-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dtzmu0lKukihremE0teZr7iyx24McxzALqn7t951sINPOvte0pXAmCWLM+N0/wVh FaqyhFagNNBqwt+zq9Da0Q== 0000785956-98-000001.txt : 19980211 0000785956-98-000001.hdr.sgml : 19980211 ACCESSION NUMBER: 0000785956-98-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971227 FILED AS OF DATE: 19980210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: J&J SNACK FOODS CORP CENTRAL INDEX KEY: 0000785956 STANDARD INDUSTRIAL CLASSIFICATION: COOKIES & CRACKERS [2052] IRS NUMBER: 221935537 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14616 FILM NUMBER: 98529280 BUSINESS ADDRESS: STREET 1: 6000 CENTRAL HGWY CITY: PENNSAUKEN STATE: NJ ZIP: 08109 BUSINESS PHONE: 6096659533 MAIL ADDRESS: STREET 1: 6000 CENTRAL HIGHWAY CITY: PENNSAUKEN STATE: NJ ZIP: 08109 10-Q 1 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 27, 1997 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 19, 1998, there were 8,889,810 shares of the Registrant's Common Stock outstanding. INDEX Page Number Part I. Financial Information Item 1. Consolidated Financial Statements Consolidated Balance Sheets - December 27, 1997 and September 27, 1997.................................... 3 Consolidated Statements of Earnings - Three Months Ended December 27, 1997 and December 28, 1996......... 5 Consolidated Statements of Cash Flows - Three Months Ended December 27, 1997 and December 28, 1996......... 6 Notes to the Consolidated Financial Statements........... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K.................... 12 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 27, September 27, 1997 1997 (Unaudited) Current assets Cash and cash equivalents $ 4,727,000 $ 1,401,000 Accounts receivable 24,678,000 25,458,000 Inventories 17,371,000 13,535,000 Prepaid expenses and deposits 1,193,000 853,000 47,969,000 41,247,000 Property, plant and equipment, at cost Land 869,000 819,000 Buildings 5,490,000 5,340,000 Plant machinery and equipment 52,668,000 51,891,000 Marketing equipment 118,272,000 90,988,000 Transportation equipment 1,835,000 1,856,000 Office equipment 4,963,000 4,792,000 Improvements 7,971,000 7,837,000 Construction in progress 1,691,000 825,000 193,759,000 164,348,000 Less accumulated depreciation and amortization 100,760,000 97,126,000 92,999,000 67,222,000 Other assets Goodwill, trademarks and rights, less accumulated amortization 45,250,000 21,459,000 Long term investment securities available for sale - 495,000 Long term investment securities held to maturity 3,199,000 3,340,000 Sundry 6,444,000 3,064,000 54,893,000 28,358,000 $195,861,000 $136,827,000 See accompanying notes to the consolidated financial statements. 3 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - Continued LIABILITIES AND December 27, September 27, STOCKHOLDERS' EQUITY 1997 1997 (Unaudited) Current liabilities Current maturities of long- term debt $ 8,317,000 $ 16,000 Accounts payable 16,129,000 13,315,000 Accrued liabilities 12,373,000 8,652,000 36,819,000 21,983,000 Long-term debt, less current maturities 38,452,000 5,028,000 Revolving credit line 10,000,000 - Deferred income 521,000 532,000 Deferred income taxes 3,385,000 3,380,000 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, 8,872,000 and 8,850,000, respectively 37,186,000 36,908,000 Foreign currency translation adjustment (1,453,000) (1,409,000) Retained earnings 70,951,000 70,405,000 106,684,000 105,904,000 $195,861,000 $136,827,000 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 27, December 28, 1997 1996 Net Sales $52,191,000 $43,601,000 Cost of goods sold 27,516,000 22,458,000 Gross profit 24,675,000 21,143,000 Operating expenses Marketing 15,859,000 14,356,000 Distribution 5,009,000 4,453,000 Administrative 2,316,000 1,984,000 Amortization of intangibles and deferred costs 527,000 346,000 23,711,000 21,139,000 Operating income 964,000 4,000 Other income (deductions) Investment income 178,000 255,000 Interest expense (304,000) (93,000) Sundry 16,000 7,000 Earnings before income taxes 854,000 173,000 Income taxes 308,000 62,000 NET EARNINGS $ 546,000 $ 111,000 Earnings per common share $ .06 $ .01 Weighted average number of shares 9,230,000 8,860,000 See accompanying notes to the consolidated financial statements. 5 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended December 27, December 28, 1997 1996 Operating activities: Net earnings $ 546,000 $ 111,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of fixed assets 4,715,000 4,016,000 Amortization of intangibles 640,000 448,000 Other adjustments 191,000 69,000 Changes in assets and liabilities, net of effects from purchase of companies Decrease in accounts receivable 3,702,000 1,834,000 Decrease (increase) in inventories 13,000 (219,000) Increase in prepaid expenses (32,000) (237,000) Decrease in accounts payable and accrued liabilities (1,527,000) (2,069,000) Net cash provided by operating activities 8,248,000 3,953,000 Investing activities: Purchases of property, plant and equipment (5,427,000) (3,643,000) Payments for purchases of companies, net of cash acquired and debt assumed (8,967,000) (11,842,000) Proceeds from investments held to maturity 135,000 285,000 Proceeds from investments available for sale 495,000 761,000 Other 787,000 151,000 Net cash used in investing activities (12,977,000) (14,288,000) Financing activities: Proceeds from issuance of common stock 277,000 9,000 Proceeds from borrowings 50,000,000 - Payments of long-term debt (42,222,000) (2,000) Net cash provided by financing activities 8,055,000 7,000 Net increase (decrease) in cash and cash equivalents 3,326,000 (10,328,000) Cash and cash equivalents at beginning of period 1,401,000 10,547,000 Cash and cash equivalents at end of period $ 4,727,000 $ 219,000 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 27, 1997 and December 28, 1996 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 and Italian Ice are generally higher in the third and fourth quarters due to warmer weather. 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 27, 1997. 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 27, September 27, 1997 1997 Finished goods $ 9,649,000 $ 7,108,000 Raw materials 1,790,000 1,789,000 Packaging materials 1,973,000 2,262,000 Equipment parts & other 3,959,000 2,376,000 $17,371,000 $13,535,000 Note 4 The amortized cost, unrealized gains and losses, and fair market values of the Company's investment securities held to maturity at December 27, 1997 are summarized as follows: 7 Gross Gross Fair Amortized Unrealized Unrealized Market Cost Gains Losses Value Held to Maturity Securities Corporate Debt Securities $ 964,000 $ 16,000 $ - $ 980,000 Municipal Government Securities 1,735,000 16,000 - 1,751,000 Other 500,000 - - 500,000 $3,199,000 $ 32,000 $ - $3,231,000 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 27, 1997 are summarized as follows: Gross Gross Fair Amortized Unrealized Unrealized Market Cost Gains Losses Value Available for sale Corporate debt securities $ 495,000 $ - $ - $ 495,000 Held to maturity Corporate debt securities $ 970,000 $19,000 $ - $ 989,000 Municipal government securities 1,870,000 3,000 (8,000) 1,865,000 Other debt securities 500,000 - - 500,000 $3,340,000 $22,000 $ (8,000) $3,354,000 Note 5 To fund the acquisition of National ICEE Corporation, and to retire most of its debt, the Company incurred the following debt: $40,000,000 unsecured term note, at an interest rate of 6.61% fixed through swap agreements, with 60 monthly principal payments of $666,667 plus interest beginning January 8, 1998. At December 27, 1997, $8,000,000 of the note was classified under current maturities of long-term debt. $10,000,000 borrowing under a $30,000,000 unsecured general purpose bank line of credit. Interest payments on the balance borrowed under the line are made monthly. The interest rate on the outstanding borrowings under the line was 6.50% at December 27, 1997. At December 27, 1997, the $10,000,000 borrowing was classified as a long-term liability. 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 27, 1997, the devaluation of the Mexican peso caused a reduction of $44,000 in stockholders' equity because of the revaluation of the net assets of the Company's Mexican frozen carbonated beverage subsidiary. In December 1997, the Company acquired the common stock of National ICEE Corporation, a marketer and distributor of frozen carbonated beverages under the tradename ICEE, with approximate annual sales of $40,000,000. As a result of the acquisition, the Company now has the rights to market and distribute frozen carbonated beverages under the name ICEE to all of the continental United States, except for portions of eleven states. The purchase price paid to the former shareholders of National ICEE Corporation was $9,000,000 in the form of cash. Additionally, the Company assumed approximately $44,000,000 of debt, of which approximately $42,000,000 was retired at closing. The source of cash utilized to retire the debt and to fund the purchase price was a $40,000,000 unsecured term loan and an unsecured revolving line of credit with the Company's existing banks. In January 1997, the Company acquired the assets of Mama Tish's International Foods for the assumption of some of its liabilities. Mama Tish is a manufacturer and distributor of Italian ices, sorbets and other frozen juice products with annual sales of approximately $15 million. In November 1996, the Company acquired all of the common stock of Pretzels, Inc. for cash. Trading as Texas Twist, Pretzels, Inc. is a soft pretzel manufacturer selling to both the food service and retail supermarket industries with annual sales of approximately $1.4 million. In October 1996, the Company acquired the assets of Bakers Best Snack Foods Corp. for cash. Bakers Best is a manufacturer of soft pretzels selling to both the food service and retail supermarket industries with annual sales of approximately $4 million. Available to the Company are unsecured general purpose bank lines of credit totalling $30,000,000. Borrowings under the lines at December 27, 1997 were $10,000,000. Results of Operations Net sales increased $8,590,000 or 20% to $52,191,000 for the three months ended December 27, 1997 compared to the three months ended December 28, 1996. 9 Excluding sales of acquired businesses, net sales increased $5,562,000 or 13% for the quarter. Sales to food service customers increased $980,000 or 5% in the first quarter to $22,670,000. Excluding sales of acquired businesses, sales to food service customers increased $112,000 or less than 1% for the period. Soft pretzel sales to the food service market decreased less than 1% to $14,384,000 in the quarter. Excluding sales of acquired businesses, food service soft pretzel sales decreased $300,000 or 2%. Soft pretzel unit volume declined approximately 5%. Italian ice and frozen juice treat and dessert sales increased 23% to $4,342,000 in the three months. Approximately 75% of the Italian ice and frozen juice and dessert sales increase was from sales of an acquired business. Churro sales to food service customers were $2,476,000, essentially unchanged from last year. Sales of products to retail supermarkets decreased $569,000 or 8% to $6,857,000 in the first quarter. Excluding sales of an acquired business, sales to retail supermarkets decreased 12%. Soft pretzel sales for the first quarter were down 22% to $4,947,000 due to an overall decline in category unit volume. Sales of the flagship SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX and CINNAMON RAISIN, decreased 14% in the first quarter. Sales of Italian Ice increased $615,000 or 70% to $1,498,000 in the first quarter. Excluding sales of an acquired business, Italian Ice sales increased $279,000 or 32%. Frozen carbonated beverage and related product sales increased $4,187,000 or 51% to $12,477,000 in the first quarter. Beverage sales alone increased 31% to $10,053,000. Excluding sales resulting from the acquisition of National ICEE Corporation in December 1997, frozen carbonated beverage and related product sales increased $2,471,000 or 30% from last year and beverage sales alone increased 11%. Approximately $1,725,000 of the $2,471,000 sales increase was from sales of equipment and service revenue. Bakery sales increased $3,653,000 or 142% to $6,222,000 in the first quarter due to increased product sales to one customer. Sales of Bavarian Pretzel Bakery increased $339,000 or 9% to $3,965,000 in the quarter from last year. Approximately one third of the increase came from sales of an acquired business. Gross profit as a percentage of sales decreased to 47% in the current first quarter from 48% in the year ago period. This gross profit percentage decrease is primarily attributable to lower gross profit percentages of the increased bakery and frozen carbonated beverage equipment sales. Total operating expenses increased $2,572,000 in the first quarter and as a percentage of sales decreased to 45% from 48% in last year's same quarter. Marketing expenses decreased to 30% of sales from 33% in last year's first quarter. The decrease in marketing expense as a percent of sales is attributable primarily to the increased bakery and frozen carbonated beverage equipment sales which incurred relatively little marketing expense. Distribution expenses were 10% of sales in both year's first quarter. Administrative expenses decreased fractionally to 4% of sales from 5% of sales last year. Amortization of intangibles and deferred costs increased to $527,000 from $346,000 because of the amortization of goodwill of acquired businesses. 10 Operating income increased $960,000 to $964,000 in the first quarter from $4,000 in last year's quarter. Investment income decreased $77,000 to $178,000 in the quarter from last year due primarily to a lower level of investable funds. Interest expense increased $211,000 from last year's quarter to $304,000 this year due to the assumption and subsequent refinancing of the debt of National ICEE Corporation. The effective income tax rate has been estimated at 36% in both three month periods. Net earnings increased $435,000 or 392% in the current three month period to $546,000. Without National ICEE Corporation's seasonal loss, net earnings would have been approximately $730,000. 11 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits - None b) Reports on Form 8-K - A report on Form 8-K was filed on December 23, 1997. 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 10, 1998 /s/ Gerald B. Shreiber Gerald B. Shreiber President Dated: February 10, 1998 /s/ Dennis G. Moore Dennis G. Moore Senior Vice President and Chief Financial Officer 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. J & J SNACK FOODS CORP. Dated: February 10, 1998 Gerald B. Shreiber President Dated: February 10, 1998 Dennis G. Moore Senior Vice President and Chief Financial Officer 13 EX-27 2
5 1,000 3-MOS SEP-26-1998 DEC-27-1997 4,727 0 25,258 (580) 17,371 47,969 193,759 (100,760) 195,861 36,819 48,452 0 0 37,186 69,498 195,861 52,191 52,191 27,516 23,711 0 0 304 854 308 546 0 0 0 546 0.06 0.06
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