-----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, E5qVLJGPvrx8JSStS/CiTbvL24eMMkWD75sYSCOWUQNF+vEMIWvkZOLpuj1BSvON 6FzbQQ9jTlzfSy9skuY5Vg== 0000785956-99-000005.txt : 19990503 0000785956-99-000005.hdr.sgml : 19990503 ACCESSION NUMBER: 0000785956-99-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990327 FILED AS OF DATE: 19990430 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: 99606392 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 March 27, 1999 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) (State or other jurisdication 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 April 22, 1999, there were 8,888,107 shares of the Registrant's Common Stock outstanding. INDEX Page Number Part I. Financial Information Item 1. Consolidated Financial Statements Consolidated Balance Sheets - March 27, 1999 and September 26, 1998 3 Consolidated Statements of Earnings - Three Months and Six Months Ended March 27, 1999 and March 28, 1998 5 Consolidated Statements of Cash Flows - Six Months Ended March 27, 1999 and March 28, 1998 6 Notes to the Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 PART I.FINANCIAL INFORMATION Item 1. Consolidated Financial Statements J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) ASSETS March 27, September 26, 1999 1998 (Unaudited) Current assets Cash and cash equivalents $ 1,889 $ 3,204 Accounts receivable 28,707 34,388 Inventories 18,109 16,447 Prepaid expenses and deposits 1,951 1,104 50,656 55,143 Property, plant and equipment, at cost Land 755 839 Buildings 5,432 5,432 Plant machinery and equipment 63,156 60,275 Marketing equipment 130,083 126,653 Transportation equipment 1,998 2,149 Office equipment 5,945 5,446 Improvements 11,498 10,616 Construction in progress 1,918 1,154 220,785 212,564 Less accumulated deprecia- tion and amortization 120,001 112,444 100,784 100,120 Other assets Goodwill, trademarks and rights,less accumulated amortization 52,288 51,871 Long term investment securities held to maturity 2,871 3,127 Sundry 3,014 3,000 58,173 57,998 $209,613 $213,261 See accompanying notes to the consolidated financial statements. 3 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - Continued (dollars in thousands, except share information) LIABILITIES AND March 27, September 26, STOCKHOLDERS' EQUITY 1999 1998 Current liabilities Current maturities of long-term debt $ 8,163 $ 8,423 Accounts payable 19,646 23,222 Accrued liabilities 8,216 8,914 36,025 40,559 Long-term debt, less current maturities 27,874 32,199 Revolving credit line 18,000 16,000 Deferred income 322 435 Deferred income taxes 4,383 4,387 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, 9,132,000 and 9,036,000, respectively 40,627 39,120 Accumulated other comprehen- sive income (1,633) (1,694) Retained earnings 84,015 82,255 123,009 119,681 $209,613 $213,261 See accompanying notes to the consolidated financial statements. 4 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (in thousands, except per share amounts) Three months ended Six months ended March 27, March 28, March 27, March 28, 1999 1998 1999 1998 Net Sales $62,908 $58,868 $123,457 $111,059 Cost of goods sold 29,323 29,037 58,890 56,553 Gross profit 33,585 29,831 64,567 54,506 Operating expenses Marketing 20,735 18,181 40,342 34,040 Distribution 7,018 5,983 13,694 10,992 Administrative 2,614 2,700 5,154 5,016 Amortization of intangibles and deferred costs 762 682 1,501 1,209 31,129 27,546 60,691 51,257 Operating income 2,456 2,285 3,876 3,249 Other income (deductions) Investment income 120 119 246 297 Interest expense (773) (901) (1,652) (1,205) Sundry 68 (308) 323 (292) Earnings before income taxes 1,871 1,195 2,793 2,049 Income taxes 692 450 1,033 758 NET EARNINGS $ 1,179 $ 745 $ 1,760 $ 1,291 Earnings per diluted share $ .12 $ .08 $ .18 $ .14 Weighted average number of diluted shares 9,638 9,249 9,579 9,230 Earnings per basic share $ .13 $ .08 $ .19 $ .15 Weighted average number of basic shares 9,095 8,896 9,066 8,881 See accompanying notes to the consolidated financial statements. 5 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six months ended March 27, March 28, 1999 1998 Operating activities: Net earnings $ 1,760 $ 1,291 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of fixed assets 11,811 10,400 Amortization of intangibles 1,734 1,462 Other adjustments (15) 181 Changes in assets and liabilities, net of effects from purchase of companies Decrease (increase) in accounts receivable 5,744 (422) (Increase)decrease in inventories (1,246) 2,308 Increase in prepaid expenses (841) (272) (Decrease) increase in accounts payable and accrued liabilities (4,447) 2,485 Net cash provided by operating activities 14,500 17,433 Investing activities: Purchases of property, plant and equipment (12,629) (14,892) Payments for purchases of companies, net of cash acquired and debt assumed (2,336) (11,953) Proceeds from investments held to maturity 245 160 Proceeds from investments available for sale - 495 Other (17) 435 Net cash used in investing activities (14,737) (25,755) Financing activities: Proceeds from borrowings 2,000 53,075 Proceeds from issuance of common stock 1,507 1,118 Payments of long-term debt (4,585) (44,288) Net cash provided by financing activities (1,078) 9,905 Net (decrease) increase in cash and cash equivalents (1,315) 1,583 Cash and cash equivalents at beginning of period 3,204 1,401 Cash and cash equivalents at end of period $ 1,889 $ 2,984 See accompanying notes to the consolidated financial statements. 6 J & J SNACK FOODS CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1 In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and the results of operations and cash flows. The results of operations for the three months and six months ended March 27, 1999 and March 28, 1998 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 26, 1998. Note 2 The Company's calculation of earnings per share in accordance with SFAS No. 128, "Earnings Per Share," is as follows: Three Months Ended March 27, 1999 Income Shares Per Share (Numerator)(Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $1,179 9,095 $.13 Effect of Dilutive Securities Options - 543 (.01) Diluted EPS Net Income available to common stockholders plus assumed conversions $1,179 9,638 $.12 7 Six Months Ended March 27, 1999 Income Shares Per Share (Numerator)(Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $1,760 9,066 $.19 Effect of Dilutive Securities Options - 513 (.01) Diluted EPS Net Income available to common stockholders plus assumed conversions $1,760 9,579 $.18 Three Months Ended March 28, 1998 Income Shares Per Share (Numerator)(Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $ 745 8,896 $.08 Effect of Dilutive Securities Options - 353 - Diluted EPS Net Income available to common stockholders plus assumed conversions $ 745 9,249 $.08 Six Months Ended March 28, 1998 Income Shares Per Share (Numerator)(Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $1,291 8,881 $.15 Effect of Dilutive Securities Options - 349 (.01) Diluted EPS Net Income available to common stockholders plus assumed conversions $1,291 9,230 $.14 8 Note 3 Inventories consist of the following: March 27, September 26, 1999 1998 (in thousands) Finished goods $ 9,423 $ 8,054 Raw materials 2,429 2,190 Packaging materials 2,215 2,239 Equipment parts & other 4,042 3,964 $18,109 $16,447 Note 4 The Company adopted SFAS No. 130, "Reporting Comprehensive Income" in the first quarter of this fiscal year. SFAS No. 130 establishes new standards for reporting comprehensive income, which includes net income as well as certain other items which result in a change to equity during the period. The adoption of SFAS No. 130 had no impact on the Company's financial position or results of operations. During the second quarters of 1999 and 1998 and the six months of 1999 and 1998, total comprehensive income, which for the Company included net income and foreign currency translation adjustments, amounted to $1,213,000 and $697,000, and $1,821,000 and $1,199,000, respectively. In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which is effective for all periods beginning after December 15, 1997, but is not required to be applied for interim reporting in the initial year of adoption. The Company is currently evaluating the impact of SFAS No. 131 on the disclosures included in its annual financial statement. In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 is required to be adopted in years beginning after June 15, 1999. Management does not anticipate the adoption of SFAS No. 133 will have a significant effect on earnings or the financial position of the Company. 9 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 three months ended March 27, 1999 and March 28, 1998, fluctuations in the value of the Mexican peso caused an increase of $34,000 and a decrease of $48,000, respectively, in stockholders' equity because of the revaluation of the net assets of the Company's Mexican frozen carbonated beverage subsidiary. In the six month periods, the increase was $61,000 in fiscal year 1999 and the decrease was $92,000 in fiscal year 1998. In February 1999, the Company acquired the Camden Creek Bakery cookie business from Schwan's Sales Enterprises, Inc., Marshall, MN for cash. Camden Creek sells frozen ready-to-bake cookies to the food service industry with approximate annual sales of $5,000,000. Available to the Company are unsecured general purpose bank lines of credit totalling $30,000,000. Borrowings under the lines at March 27, 1999 were $18,000,000. Results of Operations Net sales increased $4,040,000 or 7% to $62,908,000 for the three months and $12,398,000 or 11% to $123,457,000 for the six months ended March 27, 1999 compared to the six months ended March 28, 1998. Sales to food service customers increased $3,351,000 or 14% in the second quarter to $28,143,000 and $5,472,000 or 12% for the six months. Approximately 25% of the second quarter sales increase and 17% of the six month sales increase resulted from the acquisition of the Camden Creek Bakery cookie business. Soft pretzel sales to the food service market increased 6% to $16,301,000 in the second quarter and to $31,724,000 in the six months. Italian ice and frozen juice treat and dessert sales increased 11% to $5,758,000 in the three months and 6% to $9,920,000 in the six months due primarily to increased unit sales to one 10 customer. Churro sales to food service customers increased 16% to $3,157,000 in the second quarter and 15% to $5,956,000 in the six months due primarily to increased unit sales to one customer. Sales of products to retail supermarkets increased $1,005,000 or 10% to $10,577,000 in the second quarter and 11% to $18,443,000 in the first half due in part to a new advertising campaign. Soft pretzel sales for the second quarter and six months were up 14% to $7,484,000 and $13,284,000, respectively. Sales of our flagship SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX, increased 11% in the second quarter and 12% for the six months. Sales of Italian ice increased $61,000 or 2% to $2,571,000 in the second quarter and $195,000 or 5% to $4,203,000 in the first half. Frozen carbonated beverage and related product sales decreased $738,000 or 4% to $16,035,000 in the second quarter and increased $3,660,000 or 13% to $32,910,000 in the six months. Beverage sales alone decreased 8% in the second quarter and increased 15% in the first half to $14,019,000 and $29,005,000, respectively. The sales decreases are attributable to changes in billing practices resulting in lower revenues per gallon purchased by customers but which did not result in an overall deterioration of our profit margin. Gross profit dollars on beverage sales increased 8% in the second quarter from a year ago. Bakery sales increased $696,000 or 15% to $5,219,000 in the second quarter and $1,717,000 or 16% to $12,462,000 in the first six months due to increased unit sales across our customer base. Sales of our Bavarian Pretzel Bakery decreased 9% to $2,934,000 in the second quarter and 5% to $6,833,000 in the six month period primarily due to fewer stores. Gross profit as a percentage of sales increased to 53% and 52% in the current year's three and six month periods from 51% and 49% in the corresponding periods last year. This gross profit percentage increase is primarily attributable to increased gross profit percentages of frozen carbonated sales and increased sales of higher margin frozen carbonated beverages due to the acquisition of National ICEE Corporation late in the 1998 first quarter. 11 Total operating expenses increased $3,583,000 in the second quarter and as a percentage of sales increased to 49% from 47% in last year's same quarter. For the first half, operating expenses increased $9,434,000 and as a percentage of sales increased to 49% this year from 46% last year. Marketing expenses increased to 33% of sales in this year's three and six month periods from 31% of sales in last year's corresponding periods. The marketing percentage increase is due to substantially higher advertising and marketing spending to promote sales to retail supermarkets as well as to the change in billing practices in our frozen carbonated beverage business. Additionally, for the six month period, higher operating expenses from increased frozen carbonated beverage sales attributed to the percentage increase. Distribution expenses increased to 11% of sales in this year's periods from 10% of sales in last year's periods. The distribution expense percentage increase is attributable to the change in frozen carbonated beverage billing practices, the increased frozen carbonated beverage business over the six month period and a shift in product mix. As a percentage of sales, administrative expenses decreased less than / of one percent in both the three and six month periods from the year ago periods. Operating income increased $171,000 or 7% to $2,456,000 in the second quarter and $627,000 or 19% to $3,876,000 in the first half. For the six months, interest expense increased $477,000 from last year due to the assumption and subsequent refinancing of the debt of National Icee Corporation. For the quarter, interest expense decreased $128,000 due in part to lower interest rates and the capitalization of construction interest. Sundry income of $68,000 in this year's second quarter compared to sundry expense of $308,000 last year and sundry income of $323,000 in this year's six months compared to sundry expense of $292,000 last year. Sundry income in this year's six months includes income from a favorable settlement of litigation. Sundry expense in both periods last year includes $375,000 in write offs and reserves for the closing down of unprofitable retail stores of our Bavarian Pretzel Bakery. The effective income tax rate has been estimated at 37% in this year's second quarter and six months compared 12 to 38% in last year's second quarter and 37% in last year's six months. Net earnings increased $434,000 or 58% in the current three month period to $1,179,000 and increased $469,000 or 36% in the current six month period to $1,760,000. Item 3. Quantitative and Qualitative Disclosures About Market Risk There has been no material change in the Company's assessment of its sensitivity to market risk since its presentation set forth, in item 7a. "Quantitative and Qualitative Disclosures About Market Risk," in its 1998 annual report on Form 10-K filed with the SEC. 13 Part II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The results of voting at the Annual Meeting of Shareholders held on February 11, 1999 is as follows: Absentees Votes Cast and Broker For Against Withheld Non Votes Election of Leonard M. Lodish 8,259,114 - 182,666 - as Director The Company had 9,036,833 shares outstanding on December 14, 1998, the record date. 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 March 27, 1999 14 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: April 30, 1999 /s/Gerald B. Shreiber Gerald B. Shreiber President Dated: April 30, 1999 /s/Dennis G. Moore Dennis G. Moore Senior Vice President and Chief Financial Officer 15 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: April 30, 1999 __________________________ Gerald B. Shreiber President Dated: April 30, 1999 __________________________ Dennis G. Moore Senior Vice President and Chief Financial Officer 15 EX-27 2
5 1,000 3-MOS SEP-25-1999 MAR-27-1999 1889 0 29281 (574) 18109 50656 220785 (120001) 209613 36025 45874 0 0 40627 82382 209613 123457 123457 58890 60691 0 0 1652 2793 1033 1760 0 0 0 1760 0.19 0.18
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