-----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, KdEbb+PRpAXF0P56mkmZmc9JzJHjCOUYuH2/MgwZEyv8GnPjdqhoFC+ZBecv6FBH 4rldwF8Lx/rO5xYcA+LdJg== /in/edgar/work/20000801/0000785956-00-000009/0000785956-00-000009.txt : 20000921 0000785956-00-000009.hdr.sgml : 20000921 ACCESSION NUMBER: 0000785956-00-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000624 FILED AS OF DATE: 20000801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: J&J SNACK FOODS CORP CENTRAL INDEX KEY: 0000785956 STANDARD INDUSTRIAL CLASSIFICATION: [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: 683602 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 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 24, 2000 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 (856) 665-9533 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No As of July 19, 2000, there were 8,562,093 shares of the Registrant's Common Stock outstanding. INDEX Page Number Part I. Financial Information Item 1. Consolidated Financial Statements Consolidated Balance Sheets - June 24, 2000 and September 25, 1999 3 Consolidated Statements of Earnings - Three Months and Nine Months Ended June 24, 2000 and June 26, 1999 5 Consolidated Statements of Cash Flows - Nine Months Ended June 24, 2000 and June 26, 1999 6 Notes to the Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 15 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) ASSETS June 24, September 25, 2000 1999 (Unaudited) Current assets Cash and cash equivalents $ 1,027 $ 5,945 Short term investment securities held to maturity - 924 Accounts receivable 37,771 31,881 Inventories 19,859 16,187 Prepaid expenses and deposits 2,352 1,130 61,009 56,067 Property, plant and equipment, at cost Land 795 745 Buildings 5,586 5,386 Plant machinery and equipment 72,607 66,305 Marketing equipment 151,046 138,335 Transportation equipment 1,995 2,049 Office equipment 6,834 6,308 Improvements 12,336 11,769 Construction in progress 3,056 1,356 254,255 232,253 Less accumulated deprecia- tion and amortization 145,959 130,292 108,296 101,961 Other assets Goodwill, trademarks and rights,less accumulated amortization 49,445 50,821 Long term investment securities held to maturity 1,740 1,925 Sundry 2,793 2,906 53,978 55,652 $223,283 $213,680 See accompanying notes to the consolidated financial statements. 3 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - Continued LIABILITIES AND June 24, September 25, STOCKHOLDERS' EQUITY 2000 1999 (Unaudited) (dollars in thousands, except share information) Current liabilities Current maturities of long-term debt $ 30,143 $ 8,214 Accounts payable 29,172 23,272 Accrued liabilities 8,538 8,418 67,853 39,904 Long-term debt, less current maturities 17,657 34,660 Deferred income taxes 7,702 7,702 Other long-term liabilities 148 245 25,507 42,607 Stockholders' equity Capital stock Preferred, $1 par value; authorized, 5,000,000 shares; none issue - - Common, no par value; authorized 25,000,000 shares; issued and outstanding, 8,542,000 and 9,000,000, respectively 28,682 36,251 Accumulated other comprehen- sive income (1,694) (1,601) Retained earnings 102,935 96,519 129,923 131,169 $223,283 $213,680 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 Nine months ended June 24, June 26, June 24, June 26, 2000 1999 2000 1999 Net Sales $89,579 $82,094 $223,770 $205,551 Cost of goods sold 42,524 37,967 108,497 96,857 Gross profit 47,055 44,127 115,273 108,694 Operating expenses Marketing 27,326 23,379 70,709 63,721 Distribution 7,606 7,545 22,271 21,239 Administrative 2,815 2,782 8,382 7,936 Amortization of intangibles and deferred costs 688 753 2,172 2,254 38,435 34,459 103,534 95,150 Operating income 8,620 9,668 11,739 13,544 Other income (deductions) Investment income 72 116 312 362 Interest expense (761) (871) (2,099) (2,523) Sundry 21 143 232 466 Earnings before income taxes 7,952 9,056 10,184 11,849 Income taxes 2,942 3,351 3,768 4,384 NET EARNINGS $ 5,010 $ 5,705 $ 6,416 $ 7,465 Earnings per diluted share $ .56 $ .60 $ .70 $ .78 Weighted average number of diluted shares 8,890 9,471 9,200 9,540 Earnings per basic share $ .57 $ .64 $ .72 $ .83 Weighted average number of basic shares 8,728 8,984 8,915 9,038 See accompanying notes to the consolidated financial statements. 5 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine months ended June 24, June 26, 2000 1999 Operating activities: Net earnings $ 6,416 $ 7,465 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of fixed assets 19,767 17,898 Amortization of intangibles 2,594 2,614 Other adjustments 9 (32) Changes in assets and liabilities, net of effects from purchase of companies Increase in accounts receivable (5,856) (335) Increase in inventories (3,448) (678) Increase in prepaid expenses (1,222) (669) Increase in accounts payable and accrued liabilities 6,557 3,757 Net cash provided by operating activities 24,817 30,020 Investing activities: Purchases of property, plant and equipment (25,926) (18,774) Payments for purchases of companies, net of cash acquired and debt assumed (1,280) (2,336) Proceeds from investments held to maturity 1,109 255 Other (361) 200 Net cash used in investing activities (26,458) (20,655) Financing activities: Proceeds from borrowings 15,000 4,000 Proceeds from issuance of common stock 1,186 2,335 Payments to repurchase common stock (9,390) (5,625) Payments of long-term debt (10,073) (6,606) Net cash (used in) provided by financing activities (3,277) (5,896) Net (decrease) increase in cash and cash equivalents (4,918) 3,469 Cash and cash equivalents at beginning of period 5,945 3,204 Cash and cash equivalents at end of period $ 1,027 $ 6,673 See accompanying notes to the consolidated financial statements. 6 J & J SNACK FOODS CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1 In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and the results of operations and cash flows. The results of operations for the three months and nine months ended June 24, 2000 and June 26, 1999 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 beverages and frozen juice bars and ices 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 25, 1999. 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 June 24, 2000 Income Shares Per Share (Numerator) (Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $5,010 8,728 $.57 Effect of Dilutive Securities Options - 162 (.01) Diluted EPS Net Income available to common stockholders plus assumed conversions $5,010 8,890 $.56 7 Nine Months Ended June 24, 2000 Income Shares Per Share (Numerator) (Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $6,416 8,915 $.72 Effect of Dilutive Securities Options - 285 (.02) Diluted EPS Net Income available to common stockholders plus assumed conversions $6,416 9,200 $.70 Three Months Ended June 26, 1999 Income Shares Per Share (Numerator) (Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $5,705 8,984 $.64 Effect of Dilutive Securities Options - 487 (.04) Diluted EPS Net Income available to common stockholders plus assumed conversions $5,705 9,471 $.60 Nine Months Ended June 26, 1999 Income Shares Per Share (Numerator) (Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Income available to common stockholders $7,465 9,038 $.83 Effect of Dilutive Securities Options - 502 (.05) Diluted EPS Net Income available to common stockholders plus assumed conversions $7,465 9,540 $.78 8 Note 3 Inventories consist of the following: June 24, September 25, 2000 1999 (in thousands) Finished goods $ 9,137 $ 8,118 Raw materials 2,033 1,579 Packaging materials 2,888 1,770 Equipment parts & other 5,801 4,720 $19,859 $16,187 Note 4 In fiscal year 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". SFAS No. 131 superceded SFAS 14, "Financial Reporting for Segments of a Business Enterprise", replacing the "industry segment" approach with the "management approach". The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company's reportable segments, as well as disclosures about products and services and major customers. The adoption of SFAS No. 131 did not affect the results of operations or the financial position of the Company. Using the guidelines set forth in SFAS No. 131, the Company has two reportable segments: Snack Foods and Frozen Beverages. Snack Foods manufactures and distributes snack foods and bakery items. Frozen beverages markets and distributes frozen beverage products. The segments are managed as strategic business units due to their distinct production processes and capital requirements. The Company evaluates each segment's performance based on income or loss before taxes, excluding corporate and other unallocated expenses and non- recurring charges. Information regarding the operations in these reportable segments is as follows: 9 Three Months Ended Nine Months Ended June 24, June 26, June 24, June 26, 2000 1999 2000 1999 (in thousands) Sales: Snack Foods $ 59,735 $ 54,011 $153,539 $144,558 Frozen Beverages 29,844 28,083 70,231 60,993 $ 89,579 $ 82,094 $223,770 $205,551 Depreciation and Amortization: Snack Foods $ 3,632 $ 3,311 $ 10,476 $ 9,662 Frozen Beverages 4,064 3,656 11,885 10,850 $ 7,696 $ 6,967 $ 22,361 $ 20,512 Income Before Taxes: Snack Foods $ 4,118 $ 5,187 $ 11,035 $ 12,801 Frozen Beverages 3,834 3,869 (851) (952) $ 7,952 $ 9,056 $ 10,184 $ 11,849 Capital Expenditures: Snack Foods $ 5,079 $ 3,435 $ 12,828 $ 10,060 Frozen Beverages 5,201 2,710 13,098 8,714 $ 10,280 $ 6,145 $ 25,926 $ 18,774 Assets: Snack Foods $116,988 $116,340 $116,988 $116,340 Frozen Beverages 106,295 102,395 106,295 102,395 $223,283 $218,735 $223,283 $218,735 Note 5 In June 1998, SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" was issued. Subsequent to this statement, SFAS No. 137 was issued, which amended the effective date of SFAS No. 133 to be all fiscal quarters of all fiscal years beginning after June 15, 2000. Based on the Company's minimal use of derivatives at the current time, management does not anticipate the adoption of SFAS No. 133 will have a significant impact on earnings or financial position of the Company. However, the impact from adopting SFAS No. 133 will depend on the nature and purpose of the derivatives instruments in use by the Company at that time. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Company's future expected operating cash flow along with its borrowing capacity are its primary sources of liquidity. The Company believes that these sources are sufficient to fund future growth and expansion. In the three months ended June 24, 2000 and June 26, 1999, fluctuations in the value of the Mexican peso caused a decrease of $118,000 and a increase of $4,000, respectively, in stockholders' equity because of the revaluation of the net assets of the Company's Mexican frozen beverage subsidiary. In the nine month periods, the decrease was $93,000 in fiscal year 2000 and the increase was $65,000 in fiscal year 1999. In the three months ended June 24, 2000, the Company purchased and retired 531,800 shares of its common stock at a cost of $8,370,000. In the nine months ended June 24, 2000, the Company purchased and retired 583,000 shares of its common stock at a cost of $9,390,000. The Company is authorized to purchase and retire an additional 417,000 shares under a buyback authorization approved by the Board of Directors in December 1999. Available to the Company are unsecured general purpose bank lines of credit totaling $30,000,000. Borrowings under the lines at June 24, 2000 were $22,000,000. As the bank lines of credit expire in December 2000, the Company has classified the borrowings as a current obligation on its balance sheet. Although these lines expire in December 2000, it is management's intent to renegotiate these financings prior to their due date. Results of Operations Net sales increased $7,485,000 or 9% to $89,579,000 for the three months and $18,219,000 or 9% to $223,770,000 for the nine months ended June 24, 2000 compared to the nine months ended June 26, 1999. 11 SNACK FOODS Sales to food service customers of $32,204,000 in the third quarter and $85,202,000 in the nine months were essentially unchanged from last year's periods. Excluding sales resulting from acquisitions, sales would have decreased approximately 1% for the third quarter and 3% for the nine months. Soft pretzels sales to the food service market decreased 5% to $15,027,000 in the third quarter and 6% to $44,865,000 in the nine months due primarily to lower unit sales to three customers. Frozen juice bars and ices sales decreased less than 1% to $9,753,000 in the three months and increased 3% to $20,398,000 in the nine months. Churro sales to food service customers decreased 6% to $3,020,000 in the third quarter and 13% to $7,973,000 in the nine months due primarily to decreased unit sales to two customers. Cookie sales increased 10% to $2,225,000 in the third quarter due to increased unit sales and 52% to $7,679,000 in the nine months due to the acquisition of the Camden Creek cookie business and increased unit sales. Sales of products to retail supermarkets increased $5,215,000 or 42% to $17,763,000 in the third quarter and 22% to $37,698,000 in the nine months. Soft pretzel sales for the third quarter were up 16% and for the nine months were up 4% from last year to $6,067,000 and $19,313,000, respectively. Sales of our flagship SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX, increased 15% in the third quarter and 1% for the nine months. An advertising program which began in last year's first quarter helped boost year ago pretzel sales for the nine month period. Sales of frozen juice bars and ices increased $4,530,000 or 68% to $11,167,000 in the third quarter and increased $6,009,000 or 55% to $16,947,000 in the nine months. Sales of the Companys Minute Maid* brand licensed products, introduced in the second quarter, accounted for most of the frozen juice bars and ices' sales increase. Bakery sales increased $323,000 or 5% to $6,852,000 in the third quarter and $1,919,000 or 10% to $20,910,000 in the nine months due to increased unit sales across our *Minute Maid is a registered trademark of The Coca-Cola Company. 12 customer base. Sales of our Bavarian Pretzel Bakery increased 3% to $2,916,000 in the third quarter and 1% to $9,729,000 in the nine month period. FROZEN BEVERAGES Frozen beverage and related product sales increased $1,761,000 or 6% to $29,844,000 in the third quarter and $9,238,000 or 15% to $70,231,000 in the nine months. Beverage sales alone increased 9% in the third quarter to $25,454,000 and 11% to $58,482,000 in the nine months and gross profit on beverage sales increased 7% in the quarter and 6% in the nine months. Service and lease revenue increased $813,000 in the third quarter and $4,610,000 in the nine months due primarily to service provided to one customer. Gross profit as a percentage of sales decreased to 53% and 52% in the current third quarter and nine months, respectively, from 54% and 53% in the corresponding periods last year. The gross profit percentage decrease in the third quarter is primarily due to cost overruns during start up manufacturing of our Minute Maid brand licensed products which was begun during the Company's second quarter and lower foodservice pretzel and churro sales. For the nine months, the gross profit percentage decrease is attributable to cost overruns during start up manufacturing of our Minute Maid brand licensed products which was begun during the Company's second quarter, lower foodservice pretzel and churro sales, and lower gross profit percentages of the increased service and lease revenue of our frozen beverage business. Total operating expenses increased $3,976,000 in the third quarter and as a percentage of sales increased to 43% from 42% in last year's same quarter. For the nine months, operating expenses increased $8,384,000 and as a percentage of sales was 46% in both years. Marketing expenses increased to 31% of sales in this year's third quarter from 29% last year and increased less than one percentage point of sales to 32% of sales in the nine months from 31% of sales last year primarily due to the higher level of sales of products to retail supermarkets which generally require 13 higher marketing expenses as a percentage of sales. Distribution expenses decreased less than one percentage point of sales to 8% of sales in the third quarter from 9% in last year's quarter and were 10% of sales in both year's nine months period. Administration expenses were 3% and 4% of sales in both year's third quarter and nine months, respectively. Operating income decreased $1,048,000 or 11% to $8,620,000 in the third quarter and $1,805,000 or 13% to $11,739,000 in the nine months. For the three and nine months, interest expense decreased $110,000 and $424,000, respectively, due to lower debt levels. The effective income tax rate has been estimated at 37% in all periods reported. Net earnings decreased $695,000 or 12% in the current three month period to $5,010,000 and $1,049,000 or 14% in the current nine month period to $ 6,416,000. 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 1999 annual report on Form 10-K filed with the SEC. 14 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits - None b) Reports on Form 8-K - There were no reports on Form 8-K for the three months ended June 24, 2000. 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: August 1, 2000 /s/ Gerald B. Shreiber Gerald B. Shreiber President Dated: August 1, 2000 /s/ Dennis G. Moore Senior Vice President and Chief Financial Officer 16 EX-27 2 0002.txt
5 1,000 3-MOS SEP-30-2000 JUN-24-2000 1027 0 38503 (732) 19859 61009 254255 (145959) 223283 67853 17657 0 0 28682 101241 223283 223770 223770 108497 103534 0 0 2099 10184 3768 6416 0 0 0 6416 0.72 0.70
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