SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 0-14616
J & J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22-1935537
(State or other jurisdication (I.R.S. Employer
of incorporation or organization) Identification No.)
6000 Central Highway
Pennsauken, New Jersey 08109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609-665-9533)
__________
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value: None None
(Title of each class) (Name of each exchange on which registered)
__________
Securities registered pursuant to Section 12(g) of the Act: None
__________
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
As of November 30, 1995, the latest practicable date, 9,116,354 shares of
the Registrant's common stock were issued and outstanding. The aggregate market
value of shares held by non-affiliates of the Registrant on such date was
$73,559,162, based on the last price on that date of $12.125 per share, which is
an average of bid and asked prices.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's 1995 Annual Report to Shareholders for the fiscal year
ended September 30, 1995 and Proxy Statement for its Annual Meeting of
Shareholders to be held on February 7, 1996 are incorporated herein by reference
into Parts I, II, III and IV as set forth herein.
J & J SNACK FOODS CORP.
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Page
Item 1 Business ................................... 1
Item 2 Properties ................................. 9
Item 3 Legal Proceedings .......................... 10
Item 4 Submission Of Matters To A Vote Of
Security Holders ........................... 10
Executive Officers Of The Registrant ....... 11
PART II
Item 5 Market For Registrant's Common
Stock And Related Stockholder
Matters .................................... 12
Item 6 Selected Financial Data .................... 12
Item 7 Management's Discussion And Analysis
Of Financial Condition And Results
Of Operations .............................. 12
Item 8 Financial Statements And Supplementary
Data ....................................... 13
Item 9 Changes In And Disagreements With
Accountants On Accounting And
Financial Disclosure........................ 13
PART III
Item 10 Directors And Executive Officers Of
The Registrant ............................. 14
Item 11 Executive Compensation ..................... 14
Item 12 Security Ownership Of Certain Bene-
ficial Owners And Management ............... 14
Item 13 Certain Relationships And Related
Transactions ............................... 14
PART IV
Item 14 Exhibits, Financial Statement
Schedules And Reports On Form 8-K .......... 15
PART I
Item 1. Business
General
J & J Snack Foods Corp. (the "Company") manufactures
nutritional snack foods which it markets nationally to the food
service and retail supermarket industries. Its principal snack
food products are soft pretzels marketed principally under the
brand name SUPERPRETZEL. J & J believes it is the largest
manufacturer of soft pretzels in the United States. The Company
also markets frozen carbonated beverages to the food service
industry under the brand names ICEE and ARCTIC BLAST in the Western
United States, Mexico and Canada and under the brand names FROZEN
COKE and ARCTIC BLAST in midwestern and eastern states. Other
snack products include frozen juice treats and desserts, churros (a
Hispanic pastry), funnel cake, popcorn, baked goods and whipped
fruit drinks.
The Company's sales are made primarily to food service
customers including snack bar and food stand locations in leading
chain, department, discount, warehouse club and convenience stores;
malls and shopping centers; fast food outlets; stadiums and sports
arenas; leisure and theme parks; movie theatres; independent
retailers; and schools, colleges and other institutions. The
Company's retail supermarket customers are primarily supermarket
chains. The Company sells direct to the public through its chain
of specialty snack food retail outlets, Bavarian Pretzel Bakery,
located primarily in the Mid-Atlantic States.
The Company was incorporated in 1971 under the laws of the
State of New Jersey.
Products
Soft Pretzels
The Company's soft pretzels are sold under the SUPERPRETZEL,
MR. TWISTER, SOFT PRETZEL BITES, SOFTSTIX and SOFT PRETZEL BUNS
brand names and, to a lesser extent, under private labels. The
Company sells its soft pretzels to the food service and the retail
supermarket industries and direct to the public through Bavarian
Pretzel Bakery, its chain of specialty snack food retail outlets.
The Company's soft pretzels qualify under USDA regulations as the
nutritional equivalent of bread for purposes of the USDA school
lunch program, thereby enabling a participating school to obtain
partial reimbursement of the cost of the Company's soft pretzels
from the USDA. Soft pretzel sales amounted to 44% and 43% of the
Company's revenue in fiscals 1995 and 1994, respectively.
The Company's soft pretzels are manufactured according to a
proprietary formula. Regular soft pretzels, approximately 2-1/2
ounces in weight, and jumbo or king size soft pretzels,
approximately 5-1/2 ounces in weight, are shaped and formed by the
Company's proprietary twister machines. These soft pretzel tying
machines are automated, high speed machines for twisting dough into
the traditional pretzel shape. Soft pretzel nuggets, mini one ounce
soft pretzels and soft pretzels in customized shapes and sizes are
extruded or shaped by hand. Soft pretzels, after processing, are
quick-frozen in either raw or baked form and packaged for delivery.
The Company's food service marketing program includes
supplying ovens, mobil merchandisers, display cases, warmers and
similar merchandising equipment to the retailer to prepare and
promote the sale of soft pretzels. Some of this equipment is
proprietary, including two models of a combination warmer and
display case that reconstitute frozen soft pretzels while
displaying them, thus eliminating the need for an oven. The
Company retains ownership of the equipment placed in customer
locations and, as a result, customers are not required to make an
investment in equipment.
Frozen Carbonated Beverages
The Company markets, through its direct sales force, frozen
carbonated beverages to the food service industry under the names
ICEE and ARCTIC BLAST in fourteen western states, Mexico and Canada
and under the trade names FROZEN COKE and ARCTIC BLAST in twenty
five midwestern and eastern states and direct to the public through
Bavarian Pretzel Bakery, its chain of specialty snack food retail
outlets. Frozen carbonated beverage sales amounted to 23% and 24%
of fiscal 1995 and fiscal 1994 revenue, respectively. Under the
Company's marketing program, it installs frozen carbonated beverage
dispensers at customer locations and thereafter services the
machines, provides customers with ingredients required for
production of the frozen carbonated beverages, and supports
customer retail sales efforts with in-store promotions and
point-of-sale materials. In most cases, the Company retains
ownership of its dispensers and, as a result, customers are not
required to make an investment in equipment or arrange for the
ingredients and supplies necessary to produce and market the frozen
carbonated beverages.
Each new customer location requires a frozen carbonated
beverage dispenser supplied by the Company or by the customer.
Company supplied dispensers are built new or rebuilt by the Company
at an approximate cost of $5,500 each. The following shows the
number of Company owned and customer owned frozen carbonated
beverage dispensers at customer locations at the dates indicated:
Company Owned Customer Owned Total
September 26, 1993 7,003 417 7,420
September 25, 1994 7,312 1,100 8,412
September 24, 1995 7,157 1,107 8,264
Frozen Juice Treats and Desserts
The Company's frozen juice treats and desserts are marketed
under the SUPER JUICE, FROSTAR, SHAPE-UPS and LUIGI'S brand names
to the food service and to the retail supermarket industries.
Frozen juice treat and dessert sales were 15% and 12% of the
Company's revenue in fiscals 1995 and 1994, respectively.
The Company's SUPER JUICE and SHAPE-UPS frozen juice bars are
manufactured from an apple or pear juice base to which water,
sweeteners, coloring (in some cases) and flavorings are added. The
juice bars contain two ounces of apple or pear juice and the
minimum daily requirement of vitamin C, and qualify as reimbursable
items under the USDA school lunch program. The juice bars are
produced in various flavors and are packaged in a sealed push-up
paper container referred to as the Milliken M-pak, which the
Company believes has certain sanitary and safety advantages.
The FROSTAR product line includes frozen juice and other
frozen desserts on a stick and in a cup. The juice bar and FROSTAR
products are sold primarily to the school portion of the food
service industry.
LUIGI'S Real Italian ice is sold to the foodservice and to the
retail supermarket industries. It is manufactured from water,
sweeteners and fruit juice concentrates in various flavors and is
packaged in six ounce paper cups for retail supermarket and in four
and eight ounce squeeze up tubes for foodservice.
Churros
The Company sells frozen churros under the TIO PEPE'S brand
name to both the food service and retail supermarket industries,
primarily in the Western and Southwestern United States. Churro
sales were 5% of the Company's sales in fiscal 1995 and 6% in 1994.
Churros are Hispanic donuts in stick form which the Company
produces in several sizes according to a proprietary formula. The
churros are deep fried, frozen and packaged. At food service
point-of-sale they are reheated and topped with a cinnamon sugar
mixture. The Company supplies churro merchandising equipment
similar to that used for its soft pretzels.
Baked Goods
The Company has a contract and private label bakery business
which manufactures cookies, muffins and other baked goods for third
parties. In addition, the Company produces and markets these
products under its PRIDE O' THE FARM, MRS. GOODCOOKIE and MRS.
GOODMUFFIN brand names. Baked goods sales amounted to 6% of the
Company's sales in fiscals 1995 and 1994, respectively.
Other Products
The Company also markets to the food service industry and
direct to the public products produced by others including soft
drinks, funnel cakes sold under the FUNNEL CAKE FACTORY brand name,
whipped fruit drinks sold under the TANGO WHIP brand name, popcorn
sold under the AIRPOPT brand name, as well as smaller amounts of
various other food products. In addition, J & J manufactures and
markets machines and machine parts for sale primarily to other food
and beverage companies.
Customers
The Company sells its products to two principal customer
groups: food service and retail supermarkets. The primary products
sold to the food service group are soft pretzels, frozen carbonated
beverages, frozen juice treats and desserts, churros and baked
goods. The primary products sold to the retail supermarket
industry are soft pretzels and Italian ice. Additionally, the
Company sells soft pretzels, frozen carbonated beverages and
various other food products direct to the public through Bavarian
Pretzel Bakery, its chain of specialty snack food retail outlets.
The Company's customers in the food service industry include
snack bars and food stands in chain, department and discount stores
such as KMart, Walmart, Woolworth, Bradlees, Clover, Caldor, Target
and Venture Stores; malls and shopping centers; fast food outlets;
stadiums and sports arenas; leisure and theme parks such as
Disneyland, Walt Disney World, Opryland, Universal Studios, Sea
World, Six Flags, Hershey Park and Busch Gardens; convenience
stores such as 7-Eleven, Circle K, AM/PM, White Hen Pantry and
Wawa; movie theatres; warehouse club stores such as Sam's Club,
Price Costco and B.J.'s; schools, colleges and other institutions;
and independent retailers such as Hot Sam. Food service
concessionaires purchasing soft pretzels from the Company for use
in sports arenas and for institutional meal services include
ARAMARK, Ogden, Service America, Sportservice, Marriott and Volume
Services. Machines and machine parts are sold to other food and
beverage companies. Within the food service industry, the
Company's products are purchased by the consumer primarily for
consumption at the point-of-sale.
The Company's supermarket customers include A & P, Acme, Alpha
Beta, Food Lion, Giant, Kroger, Pathmark, Publix, Ralph's, Safeway,
Shop Rite, Superfresh, Waldbaum's and Winn Dixie. Products sold to
retail supermarket customers are primarily soft pretzel products,
including SUPERPRETZEL, LUIGI'S Real Italian Ice and various
secondary brands. Within the retail supermarket industry, the
Company's frozen and prepackaged products are purchased by the
consumer for consumption at home.
Several fast food chains continue to sell the Company's soft
pretzels, churros and frozen carbonated beverages on a test basis
and/or as an optional menu item. Presently, sales to fast food
chains do not provide a significant portion of the Company's
revenue. The Company cannot predict when, or if, sales to fast
food chains will provide a significant portion of the Company's
revenue.
Marketing and Distribution
The Company has developed a national marketing program for its
products. For food service customers, this marketing program
includes providing ovens, mobile merchandisers, display cases,
warmers, frozen carbonated beverage dispensers and other
merchandising equipment for the individual customer's requirements
and point-of-sale materials as well as participating in trade
shows. The Company's advertising and promotional campaigns for its
retail supermarket products include trade shows, newspaper
advertisements with coupons, in-store demonstrations and television
advertisements.
The Company's products are sold through a network of about 160
food brokers and over 1,000 independent sales distributors and the
Company's own direct sales force. The Company maintains warehouse
and distribution facilities in Pennsauken, New Jersey; Vernon (Los
Angeles) California; Scranton, Pittsburgh, Hatfield and Lancaster,
Pennsylvania; and Solon, Ohio. Frozen carbonated beverages are
distributed from 48 warehouse and distribution facilities located
in 21 states, Mexico and Canada which allow the Company to directly
service its customers in the surrounding areas. The Company's
products are shipped in refrigerated and other vehicles from the
Company's manufacturing and warehouse facilities on a fleet of
Company operated tractor-trailers, trucks and vans, as well as by
independent carriers.
Seasonality
The Company's sales are seasonal because frozen carbonated
beverage sales are generally higher during the warmer months and
sales of the Company's retail stores are generally higher in the
Company's first quarter during the holiday shopping season.
Trademarks and Patents
The Company has numerous trademarks, the most important of
which are SUPERPRETZEL, MR. TWISTER, SOFT PRETZEL BITES and
SOFTSTIX for its soft pretzel products; FROSTAR, SHAPE-UPS and
LUIGI'S for its frozen juice treats and desserts; TIO PEPE'S for
its churros; ARCTIC BLAST for its frozen carbonated beverages;
FUNNEL CAKE FACTORY for its funnel cake products, MRS. GOODCOOKIE
and MRS. GOODMUFFIN for its cookies, muffins and other baked goods;
and TANGO WHIP for its whipped fruit drinks. The trademarks, when
renewed and continuously used, have an indefinite term and are
considered important to the Company as a means of identifying its
products.
The Company believes that it is currently the only entity
marketing frozen carbonated beverages under the trademark ICEE in
its fourteen state market area in the Continental Western United
States and in Mexico and Canada. Additionally, the Company has the
international rights to the trademark ICEE.
The Company has two design patents for display cases used in
marketing the Company's soft pretzel and churro products. These
patents expire in 1997 and 2000. The Company has two design
patents which expire in 1997 and 1999 relating to the marketing of
its funnel cake products. The Company also has four patents related
to frozen carbonated beverage dispensers, including a countertop
unit. One expires in 2005 and three expire in 2006.
Supplies
The Company's manufactured products are produced from raw
materials which are readily available from numerous sources. With
the exception of the Company's soft pretzel twisting equipment and
funnel cake production equipment, which are made for J & J by
independent third parties, and certain specialized packaging
equipment, the Company's manufacturing equipment is readily
available from various sources. Syrup for frozen carbonated
beverages is purchased from the Coca Cola Company, the Pepsi Cola
Company, and Western Syrup Company. Cups, straws and lids are
readily available from various suppliers. Parts for frozen
carbonated beverage dispensing machines are manufactured internally
and purchased from other sources.
Competition
Snack food and baked goods markets are highly competitive.
The Company's principal products compete against similar and
different food products manufactured and sold by numerous other
companies, some of which are substantially larger and have greater
resources than the Company. As the soft pretzel, frozen juice treat
and dessert, baked goods and related markets grow, additional
competitors and new competing products may enter the markets.
Competitive factors in these markets include product quality,
customer service, taste, price, identity and brand name awareness,
method of distribution and sales promotions.
The Company believes it is the only national distributor of
food service soft pretzels. However, there are numerous regional
and local manufacturers of food service soft pretzels and one
national distributor of soft pretzels to the retail supermarket
industry. Competition is also increasing in that there are several
chains of retail pretzel stores which are aggressively expanding.
These chains compete with the Company's products. The Company
entered this area with its purchase of Bavarian Soft Pretzels, Inc.
in fiscal 1994.
In Frozen Carbonated Beverages the Company competes directly
with other frozen carbonated beverage companies. These include
several companies which have the right to use the ICEE name in
various territories. One such company, which also sells outside
its ICEE territory using the Frozen Coke trademark, is believed to
have frozen carbonated beverage sales similar to the Company's.
There are many other regional frozen carbonated beverage
competitors throughout the country and one large retail chain which
uses its own frozen carbonated beverage brand.
The Company competes with large soft drink manufacturers for
counter and floor space for its frozen carbonated beverage
dispensing machines at retail locations and with products which are
more widely known than the ICEE and ARCTIC BLAST frozen carbonated
beverages.
The Company competes with a number of other companies in the
frozen juice treat and dessert and baked goods markets.
Divestitures
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.
Employees
The Company had approximately 1,500 full and part time
employees as of September 30, 1995. Certain production and
distribution employees at the Pennsauken plant are covered by a
collective bargaining agreement which expires in December 1995.
The Company considers its employee relations to be good.
<PAGE>
Item 2. Properties
The Company's primary east coast manufacturing facility is
located in Pennsauken, New Jersey in a 70,000 square foot building
on a two acre lot. Soft pretzels and churros are manufactured at
this company-owned facility which also serves as the Company's
corporate headquarters. In 1994, the Company increased the
capacity of this manufacturing facility by approximately 30%; the
facility now operates at approximately 80% of capacity. The Company
leases a 101,200 square foot building adjacent to its manufacturing
facility in Pennsauken, New Jersey through March 2012. The Company
has constructed a large freezer within this facility for
warehousing and distribution purposes. The warehouse has a
utilization rate of 60-90% depending on product demand. The
Company also leases through September 1998 16,000 square feet of
office and warehouse space located next to the Pennsauken, New
Jersey plant.
The Company owns a 150,000 square foot building on eight acres
in Bellmawr, New Jersey. Approximately 60% of the facility is
leased to a third party. The remainder is used by the Company to
manufacture some of its products including funnel cake and
pretzels.
The Company's primary west coast manufacturing facility is
located in Vernon (Los Angeles), California. It consists of a
102,000 square foot facility in which soft pretzels, churros and
various lines of baked goods are produced. The Company has
recently leased 35,000 square feet of additional space in the same
building in which it plans to construct a large freezer for
warehousing and distribution purposes. The Company anticipates
that the construction of the freezer will be completed in 1996.
The combined facility is leased through November 2010. The
manufacturing facility operates at approximately 50% of capacity.
The Company's midwest facility is a 52,700 square foot
building located on five acres in Chicago Heights, Illinois. This
company-owned facility serves as a sales office and distribution
facility for frozen carbonated beverages. Approximately 80% of the
facility is not utilized.
The Company owns a 26,000 square foot frozen juice treat and
dessert manufacturing facility located on three acres in Scranton,
Pennsylvania. The facility operates at less than 60% of capacity.
The Company owns a 25,000 square foot facility located on 11
acres in Hatfield, Pennsylvania. The facility is used for the
production of soft pretzels and as a distribution center. The
facility operates at approximately 80% of capacity.
The Company's Bavarian Pretzel Bakery headquarters and
warehouse and distribution facilities are located in a 11,000
square foot owned building in Lancaster, Pennsylvania.
The Company also leases 48 warehouse and distribution
facilities.
Item 3. Legal Proceedings
The Company has no material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the Company or any of its subsidiaries is a party or of which
any of their property is subject.
Item 4. Submission Of Matters To A Vote Of Security Holders
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the executive officers of the
Company and their principal past occupations or employment. All
such persons serve at the pleasure of the Board of Directors and
have been elected to serve until the Annual Meeting of Shareholders
on February 1, 1995 or until their successors are duly elected.
Name Age Position
Gerald B. Shreiber 54 Chairman of the Board, President,
Chief Executive Officer and
Director
Dennis G. Moore 40 Senior Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Robert M. Radano 46 Senior Vice President, Sales
John S. Schiavo 45 Senior Vice President, West
Donald M. Taylor 63 Vice President and General
Manager of Eastern Operations
Gerald B. Shreiber is the founder of the Company and has
served as its Chairman of the Board, President, and Chief Executive
Officer since its inception in 1971. His term as a director
expires in 2000.
Dennis G. Moore joined the Company in 1984. He served in
various controllership functions prior to becoming the Chief
Financial Officer in June 1992. His term as a director expires in
1997.
Robert M. Radano joined the Company in 1972. His
responsibilities include the coordination of food service sales and
marketing activities of the Company's regional sales managers and
handling of the Company's national accounts.
John S. Schiavo, who joined the Company in 1981, manages the
manufacturing and sales activities of the Vernon, California
facility.
Donald M. Taylor joined the Company in 1978. He is
responsible for eastern region manufacturing, distribution and
branch operations.
PART II
Item 5. Market For Registrant's Common Stock And
Related Stockholder Matters
The Company's common stock is traded on the over-the-counter
market on the NASDAQ National Market System under the symbol JJSF.
The following table sets forth the high and low final sale price
quotations as reported by NASDAQ for the common stock for each
quarter of the years ended September 24, 1994 and September 30,
1995.
High Low
Fiscal 1994
First quarter ended December 25, 1993 20-3/8 17-1/8
Second quarter ended March 26, 1994 20-3/4 17-3/8
Third quarter ended June 25, 1994 18-1/4 10-7/8
Fourth quarter ended September 24, 1994 13-1/4 12-1/8
Fiscal 1995
First quarter ended December 24, 1994 12-7/8 11-1/4
Second quarter ended March 25, 1995 12 10
Third quarter ended June 24, 1995 13 10-1/8
Fourth quarter ended September 30, 1995 13-3/8 11-3/8
On November 30, 1995, there were 9,116,354 shares of common
stock outstanding. Those shares were held of record by
approximately 400 shareholders; that number does not reflect the
number of beneficial shareholders whose shares are held in street
name.
The Company has never paid a cash dividend on its common stock
and does not anticipate paying cash dividends in the foreseeable
future.
Item 6. Selected Financial Data
The information set forth under the caption "Financial
Highlights" of the 1995 Annual Report to Shareholders is
incorporated herein by reference.
Item 7. Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" of the 1995 Annual Report to Shareholders is
incorporated herein by reference.
Item 8. Financial Statements And Supplementary Data
The following consolidated financial statements of the Company
set forth in the 1995 Annual Report to Shareholders are
incorporated herein by reference:
Consolidated Balance Sheets as of September 30, 1995 and
September 24, 1994
Consolidated Statements of Earnings for the fiscal years
ended September 30, 1995, September 24, 1994 and
September 25, 1993
Consolidated Statement of Stockholders' Equity for the
three fiscal years ended September 30, 1995
Consolidated Statements of Cash Flows for the fiscal years
ended September 30, 1995, September 24, 1994 and
September 25, 1993
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Item 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure
None.
PART III
Item 10. Directors And Executive Officers Of The Registrant
Information concerning directors, appearing under the captions
"Information Concerning Nominee For Election To Board" and
"Information Concerning Continuing Directors And Executive
Officers" in the Company's Proxy Statement filed with the
Securities and Exchange Commission in connection with the Annual
Meeting of Shareholders to be held on February 7, 1996, is
incorporated herein by reference. Information concerning the
executive officers is included on page 11 following Item 4 in Part
I hereof.
Item 11. Executive Compensation
Information concerning executive compensation appearing in the
Company's Proxy Statement under the caption "Management
Remuneration" is incorporated herein by reference.
Item 12. Security Ownership Of Certain Beneficial Owners And
Management
Information concerning the security ownership of certain
beneficial owners and management appearing in the Company's Proxy
Statement under the caption "Principal Shareholders" is
incorporated herein by reference.
Item 13. Certain Relationships And Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules And
Reports On Form 8-K
(a)Financial Statements
The following are incorporated by reference in Part II
of this report:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of September 30, 1995 and
September 24, 1994
Consolidated Statements of Earnings for the fiscal years
ended September 30, 1995, September 24, 1994 and
September 25, 1993
Consolidated Statement of Stockholders' Equity for the
three fiscal years ended September 30, 1995
Consolidated Statements of Cash Flows for the fiscal
years ended September 30, 1995, September 24, 1994
and September 25, 1993
Notes to Consolidated Financial Statements
Financial Statement Schedule
The following are included in Part IV of this report:
Page
Report of Independent Certified Public Account-
ants on Schedule 18
Schedule:
II. Valuation and Qualifying Accounts 19
All other schedules are omitted either because they are not
applicable or because the information required is contained in the
financial statements or notes thereto.
Exhibits
3.1 Amended and Restated Certificate of Incorporation
filed February 28, 1990. (Incorporated by reference
from the Company's Form 10-Q dated May 4, 1990.)
3.2 Amended and Restated Bylaws adopted May 15, 1990.
(Incorporated by reference from the Company's Form
10-Q dated August 3, 1990.)
4.1 New Jersey Economic Development Authority Economic
Development Revenue Bonds Trust Indenture dated as
of December 1, 1991. (Incorporated by reference
from the Company's 10-K dated December 18, 1992.)
10.1 Proprietary Exclusive Manufacturing Agreement dated
July 17, 1984 between J & J Snack Foods Corp. and
Wisco Industries, Inc. (Incorporated by reference
from the Company's Form S-1 dated February 4, 1986,
file no. 33-2296.)
10.2* J & J Snack Foods Corp. Stock Option Plan.
(Incorporated by reference from the Company's Form
S-8 dated July 24, 1992, file no. 33-50036.)
10.3* J & J Snack Foods Corp. 401(K) Profit Sharing Plan,
As Amended, Effective January 1, 1989. (Incorporated
by reference from the Company's 10-K dated December
18, 1992.)
10.6 Lease dated September 24, 1991 between J & J Snack
Foods Corp. of New Jersey and A & H Bloom Construction
Co. for the 101,200 square foot building next to the
Company's manufacturing facility in Pennsauken, New
Jersey. (Incorporated by reference from the Company's
Form 10-K dated December 17, 1991).
10.7 Lease dated August 29, 1995 between J & J Snack Foods
Corp. and 5353 Downey Associates Ltd for the lease of
the Vernon, CA facility. (Page 20.)
11.1 Computation of Earnings Per Common Share. (Page 47.)
13.1 Company's 1995 Annual Report to Shareholders
(except for the captions and information thereof
expressly incorporated by reference in this Form
10-K, the Annual Report to Shareholders is provided
solely for the information of the Securities and
Exchange Commission and is not deemed "filed" as
part of the Form 10-K.) (Page 48.)
22.1 Subsidiaries of J & J Snack Foods Corp. (Page 77.)
24.1 Consent of Independent Certified Public Accountants.
(Page 78.)
(b)Reports on Form 8-K
No reports on Form 8-K have been filed by the Company
during the last quarter of the period covered by this
report.
*Compensatory Plan
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
December 21, 1995 By /s/ Gerald B. Shreiber
Gerald B. Shreiber,
Chairman of the Board,
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
December 21, 1995 /s/ Dennis G. Moore
Dennis G. Moore, Senior Vice
President, Chief Financial
Officer and Director
December 21, 1995 /s/ Stephen N. Frankel
Stephen N. Frankel, Director
December 21, 1995 /s/ Peter G. Stanley
Peter G. Stanley, Director
December 21, 1995 /s/ Leonard M. Lodish
Leonard M. Lodish, Director
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
December 21, 1995 By_______________________________
Gerald B. Shreiber,
Chairman of the Board,
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
_______________________________
December 21, 1995 Dennis G. Moore, Senior Vice
President, Chief Financial
Officer and Director
_______________________________
December 21, 1995 Stephen N. Frankel, Director
_______________________________
December 21, 1995 Peter G. Stanley, Director
________________________________
December 21, 1995 Leonard M. Lodish, Director
17
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS ON SCHEDULE
Board of Directors
J & J Snack Foods Corp.
In connection with our audit of the consolidated financial
statements of J & J Snack Foods Corp. and Subsidiaries referred
to in our report dated November 7, 1995, which is included in
the Annual Report to Shareholders and incorporated by reference
in Part II of this form, we have also audited Schedule II for
each of the three years in the period ended September 30, 1995
(53 weeks, 52 weeks and 52 weeks, respectively). In our opinion,
this schedule presents fairly, in all material respects, the
information required to be set forth therein.
GRANT THORNTON LLP
Philadelphia, Pennsylvania
November 7, 1995
18
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Opening Charged to Closing
Year Description balance expense Deductions balance
1995 Allowance for doubtful accounts $296,000 $ 81,000 $106,000(1) $271,000
1994 Allowance for doubtful accounts 258,000 231,000 193,000(1) 296,000
1993 Allowance for doubtful accounts 226,000 160,000 128,000(1) 258,000
(1) Write-off uncollectible accounts receivable.
19
STANDARD INDUSTRIAL LEASE - NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, as
of August 29, 1995, is made by and between 5353 Downey Associates
Ltd., a California Limited Partnership (hereinafter called
"Lessor") and J&J Snack Foods Corp. and J&J Snack Foods Corp. of
California (hereinafter called "Lessee") and restates and amends
the prior lease dated July 1, 1988 as Supplemented and Amended.
2. Premises. Lessor hereby leases to Lessee and Lessee leases
from Lessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property situated in
the County of Los Angeles, State of California, commonly known as
Unit A and Unit B and as described as 5353 (Unit A), 5499 (Unit B)
and 5477 (Unit C) Downey Road, Vernon, California, as more particu-
larly described on Exhibit "A" attached hereto:
(a) The portion of the Premises at 5353 Downey Road is
composed of a portion of a larger parcel(s) of land improved with
a building(s) in which the demised space shown as Unit "A", Unit
"B" and Unit "C" on Exhibit "A" contains approximately 136,564
square feet of ground floor area.
(b) The remaining land area of the larger parcels of which
the Premises is composed not presently utilized for permanent
improvements is hereby designated as "common areas" and is cross-hatched on
Exhibit "A" attached hereto. Lessee is granted the non-exclusive right to
use the common areas, in common with other tenants of the buildings located
on the parcels of land on which the buildings are located.
Said real property including the land and all improvements therein,
is herein called the "Premises".
3. Term.
3.1 Term. The term of this Lease shall be for fifteen (15)
years commencing on December 1, 1995 and terminating on November
31, 2010.
3.2 Option To Renew. [DELETED.]
3.3 Early Possession. [DELETED.]
4. Rent. Commencing December 1, 1995 and continuing throughout
the remainder of the lease term, Lessee shall pay to Lessor rent
for the Premises, monthly payments as set forth below, in advance
on the first day of each month of the term hereof:
RENT TOTAL TOTAL
YEAR LEASE PERIOD PER S.F./MO. PER MONTH YEAR
1 12/01/95 - 11/30/96 26.5 36,190 434,280
2 12/01/96 - 11/30/97 27.0 36,872 442,464
3 12/01/97 - 11/30/98 27.5 37,555 450,660
4 12/01/98 - 11/30/99 28.0 38,238 458,856
5 12/01/99 - 11/30/00 28.5 38,921 467,052
6 12/01/00 - 11/30/01 29.0 39,604 475,248
7 12/01/01 - 11/30/02 29.5 40,286 483,432
8 12/01/02 - 11/30/03 30.0 40,969 491,628
9 12/01/03 - 11/30/04 31.25 42,676 512,112
10 12/01/04 - 11/30/05 32.0 43,700 524,400
11 12/01/05 - 11/30/06 32.5 44,383 532,596
12 12/01/06 - 11/30/07 33.25 45,408 544,896
13 12/01/07 - 11/30/08 33.75 46,090 553,080
14 12/01/08 - 11/30/09 34.0 46,432 557,184
15 12/01/09 - 11/30/10 34.5 47,115 565,380
Rent for any period during the term hereof which is for less than
one month shall be a pro rata portion of the monthly installment.
Rent shall be payable in lawful money of the United States to
Lessor at the address stated herein or to such other persons or at
such other places as Lessor may designate in writing.
5. Security Deposit. Lessee has deposited with Lessor the sum of
$18,421.48 as security for Lessee's faithful performance of
Lessee's obligations hereunder. If Lessee fails to pay rent or
other charges due hereunder, or otherwise defaults with respect to
any provision of this Lease, Lessor may use, apply or retain all or
any portion of said deposit for the payment of any rent or other
charge in default or for the payment of any other sum to which
Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer
thereby. If Lessor so uses or applies all or any portion of said
deposit, Lessee shall within ten (10) days after written demand
therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and
Lessee's failure to do so shall be a material breach of this Lease.
Lessor shall not be required to keep said deposit separate from its
general accounts. If Lessee performs all of Lessee's obligations
hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's
option, to the last assignee, if any, of Lessee's interest
hereunder) at the expiration of the term hereof, and after Lessee
has vacated the Premises. No trust relationship is created herein
between Lessor and Lessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for
the manufacturing and/or warehousing of food products and related
uses, office use incidental thereto, or any other use which is
reasonably comparable and for no other purpose.
6.2 Compliance With Law.
(a) Lessee acknowledges that it is in possession of the
Premises and that Lessor is making no warranty regarding the
compliance of the Premises with applicable laws.
(b) Except as provided in paragraph 6.2(a), Lessee
shall, at Lessee's expense, comply promptly with all applicable
statutes, ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements in effect during the term
or any part of the term hereof, regulating the use by Lessee of the
Premises. Lessee shall not use nor permit the use of the Premises
in any manner that will tend to create waste or a nuisance or, if
there shall be more than one tenant in the building containing the
Premises, shall tend to disturb such other tenants.
6.3 Condition Of Premises.
(a) Lessor shall deliver the Premises to Lessee clean
and free of debris on Lease commencement date (unless Lessee is
already in possession) and Lessor further warrants to Lessee that
the plumbing, lighting, air conditioning, heating, and loading
doors in the Premises shall be in good operating condition on the
Lease commencement date. In the event that it is determined that
this warranty has been violated, then it shall be the obligation of
Lessor, after receipt of written notice from Lessee setting forth
with specificity the nature of the violation, to promptly, at
Lessor's sole cost, rectify such violation. Lessee's failure to
give such written notice to Lessor within thirty (30) days after
the Lease commencement date shall cause the conclusive presumption
that Lessor has complied with all of Lessor's obligations
hereunder. The warranty contained in this paragraph 6.3(a) shall
be of no force or effect if prior to the date of this Lease, Lessee
was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee
hereby accepts the Premises in their condition existing as of the
Lease commencement date or the date that Lessee takes possession of
the Premises, whichever is earlier, subject to all applicable
zoning, municipal, county and state laws, ordinances and
regulations governing and regulating the use of the Premises, and
any covenants or restrictions of record, and accepts this Lease
subject thereto and to all matters disclosed thereby and by any ex-
hibits attached hereto. Lessee acknowledges that neither Lessor
nor Lessor's agent has made any representation or warranty as to
the present or future suitability of the Premises for the conduct
of Lessee's business. Except as hereafter provided (regarding
common area and structural maintenance, and reimbursement by Lessee
for its proportional share of the cost thereof), Lessor shall not
be responsible for correcting any structural defects in the
Premises, as Lessee is currently in possession of the Premises and
it is responsible for all repairs and maintenance with respect
thereto. Lessee hereby accepts said Premises in its "As Is" and
"Where Is" condition and has not relied upon any representations of
Lessor as to the condition or use of the Premises by Lessee.
Lessee represents and warrants that all improvements made by Lessee
to the Premises have been made and completed in accordance with all
Governmental Codes and Ordinances and Lessee has obtained all
necessary governmental approvals therefor.
7. Maintenance, Repairs and Alterations.
7.1 Lessee's Obligations.
(a) Lessee shall keep in good order, condition and
repair all non-structural interior portions of the Premises and
every part thereof, structural and non-structural, (whether or not
such portion of the Premises requiring repair, or the means of
repairing the same are reasonably or readily accessible to Lessee,
and whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, or the age of such portion of the
Premises) including, without limiting the generality of the
foregoing, all plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities and equipment within the Premises,
fixtures, interior walls, interior ceilings, floors, windows,
doors, plate glass and skylights located within the Premises.
(b) Notwithstanding anything in this Lease to the
contrary, Lessor shall (the actual and reasonable cost thereof
hereinafter sometimes being collectively called the "common expen-
ses"): (i) keep in good order and repair (A) the common areas and
shall keep the common areas clean and neat, and (B) all structural
portions of the buildings of which the Premises are a part
(including the Premises), the roof, foundations, the exterior and
any utility lines serving more than one tenant, (ii) pay for all
water supplied to the building(s) of which the Premises is a part
as long as water is not separately metered to the Premises, (iii)
pay for all reasonable and customary expenses incurred directly for
the operation of the Property of which the Premises is a part,
including accounting and/or management fees to third parties, if
any, but excluding costs incurred in connection with one tenant or
less than all tenants generally (such as tenant fit up work and
legal fees for enforcement of or negotiation of a lease). Lessee
shall reimburse Lessor for Lessee's proportionate share of Lessor's
common expenses within ten (10) days of receipt of a bill for all
or any portion thereof accompanied by copies of invoices and other
reasonable evidence of the expenditures therefor. "Lessee's
proportionate share" shall be a fraction, the numerator of which
shall be the interior ground floor area of the Premises from
centerline to centerline of walls and the denominator of which
shall be the total aggregate ground floor area of the building(s)
of which the Premises is a part. Lessor and Lessee have agreed
that Lessee's proportionate share is 62.97%.
(c) It is intended that Lessee shall have full and
complete responsibility for the payment of all maintenance
expenses, structural and non-structural, relating to the Premises,
either directly via paragraph 7.1(a), or via recoupment as a part
of common expenses, notwithstanding that Lessor may be obligated
under this Lease to perform some maintenance covering the Premises
as set forth in paragraph 7.1(b).
7.2 Surrender. On the last day of the term hereof, or on any
sooner termination, Lessee shall surrender the Premises to Lessor
in the same condition as when received, ordinary wear and tear
excepted, clean and free of debris. Lessee shall repair any damage
to the Premises occasioned by the installation or removal of
Lessee's trade fixtures, furnishings and equipment.
7.3 Lessor's Rights. If Lessee fails to perform Lessee's
obligations under this Paragraph 7, or under any other paragraph of
this Lease, Lessor may at is option (but shall not be required to)
enter upon the Premises after ten (10) days prior written notice to
Lessee (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Lessee's behalf and
put the same in good order, condition and repair, and the cost
thereof together with interest thereon at 15% per annum shall
become due and payable as additional rental to Lessor together with
Lessee's next rental installment.
7.4 Lessor's Obligations. [DELETED.] (See paragraph 7.1
above)
7.5 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written
consent, which consent shall not be unreasonably withheld or
delayed, make any alterations, improvements, additions, or Utility
Installations in, on or about the Premises, except for nonstruc-
tural alterations not exceeding $10,000 in cumulative costs during
the term of this Lease. In any event, whether or not in excess of
$10,000 in cumulative cost, Lessee shall make no change or
alteration to the exterior of the Premises nor the exterior of the
building(s) on the Premises without Lessor's prior written consent,
which consent shall not be unreasonably withheld or delayed. As
used in this Paragraph 7.5 the term "Utility Installation" shall
mean carpeting, window coverings, air lines, power panels,
electrical distribution systems, lighting fixtures, space heaters,
air conditioning, plumbing, and fencing. All alterations,
improvements, additions or Utility Installations may be left at the
expiration of the term, and need not be removed by Lessee. Lessee
may elect to remove any of the same provided Lessee repairs any
damage caused by the installation or removal thereof. Lessor may
require Lessee to provide Lessor, at Lessee's sole cost and
expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure
Lessor against any liability for mechanic's and materialmen's liens
and to insure completion of the work. Should Lessee make any
alterations, improvements, additions or Utility Installations
without the prior approval of Lessor, Lessor may require that
Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility
Installations in, or about the Premises that Lessee shall desire to
make and which requires the consent of the Lessor shall be
presented to Lessor in written form, with proposed detailed plans.
If Lessor shall give its consent, the consent shall be deemed
conditioned upon Lessee acquiring a permit to do so from
appropriate governmental agencies, the furnishing of a copy thereof
to Lessor prior to the commencement of the work and the compliance
by Lessee of all conditions of said permit in a prompt and
expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for
Lessee at or for use in the Premises, which claims are or may be
secured by any mechanics' or materialmen's lien against the
Premises or any interest therein. Lessee shall give Lessor not
less than ten (10) days notice prior to the commencement of any
work in the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by
law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then lessee shall, at its sole expense
defend itself and Lessor against the same and shall pay and satisfy
any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises, upon the
condition that if Lessor shall require, Lessee shall furnish to
Lessor a surety bond satisfactory to Lessor in an amount equal to
such contested lien claim or demand indemnifying Lessor against
liability for the same and holding the Premises free from the
effect of such lien or claim. In addition, Lessor may require
Lessee to pay Lessor's attorneys fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do
so.
(d) All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute
trade fixtures of Lessee), which are left on the Premises, shall
become the property of Lessor at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7.5(d), Lessee's
machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to
the Premises, shall remain the property of Lessee and may be
removed by Lessee subject to the provisions of Paragraph 7.2.
(e) Lessee is hereby granted the right to make
nonstructural improvements to the Premises at its own cost upon
prior written approval by Lessor of the plans and specifications
for said improvements, such approval not to be unreasonably
withheld or delayed, and upon submission of approved permits from
the necessary governmental agencies. This paragraph is not
intended to limit but to extend the requirements of Section 7.
(f) Lessee has installed an electric transformer and
other improvements (the "Improvements") as set forth in that
certain covenant and agreement with the City of Vernon dated
September 27, 1994 on the parking area of the south side of the
building on the premises without the Lessor's consent. Lessor has
consented to the installation of the Improvements. Lessee
specifically agrees, if requested in writing by Lessor at the
expiration of the lease term, to remove the Improvements and
reinstall the electrical power as per the City of Vernon
requirements and to leave the premises broom clean and without
contamination.
8. Insurance Indemnity.
8.1 Insuring Party. Since the Premises is part of a larger
building or group of buildings, Lessor has agreed to maintain the
casualty insurance therefor and Lessee has agreed to pay its
proportionate share as hereafter provided.
8.2 Liability Insurance. Lessee shall, at Lessee's expense
obtain and keep in force during the term of this Lease a policy of
Combined Single Limit, Bodily Injury and Property Damage insurance
insuring Lessor and Lessee against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than $ 500,000 per
occurrence. The policy shall insure performance by Lessee of the
indemnity provisions of this Paragraph 8. The limits of said
insurance shall not, however, limit the liability of Lessee
hereunder.
8.3 Property Insurance.
(a) Lessor shall obtain and keep in force during the
term of this Lease a policy or policies of insurance covering loss
or damage to the Premises and the building(s) of which it is a part
in the amount of the full replacement value thereof, as the same
may exist from time to time, but in no event less than the total
amount required by lenders having liens on the Premises, against
all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, flood (in the event same
is required by a lender having a lien on the Premises), and special
extended perils ("all risk" as such term is used in the insurance
industry). Said insurance shall provide for payment of loss
thereunder to Lessor or to the holders of mortgages or deeds of
trust on the Premises. Lessor shall, in addition, obtain and keep
in force during the term of this Lease a policy of rental value
insurance covering a period of one year, with loss payable to
Lessor, which insurance shall also cover all real estate taxes and
insurance costs for said period. A stipulated value or agreed
amount endorsement deleting the coinsurance provision of the policy
shall be procured with said insurance. If Lessor shall fail to
procure and maintain said insurance the other party may, but shall
not be required to, procure and maintain the same, but at the
expense of Lessor except for Lessee's proportionate share as
hereafter provided. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for its proportionate share
of such deductible amount.
(b) If the Premises are part of a larger building, or if
the Premises are part of a group of buildings owned by Lessor which
are adjacent to the Premises, then Lessee shall pay for any
increase in the property insurance of such other building or
buildings if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises; and if any increase is caused by
the acts, omissions, use or occupancy of another tenant, or Lessor,
such increase shall not be paid for by Lessee.
(c) Lessor will not insure Lessee's fixtures, equipment
or tenant improvements unless the tenant improvements have become
a part of the Premises under paragraph 7 hereof. Lessee shall
insure its fixtures, equipment and tenant improvements.
(d) Lessee shall within ten (10) days after receipt of
a bill therefor, accompanied by a copy of an insurance company
invoice therefor, reimburse Lessor for Lessee's proportionate share
of the costs of premiums for the casualty insurance which Lessor
obtains pursuant to paragraph 8.3. Lessee shall have the right to
require Lessor to entertain bids from insurance companies which
satisfy the criteria set forth in paragraph 8.4 in order to insure
that the costs for casualty insurance being charged to Lessee are
reasonable and competitive.
8.4 Insurance Policies. Insurance required hereunder shall
be in companies holding a "General Policyholders Rating" of at
least B plus, or such other rating as may be required by a lender
having a lien on the Premises, as set forth in the most current
issue of "Best's Insurance Guide". The insuring party shall
deliver to the other party copies of policies of such insurance or
certificates evidencing the existence and amounts of such insurance
with loss payable clauses as required by this paragraph 8. No such
policy shall be cancelable or subject to reduction of coverage or
other modification except after thirty (30) days' prior written
notice to Lessor and Lessee. Lessor shall, at least thirty (30)
days prior to the expiration of such policies, furnish Lessee with
renewals or "binders" thereof, or Lessee may order such insurance
and charge the cost thereof to Lessor with interest at 15% per
annum (which amounts Lessee may deduct against payments due under
this Lease) which amount shall be payable by Lessor upon demand
except for Lessee's proportionate share as hereinafter provided.
Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in Paragraph 8.3. If
Lessee does or permits to be done anything which shall increase the
cost of the insurance policies referred to in Paragraph 8.3, then
Lessee shall forthwith upon Lessor's demand reimburse Lessor for
any additional premiums attributable to any act or omission or
operation of Lessee causing such increase in the cost of insurance.
Lessor shall deliver to Lessee a written statement setting forth
the amount of any such insurance cost increase and showing in
reasonable detail the manner in which it has been computed; and any
increase caused by the acts, omissions, use or occupancy of another
tenant or Lessor, shall not be paid for by Lessee.
8.5 Waiver of Subrogation. Lessee and Lessor each hereby
release and relieve the other, and waive their entire right of
recovery against the other for loss or damage arising out of or
incident to the perils insured against under paragraph 8.3, which
perils occur in, on or about the Premises, whether due to the
negligence of Lessor or Lessee or their agents, employees,
contractors and/or invitees. Lessee and Lessor shall, upon
obtaining the policies of insurance required hereunder, give notice
to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.
8.6 Indemnity. Lessee shall indemnify and hold harmless
Lessor from and against any and all claims arising from Lessee's
use of the Premises, or from the conduct of Lessee's business or
from any activity, work or things done, permitted or suffered by
Lessee in or about the Premises and shall further indemnity and
hold harmless Lessor from and against any and all claims arising
from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, or
arising from any negligence of the Lessee, or any of Lessee's
agents, contractors, or employees, and from and against all costs,
attorney's fees, expenses and liabilities incurred in the defense
of any such claim or any action or proceeding brought thereon; and
in case any action or proceeding be brought against Lessor by
reason of any such claim, Lessee upon notice from Lessor shall
defend the same at Lessee's expense by counsel satisfactory to
Lessor. Lessee, as a material part of the consideration to Lessor,
hereby assumes all risk of damage to property or injury to persons,
in or upon the Premises arising from any cause other than arising
from the negligence of Lessor or its agents or employees or
contractors or anyone acting by, through or under Lessor, and
Lessee hereby waives all claims in respect thereof against Lessor.
8.7 Exemption of Lessor from Liability. Lessee hereby agrees
that Lessor shall not be liable for injury to Lessee's business or
any loss of income therefrom or for damage to the goods, wares,
merchandise or other property of Lessee. Lessee's employees,
agents or contractors, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures, or from any other cause, whether the said damage
or injury results from conditions arising upon the Premises or upon
other portions of the building of which the Premises are a part, or
from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is
inaccessible to Lessee. Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant, if any, of the
building in which the Premises are located.
9. Damage or Destruction.
9.1 Partial Damage-Insured. Subject to the provisions of
Paragraph 9.4, if the Premises are damaged and such damage was
caused by a casualty covered under an insurance policy required to
be maintained pursuant to Paragraph 8.3, Lessor shall at Lessor's
expense repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect.
9.2 Partial Damage-Uninsured. Subject to the provisions of
Paragraph 9.4, if at any time during the term hereof the Premises
are damaged, except by a negligent or willful act of Lessee, and
such damage was caused by a casualty not covered under an insurance
policy required to be maintained pursuant to Paragraph 8.3, Lessor
may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) give written
notice to Lessee within thirty (30) days after the date of the
occurrence of such damage of Lessor's intention to cancel and
terminate this Lease as of the date of the occurrence of such
damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's intention to repair such
damage at Lessee's expense, without reimbursement from Lessor, in
which event this Lease shall continue in full force and effect, and
Lessee shall proceed to make such repairs as soon as reasonably
possible. If Lessee does not give such notice within such 10 day
period, this Lease shall be canceled and terminated as of the date
of the occurrence of such damage.
9.3 Total Destruction. If at any time during the term hereof
the Premises are totally destroyed from any cause whether or not
covered by the insurance required to be maintained pursuant to
Paragraph 8.3 (including any total destruction required by any
authorized public authority) this Lease shall automatically
terminate as of the date of such total destruction.
9.4 Damage Near End Of Term. If the Premises are partially
destroyed or damaged during the last six months of the term of this
Lease, Lessor may at Lessor's option cancel and terminate this
Lease as of the date of occurrence of such damage by giving written
notice of Lessee of Lessor's election to do so within 30 days after
the date of occurrence of such damage.
9.5 Abatement Of Rent; Lessee's Remedies.
(a) If the Premises are partially destroyed or damaged
and Lessor or Lessee repairs or restores them pursuant to the
provisions of this Article, the rent payable under Paragraph 4 for
the period during which such damage, repair or restoration
continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired; provided, however, that
the aggregate amount of abatement hereunder shall not exceed the
total of rent payable under Paragraph 4 for a period of six months.
Except for abatement of rent, if any, Lessee shall have no claim
against Lessor for any damage suffered by reason of any such
damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore
the Premises under the provisions of this Paragraph 9 and shall not
commence such repair or restoration within 90 days after such
obligation shall accrue, Lessee may at Lessee's option cancel and
terminate this Lease by giving Lessor written notice of Lessee's
election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as
of the date of such notice. Any abatement in rent shall be
computed as provided in Paragraph 9.5(a).
9.6 Termination-Advance Payments. Upon termination of this
Lease pursuant to this Paragraph 9, an equitable adjustment shall
be made concerning advance rent and any advance payments made by
Lessee to Lessor. Lessor shall, in addition, return to Lessee so
much of Lessee's security deposit as has not theretofore been
applied by Lessor.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessee shall pay all real property
taxes applicable to the Premises during the term of this Lease.
All such payments shall be made at least ten (10) days prior to the
delinquency date of such payment. Lessee shall promptly furnish
Lessor with satisfactory evidence that such taxes have been paid.
If any such taxes paid by Lessee shall cover any period of time
prior to or after the expiration of the term hereof, Lessee's share
of such taxes shall be equitably prorated to cover only the period
of time within the tax fiscal year during which this Lease shall be
in effect, and Lessor shall reimburse Lessee to the extent
required. If Lessee shall fail to pay any such taxes, Lessor shall
have the right to pay the same, in which case Lessee shall repay
such amount to Lessor with Lessee's next rent installment together
with interest at the rate of 10% per annum.
10.2 Definition of "Real Property" Tax. As used herein, the
term "real property tax" shall include any form of assessment,
license fee, commercial rental tax, levy, penalty, or tax (other
than inheritance or estate taxes), imposed by any authority having
the direct or indirect power to tax, including any city, county,
state or federal government, or any school, agricultural, lighting,
drainage or other improvement district thereof, as against any
legal or equitable interest of Lessor in the Premises or in the
real property of which the Premises are a part, as against Lessor's
right to rent or other income therefrom, or as against Lessor's
business of leasing the Premises.
10.3 Joint Assessment. If the Premises are not separately
assessed, Lessee's liability shall be an equitable proportion of
the real property taxes for all of the land and improvements
included within the tax parcel assessed, such proportion to be de-
termined as provided in Paragraph 7.1(b) above.
10.4 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings,
equipment and all other personal property of Lessee contained in
the Premises, or elsewhere, if a lien is imposed against the
Premises for non-payment thereof.
(b) [DELETED.]
10.5 Special Provision - Real Property Taxes. In the event
the Premises, or the property of which the Premises are part, are
reassessed following a change in ownership, as such term is defined
in the California Revenue and Taxation Code, Section 60 et seq.,
Lessee shall be obligated to pay only 50% of Lessee's proportionate
share of the increase in real property taxes resulting from such
reassessment.
11. Utilities. Lessee shall pay for all water, gas, heat, light,
power, telephone and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services
are not separately metered to Lessee, Lessee shall pay a reasonable
proportion to be determined by Lessor of all charges jointly
metered with other premises. All utility services other than water
are separately metered to the Premises and supplied directly from
the Utility company; however, water is not separately metered and
is to be included as a common expense provided in paragraph 7.1.
12. Assignment And Subletting.
12.1 Lessor's Consent Required. Lessee shall not voluntarily
or by operation of law assign, transfer, mortgage, sublet, or
otherwise transfer or encumber all or any part of Lessee's interest
in this Lease or in the Premises, without Lessor's prior written
consent, which Lessor shall not unreasonably withhold. Lessor
shall respond to Lessee's request for consent hereunder in a timely
manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be void, and
shall constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of
paragraph 12.1 hereof, Lessee may assign or sublet the Premises, or
any portion thereof, without Lessor's consent, to any corporation
which controls, is controlled by or is under common control with
Lessee, or to any corporation resulting from the merger or
consolidation with Lessee, or to any person or entity which
acquires all the assets of Lessee as a going corporation resulting
from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern
of the business that is being conducted on the Premises, provided
that said assignee assumes, in full, the obligations of Lessee
under this Lease. Any such assignment shall not, in any way,
affect or limit the liability of Lessee under the terms of this
Lease even if after such assignment or subletting the terms of this
Lease are materially changed or altered without the consent of
Lessee, the consent of whom shall not be necessary.
12.3 No Release Of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's
obligation or alter the primary liability of Lessee to pay the rent
and to perform all other obligations to be performed by Lessee
hereunder. The acceptance of rent by Lessor from any other person
shall not be deemed to be a waiver by Lessor of any provision
hereof. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the
event of default by any assignee of Lessee or any successor of
Lessee, in the performance of any of the terms hereof, Lessor may
proceed directly against Lessee without the necessity of exhausting
remedies against said assignee.
12.4 Attorney's Fees. In the event Lessee shall assign or
sublet the Premises or request the consent of Lessor to any
assignment or subletting or if Lessee shall request the consent of
Lessor for any act Lessee proposes to do then Lessee shall pay
Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such
request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the
following events shall constitute a material default and breach of
this Lease by Lessee:
(a) The abandonment of the Premises by Lessee. Vacating
is permitted as long as Lessee continues to pay rent and otherwise
complies with the provisions of this Lease.
(b) The failure by Lessee to make any payment of rent or
any other payment required to be made by Lessee hereunder, as and
when due, where such failure shall continue for a period of ten
days after written notice thereof from Lessor to Lessee provided,
however, that if under California law Lessee would have more than
a ten (10) day period to cure by reason of the above change from
three (3) days to ten (10) days, then Lessee only shall be entitled
to the statutory notice period. In the event that Lessor serves
Lessee with a Notice to Pay Rent or Quit pursuant to the applicable
Unlawful Detainer statutes such Notice to Pay Rent or Quit shall
also constitute the notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of
the covenants, conditions or provisions of this Lease to be
observed or performed by Lessee, other than described in
paragraph (b) above, where such failure shall continue for a period
of 30 days after written notice thereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's default is such
that more than 30 days are reasonably required for its cure, then
Lessee shall not be deemed to be in default if Lessee commenced
such cure within said 30-day period and thereafter diligently
prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement
or assignment for the benefit of creditors; (ii) Lessee becomes a
"debtor" as defined in 11 U.S.C. # 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee,
the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in
this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure
of substantially all of Lessee's assets located at the Premises or
of Lessee's interest in this Lease, where such seizure is not
discharged within 30 days. Provided, however, in the event that
any provision of this paragraph 13.1(d) is contrary to any
applicable law, such provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement
given to Lessor by Lessee, any assignee of Lessee, any subtenant of
Lessee, any successor in interest of Lessee or any guarantor of
Lessee's obligation hereunder, and any of them, was materially
false.
13.2 Remedies. In the event of any such material default or
breach by Lessee, Lessor may at any time thereafter, with or
without notice or demand and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of
such default or breach;
(a) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease shall
terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to
recover from Lessee all damages incurred by Lessor by reason of
Lessee's default including, but not limited to, the cost of re-
covering possession of the Premises; expenses of reletting,
including necessary renovation and alteration of the Premises, rea-
sonable attorney's fees, and any real estate commission actually
paid; the worth at the time of award by the court having juris-
diction thereof of the amount by which the unpaid rent for the
balance of the term after the time of such award exceeds the amount
of such rental loss for the same period that Lessee proves could be
reasonably avoided; that portion of the leasing commission paid by
Lessor pursuant to Paragraph 15 applicable to the unexpired term of
this Lease.
(b) Maintain Lessee's right to possession in which case
this Lease shall continue in effect whether or not Lessee shall
have abandoned the Premises. In such event Lessor shall be
entitled to enforce all of Lessor's rights and remedies under
his Lease, including the right to recover the rent as it becomes
due hereunder.
(c) Pursue any other remedy now or hereafter available
to Lessor under the laws or judicial decisions of the state wherein
the Premises are located. Unpaid installments of rent and other
unpaid monetary obligations of Lessee under the terms of this Lease
shall bear interest from the date due at 15% per annum.
13.3 Default By Lessor. Lessor shall not be in default unless
Lessor fails to perform obligations required of Lessor within a
reasonable time, but in no event later than thirty (30) days after
written notice by Lessee to Lessor and to the holder of any first
mortgage or deed of trust covering the Premises whose name and
address shall have theretofore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are required for performance
then Lessor shall not be in default if Lessor commences performance
within such 30-day period and thereafter diligently prosecutes the
same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late
payment by Lessee to Lessor of rent and other sums due hereunder
will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and
accounting charges, and late charges which may be imposed on Lessor
by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within
ten (10) days after such amount shall be due or any other required
payment is not made by Lessee within ten (10) days after notice
from Lessor that the same is due then, without any requirement for
notice to Lessee, Lessee shall pay to Lessor a late charge equal to
6% of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs
Lessor will incur by reason of late payment by Lessee. Acceptance
of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding
paragraph 4 or any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) installments of
rent or any other monetary obligation of Lessee under the terms of
this Lease, Lessee shall pay to Lessor, if Lessor shall so request,
in addition to any other payments required under this Lease, a
monthly advance installment, payable at the same time as the
monthly rent, as estimated by Lessor, for real property tax and
insurance expenses on the Premises which are payable by Lessee
under the terms of this Lease. Such fund shall be established to
insure payment when due, before delinquency, of any or all such
real property taxes and insurance premiums. If the amounts paid to
Lessor by Lessee under the provisions of this paragraph are
insufficient to discharge the obligations of Lessee to pay such
real property taxes and insurance premiums as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional
sums necessary to pay such obligations. All moneys paid to Lessor
under this paragraph may be intermingled with other moneys of
Lessor and shall not bear interest. In the event of a default in
the obligations of Lessee to perform under this Lease, then any
balance remaining from funds paid to Lessor under the provisions of
this paragraph may, at the option of Lessor, be applied to the
payment of any monetary default of Lessee in lieu of being applied
to the payment of real property tax and insurance premiums.
14. Condemnation. If the Premises or any portion thereof are
taken under the power of eminent domain, or sold under the threat
of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken
as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the
improvements on the premises, or more than 25% of the land area of
the Premises which is not occupied by any improvements, is taken by
condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten (10) days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall
have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the
Premises remaining, except that the rent shall be reduced in the
proportion that the floor area taken bears to the total floor area
of the building situated on the Premises. Any award for the taking
of all or any part of the Premises under the power of eminent
domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold or
for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any award for loss of or
damage to Lessee's trade fixtures and removable personal property.
In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall, to the extent of severance damages
received by Lessor in connection with such condemnation, repair any
damage to the Premises caused by such condemnation except to the
extent that Lessee has been reimbursed therefor by the condemning
authority. Lessee shall pay any amount in excess of such severance
damages required to compete such repair.
15. Broker's Fee. [DELETED.]
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than fifteen
(15) days prior written notice from Lessor execute, acknowledge and
deliver to Lessor a statement in writing (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to Lessee's knowledge, any
uncured defaults on the part of Lessor hereunder, or specifying
such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such
statement within such time shall be a material breach of this Lease
or shall be conclusive upon Lessee (i) that this Lease is in full
force and effect, without modification except as may be represented
by Lessor, (ii) that there are no uncured defaults in Lessor's
performance, and (iii) that not more than one month's rent has been
paid in advance or such failure may be considered by Lessor as a
default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee hereby agrees to deliver to
any lender or purchaser designated by Lessor such financial
statements of Lessee as may be reasonably required by such lender
or purchaser. Such statements shall include the past three years'
financial statements of Lessee. All such financial statements
shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set
forth.
17. Lessor's Liability. The term "Lessor" as used herein shall
mean only the owner or owners at the time in question of the fee
title or a lessee's interest in a ground lease of the Premises, and
except as expressly provided in Paragraph 15, in the event of any
transfer of such title or interest, Lessor herein named (and in
case of any subsequent transfers then the grantor) shall be
relieved from and after the date of such transfer of all liability
as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest,
shall be delivered to the grantee. The obligations contained in
this Lease to be performed by Lessor shall, subject as aforesaid,
be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease
as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear
interest at 15% per annum from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this
Lease, provided, however, that interest shall not be payable on
late charges incurred by Lessee nor on any amounts upon which late
charges are paid by Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor
under the terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease
contains all agreements of the parties with respect to any matter
mentioned herein. No prior agreement or understanding pertaining
to any such matter shall be effective. This Lease may be modified
in writing only, signed by the parties in interest at the time of
the modification. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither the real estate broker listed in
Paragraph 15 hereof nor any cooperating broker on this transaction
nor the Lessor or any employees or agents of any of said persons
has made any oral or written warranties or representations to
Lessee relative to the condition or use by Lessee of said Premises
and Lessee acknowledges that Lessee assumes all responsibility
regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all
applicable laws and regulations in effect during the term of this
Lease except as otherwise specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given
hereunder shall be in writing and may be given by personal delivery
if to Lessee, only to a person with a title of Office Manager or
higher, or by certified mail, and if given personally or by mail,
shall be deemed sufficiently given if addressed to Lessee or to
Lessor at the address noted below the signature of the respective
parties, as the case may be. Either party may by notice to the
other specify a different address for notice purposes except that
upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all
notices required or permitted to be given to Lessor hereunder shall
be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by
notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent
breach by Lessee of the same or any other provision. Lessor's
consent to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to or approval of any
subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of
such preceding breach at the time of acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes.
26. Holding Over. If Lessee, with Lessor's consent, remains in
possession of the Premises or any part thereof after the expiration
of the term hereof, such occupancy shall be a tenancy from month to
month upon all the provisions of this Lease pertaining to the
obligations of Lessee, but all options and rights of first refusal,
if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month
tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with
all other remedies at law or in equity.
28. Covenants and Conditions. Each provisions of this Lease
performable by Lessee shall be deemed both a covenant and a
condition.
29. Binding Effect; Choice of Law. Subject to any provisions
hereof restricting assignment or subletting by Lessee and subject
to the provisions of Paragraph 17, this Lease shall bind the
parties, their personal representatives, successors and assigns.
This Lease shall be governed by the laws of the State wherein the
Premises are located.
30. Non-Disturbance. Notwithstanding anything in this Lease to
the contrary, Lessor shall use its best efforts to obtain the
written agreement in recordable form from the holder of every
mortgage and encumbrance with priority over this Lease, in form and
content reasonably satisfactory to Lessee, that neither such holder
nor its successors or assigns will take any action to interfere
with the rights of Lessee, its successors or assigns, in the
Premises so long as Lessee, its successors or assigns, are not in
default, after expiration of applicable notice and/or grace
provisions, under this Lease, and to make available insurance and
condemnation proceeds for repair and restoration to enable Lessor
to comply with its obligations under this Lease. Lessee agrees to
subordinate this Lease to any mortgage encumbering the Premises
subsequent to the date hereof, but only and if to the extent that
the holder of such mortgage has agreed in writing with Lessee as in
this paragraph 30 above described and only so long as such
agreement is in effect.
31. Attorney's Fees. If either party or the broker named herein
brings an action to enforce the terms hereof or declare rights
hereunder, the prevailing party in any such action, on trial or
appeal, shall be entitled to his reasonable attorney's fees to be
paid by the losing party as fixed by the court. The provisions of
this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
32. Lessor's Access. Lessor and Lessor's agents shall have the
right to enter the Premises at reasonable times for the purpose of
inspecting the same, showing the same to prospective purchasers,
lenders, or lessees provided the same will and shall not interfere
with the operations of Lessee from the Premises, but only upon the
prior written consent of Lessee, such consent not to unreasonably
be withheld, and making such alterations, repairs, improvements or
additions to the Premises or to the building of which they are a
part as Lessor may deem necessary or desirable. Lessor may at any
time place on or about the Premises any ordinary "For Sale" signs
and Lessor may at any time during the last 120 days of the term
hereof place on or about the Premises any ordinary "For Lease"
signs, all without rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction upon
the Premises without first having obtained Lessor's prior written
consent. Notwithstanding anything to the contrary in this Lease,
Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises
without Lessor's prior written consent except that Lessee shall
have the right, without the prior permission of Lessor to place
ordinary and usual for rent or sublet signs thereon. Existing
signs of Lessee are hereby deemed approved.
35. Merger. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, or a termination by
Lessor, shall not work a merger, and shall, at the option of
Lessor, terminate all or any existing subtenancies or may, at the
option of Lessor, operate as an assignment to Lessor of any or all
of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this
Lease the consent of one party is required to an act of the other
party such consent shall not be unreasonably withheld or delayed.
37. Guarantor. In the event that there is a guarantor of this
Lease, said guarantor shall have the same obligations as Lessee
under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the
Premises and observing and performing all of the covenants,
conditions and provisions on Lessee's part to be observed and per-
formed hereunder, Lessee shall have quiet possession of the Prem-
ises for the entire term hereof subject to all of the provisions of
this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully
authorized and legally capable of executing this Lease on behalf of
Lessor and that such execution is binding upon all parties holding
an ownership interest in the Premises.
39. Options. [DELETED.]
40. Multiple Tenant Building. [DELETED.]
41. Security Measures. Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the cost of guard
service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all
responsibility for the protection of Lessee, its agents and
invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to
time, to grant such easements, rights and dedications that Lessor
deems necessary or desirable, and to cause the recordation of
Parcel Maps and restrictions, so long as such easements, rights,
dedications, Maps and restrictions do not unreasonably interfere
with the use of the Premises by Lessee.
43. Performance Under Protest. If at any time a dispute shall
arise as to any amount or sum of money to be paid by one party to
the other under the provisions hereof, the party against whom the
obligation to pay the money is asserted shall have the right to
make payment "under protest" and such payment shall not be regarded
as a voluntary payment, and there shall survive the right on the
part of said party to institute suit for recovery of such sum. If
it shall be adjudged that there was no legal obligation on the part
of said party to pay such sum or any part thereof, said party shall
be entitled to recover such sum or so much thereof as it was not
legally required to pay under the provisions of this Lease.
44. Authority. If Lessee is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf
of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of said
entity. If Lessee is a corporation, trust or partnership, Lessee
shall, within thirty (30) days after execution of this Lease,
deliver to Lessor evidence of such authority satisfactory to
Lessor.
45. Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be
controlled by the typewritten or handwritten provisions.
46. Deleted.
47. Deleted.
48. Hazardous Materials/Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous
Materials/Hazardous Substances" as used in this Lease shall mean
any product, substance, chemical, material or waste whose presence,
nature, quantity and/or intensity of existence, use, manufacture,
disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a
basis for liability of Lessor to any governmental agency or third
party under any applicable statute or common law theory. Hazardous
Materials/Hazardous Substances shall include, but not be limited
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LESSOR:
5353 DOWNEY ASSOCIATES LTD., a
Executed at Beverly Hills, CA California limited Partnership
on , 1995
Address: 9595 Wilshire Blvd. By:
Suite 511 Michael L. Schwab
Beverly Hills, CA 90212 General Partner
SIGNATURES CONTINUED ON THE NEXT PAGE
LESSEE:
Executed at J & J SNACK FOODS CORP.
on , 1995
Address: By:
Its:
(Title)
By:
Its:
(Title)
[Corporate Seal]
Executed at J & J SNACK FOODS CORP. OF
CALIFORNIA
on , 1995
Address:
By:
Its:
(Title)
By:
Its:
(Title)
[Corporate Seal]
EXHIBIT 11.1
J & J SNACK FOODS CORP.
COMPUTATION OF EARNINGS PER COMMON SHARE
Fiscal year ended
September 30, September24, September 25,
1995 1994 1993
Primary Earnings Per Share
Net earnings $ 5,804,000 $ 8,532,000 $8,350,000
Weighted average number of
common shares outstanding
during year 9,436,000 10,192,000 10,242,000
Add common equivalent shares
(as determined by the
application of the treasury
stock method) representing
shares issuable upon assumed
exercise of stock options 108,000 238,000 189,000
Weighted average number of
common shares used in
calculation of primary
earnings per share 9,544,000 10,430,000 10,431,000
Earnings per common share
assuming no dilution $.61 $.82 $.80
Fully Diluted Earnings Per Share
Net earnings $ 5,804,000 $ 8,532,000 $ 8,350,000
Weighted average number of common
shares outstanding during year 9,436,000 10,192,000 10,242,000
Add common equivalent shares (as
determined by the application
of the treasury stock method)
representing shares issuable
upon assumed exercise of stock
options 106,000 243,000 328,000
Weighted average number of
common shares used in calcu-
lation of fully diluted
earnings per share 9,542,000 10,435,000 10,570,000
Earnings per common share
assuming full dilution $.61 $.82 $.79
47
J & J Snack Foods Corp.
Front cover page: Graphic of J&J Snack Foods Copr. LOGO and
drawing of SuperPretzel
1995 Annual Report
Profile
J & J Snack Foods Corp. is a special niche company that
manufactures, markets and distributes an expanding variety of
nutritional, popularly priced snack foods and beverages to the
food service and retail supermarket industries.
Our product offerings include soft pretzels; frozen carbonated
beverages; frozen juice bars and desserts; churros, a cinnamon
pastry; funnel cakes; cookies, muffins and baked health foods;
popcorn and other snack foods and drinks.
These tasty products are available throughout the U.S. and a
growing list of markets abroad. Consumers enjoy them in a variety
of settings, including:
* Snack bars and food stands in leading chain, department,
discount and convenience stores
* Malls and shopping centers
* Fast food outlets
* Stadiums and sports arenas
* Leisure and theme parks
* Movie theatres
* Schools, colleges and other institutions
In addition, a number of J & J's products are available through
supermarkets and warehouse club stores for home consumption.
Financial Highlights
J & J Snack Foods Corp. and Subsidiaries
Fiscal year ended in September
(In thousands except per share data)
1995 1994 1993 1992 1991
Sales $185,362 $174,425 $147,190 $126,927 $109,666
Net Earnings $5,804 $8,532 $8,350 $5,936 $6,079
Total Assets $123,309 $127,366 $121,494 $112,447 $104,412
Long-Term
Debt $5,011 $5,028 $5,043 $5,068 $2,411
Stockholders'
Equity $96,084 $100,545 $97,956 $90,065 $86,437
Common Share Data
Earnings Per
Share $.61 $.82 $.80 $.55 $.67
Book Value
Per Share $10.53 $10.17 $9.49 $8.66 $8.12
Common Shares Outstanding
At Year End 9,126 9,889 10,318 10,400 10,641
Graphic: Chart representation of Sales, Net Earnings and Stockholders equity
for the years 1991 through 1995. The information depicted is
contained in the above chart.
Graphic: Photograph of Gerald B. Shreiber President and Chairman of J&J
Snack Foods Corp.
Letter from the President
While preparing to write my President's Message for the year, I
struggled with an appropriate tone to describe our performance for
fiscal year 1995.
I didn't want to paint a glossed-over inaccurate picture of
rose-colored puffery, supported by selective numbers and facts.
Nor did I want to be too negative in view of our actual
performance and, given the dedicated and tireless effort of our
people.
Last year was, indeed, a year of challenges. Although our sales
climbed to a record $185.4 million -- our 24th consecutive year of
sales increases -- our earnings, impacted by a combination of
unrelated factors, declined to $5.8 million.
1995 Results in brief:
All in all, the numbers look like this:
* Sales grew 6.3% to $185.4 million.
* Net income declined to $5.8 million from $8.5 million.
* Earnings per share decreased to $.61 from $.82.
* Book value increased to $10.53 per share.
During fiscal year 1995, a combination of factors, including
higher costs of raw materials and packaging, increased competition
in our supermarket business sector, and economic problems and the
peso devaluation in Mexico, contributed to our earnings decline.
While we didn't achieve the overall goals and objectives we had
set for ourselves, we did, nevertheless, improve our position and
foundation in several key areas. In fiscal year 1995, we:
* Expanded our core food service markets.
* Developed new products, including soft pretzel line extensions
and fruit filled churros.
* Increased our manufacturing capability and improved our
efficiencies.
* Developed new channels of distribution.
* Acquired international marketing rights for ICEE.
While dealing with challenges in 1995 that negatively impacted our
earnings, we maintained our focus on expanding our markets for the
long term. On the cover of this year's annual report is an
illustration of a soft pretzel along with scenes depicting a
variety of market settings for our products. Our products and business
opportunities take us into a growing and diverse variety
of settings to sell our products, competing for "share of stomach"
at tens-of-thousands of locations including:
* Sports arenas, amusement and theme parks
* Mass merchandisers
* Malls and shopping centers
* Business and industry
* Schools, colleges and healthcare institutions
* Convenience stores
* Supermarkets and club stores
Over the years, we have improved our products and method of
presentation to the consumer so as to make them more available,
affordable and appealing.
Niche product leadership
SUPERPRETZEL soft pretzels is the recognized leader and has the
dominant share of the growing soft pretzel category. As the low
cost producer and market innovator, we plan on continuing our
category development and leadership. Our other niche products,
including TIO PEPE'S churros, LUIGI'S Real Italian Ice, SHAPE-UPS
frozen juice bars, THE FUNNEL CAKE FACTORY funnel cakes and our
ICEE and ARCTIC BLAST frozen carbonated beverages, are also the
market leaders in their niche categories.
The above group, while impacted by increased costs of raw
materials and packaging, continued to support and grow its niche
markets while defending its market share.
We particularly addressed problems related to our frozen
carbonated beverage business, which operates under the ICEE and
ARCTIC BLAST brands. Beverage sales of this group rose 3%,
reversing a decline in 1994 and operational efficiencies and other
strategies were put in place to improve performance and
profitability.
While competition is intense for the consumer discretionary
dollar, our nutritional snack foods and beverages are unique. Our
niche positioning and trade relations are excellent and our
customer base continues to expand. Over the years, we have
enhanced our position as a premier producer and have invested
heavily to maintain that edge.
25th Anniversary
As we look to fiscal 1996, our 25th Anniversary year, we are
enthusiastic and optimistic for the future. Nearly a quarter
century of business experience, leadership and growth, coupled
with our dedicated management, gives us great confidence for the
future.
Our business remains fertile and growable. We are the market
leaders in the snack food and beverage categories that we
participate in. We believe our products are relatively resistant
to cyclical recessionary pressures. We are financially sound and
our cash flow is strong. We plan on continuing to grow our
business through internal expansion and through possible
acquisitions. We will continue to manage our business for the long
term and we believe we are well positioned for the future.
Graphic of Mr. Shreiber's signature.
Gerald B. Shreiber
President and Chairman
December 1, 1995
Graphic: Picture of a box of SuperPretzel Bites and a SuperPretzel Graphic
Soft Pretzels
Graphic: Pictures of a box of SuperPretzel Bites, Softstix, SuperPretzel, and
banners for Sweet Dough Soft Pretzels and Bavarian Pretzel Bakery
The right snacks for today.
In today's fast-paced world, people have less time. They're making
the most of every minute and eating on the run wherever they go.
Today's health-conscious consumers want snacks that are
nutritious, as well as delicious. And parents continue to search
for ways to combat traditional "fast-food mania" by providing
equally fun and tasty treats for their children.
J & J Snack Foods is ideally positioned to benefit from these two
mega-trends. Our wide variety of wholesome and satisfying products
are available in more and more of the places where consumers find
themselves "grabbing a snack." At the local shopping mall; a
sporting event; a theme park; at school; or even a quick bite at
home.
As the largest producer of soft pretzels in the world, J & J Snack
Foods' flagship brand, SUPERPRETZEL soft pretzels, is "the
good-for-you snack." They're fat free, cholesterol free and all
natural -- qualities that continue to fuel our soft pretzel sales
in both our Food Service and Retail Supermarket divisions.
A growth strategy that works.
J & J's sales and marketing strategy for growth has produced
outstanding results across our product lines, and consists of two
fundamental principles:
* Create innovative new products for existing distribution
channels
* Develop new distribution channels for existing products
Over the years, we have created innovative new products by
introducing a number of line extensions to our flagship
SUPERPRETZEL brand. These include such products as SOFT PRETZEL
BITES, SOFTSTIX cheese-filled soft pretzel sticks, THE BIG CHEESE
cheese-filled soft pretzels, king size and one ounce soft pretzels
as well as proprietary and custom pretzel shapes.
Our second principle is visible in the number of new locations
where our pretzels can be found. In the past year, we continued to
expand soft pretzel distribution to consumers through various
alternative product delivery systems through schools and home
delivery services, which helped contribute to an overall 13%
increase in food service soft pretzel sales.
SUPERPRETZEL: The gold standard.
SUPERPRETZEL soft pretzels are "the perfect snack." Recognized as
the gold standard of soft pretzels, it is the brand consumers have
come to know and trust. For customers with existing food service
facilities, we provide the well known SUPERPRETZEL soft pretzel
brand, which can stand alone or work together with other branded
merchandising concepts.
SUPERPRETZEL generates revenue even for customers without
traditional snack bar facilities, thanks to our branded concept
programs and innovative use of specially designed mobile
merchandising units. College campuses and warehouse club stores
are among those enjoying added revenue generating food service
operations.
Feeling the heat in the freezer case.
The SUPERPRETZEL product line, including SUPERPRETZEL soft
pretzels, SOFT PRETZEL BITES and SOFTSTIX, is the number one brand
of soft pretzels in the retail supermarket. These microwaveable
pretzels make it easy for consumers to enjoy a soft, warm,
delicious treat at home or at work -- in just seconds.
Graphic: Drawing of baseball park packed with fans eating
SuperPretzels
This year, however, has been a challenging one. Significant and
increased competition for freezer space from other soft pretzels
and hot snacks, together with slower category growth, has impacted
our performance.
Although overall supermarket sales of our soft pretzel products
declined by 2% for the year, mostly due to volume declines of
SOFTSTIX, our core retail SUPERPRETZEL soft pretzels grew
slightly. We are in the process of implementing programs and
marketing strategies which are designed to regain positive
momentum in building the soft pretzel category in supermarkets.
A new twist on pretzels.
As the market leader and innovator, we are always working to
further improve our existing soft pretzel products and introduce
new items to the marketplace. Our research and development
department continues to create soft pretzel line extensions in new
flavors, shapes and sizes.
This year marked the introduction of a new soft pretzel product to
our Food Service division: SWEET DOUGH soft pretzels. These soft
pretzels offer an exciting twist on the conventional soft pretzel
using a non-traditional sweet dough recipe. They're delicious
plain or dipped in butter and topped with cinnamon sugar.
Near the end of our fourth quarter, tests were initiated on a new
cinnamon raisin pretzel for an existing large food service
customer. Other new products are in various stages of development
and commercialization.
Snackin' at the pretzel shoppe.
Consumers continue to flock to our BAVARIAN PRETZEL BAKERY outlets
for a healthy snack on the run. This J & J subsidiary operates
approximately 80 retail outlets in regional malls primarily
throughout the Mid-Atlantic states, all company owned and
operated.
Retail sales at BAVARIAN PRETZEL BAKERY grew by 6% for the year.
The menu offerings were expanded at many locations to include our
new SWEET DOUGH soft pretzels along with a host of other J & J
snack items. BAVARIAN PRETZEL BAKERY enables us to compete in the
growing retail pretzel shoppe marketplace and provides a natural
extension to our distribution channels.
It's Fun! It's Healthy! It's SUPERPRETZEL!
No wonder kids, parents and schools love SUPERPRETZEL! It's the
perfect fat free school lunch or snack item. Our soft pretzel
products meet the requirements for the U.S.D.A. National School
Lunch/Breakfast Program.
Graphic: Drawing of a SuperPretzel
A Super Selling Tool
J & J offers a wide array of branded merchandising and equipment
programs which are available to our thousands of food service
customers.
These units, which prominently display our eye-catching
SUPERPRETZEL logo, provide food service customers with everything
they need. The result is higher consumer recognition and increased
sales.
Graphic: Picture of a SuperPretzel display case
Frozen Desserts
Graphic: Picture of a LUIGI'S reqtail package, LUIGI'S, shap-ups
and FROSTAR logos.
Our frozen products are hot! hot! hot!
Our two-fold growth strategy of product development and market
expansion has resulted in healthy sales gains for J & J's other
niche products, including frozen juice bars and desserts, marketed
under the LUIGI'S, SHAPE-UPS and FROSTAR brands.
Frozen dessert products for the Food Service division experienced
growth this year largely due to the new LUIGI'S Real Italian Ice
squeeze-up tubes, which helped produce a sales increase of 26% for
the year.
LUIGI'S is another good-for-you niche product benefitting from the
consumer's desire to eat healthier foods. An excellent alternative
to ice cream, it's a refreshing taste treat that is fat free,
cholesterol free and dairy free.
We also enjoyed continued strength in our SHAPE-UPS and FROSTAR
brands. These frozen treats are both made with real fruit juice
and are sold primarily through school food service. Like our soft
pretzels, SHAPE-UPS carry the Child Nutrition (CN) Label and are
approved by the U.S.D.A. for the National School Lunch Program.
They're nutritious, fun to eat, and a favorite of kids nationwide.
Graphic: Artist drawing of children
The squeeze is on!
LUIGI'S Real Italian Ice squeeze-up tubes, which were introduced
last year in a 4 oz. size, were rolled out nationally this year
with better than expected results. Squeeze-ups are currently being
sold in snack bars, convenience stores, leisure and theme parks
and pizzeria restaurants. And they're even being served on a major
airline!
Made with real fruit juice, LUIGI'S 4 oz. squeeze-ups are also
being sold in a wide variety of retail outlets to complement our
other snack foods. A variety pack was designed for sale in
warehouse club stores and is experiencing strong sales growth.
And, to generate LUIGI'S sales at stadiums and arenas, we
introduced an exclusive 8 oz. squeeze-up tube toward the end of
our year.
A growing year in grocery.
Retail supermarket sales of LUIGI'S Real Italian Ice experienced
another strong growth year, thanks in part to today's health
conscious consumers. Sales and market share increased
significantly. We also introduced and successfully gained
distribution of a new variety pack to the marketplace.
Industry retail information reports indicate that this year's
sales have resulted in LUIGI'S becoming the number one brand of
Italian Ice in the supermarket freezer.
Sizing Up Each Market
LUIGI'S Real Italian Ice is available in 6-oz. cups for retail
supermarkets, and 4-oz. and 8-oz. squeeze-up tubes for food
service sales. No matter what the size, LUIGI'S is a delicious,
fat free, cholesterol free and dairy free treat for kids of all
ages.
Graphic: Pictures of three LUIGI'S products
Other Snack Foods
Graphic: Picture of Churros and Funnel Cake graphic
Viva TIO PEPE!
J & J Snack Foods Corp. produces a variety of other niche snack
foods including TIO PEPE'S churros, a crispy, cinnamon-sugared,
doughnut-like snack of Hispanic origin. Churro sales were down
only slightly for the year despite a large decline in sales to one
customer that discontinued the product offering.
Traditionally well known in the West and Southwest, churros are
now becoming more familiar to consumers nationwide due to
increased exposure. In keeping with our strategy to create new
market niches for existing products, in 1995 we increased churro
sales through warehouse club stores and in retail supermarkets in
Western and Southwest markets.
In our continuing effort to expand our international business, a
churro program was introduced in Mexico through our ICEE division.
Additionally, our export sales of churros to the Far East continue
to grow.
Graphic: Artist rendering of a Churros concession stand
Churros and fruit -- ole !
In our fourth quarter we developed a new food service line
extension which is being introduced in fiscal '96, TIO PEPE'S
fruit filled churros. They combine the traditional churro cinnamon
pastry with delicious fruit and cream fillings. It's a scrumptious
and wholesome combination!
Our filled churros will appeal to food service locations beyond
traditional snack bars. They're also perfect for school food
service, since they meet both bread and fruit requirements for the
U.S.D.A. National School Breakfast/Lunch Program.
Funnel cakes made easy.
Funnel cakes are "the original carnival treat" that J & J has
turned into a growing business, marketing a line of frozen
pre-cooked and dry mix funnel cakes under THE FUNNEL CAKE FACTORY
brand name. Our unique, frozen funnel cakes make preparation
easier than ever before. In fact, just heat and serve -- no more
mixing, measuring or frying required.
Our funnel cakes are also approved by the U.S.D.A. for the
National School Breakfast Program. They are sold through our Food
Service division to school food service, snack bars and amusement
parks.
Churros on the Move!
We've placed our innovative new mobile merchandising carts at
warehouse club stores nationwide.
These carts give thousands of shoppers the chance to try our
churros, which can then be purchased from the frozen foods section
for home consumption.
Graphic: Picture of a Churros display case
Frozen Carbonated Beverages (FCB)
Graphic: Picture of a box of Churros and Churros and Funnel Cake Graphics
A refreshing way to chill out.
Ice-cold and bubbly, our ICEE and ARCTIC BLAST brands are among
the most refreshing drinks available in what has become a fiercely
competitive beverage market.
These semi-frozen beverages, which are served from our proprietary
dispensing equipment, are marketed and distributed by ICEE-USA,
the FCB division of J & J Snack Foods Corp. Whether sipped through
a straw or eaten with a spoon, they're a growing favorite of
consumers of all ages.
We're continually working to put our frozen beverages in the hands
of more consumers in more locations. Today, they can be found in
thousands of outlets throughout North America, including many
outlets where our soft pretzels and other snack foods are sold.
Finding liquidity in frozen assets.
Sales this year resulted in a modest increase of 1% in frozen
carbonated beverages and related products, despite a sharp sales
decline at our Mexican FCB subsidiary due to the troubled Mexican
economy and peso devaluation.
Graphic: Drawing of a snack food stand that is in the shape of a giant ICEE
Frozen Carbonated Beverage dispensing machine. The stand is staffed by a
sales person who is dispensing SuperPretzels and ICEE beverages to customers.
In order to provide for future gains by the frozen carbonated
beverage product line, we made key improvements throughout the
year. These included an aggressive new promotional program and the
development of a new kiosk designed for a mass merchandiser.
We also improved the efficiency of our syrup distribution system
by utilizing third party distribution, where appropriate, for a
segment of our customers. This plan will be expanded on a
selective basis.
New, "friendlier" dispensers.
The proprietary dispensing equipment manufactured by the FCB
division is a major factor in expanding our customer base. In
1995, we made several design and operational improvements in both
our standard ICEE floor model dispenser and our counter top
dispenser, which is used where space is a limitation. The results
have been improved reliability and more "user-friendly" machines.
A warm reception for a cool product.
The distribution of ARCTIC FREEZE, a new frozen beverage product,
was expanded to both school locations and other retailers this
past year. ARCTIC FREEZE is offered in two formulations, one of
which contains 50% fruit juice and carries the U.S.D.A. approved
Child Nutrition (CN) Label.
An expanding cold front.
Our ICEE-USA subsidiary is the largest distributor of frozen
carbonated beverages in North America, with branches and
warehouses positioned to serve our customers. Our ICEE products
are distributed in the western United States, Canada and Mexico,
while ARCTIC BLAST is sold primarily in the East.
During the year, we acquired the international rights for the sale
of ICEE products and are currently exploring opportunities to
develop the international market for FCB.
A Promotional Blast
To support our customers' retail sales efforts, we provide topical
in-store promotions and attention-getting point-of-sale materials.
Graphic: Pictures of ICEE and ARCTIC BLAST promotional material
J & J Snack Foods Corp. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Fiscal 1995 (53 weeks) Compared to Fiscal 1994 (52 weeks)
Net sales increased $10,937,000 or 6% in fiscal 1995 compared to
fiscal 1994 to $185,362,000. Net sales, excluding sales of Western
Syrup Company in both years, increased $13,084,000 or 8% to
$184,431,000 for the year.
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.
Sales to food service customers increased $10,455,000 or 15% to
$79,382,000 in fiscal 1995. Soft pretzel sales to the food service
market increased 13% to $51,032,000 and churro sales decreased 1%
to $9,512,000. Excluding a large sales decline to one customer,
sales of churros increased $824,000 or 10%. New channels of
distribution and new products accounted for most of the added
pretzel volume. Frozen juice bar and dessert sales increased 26%
to $13,571,000 due to expanded distribution and new products.
Sales of products to retail supermarkets increased $2,897,000 or
8% to $41,300,000 in fiscal 1995 due to higher unit volume. Total
soft pretzel sales to retail supermarkets were $26,043,000, a
decrease of 2% from fiscal 1994. Sales of the flagship
SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX, increased 3%
to $21,708,000. The increase was substantially less than in prior
years due to increased competition. SOFTSTIX sales decreased
$1,340,000 or 26% to $3,839,000 from the previous year. LUIGI'S
Real Italian Ice sales increased $3,533,000 or 33% to $14,358,000
due to increased distribution and market share.
Frozen carbonated beverage and related product sales increased
$590,000 or 1% to $43,600,000 in fiscal 1995 even though sales of
the Company's Mexican frozen carbonated beverage subsidiary were
down $1,232,000 or 39% for the year due to the devaluation of the
peso and the business downturn in Mexico. Beverage sales alone
increased 3% to $41,736,000.
Bakery sales decreased $1,471,000 or 13% to $9,485,000 in fiscal
1995 due to lower unit volume. The decline was due to a reduction
in purchases by a single customer. Bavarian Pretzel Bakery sales
increased 6% to $10,664,000 for the year.
Gross profit on sales declined to 50% for fiscal 1995 compared to
53% for fiscal 1994. The percentage decrease is 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 $6,196,000 to $85,481,000 in
fiscal 1995 and as a percentage of sales increased to 46% from 45%
in fiscal 1994. Marketing expenses as a percent of sales increased
approximately 2% of sales to 32% of sales in 1995 from 29% in 1994
due primarily to higher retail supermarket promotional and
advertising spending and increased equipment costs, which includes
depreciation, installation and service costs, in our frozen
carbonated beverage division. Distribution expenses decreased to
10% of sales in 1995 from 11% in 1994 due primarily to the use of
alternate channels of distribution and more efficient operations
in our frozen carbonated beverage division. Administrative
expenses decreased approximately 1/2% of sales to 4% of sales in
1995 due to higher sales volume and reduced expenses.
Operating income decreased $5,395,000 or 43% to $7,008,000 in
fiscal 1995. Decreases in operating income and increases in
operating losses were across all product lines.
Investment income increased in fiscal year 1995 due to a higher
level of invested funds and higher interest and dividend rates on
investments. Interest expense decreased $52,000 to $399,000
because of debt reduction.
Sundry income increased $789,000 to $1,365,000 for the fiscal year
principally due to gains on disposals of certain property and
equipment.
The effective income tax rate was 38% in both fiscal 1995 and
1994.
Net earnings decreased $2,728,000 or 32% in fiscal 1995 to
$5,804,000.
The Financial Accounting Standards Board (the FASB) issued a new
standard, FAS No. 107, "Disclosure About Fair Value of Financial
Instruments," which requires all entities to disclose the
estimated fair value of their financial instrument assets and
liabilities. The Company will be required to implement this new
standard in its fiscal year 1996. Implementation of this standard
will have no effect on earnings.
The FASB issued a new standard, FAS No. 123, "Accounting for
Stock-Based Compensation," which contains a fair value-based
method for valuing stock-based compensation that entities may use,
which measures compensation cost at the grant date based on the
fair value of the award. Compensation is then recognized over the
service period, which is usually the vesting period.
Alternatively, the standard permits entities to continue
accounting for employee stock options and similar equity
instruments under APB Opinion 25, "Accounting for Stock Issued to
Employees." Entities that continue to account for stock options
using APB Opinion 25 are required to make pro forma disclosures of
net income and earnings per share, as if the fair value-based
method of accounting defined in FAS No. 123 had been applied. The
Company has not determined which method it will follow in the
future. The Company will be required to adopt the new standard in
its fiscal year 1997.
The FASB issued a new standard, FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," which provides guidance on when to recognize and how
to measure impairment losses of long-lived assets and certain
identifiable intangibles and how to value long-lived assets to be
disposed of. The Company anticipates that the impact of FAS No.
121 on the financial position and results of operations of the
Company, when adopted, will not be material. The Company is
required to adopt this new standard in its fiscal year 1997.
The Company adopted FAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which provides
guidance on accounting and reporting for investments in equity
securities with readily determinable fair values and for all
investments in debt securities. The Company adopted this new
standard in the first quarter of the current fiscal year with no
impact on earnings.
Results of Operations
Fiscal 1994 (52 weeks) Compared to Fiscal 1993 (52 weeks)
Net sales increased $27,235,000 or 19% in fiscal 1994 compared to
fiscal 1993 to $174,425,000. Net sales, excluding sales of
Bavarian Pretzel Bakery, increased $17,184,000 or 12% to
$164,374,000 for the year.
Sales to food service customers increased $9,950,000 or 17% to
$68,927,000 in fiscal 1994. Soft pretzel sales to the food service
market increased 21% to $45,246,000 and churro sales increased 18%
to $9,603,000. Expanded unit volume accounted for virtually all of
the dollar increases and resulted from increased warehouse club
store, fast food chain, convenience store, school, movie theatre
and stadium business. Frozen juice bar and dessert sales increased
13% to $10,806,000.
Sales of products to retail supermarkets increased $8,426,000 or
28% to $38,403,000 in fiscal 1994 primarily due to higher unit
volume. Total soft pretzel sales to retail supermarkets were
$26,453,000, an increase of 36% from fiscal 1993. Sales of the
flagship SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX,
increased 29% to $20,977,000. SOFTSTIX sales increased $2,008,000
to $5,179,000 in the year primarily due to expanded distribution.
LUIGI'S Real Italian Ice sales increased $1,299,000 or 14% to
$10,825,000 due to higher unit volume and a price increase. The
price increase accounted for approximately 50% of the dollar sales
increase.
Frozen carbonated beverage and related product sales decreased
$2,463,000 or 5% to $43,010,000 in fiscal 1994. Beverage sales
alone decreased 6% to $40,371,000 even though there were an
increased number of our frozen carbonated beverage dispensers at
customer locations. The sales decrease was caused by continuing
significant declines in unit sales to the division's largest
customer and by temporary and permanent removals and relocations
of our frozen carbonated beverage dispensers at chain and
convenience store accounts, as well as by other less directly
identifiable factors.
Bakery sales increased $1,697,000 or 18% to $10,956,000 in fiscal
1994 due to higher unit volume. One customer accounted for
substantially all of the increase. Syrup and topping product sales
decreased $426,000 or 12% to $3,078,000 due to lower unit volume.
Gross profit on sales was 53% for fiscal 1994 compared to 55% for
fiscal 1993. Excluding Bavarian, gross profit as a percentage of
sales was 55% in both fiscal years.
Total operating expenses increased $10,400,000 in fiscal 1994 and
as a percentage of sales decreased to 45% from 47% in fiscal 1993.
Excluding Bavarian, operating expenses as a percentage of sales
increased 1% to 48% in 1994. Marketing expenses, exclusive of
Bavarian, increased from 29% to 31% for the year primarily because
of higher frozen carbonated beverage marketing expenses combined
with lower frozen carbonated beverage sales compared to last year.
Distribution expenses, exclusive of Bavarian, were 12% of sales in
both years. Administrative expenses, exclusive of Bavarian,
decreased less than 1% to 4% of sales in the current year from 5%
last year primarily because of higher sales volume.
Group health insurance costs for fiscal year 1994 decreased
approximately $1,000,000 from last year's amounts due to a change
in programs effected during last year's third quarter. Most of the
decreases were in operating expenses.
Operating income increased $196,000 or 2% to $12,403,000 in fiscal
1994.
Investment income increased slightly in fiscal year 1994 due to a
higher level of invested funds. Interest expense increased $86,000
to $451,000 in 1994 because of the Bavarian acquisition and
because interest on the borrowings related to the expansion of the
East Coast freezer storage warehouse was capitalized during the
construction period in 1993 but was fully expensed in 1994.
Sundry income increased $403,000 to $576,000 for the fiscal year
principally due to the sale of idle land.
The effective income tax rates were 38% in fiscal 1994 and 36% in
fiscal 1993. The increase of slightly more than 1% in the
effective income tax rate was caused by higher federal income tax
rates in 1994 and miscellaneous factors. The Financial Accounting
Standards Board (the FASB) issued a new standard, FAS No. 109,
"Accounting for Income Taxes," which significantly changes the
accounting for deferred income taxes. The statement provides for a
liability approach under which deferred income taxes are provided
based upon enacted tax laws and rates applicable to the periods in
which the taxes become payable. The Company adopted this new
standard in the quarter ended December 25, 1993. The adoption of
the standard did not have a significant impact on net earnings for
fiscal year 1994.
Net earnings increased $182,000 or 2% in fiscal 1994 to
$8,532,000.
Acquisitions, Liquidity and Capital Resources
In May 1994, the Company acquired the assets of The Funnel Cake
Factory, Inc., a manufacturer and distributor of funnel cake
products. The acquisition was paid for with cash and stock.
In October 1993, all of the common stock of Bavarian Soft
Pretzels, Inc., a specialty snack food retailer operating in
malls, was acquired. The acquisition was paid for with cash.
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 in December 1994 caused a
reduction of $1,121,000 in stockholders' equity for the 1995
fiscal year because of the revaluation of the net assets of the
Company's Mexican frozen carbonated beverage subsidiary. The
Company experienced a dollar decline in the sales of this
subsidiary of about 50% since the devaluation. The Company
anticipates that the sales decline from prior year levels will
continue at least through the first quarter of the 1996 fiscal
year. In 1995, sales of the Mexican subsidiary decreased to
$1,966,000 from $3,198,000 in 1994.
Under share repurchase programs initiated in fiscal year 1992, the
Company purchased and retired 709,000 shares of its common stock
at a cost of $8,467,000 in fiscal years 1994 and 1993. Under an
additional share repurchase program initiated in fiscal year 1994,
the Company is authorized to acquire an additional 1,000,000
shares of its common stock. The Company repurchased and retired
854,600 shares at a cost of $10,118,000 in fiscal years 1995 and
1994 under this authorization. Total purchases of Company stock in
1995 under the repurchase programs were 801,000 shares at a cost
of $9,447,000.
Available to the Company are unsecured general purpose bank lines
of credit totalling $25,000,000. There were no borrowings under
these general bank lines of credit at September 30, 1995.
Fiscal 1995 Compared to Fiscal 1994
The combined balance of cash and cash equivalents and marketable
securities increased $3,456,000 from $11,064,000 in 1994 to
$14,520,000 in 1995 primarily because of the investment of
proceeds from long-term investments into cash equivalents.
Receivables increased $328,000 to $16,846,000 primarily because of
higher sales levels.
Inventories decreased $510,000 to $11,009,000 primarily because of
the sale of Western Syrup Company.
Property, plant and equipment increased $7,717,000 primarily
because of expenditures for dispensers required for the expansion
of the frozen carbonated beverage business, for ovens and portable
merchandisers required for the expansion of the food service
business and for the expansion and upgrading of production
capability at the Company's manufacturing facilities which were
offset by declines resulting from the sale of Western Syrup
Company, disposals and a foreign currency translation adjustment
recorded because of the devaluation of the Mexican peso.
Goodwill, trademarks and rights, net of accumulated amortization
decreased $1,149,000 to $8,644,000 primarily because of
amortization. Long-term investments decreased $2,429,000 to
$8,335,000 primarily because of the investment of proceeds from
long-term investments into cash equivalents. Sundry assets
increased by $302,000 from 1994 primarily because of a note
receivable accepted as part of the payment for the purchase of
Western Syrup Company by a third party offset by use of bond trust
funds.
Accounts payable decreased $1,247,000 primarily because of a
decline in deposits received for equipment purchases, a decline in
vendor advances and the sale of Western Syrup Company.
Accrued liabilities increased $1,385,000 in 1995 from $4,537,000
in 1994 due to higher sales rebates due customers, higher income
taxes accrued and a provision for closed stores at Bavarian
Pretzel Bakery.
Common stock decreased $9,144,000 in 1995 to $40,802,000 because
of payments by the Company to repurchase and retire its stock.
A foreign currency translation adjustment of ($1,121,000) was
recorded in 1995 due to the revaluation of the net assets of the
Company's Mexican frozen carbonated beverage subsidiary. The
revaluation was necessitated by the sharp devaluation of the
Mexican peso.
Net cash provided by operating activities decreased $2,579,000 to
$20,588,000 in 1995 from $23,167,000 in 1994 primarily because of
lower net earnings.
Net cash used in investing activities decreased $10,382,000 to
$7,353,000 in 1995 from $17,735,000 in 1994 primarily because of
lower capital expenditures of $5,651,000, no payments for
purchases of companies compared to $1,523,000 in 1994, an increase
of $4,282,000 in net proceeds from investments, and higher
proceeds of $323,000 from the sales of operations and disposals of
property and equipment offset by the lower use of funds from the
bond trust fund of $1,287,000. Capital expenditures decreased by
$5,651,000 in 1995 from 1994 primarily because of lower
expenditures by our frozen carbonated beverage division.
Net cash used in financing activities increased to $9,160,000 in
1995 compared to $7,268,000 used in 1994 primarily because of an
increase in the purchase of the Company's common stock of
$2,168,000.
Fiscal 1994 Compared to Fiscal 1993
The combined balance of cash and cash equivalents and marketable
securities decreased $4,724,000 from $15,788,000 in 1993 to
$11,064,000 in 1994 primarily because funds were redirected to
long-term investments.
Receivables increased $1,037,000 to $17,176,000 primarily because
of higher sales levels.
Inventories increased $1,019,000 to $11,519,000 because of higher
sales levels and inventory required for Bavarian Pretzel Bakery.
Prepaid expenses and deposits increased to $1,611,000 in 1994 from
$1,035,000 in 1993 because of deposits made for equipment
purchases.
Property, plant and equipment increased $18,532,000 primarily
because of expenditures for additional dispensers required for the
expansion of the frozen carbonated beverage business, for ovens
and portable merchandisers required for the expansion of the food
service business and for the expansion of production capacity at
the Company's primary East Coast manufacturing facility.
Goodwill, trademarks and rights, net of accumulated amortization
increased $441,000 to $9,793,000 because of the acquisitions of
Bavarian Pretzel Bakery and The Funnel Cake Factory, Inc.
Long-term investments increased $4,138,000 to $10,764,000 because
of the long-term investment of excess funds. Sundry assets
decreased by $2,330,000 from 1994 primarily because of the use of
$1,942,000 of bond trust funds.
Accounts payable increased $2,693,000 primarily because of
increased production requirements and deposits received for
equipment purchases.
Deferred income of $692,000 was recorded on the sale of the
Company's Hawaiian ICEE operations.
Common stock decreased $5,943,000 in 1994 to $49,946,000 because
of payments by the Company to repurchase and retire its stock.
Net cash provided by operating activities increased $2,948,000 to
$23,167,000 in 1994 from $20,219,000 in 1993 because of increased
depreciation and amortization of fixed assets, accounts payable
and accrued liabilities.
Net cash used in investing activities increased $6,182,000 to
$17,735,000 in 1994 from $11,553,000 in 1993 primarily because
increased capital expenditures of $3,167,000, higher payments for
purchases of companies of $1,322,000 and a decline of $4,670,000
in net proceeds from investments offset an increase in proceeds of
$1,500,000 from the sales of operations, property and equipment
and the increased use of funds from the bond trust fund of
$1,110,000. Capital expenditures increased by $3,167,000 in 1994
from 1993 primarily because of expenditures to increase production
capacity at the Company's primary East Coast manufacturing
facility.
Net cash used in financing activities increased to $7,268,000 in
1994 compared to $774,000 used in 1993 primarily because of an
increase in the purchase of the Company's common stock of
$5,421,000.
Consolidated Statements of Earnings
Fiscal year ended
September 30, September 24, September 25,
1995 1994 1993
(53 weeks) (52 weeks) (52 weeks)
Net sales $185,362,000 $174,425,000 $147,190,000
Cost of goods sold 92,873,000 82,737,000 66,098,000
Gross profit 92,489,000 91,688,000 81,092,000
Operating expenses
Marketing 58,444,000 51,428,000 43,364,000
Distribution 18,591,000 19,071,000 17,351,000
Administrative 7,585,000 7,936,000 7,321,000
Amortization of intangibles
and deferred costs 861,000 850,000 849,000
85,481,000 79,285,000 68,885,000
Operating income 7,008,000 12,403,000 12,207,000
Other income (deductions)
Investment income 1,327,000 1,145,000 1,113,000
Interest expense (399,000) (451,000) (365,000)
Sundry 1,365,000 576,000 173,000
2,293,000 1,270,000 921,000
Earnings before
income taxes 9,301,000 13,673,000 13,128,000
Income taxes 3,497,000 5,141,000 4,778,000
NET EARNINGS $5,804,000 $8,532,000 $8,350,000
Earnings per common share $.61 $.82 $.80
Weighted average
number of shares 9,544,000 10,430,000 10,431,000
The accompanying notes are an integral part of these statements.
Consolidated Balance Sheets
September 30, September 24,
1995 1994
Assets
Current Assets
Cash and cash equivalents $10,696,000 $6,621,000
Marketable securities
available for sale 3,824,000 4,443,000
Receivables
Trade, less allowance
of $271,000 and $296,000,
respectively 16,846,000 16,518,000
Other 621,000 658,000
Inventories 11,009,000 11,519,000
Prepaid expenses and deposits 1,498,000 1,611,000
Total current assets 44,494,000 41,370,000
Property, Plant and
Equipment, at cost 130,633,000 122,916,000
Less accumulated
depreciation and amortization 71,410,000 59,788,000
59,223,000 63,128,000
Other Assets
Goodwill, trademarks
and rights, less accumulated
amortization of $5,147,000
and $4,353,000, respectively 8,644,000 9,793,000
Long-term investments
available for sale 990,000 --
Long-term investments
held to maturity 7,345,000 10,764,000
Sundry 2,613,000 2,311,000
19,592,000 22,868,000
$123,309,000 $127,366,000
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities
of long-term debt $16,000 $15,000
Accounts payable 10,607,000 11,854,000
Accrued liabilities 5,922,000 4,537,000
Total current liabilities 16,545,000 16,406,000
Long-Term Debt, less current maturities 5,011,000 5,028,000
Deferred Income 666,000 692,000
Deferred Income Taxes 5,003,000 4,695,000
Commitments -- --
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,
9,126,000 and 9,889,000,
respectively 40,802,000 49,946,000
Foreign currency
translation adjustment (1,121,000) --
Retained earnings 56,403,000 50,599,000
96,084,000 100,545,000
$123,309,000 $127,366,000
The accompanying notes are an integral part of these statements.
Consolidated Statement of Stockholders' Equity
Foreign
Currency
Common Stock Translation Retained
Shares Amount Adjustment Earnings Total
Balance at
September 27, 1992 10,400,000 $56,348,000 $ -- $33,717,000 $90,065,000
Issuance of common
stock upon exercise
of stock options 151,000 1,399,000 -- -- 1,399,000
Repurchase of
common stock. (233,000) (1,858,000) -- -- (1,858,000)
Net earnings for the
fiscal year ended
September 25, 1993 -- -- -- 8,350,000 8,350,000
Balance at
September 25, 1993 10,318,000 55,889,000 -- 42,067,000 97,956,000
Issuance of common stock
Exercise of stock
options 80,000 936,000 -- -- 936,000
Acquisition 20,000 400,000 -- -- 400,000
Repurchase of
common stock (529,000) (7,279,000) -- -- (7,279,000)
Net earnings for the
fiscal year ended
September 24, 1994 -- -- -- 8,532,000 8,532,000
Balance at
September 24, 1994 9,889,000 49,946,000 -- 50,599,000 100,545,000
Issuance of common stock
upon exercise of stock
options 38,000 303,000 -- -- 303,000
Foreign currency
translation adjustment -- -- (1,121,000) -- (1,121,000)
Repurchase of
common stock. (801,000)(9,447,000) -- -- (9,447,000)
Net earnings for the
fiscal year ended
September 30, 1995 -- -- -- 5,804,000 5,804,000
Balance at
September 30, 1995 9,126,000 $40,802,000 $(1,121,000) $56,403,000 $96,084,000
The accompanying notes are an integral part of these statements.
Consolidated Statements of Cash Flows
Fiscal year ended
September 30, September 24, September 25,
1995 1994 1993
(53 weeks) (52 weeks) (52 weeks)
Cash flows from operating activities:
Net earnings $5,804,000 $8,532,000 $8,350,000
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and amortization
of fixed assets 15,040,000 13,797,000 11,815,000
Amortization of intangibles
and deferred costs 1,016,000 1,011,000 1,017,000
Gains from disposals of property
and equipment (1,222,000) (416,000) (82,000)
Increase (decrease) in deferred
income taxes 308,000 (73,000) 496,000
Other adjustments (123,000) -- (61,000)
Changes in assets and liabilities,
net of effects from purchase of companies
Increase in accounts receivable (443,000) (1,184,000) (2,013,000)
Increase in inventories (235,000) (400,000) (827,000)
Decrease (increase) in
prepaid expenses 15,000 (556,000) 339,000
Increase in accounts payable
and accrued liabilities 428,000 2,456,000 1,185,000
Net cash provided by operating
activities 20,588,000 23,167,000 20,219,000
Cash flows from investing activities:
Capital expenditures (12,935,000) (18,586,000) (15,419,000)
Proceeds from sales of operations 405,000 1,100,000 --
Payments for purchase of companies,
net of cash acquired and debt assumed -- (1,523,000) (201,000)
Proceeds from investments held
to maturity 405,000 4,606,000 210,000
Payments for investments
held to maturity (1,000,000) (4,171,000) (2,609,000)
Proceeds from investments
available for sale 6,609,000 6,020,000 15,910,000
Payments for investments
available for sale (2,981,000) (7,704,000) (10,090,000)
Decrease in bond trust fund 655,000 1,942,000 832,000
Proceeds from disposals of
property and equipment 1,620,000 602,000 202,000
Other (131,000) (21,000) (388,000)
Net cash used in
investing activities (7,353,000) (17,735,000) (11,553,000)
Cash flows from financing activities:
Proceeds from issuance of
common stock 303,000 786,000 1,204,000
Payments to repurchase
common stock (9,447,000) (7,279,000) (1,858,000)
Payments of long-term debt (16,000) (775,000) (137,000)
Other -- -- 17,000
Net cash used in
financing activities (9,160,000) (7,268,000) (774,000)
Net increase (decrease) in
cash and cash equivalents 4,075,000 (1,836,000) 7,892,000
Cash and cash equivalents
at beginning of year 6,621,000 8,457,000 565,000
Cash and cash equivalents
at end of year $10,696,000 $6,621,000 $8,457,000
The accompanying notes are an integral part of these statements.
Notes to Consolidated Financial Statements
Note A -- Summary of Accounting Policies
J & J Snack Foods Corp. and Subsidiaries (the Company)
manufactures, markets and distributes a variety of nutritional
snack foods and beverages to the food service and retail
supermarket industries. A summary of the significant accounting
policies consistently applied in the preparation of the
accompanying consolidated financial statements follows.
1. Principles of Consolidation
The consolidated financial statements include the accounts of J &
J Snack Foods Corp. and all its wholly-owned subsidiaries. All
material intercompany balances and transactions have been
eliminated in the consolidated statements.
2. Revenue Recognition
The Company recognizes revenue when its product is shipped.
3. Foreign Currency
Assets and liabilities in foreign currencies are translated into
U.S. dollars at the rate of exchange prevailing at the balance
sheet date. Revenues and expenses are translated at the average
rate of exchange for the period. The cumulative translation
adjustment is recorded as a separate component of stockholders'
equity.
4. Cash Equivalents
Cash equivalents are short-term, highly liquid investments with
original maturities of three months or less. Cash equivalents were
$11,524,000 and $4,895,000 at September 30, 1995 and September 24,
1994, respectively.
5. Concentrations of Credit Risk
Concentrations of credit risk with respect to trade receivables
are limited due to the dispersion of the Company's customers over
different industries and geographies.
6. Inventories
Inventories are valued at the lower of cost (determined by the
first-in, first-out method) or market.
7. Depreciation and Amortization
Depreciation of equipment and buildings is provided for by the
straight-line and accelerated methods over estimated useful lives.
Amortization of improvements is provided for by the straight-line
method over the term of the lease or the estimated useful life,
whichever is shorter. Goodwill, trademarks and rights arising from
acquisitions are being amortized by the straight-line method over
periods ranging from 5 to 30 years. Management reviews the
realization of goodwill based upon past and expected performance
of acquired businesses.
The FASB issued a new standard, FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," which provides guidance on when to recognize and how
to measure impairment losses of long-lived assets and certain
identifiable intangibles and how to value long-lived assets to be
disposed of. The Company anticipates that the impact of FAS No.
121 on the financial position and results of operations of the
Company, when adopted, will not be material. The Company is
required to adopt this new standard in its fiscal year 1997.
8. Financial Instruments
The FASB issued a new standard, FAS No. 107, "Disclosure About
Fair Value of Financial Instruments," which requires all entities
to disclose the estimated fair value of their financial instrument
assets and liabilities. The Company will be required to implement
this new standard in its fiscal year 1996.
9. Income Taxes
The Company adopted, effective September 26, 1993, FAS No. 109,
"Accounting For Income Taxes." Under the liability method
specified by FAS No. 109, deferred tax assets and liabilities are
determined based on the difference between the financial statement
and tax bases of assets and liabilities as measured by the enacted
tax rates which will be in effect when these differences reverse.
Deferred tax expense is the result of changes in deferred tax
assets and liabilities. The principal types of differences between
assets and liabilities for financial statement and tax return
purposes are vacation accruals, insurance reserves, deferred
income and accumulated depreciation.
The deferred method, used in years prior to fiscal 1994, required
the Company to provide for deferred tax expense based on certain
items of income and expense which were reported in different years
in the financial statements and the tax returns as measured by the
tax rate in effect for the year the difference occurred. The
cumulative effect of the change in accounting on years prior to
fiscal 1994 did not have a material impact on the Company's net
earnings for the year ended September 24, 1994.
10. Investments in Debt and Equity Securities
The Company adopted, effective September 25, 1994, FAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," which provides guidance on accounting and reporting
for investments in equity securities with readily determinable
fair values and for all investments in debt securities. The
adoption of FAS No. 115 did not have a material impact on the
financial position and results of operations of the Company.
11. Earnings Per Common Share
Earnings per share are based on the weighted average number of
common shares outstanding, including common stock equivalents
(stock options).
12. Accounting for Stock-Based Compensation
The FASB issued a new standard, FAS No. 123, "Accounting for
Stock-Based Compensation," which contains a fair value-based
method for valuing stock-based compensation that entities may use,
which measures compensation cost at the grant date based on the
fair value of the award. Compensation is then recognized over the
service period, which is usually the vesting period.
Alternatively, the standard permits entities to continue
accounting for employee stock options and similar equity
instruments under APB Opinion 25, "Accounting for Stock Issued to
Employees." Entities that continue to account for stock options
using APB Opinion 25 are required to make pro forma disclosures of
net income and earnings per share, as if the fair value-based
method of accounting defined in FAS No. 123 had been applied. The
Company has not determined which method it will follow in the
future. The Company will be required to adopt the new standard in
its fiscal year 1997.
Note B -- Acquisitions
In May 1994, the Company acquired the assets of The Funnel Cake
Factory, Inc., a manufacturer and distributor of funnel cake
products. The acquisition was paid for with cash and stock.
In October 1993, all of the common stock of Bavarian Soft
Pretzels, Inc., a specialty snack food retailer operating in
malls, was acquired. The acquisition was paid for with cash.
The acquisitions were accounted for under the purchase method of
accounting and the operations are included in the consolidated
financial statements from the respective acquisition dates. The
impact of the acquisitions on the results of operations is not
significant.
Note C -- Credit Arrangements
The Company has available general unsecured bank lines of credit
of $25,000,000 at rates below the prime rate. The loan agreements
specify net worth and other financial covenants. The entire
amounts of these lines of credit were available at September 30,
1995.
Note D -- Marketable Securities
The Company adopted FAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," effective September
25, 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 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 $6,600,000 in the year ended September 30, 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 September 30, 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 -- 46,000 950,000
Municipal govern-
-ment securities 3,818,000 6,000 8,000 3,816,000
$4,814,000 $18,000 $54,000 $4,778,000
Held to maturity
securities
Corporate debt
securities $1,015,000 $8,000 $15,000 $1,008,000
Municipal govern-
-ment securities 5,830,000 11,000 195,000 5,646,000
Other 500,000 -- -- 500,000
$7,345,000 $19,000 $210,000 $7,154,000
The following table lists the maturities of debt securities held
at September 30, 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 $3,824,000 $3,816,000 $ -- $ --
Due after
one year
through
five years 495,000 500,000 7,345,000 7,154,000
Due after
five years 495,000 450,000 -- --
Total $4,814,000 $4,766,000 $7,345,000 $7,154,000
Note E -- Inventories
Inventories consist of the following:
September 30, September 24,
1995 1994
Finished goods $5,669,000 $5,538,000
Raw materials 1,019,000 1,293,000
Packaging materials 1,947,000 1,777,000
Equipment parts and other 2,374,000 2,911,000
$11,009,000 $11,519,000
Note F -- Property, Plant and Equipment
Property, plant and equipment consist of the following:
September 30, September 24, Estimated
1995 1994 Useful Lives
Land $819,000 $973,000 --
Buildings 5,119,000 5,119,000 15-39.5 years
Plant
machinery and
equipment 39,006,000 35,045,000 5-10 years
Marketing
equipment 75,085,000 70,311,000 5 years
Transportation
equipment 2,086,000 2,622,000 5 years
Office
equipment 3,002,000 3,355,000 3-5 years
Improvements 5,036,000 4,741,000 5-20 years
Construction
in progress 480,000 750,000 --
$130,633,000 $122,916,000
Note G -- Accrued Liabilities
Included in accrued liabilities is accrued compensation of
$2,423,000 and $2,263,000 as of September 30, 1995 and September
24, 1994, respectively.
Note H -- Long-Term Debt
Long-term debt consists of the following:
September 30, September 24,
1995 1994
7.25% redeemable economic
development revenue bonds
payable December 2005; interest
payable semi-annually (subject
to debt limitation and minimum
stockholders' equity covenants) $5,000,000 $5,000,000
Other 27,000 43,000
5,027,000 5,043,000
Less current maturities 16,000 15,000
$5,011,000 $5,028,000
Annual principal payments of long-term debt as of September 30,
1995 are as follows:
1996 $16,000
1997 7,000
1998 4,000
1999 --
2000 --
2001 and thereafter 5,000,000
$5,027,000
Note I -- Deferred Income
Deferred income consists of the Company's unrecognized gain on the
sale of its ICEE operations in Hawaii to the former President of
ICEE-USA Corp. in July 1994 for $1,100,000 in cash. Under the
terms of the sale, the Company has guaranteed the payment of a
bank note by the newly formed company, ICEE of Hawaii, Inc.,
through the issuance of a letter of credit. The Company's
guarantee is collateralized by the assets of ICEE of Hawaii, Inc.
The Company recognizes gain on the sale as the principal due on
the bank note is reduced through payments by ICEE of Hawaii, Inc.
During the year ended September 30, 1995, $25,000 was recognized.
Note J -- Income Taxes
Effective September 26, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the
liability method. The income tax provision for fiscal year 1993
has not been restated and there was no material cumulative effect.
Fiscal year ended
September 30, September 24, September 25,
1995 1994 1993
(liability (liability (deferred
method) method) method)
Current
U.S. Federal $2,841,000 $4,829,000 $3,305,000
Foreign 63,000 98,000 261,000
State 285,000 449,000 248,000
3,189,000 5,376,000 3,814,000
Deferred (Benefit)
U.S. Federal 359,000 (259,000) 905,000
Foreign (43,000) 33,000 (71,000)
State (8,000) (9,000) 130,000
308,000 (235,000) 964,000
$3,497,000 $5,141,000 $4,778,000
The deferred income tax provision as of September 25, 1993
(deferred method) was comprised of the following:
Fixed asset accounting and depreciation methods $529,000
Benefit of tax carry forwards 233,000
Provision for workers' compensation (34,000)
Other 236,000
$964,000
The provisions for income taxes differ from the amounts computed
by applying the federal income tax rate of approximately 34% to
earnings before income taxes for the following reasons:
Fiscal year ended
September 30, September 24, September 25,
1995 1994 1993
(liability (liability (deferred
method) method) method)
Income taxes at
statutory rates $3,162,000 $4,649,000 $4,464,000
Increase (decrease) in
taxes resulting from:
State income taxes,
net of federal income
tax benefit 194,000 282,000 238,000
Non-taxable income (315,000) (310,000) (278,000)
Other 456,000 520,000 354,000
$3,497,000 $5,141,000 $4,778,000
Deferred tax assets and liabilities consist of the following:
September 30, September 24,
1995 1994
Deferred tax assets
Vacation accrual $256,000 $231,000
Insurance reserve 222,000 226,000
Deferred income 247,000 256,000
Other, net 449,000 420,000
1,174,000 1,133,000
Deferred tax liabilities
Depreciation of property
and equipment 6,115,000 5,774,000
Other, net 62,000 54,000
6,177,000 5,828,000
$5,003,000 $4,695,000
Note K -- Lease Commitments
The following is a summary of approximate future minimum rental
commitments for non-cancelable operating leases with terms of more
than one year as of September 30, 1995:
Plants and
Offices Equipment Total
1996 $2,935,000 $1,838,000 $4,773,000
1997 2,590,000 1,456,000 4,046,000
1998 2,310,000 1,109,000 3,419,000
1999 2,075,000 738,000 2,813,000
2000 1,823,000 613,000 2,436,000
2001 and
thereafter 11,696,000 613,000 12,309,000
$23,429,000 $6,367,000 $29,796,000
Total rent expense was $6,141,000, $6,407,000 and $3,598,000 for
fiscal years 1995, 1994 and 1993, respectively. Rent expense in
1995 and 1994 includes approximately $2,300,000 each year for
Bavarian's retail stores.
Note L -- Capital Stock
Under share repurchase programs initiated in fiscal year 1992, the
Company purchased and retired 709,000 shares of its common stock
at a cost of $8,467,000 in fiscal years 1994 and 1993. Under an
additional share repurchase program initiated in fiscal year 1994,
the Company is authorized to acquire an additional 1,000,000
shares of its common stock. The Company repurchased and retired
854,600 shares at a cost of $10,118,000 in fiscal years 1995 and
1994 under this authorization. Total purchases of Company stock in
1995 under the repurchase programs were 801,000 shares at a cost
of $9,447,000.
Note M -- Stock Options
In fiscal year 1992, the Company adopted a Stock Option Plan (the
"Plan") which replaces the former Incentive Stock Option Plan.
Pursuant to the Plan, stock options may be granted to officers and
key employees of the Company which qualify as incentive stock
options as well as stock options which are non-qualified. The
exercise price of incentive stock options is at least the fair
market value of the common stock on the date of grant. The
exercise price for non-qualified options is determined by a
committee of the Board of Directors. The options are generally
exercisable after three years and expire no later than ten years
from date of grant. There were 1,000,000 shares reserved under the
Plan; options for 504,000 shares remain unissued as of September
30, 1995.
In fiscal year 1991, the Company adopted a nonstatutory stock
option plan for non-employee directors and the Chief Executive
Officer of the Company whereby a total of 340,000 shares of common
stock may be issued. Under the plan, each non-employee director is
granted options to purchase 3,000 shares of common stock and the
Chief Executive Officer is granted options to purchase 25,000
shares annually. The option price is equal to the fair market
value of the common stock at the date of grant and the options
expire ten years after date of grant. Other non-qualified options
have been issued to the Chief Executive Officer, directors and
certain employees.
The following is a summary of stock options:
Incentive Non-Qualified
Stock Options Stock Options
Balance at September 27, 1992
Shares 550,129 225,026
Prices $5.75-14.16 $2.50-12.88
Granted
Shares 119,500 37,000
Prices $13.63-15.75 $13.63
Exercised
Shares 139,250 11,786
Prices $5.75-12.88 $7.50-9.81
Cancelled
Shares 31,800 958
Prices $7.25-12.88 $5.89
Incentive Non-Qualified
Stock Options Stock Options
Balance at September 25, 1993
Shares 498,579 249,282
Prices $5.75-15.75 $2.50-13.63
Granted
Shares 147,691 37,000
Prices $11.00 $11.00
Exercised
Shares 76,067 4,282
Prices $5.75-14.00 $5.89
Cancelled
Shares 20,125 --
Prices $7.25-14.00 --
Balance at September 24, 1994
Shares 550,078 282,000
Prices $7.25-15.75 $2.50-13.63
Granted
Shares 147,500 47,000
Prices $11.00-12.50 $11.75-11.88
Exercised
Shares 37,675 --
Prices $7.25-8.63 --
Cancelled
Shares 17,091 --
Prices $11.00-13.63 --
Balance at September 30, 1995
Shares 642,812 329,000
Prices $7.25-15.75 $2.50-13.63
Note N -- 401(k) Profit Sharing Plan
The Company maintains a 401(k) profit sharing plan for its
employees. Under the plan, the Company may make discretionary
profit-sharing and matching 401(k) contributions. Contributions of
$242,000, $204,000 and $146,000 were made in fiscal years 1995,
1994 and 1993, respectively.
Note O -- Cash Flow Information
The following is supplemental cash flow information:
Fiscal year ended
September 30, September 24, September 25,
1995 1994 1993
Cash paid for:
Interest (net of amount
capitalized) $395,000 $451,000 $367,000
Income taxes 2,826,000 5,024,000 4,425,000
Non-cash investing and financing activities:
During 1993, $17,000 of capital lease obligations were incurred
when the Company entered into leases for new equipment.
Report of Independent Certified Public Accountants
The Shareholders and Board of Directors
J & J SNACK FOODS CORP.
Graphic: Grant Thornton Letterhead
We have audited the accompanying consolidated balance sheets of J
& J Snack Foods Corp. and Subsidiaries as of September 30, 1995
and September 24, 1994, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the
fiscal years in the three year period ended September 30, 1995 (53
weeks, 52 weeks and 52 weeks, respectively). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of J & J Snack Foods Corp. and Subsidiaries at September
30, 1995 and September 24, 1994, and the consolidated results of
their operations and their cash flows for each of the fiscal years
in the three year period ended September 30, 1995 in conformity
with generally accepted accounting principles.
As disclosed in Note D, the Company adopted Financial Accounting
Standard No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," effective September 25, 1994.
Graphic: Grant Thornton signature
Grant Thornton LLP
Philadelphia, Pennsylvania
November 7, 1995
Corporate Information
Officers
Gerald B. Shreiber
Chairman of the Board,
President and Chief Executive Officer
Dennis G. Moore
Senior Vice President,
Chief Financial Officer,
Secretary and Treasurer
Robert M. Radano
Senior Vice President, Sales
John S. Schiavo
Senior Vice President, West
Donald M. Taylor
Vice President and General Manager of Eastern Operations
Directors
Gerald B. Shreiber
Chairman of the Board,
President and Chief Executive Officer
Dennis G. Moore
Senior Vice President,
Chief Financial Officer,
Secretary and Treasurer
Stephen N. Frankel
President, Stephen N. Frankel Realtor, Inc.
Peter G. Stanley
Executive Vice President,
Tri-Arc Financial Services, Inc.
Leonard M. Lodish
Samuel R. Harrell Professor,
Marketing Department of the Wharton
School, University of Pennsylvania
Quarterly Common Stock Data
Market Price
Fiscal 1995 High Low
1st Quarter 12 7/8 11 1/4
2nd Quarter 12 10
3rd Quarter 13 10 1/8
4th Quarter 13 3/8 11 3/8
Fiscal 1994
1st Quarter 20 3/8 17 1/8
2nd Quarter 20 3/4 17 3/8
3rd Quarter 18 1/4 10 7/8
4th Quarter 13 1/4 12 1/8
Stock Listing
The common stock of J & J Snack Foods Corp. is traded on the
over-the-counter market on the NASDAQ National Market System with
the symbol JJSF.
Transfer Agent and Registrar
Midlantic National Bank
Metro Park Plaza
P.O. Box 600
Edison, NJ 08818
Auditors
Grant Thornton LLP
Counsel
Blank, Rome, Comisky & McCauley
Annual Meeting
The Annual Meeting of Shareholders is scheduled for Wednesday,
February 7, 1996 at 10:00 a.m. at the Hilton at Cherry Hill, 2349
W. Marlton Pike, Cherry Hill, New Jersey
Form 10-K
Copies of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K may be obtained without charge by
writing to:
J & J Snack Foods Corp.
6000 Central Highway
Pennsauken, NJ 08109
Attention: Dennis G. Moore
EXHIBIT 21.1 - SUBSIDIARIES OF J & J SNACK FOODS CORP.
Place of
Incorporation
J & J Snack Foods Investment Corp. Delaware
ICEE-USA Corp. Delaware
J & J Snack Foods Corp. of New Jersey New Jersey
J & J Snack Foods Corp. of California California
J & J Snack Foods Corp./Midwest Illinois
J & J Snack Foods Corp./Mia Pennsylvania
J & J Snack Foods Corp. of Pennsylvania Pennsylvania
J & J Snack Foods Sales Corp. New Jersey
J & J Snack Foods Sales Corp. of Texas Texas
J & J Snack Foods Transport Corp. New Jersey
Trotter Soft Pretzels, Inc. Pennsylvania
American Snack Foods Corp. Pennsylvania
Snack Foods Acquisition Corp. Delaware
ICEE-Canada, Inc. Canada
ICEE DE MEXICO, S.A. DE C.V. Mexico
Bavarian Soft Pretzels, Inc. Pennsylvania
77
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated November 7, 1995 accompanying the
consolidated financial statements and schedules incorporated by reference or
included in the Annual Report of J & J Snack Foods Corp. and Subsidiaries on
Form 10-K for the year ended September 30, 1995. We hereby consent to the
incorporation by reference of said reports in the Registration Statement
of J & J Snack Foods Corp. and Subsidiaries on Form S-8 ( File No. 33-87532,
effective December 16, 1994 and File No. 33-50036, effective July 24, 1992).
Graphic: Grant Thornton singnature
GRANT THORNTON LLP
Philadelphia, Pennsylvania
December 21, 1995
78
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