leases for 143 restaurant properties that were sold as part of a sale leaseback transaction in the fourth quarter of fiscal 2016. The Company and BEF Foods, Inc. will continue to guarantee certain payment and performance obligations associated with the lease agreements for those restaurant properties.

Off-Balance Sheet Arrangements

As of ~~January~~July 2728, 2017, we have not entered into any “off-balance sheet” arrangements with unconsolidated entities or other persons, as that term is defined in rules issued by the SEC.

Critical Accounting Policies and Estimates

As discussed in Note 1 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, the preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of commitments and contingencies at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. We base these estimates and judgments on our historical experience and other factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and appraisal techniques. We routinely re-evaluate these significant factors and make adjustments where facts and circumstances dictate. Our critical accounting policies have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended April 2928, ~~2016~~2017.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not currently use derivative financial instruments for speculative or hedging purposes. We maintain our cash and cash equivalents in financial instruments with maturities of three months or less when purchased.

Interest Rate Risk

At ~~January~~July 2728, 2017, our outstanding debt included $~~300~~90.50 million outstanding onunder the ~~credit~~Credit ~~facility~~Facility, and $292.56 million of other outstanding long-term notes. A change in market interest rates will impact our Credit ~~Agreement~~Facility when there is an outstanding balance. For example, a one percent increase in the benchmark rate used for our Credit ~~Agreement~~Facility would increase our annual interest expense by approximately $3.0.9 million, assuming the $~~300~~90.50 million outstanding at ~~January~~July 2728, 2017, was outstanding for the entire year.

Commodities Prices

We purchase certain commodities such as pork, produce and dairy products. These commodities are generally purchased based upon market prices established with suppliers. These purchase arrangements may contain contractual features that fix the price paid for certain commodities. We do not use financial instruments to hedge commodity prices, because these purchase arrangements help control the ultimate cost paid. Most commodity price aberrations are generally short-term in nature and for some commodities, such as sows, hedge instruments are not available.

ITEM 4. CONTROLS AND PROCEDURES

Changes in Internal Control Over Financial Reporting

InThere ~~the~~have ~~second~~been ~~quarter~~no ofmaterial ~~fiscal~~changes ~~2017, we implemented the second phase of our ERP system which improves the efficiency of certain financial and related transaction processes. The implementation resulted~~ in ~~business and operational changes, which required changes to~~ our internal ~~controls~~control over financial reporting. We(as ~~believe~~defined wein ~~have~~Rules ~~designed~~13a-15(f) ~~adequate~~under ~~controls into and around~~ the ~~new~~Securities ~~ERP~~Exchange ~~system,~~Act ~~which~~if ~~includes performing significant procedures~~1934, ~~both~~as ~~within~~amended (the ~~ERP~~"Exchange ~~and~~Act") ~~outside~~during the ~~ERP,~~quarter toended ~~monitor~~July 28, ~~review~~2017, ~~and~~that ~~reconcile~~have ~~financial~~materially ~~activity~~affected, ~~for~~or ~~the~~is ~~third~~reasonably ~~quarter~~likely ~~of fiscal 2017~~ to ~~ensure~~materially ~~ongoing~~affect, ~~reliability~~our ofinternal ~~our~~control over financial reporting.

Aside from the implementation noted above, there have been no material changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended January 27, 2017, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

With the participation of our management, including Bob Evans’ principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(c) under the ~~Securities~~ Exchange Act ~~of 1934 (the “Exchange Act”))~~ as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, Bob Evans’ principal executive officer and principal financial officer have concluded our disclosure controls and procedures were effective.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are from time-to-time involved in ordinary and routine litigation, typically involving claims from customers, employees and others related to operational issues common to the ~~restaurant and~~ food manufacturing ~~industries~~industry, and incidental to our business. As part of the Restaurants Transaction, we also retained liability for claims associated with our Restaurant Business that occurred prior to closing. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

ITEM 1A. RISK FACTORS

~~Except~~There ~~as otherwise described herein there~~ have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended April 2928, ~~2016~~2017.

The pending sale of the Company’s Bob Evans Restaurants business and the pending acquisition of Pineland Farms Potato Company, Inc. may not be completed within the currently contemplated time frame or at all, or may be completed on different terms.

We can provide no assurance that the pending sale of the Company’s Bob Evans Restaurants business (the “Restaurants Business”) or the pending acquisition of Pineland Farms Potato Company, Inc. (the “Acquisition”) will be completed or completed on a timely basis. Unforeseen developments outside of our control, including possible delays in obtaining applicable regulatory consents and approvals, could delay or prevent the sale of the Restaurants Business and/or the Acquisition, or cause them to occur on terms and conditions that are less favorable, or at a higher cost, than expected.

Any failure to complete the sale of the Restaurants Business and/or the Acquisition could have a negative impact on our business, financial results and stock price, as well as on our relationships with our customers, suppliers and employees. Moreover, after the sale of the Restaurants Business is completed, the Company will be smaller and less diversified, with a narrower business focus and may be more vulnerable to changing market conditions, which could adversely affect our business, results of operations or financial condition.

Our business and financial results could be adversely impacted during the pendency of the sale of the Restaurants Business and the Acquisition, particularly if there is a delay in the completion of the sale of the Restaurants Business or the Acquisition.

The pending sale of the Restaurants Business and the pending Acquisition may cause disruptions to our business or business relationships, and may create uncertainty surrounding our ongoing business operations, which could materially and adversely affect our business, results of operations or financial condition, regardless of whether the sale of the Restaurants Business and/or the Acquisition are completed, including as a result of the following:

• the attention of our management may be directed to transaction-related considerations and may be diverted from the day-to-day operations of our business;

• uncertainty regarding the future of our organization may adversely affect our ability to hire, retain and motivate key personnel and other employees; and

• customers, suppliers or other parties which we maintain business relationships may experience uncertainty prior to the closing of the sale of the Restaurants Business or the Acquisition and seek alternative relationships with third parties or seek to terminate or renegotiate their relationships with us.

In addition, with respect to the sale of the Restaurants Business, the BER Sale Agreement restricts us from engaging in certain actions with respect to the Restaurants Business without the consent of Buyer, which could prevent us from pursuing business opportunities related to the Restaurants Business that may arise prior to the consummation of the sale of the Restaurants Business.

We have incurred, and will continue to incur, transaction costs in connection with the pending sale of the Restaurants Business and the Acquisition, and many of these fees and costs are payable regardless of whether or not the sale of the Restaurants Business or the Acquisition are completed.

Our financial and operating results may suffer if we are unsuccessful in integrating Pineland Farms Potato Company, Inc. with our food production business.

If we are unable to successfully integrate Pineland Farms Potato Company, Inc. with our food production business in an efficient and effective manner following the Acquisition, the anticipated benefits, including the expected diversification and expansion of our production capability and transportation cost savings, may not be realized fully, or at all, or may take longer to realize than expected. An inability to realize the full extent of the anticipated benefits of the Acquisition, or any delays encountered

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in the integration process, could have an adverse effect on the results of operations, cash flows and financial position of the Company, which may adversely affect the value of our common stock following the Acquisition. In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and transportation cost savings, if achieved, may be lower than what the Company expects and may take longer to achieve than anticipated.

Guarantor provisions associated with restaurant lease obligations could adversely affect our results of operations or financial condition even after completion of the sale.

Upon the closing of the sale of the Restaurants Business, the Buyer will assume the lease obligations of the Restaurants Business. However, as part of the sale leaseback transaction of 143 of our restaurant properties in fiscal 2016, the Company and its wholly owned subsidiary BEF Foods, Inc. entered into payment and performance guaranties relating to the leases on such restaurant properties, which will remain in place upon the completion of the sale of our Restaurants Business. Under the terms of the BER Sale Agreement, the Buyer is assuming primary responsibility for the payment and performance obligations under the leases on these sale leaseback properties. However, while following the sale we will no longer have control over the Restaurants Business, under the terms of the guaranties we will remain liable for payments due under these leases if the Buyer fails to satisfy its lease obligations. Any such unexpected expenses related to our obligations under the payment and performance guaranties could adversely affect our results of operations or financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On ~~August~~November 2019, ~~2014~~2015, the Board of Directors increased the authorization of our stock repurchase program ~~for up~~ to $~~150~~250.0 million ~~through fiscal 2016~~. The program authorizes the Company to repurchase its outstanding common stock pursuant to plans approved by the Board under SEC Rules ~~10b~~106-18 and ~~10b5~~105-1, and in the open market or through privately negotiated transactions. In ~~The~~fiscal ~~ability~~2016 towe ~~repurchase~~repurchased ~~stock~~approximately ~~and~~3.9 ~~complete~~million ~~the~~shares ~~repurchase~~for ~~program~~$171.5 ismillion. The ~~dependent~~repurchases ~~upon~~were funded primarily through additional borrowings on our ~~having~~prior ~~available~~$650.0 ~~funds~~million ~~and~~revolving ~~complying~~credit ~~with~~agreement, ~~the~~cash ~~financial~~from ~~covenants~~operations and ~~other~~the ~~restrictions~~net ~~contained~~proceeds infrom ~~our~~the ~~Credit~~sale ~~Agreement~~leaseback transaction of 143 restaurant properties and ~~the~~two ~~repurchase~~production ~~authorization~~facilities.

On ~~November~~January 1924, ~~2015~~2017, the Board of Directors ~~approved~~increased anthe ~~additional~~Company's existing share repurchase authorization, which extends through December 31, 2017, to $100.0 million. We ~~authorization~~did ~~under~~not ~~our~~repurchase ~~share~~any ~~repurchase~~shares ~~program,~~in ~~for~~fiscal a2017 ~~total~~or ~~authorization~~in the first quarter of ~~$250.0~~fiscal ~~million~~2018.

In fiscal 2016 we repurchased approximately 3.9 million shares for $171.5 million. The repurchases were funded primarily through additional borrowings on our Credit Agreement, cash from operations and the net proceeds from the sale leaseback transactions of 143 restaurant properties and two production facilities. Following the repurchases, there had been $78.5 million remaining on the share repurchase authorization. We did not repurchase any shares in the first nine months of fiscal 2017. On January 24, 2017, the Board of Directors increased the Company's existing share repurchase authorization, which extends through December 31, 2017, to $100.0 million. Additional repurchases under this authorization will depend on valuation, maintaining a prudent leverage ratio and other factors.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS

See index to exhibits

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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 thereunto duly authorized.

	BOB EVANS FARMS, INC.
Date: March 8, 2017	By:	/s/ Saed Mohseni
Date: August 30, 2017	By:	/s/ J. Michael Townsley
		Saed MohseniPresident and Chief Executive Officer(Principal Executive Officer)
		J. Michael TownsleyPresident, Chief Executive Officer and Director(Principal Executive Officer)
Date: March 8, 2017	By:	/s/ Mark E. Hood
Date: August 30, 2017	By:	/s/ Mark E. Hood
		Mark E. HoodChief Financial Officer and Chief Administrative Officer (Principal Financial Officer)
		Mark E. HoodChief Financial Officer and Chief Administrative Officer (Principal Financial Officer and Principal Accounting Officer)
Date: March 8, 2017	By:	/s/ Beth A. Rauschenberger
		Beth A. RauschenbergerSenior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

* Mr. Hood ~~and~~has ~~Ms. Rauschenberger have~~ been duly authorized to sign on behalf of the Registrant as its principal financial officer and its principal accounting officer~~, respectively~~.

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INDEX TO EXHIBITS

Quarterly Report on Form 10-Q

Dated ~~January~~July 2728, 2017

Bob Evans Farms, Inc.

Exhibit Number	Description	Location
2.1	Asset and Membership Interest Purchase Agreement, dated as of January 24, 2017, by and between Bob Evans Farms, Inc. and BER Acquisition, LLC.	Incorporated herein by reference to Exhibit 2.1 to Bob Evans Farms, Inc.'s Current Report on Form 8-K filed January 25, 2017 (File No. 000-01667)
2.2	Stock Purchase Agreement, dated as of January 24, 2017, by and among BEF Foods, Inc., Pineland Farms Potato Company, Inc., the selling stockholders party thereto, Libra Foundation, in its capacity as the Sellers' Representative, and Bob Evans Farms, Inc.	Incorporated herein by reference to Exhibit 2.2 to Bob Evans Farms, Inc.'s Current Report on Form 8-K filed January 25, 2017 (File No. 000-01667)
3.1	Amended and Restated Certificate of Incorporation of company reflecting amendments through Aug. 20, 2014. [This document represents the Company’s Certificate of Incorporation in restated format incorporating all amendments. This compiled document has not been filed with the Delaware Secretary of State.]	Incorporated herein by reference to Exhibit 3.1 to Bob Evans Farms, Inc.’s Current Report on Form 8-K filed September 3, 2014 (File No. 000-01667)
3.2	Amended and Restated By-Laws of Bob Evans Farms, Inc. (Effective August 20, 2014)	Incorporated herein by reference to Exhibit 3.2 to Bob Evans Farms, Inc.’s Current Report on Form 8-K filed September 3, 2014 (File No. 000-01667)
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)	Filed herewith
32.1	Section 1350 Certification (Principal Executive Officer)	Filed herewith
32.2	Section 1350 Certification (Principal Financial Officer)	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

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