UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended December 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-14616
J & J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22-1935537
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6000 Central Highway, Pennsauken, NJ 08109
(Address of principal executive offices)
Telephone (609) 665-9533
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
As of January 25, 1996, there were 9,035,370 shares of the Registrant's Common
Stock outstanding.
<PAGE>
INDEX
Page
Number
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - December 30, 1995 and
September 30, 1995.................................... 3
Consolidated Statements of Earnings - Three Months
Ended December 30, 1995 and December 24, 1994......... 5
Consolidated Statements of Cash Flows - Three Months
Ended December 30, 1995 and December 24, 1994......... 6
Notes to the Consolidated Financial Statements........... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................... 11
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS December 30, September 30,
1995 1995
(Unaudited)
Current assets
Cash and cash equivalents $ 13,222,000 $ 10,696,000
Marketable securities available
for sale 3,372,000 3,824,000
Accounts receivable 13,926,000 17,467,000
Inventories 10,944,000 11,009,000
Prepaid expenses and deposits 1,041,000 1,498,000
42,505,000 44,494,000
Property, plant and equipment,
at cost
Land 819,000 819,000
Buildings 5,119,000 5,119,000
Plant machinery and equipment 39,220,000 39,006,000
Marketing equipment 76,287,000 75,085,000
Transportation equipment 2,018,000 2,086,000
Office equipment 3,204,000 3,002,000
Improvements 5,155,000 5,036,000
Construction in progress 915,000 480,000
132,737,000 130,633,000
Less accumulated depreciation
and amortization 74,991,000 71,410,000
57,746,000 59,223,000
Other assets
Goodwill, trademarks and rights,
less accumulated amortization 8,458,000 8,644,000
Long term investments available
for sale 990,000 990,000
Long term investments held to
maturity 8,895,000 7,345,000
Sundry 2,418,000 2,613,000
20,761,000 19,592,000
$121,012,000 $123,309,000
See accompanying notes to the consolidated financial statements.
3
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
LIABILITIES AND December 30, September 30,
STOCKHOLDERS' EQUITY 1995 1995
(Unaudited)
Current liabilities
Current maturities of long-
term debt $ 4,000 $ 16,000
Accounts payable 9,887,000 10,607,000
Accrued liabilities 5,162,000 5,922,000
15,053,000 16,545,000
Long-term debt, less current
maturities 5,007,000 5,011,000
Deferred income 647,000 666,000
Deferred income taxes 5,003,000 5,003,000
Stockholders' equity
Capital stock
Preferred, $1 par value;
authorized, 5,000,000
shares; none issued - -
Common, no par value;
authorized, 25,000,000
shares; issued and
outstanding, 9,010,000 and
9,126,000, respectively 39,456,000 40,802,000
Foreign currency translation
adjustment (1,384,000) (1,121,000)
Retained earnings 57,230,000 56,403,000
95,302,000 96,084,000
$121,012,000 $123,309,000
See accompanying notes to the consolidated financial statements.
4
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended
December 30, December 24,
1995 1994
Net Sales $42,863,000 $41,217,000
Cost of goods sold 21,696,000 20,422,000
Gross profit 21,167,000 20,795,000
Operating expenses
Marketing 13,880,000 13,324,000
Distribution 4,243,000 4,532,000
Administrative 1,896,000 1,968,000
Amortization of
intangibles and
deferred costs 208,000 216,000
20,227,000 20,040,000
Operating income 940,000 755,000
Other income (deductions)
Investment income 411,000 292,000
Interest expense (100,000) (98,000)
Sundry 17,000 (68,000)
Earnings before
income taxes 1,268,000 881,000
Income taxes 441,000 331,000
NET EARNINGS $ 827,000 $ 550,000
Earnings per common
share $ .09 $ .06
Weighted average number
of shares 9,186,000 9,854,000
See accompanying notes to the consolidated financial statements.
5J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
December 30, December 24,
1995 1994
Cash flows from operating activities:
Net earnings $ 827,000 $ 550,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of fixed
assets 3,827,000 3,669,000
Amortization of intangibles and deferred
costs 250,000 252,000
Increase in deferred income taxes - 18,000
Other adjustments (9,000) 13,000
Changes in assets and liabilities
Decrease in accounts receivable 3,498,000 3,729,000
Decrease (increase) in inventories 99,000 (1,002,000)
Decrease (increase) in prepaid expenses 439,000 (49,000)
Decrease in accounts payable and
accrued liabilities (1,449,000) (2,116,000)
Net cash provided by operating activities 7,482,000 5,064,000
Cash flows from investing activities:
Capital expenditures (2,541,000) (3,762,000)
Proceeds from investments held to maturity 195,000 115,000
Payments for investments held to maturity (1,750,000) (500,000)
Proceeds from investments available for sale 1,850,000 2,047,000
Payments for investments available for sale (1,407,000) (2,481,000)
Decrease in bond trust fund 1,000 441,000
Other 59,000 35,000
Net cash used in investing activities (3,593,000) (4,105,000)
Cash flows from financing activities:
Proceeds from issuance of common stock 24,000 64,000
Payments to repurchase common stock (1,370,000) (5,728,000)
Payments of long-term debt (17,000) (4,000)
Net cash used in financing activities (1,363,000) (5,668,000)
Net increase (decrease) in cash
and cash equivalents 2,526,000 (4,709,000)
Cash and cash equivalents at beginning of period 10,696,000 6,621,000
Cash and cash equivalents at end of period $13,222,000 $ 1,912,000
See accompanying notes to the consolidated financial statements.
6
J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position
and the results of operations and cash flows.
The results of operations for the three months ended December 30, 1995
and December 24, 1994 are not necessarily indicative of results for the
full year. Sales of the Company's retail stores are generally higher
in the first quarter due to the holiday shopping season. Sales of the
Company's frozen carbonated beverages are generally higher in the
third and fourth quarters due to seasonal factors.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, it is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1995.
Note 2 Earnings per share are based on the weighted average number of common
shares outstanding, including common stock equivalents (stock options).
Note 3 Inventories consist of the following:
December 30, September 30,
1995 1995
Finished goods $ 5,262,000 $ 5,669,000
Raw materials 1,203,000 1,019,000
Packaging materials 2,304,000 1,947,000
Equipment parts & other 2,175,000 2,374,000
$10,944,000 $11,009,000
Note 4 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 December 30, 1995 are summarized as follows:
7
Gross Gross Fair
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
Available for Sale Securities
Equity Securities $ - $12,000 $ - $ 12,000
Corporate Debt Securities 995,000 - 55,000 940,000
Municipal Government Securities 3,367,000 7,000 2,000 3,372,000
$4,362,000 $19,000 $ 57,000 $4,324,000
Held to Maturity Securities
Corporate Debt Securities $1,010,000 $22,000 $ - $1,032,000
Municipal Government Securities 7,385,000 59,000 100,000 7,344,000
Other 500,000 - - 500,000
$8,895,000 $ 81,000 $100,000 $8,876,000
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 government 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 government 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
Note 5 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 provide these new disclosures
at September 29, 1996.
8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
The Company's current cash and marketable securities balances and cash
expected to be provided by future operations are its primary sources of
liquidity. The Company believes that these sources, along with its borrowing
capacity, are sufficient to fund future growth and expansion.
In the quarter ended December 30, 1995, the devaluation of the Mexican
peso caused a reduction of $263,000 in stockholders' equity because of the
revaluation of the net assets of the Company's Mexican frozen carbonated
beverage subsidiary. Dollar Sales of this subsidiary were about 50% lower than
a year ago due to the devaluation and continuing economic problems in Mexico.
During the first quarter, the Company purchased and retired 116,000 shares
of its common stock at a cost of $1,370,000.
During the third quarter of fiscal year 1995, the Company sold its syrup
and flavor manufacturing subsidiary, Western Syrup Company, to an unrelated
third party for cash and notes. During the quarter ended December 24, 1994
Western Syrup Company generated an after tax loss of approximately $170,000.
The Company does not anticipate that the sale of Western will have a material
impact on its operations or financial position.
Available to the Company are unsecured general purpose bank lines of
credit totalling $25,000,000.
Results of Operations
Net sales increased $1,646,000 or 4% to $42,863,000 for the three months
ended December 30, 1995 compared to the three months ended December 24, 1994.
Net sales, excluding sales of Western Syrup Company for both periods, increased
$2,115,000 or 5%.
Sales to food service customers increased $3,426,000 or 18% in the first
quarter to $22,376,000. Soft pretzel sales to the food service market
increased 20% to $14,734,000 in the quarter primarily due to increased
distribution. Two customers accounted for over 90% of the soft pretzels
sales' increase. Frozen juice treat and dessert sales increased 1% to
$2,902,000 in the quarter. Churro sales to food service customers increased
9% to $2,360,000. All foodservice sales increases were due primarily to
expanded unit volume. Approximately 26% of the overall increase in sales to
foodservice customers was accounted for by equipment sales.
Sales of products to retail supermarkets decreased $103,000 or 1% to
$7,280,000 in the first quarter. Soft pretzel sales for the first quarter were
down 4% to $5,871,000 due primarily to decreased distribution of SOFTSTIX.
SOFTSTIX sales decreased $348,000 to $802,000 in the quarter. Sales of the
flagship SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX, decreased 2% in
the first quarter. Sales of Luigi's Real Italian Ice increased $97,000 or 9% to
$1,184,000
9
in the first quarter. All of the increases and decreases were due primarily to
changes in unit volume.
Frozen carbonated beverage and related product sales decreased $247,000 or
3% to $8,488,000 in the first quarter. Beverage sales alone decreased 3% to
$7,968,000 due to lower sales of our Mexican frozen carbonated beverage
subsidiary.
Bakery sales decreased $909,000 or 37% to $1,578,000 in the first quarter
due to decreased product sales to two major customers. Sales of Bavarian Pretzel
Bakery decreased $52,000 or 2% to $3,141,000 in the quarter due to lower unit
volume.
Gross profit as a percentage of sales decreased to 49% in the current first
quarter from 50% in the year ago period. This gross profit percentage decrease
is primarily attributable to higher raw material and packaging costs.
Total operating expenses increased $187,000 in the first quarter but as a
percentage of sales decreased to 47% from 49% in last year's same quarter.
Marketing expenses were 32% of sales in both year's first quarters.
Distribution expenses decreased to 10% of sales from 11% of sales last year due
primarily to changes in methods of distribution in our frozen carbonated
beverage subsidiary. Administrative expenses declined less than 1/2 of one
percent of sales to 4% from 5% last year due to a combination of lower
overall expenses and an increase in sales volume.
Operating income increased $185,000 or 25% to $940,000 in the first
quarter.
Interest income increased $119,000 to $411,000 in the quarter from last
year due to a higher level of investable funds invested at higher interest
rates.
Interest expense remained essentially unchanged from last year's quarter.
Sundry increased $85,000 to income of $17,000 in the quarter due primarily
to lower legal expenses related to a past acquisition compared to last year.
The effective income tax rate has been estimated at 35% in this year's
first quarter compared to 38% last year. The lower rate this year is due to tax
benefits derived by our Mexican subsidiary and other factors.
Net earnings increased $277,000 or 50% in the current three month period to
$827,000.
10
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None
b) Reports on Form 8-K - There were no reports on Form 8-K
for the three months ended December 30, 1995.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J & J SNACK FOODS CORP.
Dated: February 5, 1996 /s/ Gerald B. Shreiber
Gerald B. Shreiber
President
Dated: February 5, 1996 /s/ Dennis G. Moore
Dennis G. Moore
Senior Vice President and
Chief Financial Officer
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
J & J SNACK FOODS CORP.
Dated: February 5, 1996
Gerald B. Shreiber
President
Dated: February 5, 1996
Dennis G. Moore
Senior Vice President and
Chief Financial Officer
12
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