-----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, L3rF18ywLd0NdRAT5r7XSUd85a3uQnhfmoAoz0BHyQYT4VUJoXVJ6TVTzZUQs3va tQx6Wj0CE6X6sZUSaeTrIw== 0000785956-04-000026.txt : 20040913 0000785956-04-000026.hdr.sgml : 20040913 20040913162941 ACCESSION NUMBER: 0000785956-04-000026 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031227 FILED AS OF DATE: 20040913 DATE AS OF CHANGE: 20040913 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14616 FILM NUMBER: 041027782 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/A 1 r10q0401.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 December 27, 2003 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 jurisdiction 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 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) X Yes No As of January 15, 2004, there were 8,800,678 shares of the Registrant's Common Stock outstanding. INDEX Page Number Part I. Financial Information Item l. Consolidated Financial Statements Consolidated Balance Sheets - December 27, 2003 (unaudited) and September 27, 2003 3 Consolidated Statements of Operations - Three Months Ended December 27, 2003 and December 28, 2002 (unaudited) 5 Consolidated Statements of Cash Flows - Three Months Ended December 27, 2003 and December 28, 2002 (unaudited) 6 Notes to the Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 19 Item 4. Controls and Procedures 19 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 21 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) ASSETS December 27, September 27, 2003 2003 (Unaudited) Current assets Cash and cash equivalents $ 40,243 $ 37,694 Accounts receivable 32,349 38,161 Inventories 25,250 23,202 Prepaid expenses and other 1,154 1,348 98,996 100,405 Property, plant and equipment, at cost Land 606 606 Buildings 5,106 5,106 Plant machinery and equipment 93,552 93,122 Marketing equipment 174,285 173,360 Transportation equipment 934 909 Office equipment 7,699 7,394 Improvements 15,759 15,654 Construction in progress 2,767 2,458 300,708 298,609 Less accumulated deprecia- tion and amortization 216,094 211,494 84,614 87,115 Other assets Goodwill, less accumulated amortization 46,529 45,850 Other intangible assets, less accumulated amortization 1,154 1,231 Long term investment securities held to maturity - 275 Sundry 2,185 1,807 49,868 49,163 $233,478 $236,683 See accompanying notes to the consolidated financial statements. 3 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - Continued (in thousands) LIABILITIES AND December 27, September 27, STOCKHOLDERS' EQUITY 2003 2003 (unaudited) Current liabilities Accounts payable $ 24,420 $ 27,252 Accrued liabilities 10,338 12,806 34,758 40,058 Deferred income taxes 13,374 13,374 Other long-term liabilities 644 687 14,018 14,061 Stockholders' equity Capital stock Preferred, $1 par value; authorized, 5,000 shares; none issued - - Common, no par value; authorized 25,000 shares; issued and outstanding, 8,784 and 8,757, respectively 28,523 28,143 Accumulated other comprehen- sive loss (2,024) (1,957) Retained earnings 158,203 156,378 184,702 182,564 $233,478 $236,683 See accompanying notes to the consolidated financial statements. 4 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) Three Months Ended December 27, December 28, 2003 2002 Net Sales $79,945 $77,244 Cost of goods sold 55,307 55,179 Gross profit 24,638 22,065 Operating expenses Marketing 11,224 10,863 Distribution 6,960 6,128 Administrative 3,708 3,322 Other general income (33) (58) 21,859 20,255 Operating income 2,779 1,810 Other income (expenses) Investment income 117 98 Interest expense (29) (32) Earnings before income taxes 2,867 1,876 Income taxes 1,042 675 NET EARNINGS $ 1,825 $ 1,201 Earnings per diluted share $ .20 $ .13 Weighted average number of diluted shares 9,039 9,235 Earnings per basic share $ .21 $ .14 Weighted average number of basic shares 8,792 8,730 See accompanying notes to the consolidated financial statements. 5 J & J SNACK FOODS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended December 27, December 28, 2003 2002 Operating activities: Net earnings $ 1,825 $ 1,201 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of fixed assets 5,872 7,019 Amortization of intangibles and deferred costs 194 189 Other (35) (249) Changes in assets and liabilities, net of effects from purchase of companies Decrease in accounts receivable 5,814 6,370 Increase in inventories (1,985) (1,386) Decrease (increase) in prepaid expenses 194 (404) Decrease in accounts payable and accrued liabilities (5,342) (7,229) Net cash provided by operating activities 6,537 5,511 Investing activities: Purchase of property, plant and equipment (3,252) (3,196) Payments for purchase of companies, net of cash acquired (1,631) - Proceeds from investments held to maturity 275 150 Proceeds from disposal of property and equipment 200 1,640 Other 40 (189) Net cash used in investing activities (4,368) (1,595) Financing activities: Proceeds from issuance of stock 380 - Net cash provided by financing activities 380 - Net increase in cash and cash equivalents 2,549 3,916 Cash and cash equivalents at beginning of period 37,694 14,158 Cash and cash equivalents at end of period $40,243 $18,074 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. Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net earnings. The results of operations for the three months ended December 27, 2003 and December 28, 2002 are not necessarily indicative of results for the full year. Sales of our retail stores are generally higher in the first quarter due to the holiday shopping season. Sales of our frozen beverages and frozen juice bars and ices are generally higher in the third and fourth quarters due to warmer weather. While we believe 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 our Annual Report on Form 10-K for the year ended September 27, 2003. Note 2 We recognize revenue from Food Service, Retail Supermarkets, The Restaurant Group and Frozen Beverage products at the time the products are shipped to third parties. When we perform services for others under time and material agreements, revenue is recognized upon the completion of the services. We also sell fixed-fee service contracts. The terms of coverage range between 12 and 60 months. We record deferred income on service contracts which is amortized by the straight-line method over the term of the contracts. We provide an allowance for doubtful receivables after taking into account historical experience and other factors. Note 3 Depreciation of equipment and buildings is provided for by the straight-line method over the assets' estimated useful lives. Amortization of improvements is provided for by the straight- line method over the term of the lease or the assets' estimated useful lives, whichever is shorter. Licenses and rights arising from acquisitions are amortized by the 7 straight-line method over periods ranging from 4 to 20 years. Note 4 Our calculation of earnings per share in accordance with SFAS No. 128, "Earnings Per Share," is as follows: Three Months Ended December 27, 2003 Income Shares Per Share (Numerator) (Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Earnings available to common stockholders $1,825 8,792 $ .21 Effect of Dilutive Securities Options - 247 (.01) Diluted EPS Net Earnings available to common stockholders plus assumed conversions $1,825 9,039 $ .20 92,394 anti-dilutive weighted shares have been excluded in the computation of the three months ended December 27, 2003 diluted EPS because the options' exercise price is greater than the average market price of the common stock. Three Months Ended December 28, 2002 Income Shares Per Share (Numerator) (Denominator) Amount (in thousands, except per share amounts) Basic EPS Net Earnings available to common stockholders $1,201 8,730 $ .14 Effect of Dilutive Securities Options - 505 (.01) Diluted EPS Net Earnings available to common stockholders plus assumed conversions $1,201 9,235 $ .13 110,000 anti-dilutive weighted shares have been excluded in the computation of the three months ended December 28, 2002 diluted EPS because the options' exercise price is greater than the average market price of the common stock. 8 Note 5 The Company accounts for stock options under SFAS No. 123, "Accounting for Stock-Based Compensation", as amended by SFAS No. 148, 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, SFAS No. 123 permits entities to continue accounting for employee stock options and similar equity instruments under Accounting Principles Board (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 SFAS No. 123 had been applied. At December 27, 2003, the Company has one stock-based employee compensation plan. The Company accounts for this plan under the recognition and measurement principles of APB No. 25, "Accounting for Stock Issued to Employees", and related interpretations. Stock-based employee compensation costs are not reflected in net income, as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, to stock-based employee compensation. 9 Three Months Ended December 27, December 28, 2003 2002 (in thousands, except per share amounts) Net income, as reported $1,825 $1,201 Less: stock-based compensation costs determined under fair value based method for all awards 281 341 Net income, pro forma $1,544 $ 860 Earnings per share of common stock - basic: As reported $ .21 $ .14 Pro forma $ .18 $ .09 Earnings per share of common stock - diluted: As reported $ .20 $ .13 Pro forma $ .17 $ .09 The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted average assumptions used for grants in fiscal 2003 and fiscal 2004: expected volatility of 43% and 36%; risk-free interest rate of 3.07% and rates ranging between 2.27% and 3.49%; and expected lives ranging between 5 and 10 years. Note 6 In November 2002, FASB Interpretation 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45), was issued. FIN 45 requires a guarantor entity, at the inception of a guarantee covered by the measurement provisions of the interpretation, to record a liability for the fair value of the obligation undertaken in issuing the guarantee. 10 We previously did not record a liability when guaranteeing obligations unless it became probable that we would have to perform under the guarantee. FIN 45 applies prospectively to guarantees we issue or modify subsequent to December 31, 2002, but has certain disclosure requirements effective for interim and annual periods ending after December 15, 2002. The adoption of FIN 45 did not have a significant impact on our consolidated financial position, results of operations or cash flows. In January 2002, the FASB issued Interpertation 46 (FIN 46), "Consolidation of Variable Interest Entities." FIN 46 clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest ("variable interest entities"). Variable interest entities within the scope of FIN 46 will be required to be consolidated by their primary beneficiary. The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity's expected losses, receives a majority of its expected returns, or both. FIN 46 applies immediately to variable interest entities created after January 31, 2002, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2002, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2002. The adoption of FIN 46 did not have a material effect on our consolidated financial position, results of operations, or cash flows. On May 15, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is 11 effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material effect on our consolidated financial position, results of operations or cash flows. Note 7 Inventories consist of the following: December 27, September 27, 2003 2003 (unaudited) (in thousands) Finished goods $11,637 $10,537 Raw materials 3,232 2,775 Packaging materials 3,166 2,975 Equipment parts & other 7,215 6,915 $25,250 $23,202 Note 8 We principally sell our products to the food service and retail supermarket industries. We also distribute our products directly to the consumer through our chain of retail stores referred to as The Restaurant Group. Sales and results of our frozen beverages business are monitored separately from the balance of our food service business and restaurant group because of different distribution and capital requirements. We maintain separate and discrete financial information for the four operating segments mentioned above which is available to our Chief Operating Decision Makers. We have applied no aggregate criteria to any of these operating segments in order to determine reportable segments. Our four reportable segments are Food Service, Retail Supermarkets, The Restaurant Group and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income (loss). These segments are described below. Food Service The primary products sold by the food service group are soft pretzels, frozen juice treats and desserts, churros and baked goods. Our customers in the food service industry include snack bars and food stands in chain, department and discount stores; malls and shopping centers; fast food outlets; stadiums and sports arenas; leisure and theme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges and other institutions. Within the food service industry, our products are 12 purchased by the consumer primarily for consumption at the point-of-sale. Retail Supermarkets The primary products sold to the retail supermarket industry are soft pretzel products, including SUPERPRETZEL, LUIGI'S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, ICEE Squeeze Up Tubes and TIO PEPE'S Churros. Within the retail supermarket industry, our frozen and prepackaged products are purchased by the consumer for consumption at home. The Restaurant Group We sell direct to the consumer through our Restaurant Group, which operates BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, our chain of specialty snack food retail outlets. Frozen Beverages We sell frozen beverages to the food service industry, including our restaurant group, primarily under the names ICEE and ARCTIC BLAST in the United States, Mexico and Canada. The Chief Operating Decision Maker for Food Service, Retail Supermarkets and The Restaurant Group and the Chief Operating Decision Maker for Frozen Beverages monthly review and evaluate operating income and sales in order to assess performance and allocate resources to each individual segment. In addition, the Chief Operating Decision Makers review and evaluate depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. Information regarding the operations in these four reportable segments is as follows: 13 Three Months Ended December 27, December 28, 2003 2002 (in thousands) Sales to external customers: Food Service $ 47,941 $ 43,806 Retail Supermarket 6,277 5,739 The Restaurant Group 2,568 3,090 Frozen Beverages 23,159 24,609 $ 79,945 $ 77,244 Depreciation and Amortization: Food Service $ 3,282 $ 3,340 Retail Supermarket - - The Restaurant Group 111 157 Frozen Beverages 2,673 3,711 $ 6,066 $ 7,208 Operating Income(Loss): Food Service $ 2,848 $ 2,663 Retail Supermarket 59 (414) The Restaurant Group 52 130 Frozen Beverages (180) (569) $ 2,779 $ 1,810 Capital Expenditures: Food Service $ 1,236 $ 1,398 Retail Supermarket - - The Restaurant Group 9 20 Frozen Beverages 2,007 1,778 $ 3,252 $ 3,196 Assets: Food Service $149,318 $128,690 Retail Supermarket - - Restaurant Group 2,292 2,815 Frozen Beverages 81,868 82,474 $233,478 $213,979 Note 9 We follow SFAS No. 142 "Goodwill and Intangible Assets." SFAS No. 142 includes requirements to test goodwill and indefinite lived intangible assets for impairment rather than amortize them; accordingly, we no longer amortize goodwill. Our four reporting units, which are also reportable segments, are Food Service, Retail Supermarkets, The Restaurant Group and Frozen Beverages. Each of the segments have goodwill and indefinite lived intangible assets. 14 The carrying amount of acquired intangible assets for the Food Service, Retail Supermarkets, The Restaurant Group and Frozen Beverage segments as of December 27, 2003 are as follows: Gross Net Carrying Accumulated Carrying Amount Amortization Amount (in thousands) FOOD SERVICE Amortized intangible assets Licenses and rights $2,066 $981 $1,085 RETAIL SUPERMARKETS Amortized intangible assets Licenses and rights $ - $ - $ - THE RESTAURANT GROUP Amortized intangible assets Licenses and rights $ 20 $ 20 $ - FROZEN BEVERAGES Amortized intangible assets Licenses and rights $ 201 $132 $ 69 Licenses and rights are being amortized by the straight-line method over periods ranging from 4 to 20 years and amortization expense is reflected throughout operating expenses. There were no changes in the gross carrying amount of intangible assets for the three months ended December 27, 2003. Aggregate amortization expense of intangible assets for the 3 months ended December 27, 2003 and December 28, 2002 was $78,000 and $78,000, respectively. Estimated amortization expense for the next five fiscal years is approximately $300,000 in 2004, $200,000 in 2005 and $140,000 in 2006, 2007 and 2008. Goodwill The carrying amounts of goodwill for the Food Service, Retail Supermarket, Restaurant Group and Frozen Beverage segments are as follows: 15 Food Retail Restaurant Frozen Service Supermarket Group Beverages Total (in thousands) Balance at December 27, 2003 $14,241 $ - $438 $31,850 $46,529 The $679,000 increase in the goodwill in the frozen beverage segment was the result of an acquisition made in the quarter. Note 10 Subsequent Event On January 5, 2004, we acquired the assets of Country Home Bakers, Inc. for approximately $13 million in cash. Country Home Bakers, Inc., with its manufacturing facility in Atlanta, GA, manufactures and distributes bakery products to the food service and supermarket industries. Its product line includes cookies, biscuits, and frozen doughs sold under the names READI-BAKE, COUNTRY HOME and private labels sold through supermarket in-store bakeries. Total annual sales are estimated to be approximately $55 million. 16 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Our current cash and marketable securities balances and cash expected to be provided by future operations are our primary sources of liquidity. We believe that these sources, along with our borrowing capacity, are sufficient to fund future growth and expansion. In the quarters ended December 27, 2003 and December 28, 2002 fluctuations in the valuation of the Mexican peso caused a decrease of $67,000 and an decrease of $29,000 in stockholders' equity, respectively, because of the translation of the net assets of the Company's Mexican frozen beverage subsidiary. On January 5, 2004, we acquired the assets of Country Home Bakers, Inc. for approximately $13 million in cash. Country Home Bakers, Inc., with its manufacturing facility in Atlanta, GA, manufactures and distributes bakery products to the food service and supermarket industries. Its product line includes cookies, biscuits, and frozen doughs sold under the names READI-BAKE, COUNTRY HOME and private labels sold through supermarket in-store bakeries. Total annual sales are estimated to be approximately $55 million. Our general-purpose bank credit line provides for up to a $50,000,000 revolving credit facility. The agreement contains restrictive covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under this facility at December 27, 2003. Results of Operations Net sales increased $2,701,000 or 3% to $79,945,000 for the three months ended December 27, 2003 compared to the three months ended December 28, 2002. FOOD SERVICE Sales to food service customers increased $4,135,000 or 9% in the first quarter to $47,941,000. Soft pretzel sales increased $1,576,000 or 9% from last year to $18,884,000 in this year's quarter due primarily to increased sales of PRETZEL FILLERS to one customer. Italian ice and frozen juice treat and dessert sales increased 9% to $5,652,000 in the three months primarily due to increased sales to school food service. Churro sales to food service customers increased 2% to $3,183,000 in the quarter. Sales of bakery 17 products increased 11% to $19,080,000 from $17,152,000 last year due to increased sales across our customer base. RETAIL SUPERMARKETS Sales of products to retail supermarkets increased $538,000 or 9% in the first quarter. Soft pretzel sales for the first quarter were up 13% to $4,207,000 due mainly to sales of our recently introduced PRETZELFILS. Sales of frozen juices and ices increased $147,000 or 6% to $2,490,000 in the quarter due to lower trade spending; case sales of frozen juices and ices were down approximately 12% in the quarter. THE RESTAURANT GROUP Sales of our Restaurant Group decreased 17% to $2,568,000 in the first quarter. The sales decrease was caused primarily by decreased mall traffic and the closing of unprofitable stores. FROZEN BEVERAGES Frozen beverage and related product sales decreased $1,450,000 or 6% to $23,159,000 in the first quarter. Excluding the sale of equipment to one customer in last year's quarter, sales would have been down about 1/2 of 1% of sales. Beverage sales alone decreased 2% to $17,411,000 for the quarter. Lower sales to one customer accounted for the entire decrease in beverage sales. Service revenue increased $883,000 or 27% from the first quarter of fiscal year 2003 to $4,115,000 in this year's first quarter. CONSOLIDATED Gross profit as a percentage of sales increased two percentage points to 31% from 29% from last year. The increase was caused primarily by a lower level of allowances in our retail supermarket business and reduced depreciation of our frozen beverage dispensing machines. Total operating expenses increased $1,604,000 in the first quarter and as a percentage of sales increased to 27% from 26% in last year's same quarter. Marketing expenses were 14% of sales in both year's first quarter. Distribution expenses increased to 9% of sales from 8% last year. The increase was caused by higher fuel and trucking costs and shifts in product mix. Administrative expenses increased about 1/3 of 1% as a percentage of sales to 5% this year due to attorney costs. 18 Operating income increased 54% to $2,779,000 this year from $1,810,000 a year ago. The effective income tax rate has been estimated at 36% this year. Net earnings increased 52% to $1,825,000 in this year's first quarter compared to net earnings of $1,201,000 in the year ago period. 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 2003 annual report on Form 10-K filed with the SEC. Item 4. Controls and Procedures Quarterly evaluation of the Company's Disclosure and Internal Controls. The Company evaluated (i) the effectiveness of the design and operation of its disclosure controls and procedures (the "Disclosure Controls") as of the end of the period covered by this Form 10-Q and (ii) any changes in internal controls over financial reporting that occurred during the first quarter of its fiscal year. This evaluation ("Controls Evaluation") was done under the supervision and with the participation of management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Limitations on the Effectiveness of Controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost effective control system, misstatements due to 19 error or fraud may occur and not be detected. The Company conducts periodic evaluations of its internal controls to enhance, where necessary, its procedures and controls. Conclusions. Based upon the Controls Evaluation, the CEO and CFO have concluded that the Disclosure Controls are effective in reaching a reasonable level of assurance that management is timely alerted to material information relating to the Company during the period when its periodic reports are being prepared. In accord with the U.S. Securities and Exchange Commission's requirements, the CEO and CFO conducted an evaluation of the Company's internal control over financial reporting (the "Internal Controls") to determine whether there have been any changes in Internal Controls that occurred during the quarter which have materially affected or which are reasonable likely to materially affect Internal Controls. Based on this evaluation, there have been no such changes in Internal Controls during the quarter covered by this report. 20 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits 31.1 & Certification Pursuant to Section 302 of 31.2 the Sarbanes-Oxley Act of 2002 99.5 Certification Pursuant to the 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 b) Reports on Form 8-K - Reports on Form 8-K were filed on November 5, 2003 and December 23, 2003. 21 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: September 9, 2004 /s/ Gerald B. Shreiber Gerald B. Shreiber President Dated: September 9, 2004 /s/ Dennis G. Moore Dennis G. Moore Senior Vice President and Chief Financial Officer 22 EX-31 2 r31_0401.txt Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Dennis G. Moore, certify that: 1. I have reviewed this report on Form 10-Q of J & J Snack Foods Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls and procedures for financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal controls and procedures for financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: September 9, 2004 /s/ Dennis G. Moore Dennis G. Moore Chief Financial Officer EX-32 3 r32_0401.txt Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Gerald B. Shreiber, certify that: 1. I have reviewed this report on Form 10-Q of J & J Snack Foods Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls and procedures for financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal controls and procedures for financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: September 9, 2004 /s/ Gerald B. Shreiber Gerald B. Shreiber Chief Executive Officer EX-99 4 r99_0401.txt Exhibit 99.5 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), each of the undersigned officers of J & J Snack Foods Corp. (the "Company"), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the quarter ended December 27, 2003 (the "Report") that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: September 9, 2004 /s/ Dennis G. Moore Dennis G. Moore Chief Financial Officer Dated: September 9, 2004 /s/ Gerald B. Shreiber Gerald B. Shreiber Chief Executive Officer The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----