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 period ended June 24, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-14616
J & J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22-1935537
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6000 Central Highway, Pennsauken, NJ 08109
(Address of principal executive offices)
Telephone (609) 665-9533
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.
[X] Yes [ ] No
As of July 21, 1995, there were 9,339,993 shares of the Registrant's Common
Stock outstanding.
<PAGE>
INDEX
Page
Number
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - June 24, 1995 and
September 24, 1994................................... 3
Consolidated Statements of Earnings - Three Months and
Nine Months Ended June 24, 1995 and June 25, 1994.... 5
Consolidated Statements of Cash Flows - Nine Months
Ended June 24, 1995 and June 25, 1994................ 6
Notes to the Consolidated Financial Statements.......... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................... 12
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS June 24, September 24,
1995 1994
(Unaudited)
Current assets
Cash and cash equivalents $ 9,310,000 $ 6,621,000
Marketable securities available
for sale 4,825,000 4,443,000
Accounts receivable 17,066,000 17,176,000
Inventories 10,989,000 11,519,000
Prepaid expenses and deposits 1,712,000 1,611,000
43,902,000 41,370,000
Property, plant and equipment,
at cost
Land 819,000 973,000
Buildings 5,119,000 5,119,000
Plant machinery and equipment 37,705,000 35,045,000
Marketing equipment 73,652,000 70,311,000
Transportation equipment 2,219,000 2,622,000
Office equipment 3,468,000 3,355,000
Improvements 5,038,000 4,741,000
Construction in progress 902,000 750,000
128,922,000 122,916,000
Less accumulated depreciation
and amortization 68,552,000 59,788,000
60,370,000 63,128,000
Other assets
Goodwill, trademarks and rights,
less accumulated amortization 8,862,000 9,793,000
Long term investments available
for sale 990,000 -
Long term investments held to
maturity 6,881,000 10,764,000
Sundry 2,602,000 2,311,000
19,335,000 22,868,000
$123,607,000 $127,366,000
See accompanying notes to the consolidated financial statements.
3
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
LIABILITIES AND June 24, September 24,
STOCKHOLDERS' EQUITY 1995 1994
(Unaudited)
Current liabilities
Current maturities of long-
term debt $ 15,000 $ 15,000
Accounts payable 11,478,000 11,854,000
Accrued liabilities 5,592,000 4,537,000
17,085,000 16,406,000
Long-term debt, less current
maturities 5,016,000 5,028,000
Deferred income 692,000 692,000
Deferred income taxes 4,678,000 4,695,000
Stockholders' equity
Capital stock
Preferred, $1 par value;
authorized, 5,000,000
shares; none issued - -
Common, no par value;
authorized, 25,000,000
shares; issued and
outstanding, 9,359,000 and
9,889,000, respectively 43,612,000 49,946,000
Foreign currency translation
adjustment (1,070,000) -
Retained earnings 53,594,000 50,599,000
96,136,000 100,545,000
$123,607,000 $127,366,000
See accompanying notes to the consolidated financial statements.
4
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended Nine months ended
June 24, June 25, June 24, June 25,
1995 1994 1995 1994
Net Sales $47,876,000 $45,166,000 $129,410,000 $123,842,000
Cost of goods sold 24,262,000 21,602,000 64,717,000 59,171,000
Gross profit 23,614,000 23,564,000 64,693,000 64,671,000
Operating expenses
Marketing 14,955,000 12,652,000 41,757,000 36,745,000
Distribution 4,570,000 4,770,000 13,589,000 13,661,000
Administrative 1,789,000 1,894,000 5,829,000 5,851,000
Amortization of
intangibles and
deferred costs 214,000 218,000 647,000 627,000
21,528,000 19,534,000 61,822,000 56,884,000
Operating income 2,086,000 4,030,000 2,871,000 7,787,000
Other income (deductions)
Investment income 353,000 286,000 944,000 858,000
Interest expense (92,000) (112,000) (304,000) (343,000)
Sundry 823,000 (106,000) 1,289,000 471,000
Earnings before
income taxes 3,170,000 4,098,000 4,800,000 8,773,000
Income taxes 1,192,000 1,541,000 1,805,000 3,299,000
NET EARNINGS $ 1,978,000 $ 2,557,000 $ 2,995,000 $ 5,474,000
Earnings per common
share $ .21 $ .25 $ .31 $ .52
Weighted average number
of shares 9,482,000 10,267,000 9,660,000 10,529,000
See accompanying notes to the consolidated financial statements.
5
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
June 24, June 25,
1995 1994
Cash flows from operating activities:
Net earnings $ 2,995,000 $ 5,474,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of fixed
assets 11,101,000 10,189,000
Amortization of intangibles and deferred
costs 762,000 742,000
Gain from disposals of property &
equipment (1,132,000) (416,000)
(Decrease) increase in deferred income taxes (17,000) 417,000
Other adjustments (104,000) -
Changes in assets and liabilities
Increase in accounts receivable (55,000) (38,000)
Increase in inventories (168,000) (1,514,000)
Increase in prepaid expenses (199,000) (449,000)
Increase in accounts payable and
accrued liabilities 975,000 1,794,000
Net cash provided by operating activities 14,158,000 16,199,000
Cash flows from investing activities:
Capital expenditures (9,933,000) (14,230,000)
Proceeds from sale of company 405,000 -
Payments for purchase of companies, net of
cash acquired and debt assumed - (1,535,000)
Proceeds from investments held to maturity 375,000 7,949,000
Payments for investments held to maturity (500,000) (4,171,000)
Proceeds from investments available for sale 5,610,000 1,720,000
Payments for investments available for sale (2,981,000) (7,358,000)
Proceeds from disposals of property &
equipment 1,351,000 646,000
Decrease in bond trust fund 655,000 1,480,000
Other (106,000) (35,000)
Net cash used in investing activities (5,124,000) (15,534,000)
Cash flows from financing activities:
Proceeds from issuance of common stock 273,000 749,000
Payments to repurchase common stock (6,607,000) (5,582,000)
Payments of long-term debt (11,000) (766,000)
Net cash used in financing activities (6,345,000) (5,599,000)
Net increase (decrease) in cash and
cash equivalents 2,689,000 (4,934,000)
Cash and cash equivalents at beginning of period 6,621,000 8,457,000
Cash and cash equivalents at end of period $ 9,310,000 $ 3,523,000
See accompanying notes to the consolidated financial statements.
6
J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly the financial position and the results of
operations and cash flows.
The results of operations for the three months and nine months
ended June 24, 1995 and June 25, 1994 are not necessarily
indicative of results for the full year. Sales of the Company's
retail stores are generally higher in the first quarter due to
the holiday shopping season. Sales of the Company's frozen
carbonated beverages are generally higher in the third and
fourth quarters due to seasonal factors.
While the Company believes that the disclosures presented are
adequate to make the information not misleading, it is
suggested that these consolidated financial statements be read
in conjunction with the consolidated financial statements and
the notes included in the Company's Annual Report on Form 10-K
for the year ended September 24, 1994.
Note 2 Earnings per share are based on the weighted average number of
common shares outstanding, including common stock equivalents
(stock options).
Note 3 Inventories consist of the following:
June 24, September 24,
1995 1994
Finished goods $ 4,907,000 $ 5,538,000
Raw materials 1,147,000 1,293,000
Packaging materials 2,137,000 1,777,000
Equipment parts & other 2,798,000 2,911,000
$10,989,000 $11,519,000
Note 4 The Company adopted FAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" at December 24,
1994. This new standard requires investments in securities to
be classified in one of three categories: held to maturity,
trading and available for sale. Debt securities that the
Company has the positive intent and ability to hold to maturity
7
are classified as held to maturity and are reported at
amortized cost. As the Company does not engage in security
trading, the balance of its debt securities and any equity
securities are classified as available for sale. Net
unrealized gains and losses for such securities, net of tax are
reported as a separate component of stockholders' equity and
excluded from the determination of net income.
Proceeds on sales of securities classified as available for sale
were $3,525,000 in the quarter ended June 24, 1995 with a
$18,000 gain realized and $5,610,000 in the nine months ended
June 24, 1995 with a gain of $21,000 realized. The Company uses
the specific identification method to determine the cost of
securities sold.
The amortized cost, unrealized gains and losses, and fair market
values of the Company's available for sale and held to maturity
securities held at June 24, 1995 are summarized as follows:
Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
Available for Sale Securities
Equity Securities $ - $12,000 $ - $ 12,000
Corporate Debt Securities 996,000 - 55,000 941,000
Municipal Government Securities 4,819,000 1,000 23,000 4,797,000
$5,815,000 $13,000 $ 78,000 $5,750,000
Held to Maturity Securities
Corporate Debt Securities $1,021,000 $ 1,000 $ 28,000 $ 994,000
Municipal Government Securities 5,360,000 41,000 146,000 5,255,000
Other 500,000 - - 500,000
$6,881,000 $42,000 $174,000 $6,749,000
The following table lists the maturities of debt securities held at June
24, 1995 classified as available for sale and held to maturity:
Available for Sale Held to Maturity
Estimated Estimated
Amortized Fair Market Amortized Fair Market
Cost Value Cost Value
Due in one year or less $4,825,000 $4,807,000 $ - $ -
Due after one year
through five years 495,000 488,000 6,881,000 6,749,000
Due after five years 495,000 443,000 - -
Total $5,815,000 $5,738,000 $6,881,000 $6,749,000
8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The Company's current cash and marketable securities balances and cash
expected to be provided by future operations are its primary sources of
liquidity. The Company believes that these sources, along with its borrowing
capacity, are sufficient to fund future growth and expansion.
The devaluation of the Mexican peso caused a reduction of $1,071,000
in stockholders' equity for the nine months ended June 24, 1995 because of
the revaluation of the net assets of the Company's frozen carbonated beverage
subsidiary. The Company is experiencing a dollar decline in the sales of
this subsidiary of about 50% due primarily to the devaluation. The Company
anticipates that the sales decline from last year's levels will continue for
at least the balance of its fiscal year. In fiscal year 1994, sales of the
Mexican subsidiary were $3,198,000.
During the nine months ended June 24, 1995, the Company purchased and
retired 564,100 shares of its common stock at a cost of $6,607,000.
During the third quarter, the Company sold its syrup and flavor
manufacturing subsidiary, Western Syrup Company, to an unrelated third party
for cash and notes. The Company does not anticipate that the sale of Western
will have a material impact on its operations or financial position.
Available to the Company are unsecured general purpose bank lines of
credit totalling $25,000,000.
Results of Operations
Net sales increased $2,710,000 or 6% to $47,876,000 for the three
months and $5,568,000 or 4% to $129,410,000 for the nine months ended June
24, 1995. Net sales, excluding sales of Western Syrup Company for all
periods, increased $3,490,000 or 8% for the three months and $7,720,000 or
6% for the nine month period.
Sales to food service customers increased $2,332,000 or 13% in the
third quarter to $19,623,000 and $5,485,000 or 11% to $56,525,000 in the nine
months. Soft pretzel sales to the food service market increased 11% to
$12,502,000 in the third quarter and 10% to $37,092,000 in the nine months
due primarily to expanded unit volume. New channels of distribution and new
products accounted for most of the added pretzel volume. Frozen juice treat
and dessert sales increased 35% to $3,458,000 in the three months and 13% to
$8,971,000 in the nine months. Churro sales to food service customers
decreased 2% to $2,548,000 in the third quarter and 4% to $6,861,000 in the
nine months. One customer accounted for all of the churros sales decrease.
All food service sales increases were due primarily to expanded unit volume.
9
Sales of products to retail supermarkets increased $1,856,000 or 21%
to $10,868,000 in the third quarter and $1,915,000 or 7% to $28,370,000 in
the nine months. Soft pretzel sales for the third quarter were up 8% to
$5,292,000 and for the nine months were up less than 1% to $19,423,000. Sales
of the flagship SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX,
increased 10% in the third quarter and 2% in the nine months due to unit
volume increases. Softstix sales decreased $178,000 to $600,000 in the third
quarter and $565,000 to $3,011,000 in the nine months. Sales of Luigi's Real
Italian Ice increased $1,456,000 or 37% to $5,339,000 in the third quarter
and $2,023,000 or 32% in the nine months. All of the retail supermarket
increases and decreases were due primarily to changes in unit volume.
Frozen carbonated beverage and related product sales decreased
$243,000 or 2% to $12,222,000 in the third quarter and $660,000 or 2% to
$28,471,000 in the nine months. Sales of the Company's Mexican frozen
carbonated beverage subsidiary were down $433,000 or 46% in the third quarter
and $924,000 or 39% in the nine months due to the devaluation of the peso and
the business downturn in Mexico. Equipment and parts sales were down $89,000
or 55% in the third quarter and $276,000 or 58% in the nine months due to
reduced demand. Beverage sales alone decreased 2% to $11,602,000 in the
third quarter and 1% to $26,963,000 in the nine months primarily because of
lower sales in Mexico and the net loss of higher volume accounts elsewhere.
Bakery sales decreased $518,000 or 16% to $2,798,000 in the third
quarter and $377,000 or 5% to $7,084,000 in the nine months. The decline was
due to a reduction in purchases by a single customer. Bavarian Pretzel
Bakery sales increased 3% to $2,365,000 in the third quarter and 6% to
$8,029,000 in the nine month period.
Gross profit as a percentage of sales decreased to 49% and 50% in the
current three and nine month periods from 52% in the comparable periods last
year. The gross profit percentage decreases are primarily attributable to
higher packaging and raw material costs and increased manufacturing overhead
costs due to recent expansions of production capacities.
Total operating expenses increased $1,994,000 in the third quarter and
as a percentage of sales increased to 45% from 43% in last year's same
quarter. For the nine months, operating expenses increased $4,938,000 and
as a percentage of sales increased to 48% from 46% last year. Marketing
expenses increased from 28% to 31% in the third quarter and from 30% to 32%
in the nine months primarily because of higher frozen carbonated beverage
marketing expenses combined with lower frozen carbonated beverage sales
compared to last year and higher retail supermarket promotional spending.
Distribution expenses decreased to 10% of sales in this year's third quarter
from 11% last year and were 11% of sales in both nine month periods.
Administrative expenses were 4% of sales in both three month periods and 5%
of sales in both nine month periods.
Operating income decreased $1,944,000 or 48% to $2,086,000 in the
third quarter and $4,916,000 or 63% to $2,871,000 in the nine months.
10
Investment income increased in the third quarter and nine months due
primarily to higher levels of interest rates on invested funds. Interest
expense decreased in the third quarter and nine months due to the reduction
of debt.
Sundry income of $823,000 in the third quarter compared to sundry
expense of $106,000 in last year's quarter, and for the nine months, sundry
income of $1,289,000 this year compared to $471,000 last year. The sundry
income this year included gains on insurance settlements, gains on sales of
land and a gain on the sale of Western Syrup Company, while last year's nine
month income included a gain on the sale of land.
The effective income tax rate has been estimated at 38% in all
periods.
Net earnings decreased $579,000 or 23% in the current three month
period to $1,978,000 and decreased $2,479,000 or 45% in the current nine
month period to $2,995,000.
11
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None
b) Reports on Form 8-K - There were no reports on Form 8-K
for the three months ended June 24, 1995.
12
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.
J & J SNACK FOODS CORP.
Dated: August 2, 1995 /s/ Gerald B. Shreiber
Gerald B. Shreiber
President
Dated: August 2, 1995 /s/ Dennis G. Moore
Dennis G. Moore
Senior Vice President and
Chief Financial Officer
13
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.
J & J SNACK FOODS CORP.
Dated: August 2, 1995
Gerald B. Shreiber
President
Dated: August 2, 1995
Dennis G. Moore
Senior Vice President and
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-24-1995
<CASH> 9310
<SECURITIES> 4825
<RECEIVABLES> 17325
<ALLOWANCES> (259)
<INVENTORY> 10989
<CURRENT-ASSETS> 43902
<PP&E> 128922
<DEPRECIATION> (68552)
<TOTAL-ASSETS> 123607
<CURRENT-LIABILITIES> 17085
<BONDS> 5016
<COMMON> 43612
0
0
<OTHER-SE> 52524
<TOTAL-LIABILITY-AND-EQUITY> 123607
<SALES> 129410
<TOTAL-REVENUES> 129410
<CGS> 64717
<TOTAL-COSTS> 61822
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 304
<INCOME-PRETAX> 4800
<INCOME-TAX> 1805
<INCOME-CONTINUING> 2995
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2995
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
