SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 28, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 0-14616
J & J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22-1935537
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
6000 Central Highway
Pennsauken, New Jersey 08109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
including area code: (856-665-9533)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value: None None
(Title of each class) (Name of each exchange
on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
As of December 9, 2002, the latest practicable date, 8,904,680 shares of
the Registrant's common stock were issued and outstanding. The aggregate
market value of shares held by non-affiliates of the Registrant on such date
was $244,563,300 based on the last price on that date of $37.50 per share,
which is an average of bid and asked prices.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's 2002 Annual Report to Shareholders for the fiscal
year ended September 28, 2002 and Proxy Statement for its Annual Meeting
of Shareholders to be held on February 6, 2003 are incorporated herein
by reference into Parts I, II, III and IV as set forth herein.
J & J SNACK FOODS CORP.
2002 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Page
Item 1 Business . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . 10
Item 3 Legal Proceedings. . . . . . . . . . . . . . 11
Item 4 Submission Of Matters To A Vote Of Security
Holders. . . . . . . . . . . . . . . . . . . 11
Executive Officers Of The Registrant . . . . 12
PART II
Item 5 Market For Registrant's Common Equity And
Related Stockholder Matters. . . . . . . . . 13
Item 6 Selected Financial Data. . . . . . . . . . . 13
Item 7 Management's Discussion And Analysis Of Finan-
cial Condition And Results Of Operations . . 13
Item 7a Quantitative And Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . 14
Item 8 Financial Statements And Supplementary Data. 15
Item 9 Changes In And Disagreements With Accountants
On Accounting And Financial Disclosure . . . 15
PART III
Item 10 Directors And Executive Officers Of The
Registrant . . . . . . . . . . . . . . . . . 16
Item 11 Executive Compensation . . . . . . . . . . . 16
Item 12 Security Ownership Of Certain Beneficial
Owners And Management. . . . . . . . . . . . 16
Item 13 Certain Relationships And Related Transactions 16
Item 14 Controls and Procedures. . . . . . . . . . . 16
PART IV
Item 15 Exhibits, Financial Statement Schedules And
Reports On Form 8-K. . . . . . . . . . . . . 18
Item 1. Business
General
J & J Snack Foods Corp. (the ''Company'' or ''J & J'') manufactures
nutritional snack foods and distributes frozen beverages which it
markets nationally to the food service and retail supermarket
industries. Its principal snack food products are soft pretzels
marketed primarily under the brand name SUPERPRETZEL and frozen juice
treats and desserts marketed primarily under the LUIGI'S, ICEE and
MINUTE MAID* brand names. J & J believes it is the largest manufacturer
of soft pretzels in the United States, Mexico and Canada. Other snack
food products include churros (an Hispanic pastry), funnel cake, popcorn
and bakery products. The Company's principal frozen beverage product is
ICEE brand frozen carbonated beverage.
The Company's Food Service and Frozen Beverages sales are made
primarily to food service customers including snack bar and food stand
locations in leading chain, department, discount, warehouse club and
convenience stores; malls and shopping centers; fast food outlets;
stadiums and sports arenas; leisure and theme parks; movie theatres;
independent retailers; and schools, colleges and other institutions.
The Company's retail supermarket customers are primarily supermarket
chains. The Company's restaurant group sells direct to the public
through its chains of specialty snack food retail outlets, BAVARIAN
PRETZEL BAKERY and PRETZEL GOURMET, located primarily in the Mid-
Atlantic States.
The Company was incorporated in 1971 under the laws of the State
of New Jersey.
The Company operates in four business segments: Food Service,
Retail Supermarkets, The Restaurant Group and Frozen Beverages. These
segments are described below.
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.
*Minute Maid is a registered trademark of The Coca-Cola
Company
1
Food Service
The primary products sold by the food service segment 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 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 public 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 primarily
under the names ICEE and ARCTIC BLAST in the United States, Mexico and
Canada.
Products
Soft Pretzels
The Company's soft pretzels are sold under many brand names; some
of which are: SUPERPRETZEL, PRETZEL FILLERS, GOURMET TWISTS, MR.
TWISTER, SOFT PRETZEL BITES, SOFTSTIX, SOFT PRETZEL BUNS, HOT KNOTS,
DUTCH TWIST, TEXAS TWIST and SANDWICH TWIST and; to a lesser extent,
under private labels. Soft pretzels are sold in the Food Service, Retail
Supermarket and The Restaurant Group segments. Soft pretzel sales
amounted to 28% of the Company's revenue in fiscals 2002 and 2001.
The Company's soft pretzels qualify under USDA regulations as the
nutritional equivalent of bread for purposes of the USDA school lunch
program, thereby enabling
2
a participating school to obtain partial reimbursement of the cost of
the Company's soft pretzels from the USDA.
The Company's soft pretzels are manufactured according to a
proprietary formula. Soft pretzels, ranging in size from one to ten
ounces in weight, are shaped and formed by the Company's proprietary
twister machines. These soft pretzel tying machines are automated, high
speed machines for twisting dough into the traditional pretzel shape.
Additionally, we make soft pretzels which are extruded or shaped by
hand. Soft pretzels, after processing, are primarily quick-frozen in
either raw or baked form and packaged for delivery.
The Company's principle marketing program in the Food Service
segment includes supplying ovens, mobile merchandisers, display cases,
warmers and similar merchandising equipment to the retailer to prepare
and promote the sale of soft pretzels. Some of this equipment is
proprietary, including combination warmer and display cases that
reconstitute frozen soft pretzels while displaying them, thus
eliminating the need for an oven. The Company retains ownership of the
equipment placed in customer locations and, as a result, customers are
not required to make an investment in equipment.
Frozen Juice Treats and Desserts
The Company's frozen juice treats and desserts are marketed under
the LUIGI'S, ICEE, MINUTE MAID, SHAPE-UPS, CHILL and MAMA TISH'S brand
names. Frozen juice treats and desserts are sold in the Food Service and
Retail Supermarkets segments. Frozen juice treat and dessert sales were
18% and 17% of the Company's revenue in fiscal years 2002 and 2001,
respectively.
The Company's SHAPE-UPS and MINUTE MAID frozen juice and fruit
bars are manufactured from an apple juice base to which water,
sweeteners, coloring (in some cases) and flavorings are added. The
juice bars contain two to three ounces of apple or pear juice and the
minimum daily requirement of vitamin C, and qualify as reimbursable
items under the USDA school lunch program. The juice bars are produced
in various flavors and are packaged in a sealed push-up paper container
referred to as the Milliken M-pak, which the Company believes has certain
sanitary and safety advantages.
LUIGI'S Real Italian Ice and MAMA TISH'S Italian Ice and Sorbets
are manufactured from water, sweeteners and
3
fruit juice concentrates in various flavors and are packaged in plastic
cups and in squeeze up tubes.
ICEE Squeeze Tubes are designed to capture the carbonated frozen
taste of a traditional ICEE drink. They are packaged in three and four
ounce squeeze up tubes.
MINUTE MAID soft frozen lemonade and fruit and cream swirl are
packaged in squeeze up tubes and cups.
Churros
The Company's frozen churros are sold primarily under the TIO
PEPE'S brand name. Churros are sold to the Food Service and Retail
Supermarkets segments. Churro sales were 4% of the Company's sales in
both fiscals 2002 and 2001, respectively. Churros are Hispanic donuts
in stick form which the Company produces in several sizes according to a
proprietary formula. The churros are deep fried, frozen and packaged.
At food service point-of-sale they are reheated and topped with a
cinnamon sugar mixture. The Company also sells fruit and creme filled
churros. The Company supplies churro merchandising equipment similar to
that used for its soft pretzels.
Bakery Products
The Company's bakery products are marketed under the MRS.
GOODCOOKIE, CAMDEN CREEK BAKERY and PRETZEL COOKIE brane names, and
under private labels. Bakery products include primarily cookies,
muffins and donuts. Bakery products are sold to the Food Service
segment. Bakery products sales amounted to 18% of the Company's sales
in fiscals 2002 and 2001.
Frozen Beverages
The Company markets frozen beverages primarily under the names
ICEE and ARCTIC BLAST in the United States, Mexico and Canada.
Additional frozen beverages are SMOOTHEE by ICEE, JAVA FREEZE and
CALIFORNIA NATURAL. Frozen beverages are sold in the Food Service, The
Restaurant Group and Frozen Beverages segments. Frozen beverage sales
amounted to 26% of revenue in fiscal 2002 and 28% of revenue in fiscal
2001.
Under the Company's principle marketing program, it installs
frozen beverage dispensers at customer locations and thereafter services
the machines, arranges to supply customers with ingredients required for
production of the frozen beverages, and supports customer retail sales
efforts
4
with in-store promotions and point-of-sale materials. In most cases,
the Company retains ownership of its dispensers and, as a result,
customers are not required to make an investment in equipment or arrange
for the ingredients and supplies necessary to produce and market the
frozen beverages. In fiscal 1999 the Company began providing
installation and maintenance service only to a large quick service
restaurant and others, which resulted in the increase of Customer Owned
beverage dispensers beginning in 1999. The Company also provides managed
service and sells equipment in its Frozen Beverages segment.
Each new customer location requires a frozen beverage dispenser
supplied by the Company or by the customer. Company supplied frozen
carbonated dispensers are purchased from outside vendors, built new or
rebuilt by the Company at an approximate cost of $6,000 each.
The Company provides managed service and/or products to
approximately 37,000 Company owned and customer owned dispensers.
The Company has the rights to market and distribute frozen
beverages under the name ICEE to all the Continental United States,
except for portions of eleven states.
Other Products
Other products sold by the Company include soft drinks, funnel
cakes sold under the FUNNEL CAKE FACTORY brand name, popcorn sold under
the AIRPOPT brand name and smaller amounts of various other food
products. These products are sold in the Food Service, The Restaurant
Group and Frozen Beverages segments.
Customers
The Company sells its products to two principal customer groups:
food service and retail supermarkets. The primary products sold to the
food service group are soft pretzels, frozen beverages, frozen juice
treats and desserts, churros and baked goods. The primary products
sold to the retail supermarket industry are soft pretzels and frozen
juice treats and desserts. Additionally, the Company sells soft
pretzels, frozen beverages and various other food products direct to the
public through its restaurant group, which operates BAVARIAN PRETZEL
BAKERY and
PRETZEL GOURMET, our chain of specialty snack food retail outlets.
The Food Service, The Restaurant Group and the Frozen Beverages
segments sell primarily to the food service
5
industry. The Retail Supermarkets segment sells to the retail
supermarket industry.
The Company's customers in the food service industry include snack
bars and food stands in chain, department and mass merchandising stores
such as Kmart, Wal-Mart and Target; malls and shopping centers; fast
food outlets; stadiums and sports arenas; leisure and them parks such as
Disneyland, Walt Disney World, Universal Studios, Sea World, Six Flags,
Hershey Park and Busch Gardens; convenience stores such as 7-Eleven,
Circle K, AM/PM and Wawa; movie theatres; warehouse club stores such as
Sam's Club, Costco and B.J.'s; schools, colleges and other institutions;
and independent retailers such as Mrs. Fields. Food service
concessionaires purchasing soft pretzels and other products from the
Company for use in sports arenas and for institutional meal services
include ARAMARK, Sodexho and Delaware North. Machines and machine parts
are sold to other food and beverage companies. Within the food service
industry, the Company's products are purchased by the consumer primarily
for consumption at the point-of-sale.
Sales to certain of our chain, department and mass merchandising
customers decreased in 2002 and are expected to decline further in 2003
as a result of store closings and other factors affecting their
operations.
The Company sells its products to over 90% of supermarkets in the
United States. Products sold to retail supermarket customers are
primarily 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, the Company's frozen and prepackaged products are purchased by
the consumer for consumption at home.
Marketing and Distribution
The Company has developed a national marketing program for its
products. For Food Service and Frozen Beverages segments' customers,
this marketing program includes providing ovens, mobile merchandisers,
display cases, warmers, frozen beverage dispensers and other
merchandising equipment for the individual customer's requirements and
point-of-sale materials as well as participating in trade shows and in-
store demonstrations. The Company's ongoing advertising and promotional
campaigns for its Retail Supermarket segment's products include trade
shows, newspaper advertisements with coupons, in-store demonstrations,
billboards and, periodically, television advertisements.
6
The Company develops and introduces new products on a routine
basis. The Company evaluates the success of new product introductions
on the basis of sales levels, which are reviewed no less frequently than
monthly by the Company's Chief Operating Decision Makers.
The Company's products are sold through a network of about 150
food brokers and over 1,000 independent sales distributors and the
Company's own direct sales force. For its snack food products, the
Company maintains warehouse and distribution facilities in Pennsauken,
Bellmawr and Bridgeport, New Jersey; Vernon (Los Angeles), California;
Scranton, Pittsburgh, Hatfield and Lancaster, Pennsylvania; Carrollton
(Dallas), Texas; and Solon, Ohio. Frozen beverages are distributed from
94 Company managed warehouse and distribution facilities located in 41
states, Mexico and Canada which allow the Company to directly service
its customers in the surrounding areas. The Company's products are
shipped in refrigerated and other vehicles from the Company's
manufacturing and warehouse facilities on a fleet of Company operated
tractor-trailers, trucks and vans, as well as by independent carriers.
Seasonality
The Company's sales are seasonal because frozen beverage sales and
frozen juice treats and desserts sales are generally higher during the
warmer months and sales of the Company's retail stores are generally
higher in the Company's first quarter during the holiday shopping
season.
Trademarks and Patents
The Company has numerous trademarks, the most important of which
are SUPERPRETZEL, DUTCH TWIST, TEXAS TWIST, MR. TWISTER, SOFT PRETZEL
BITES and SOFTSTIX for its pretzels products; FROSTAR, SHAPE-UPS,
MAZZONE'S, MAMA TISH'S and LUIGI'S for its frozen juice treats and
desserts; TIO PEPE'S for its churros; ARCTIC BLAST for its frozen
beverages; FUNNEL CAKE FACTORY for its funnel cake products, and MRS.
GOODCOOKIE and CAMDEN CREEK for its bakery products. The trademarks,
when renewed and continuously used, have an indefinite term and are
considered important to the Company as a means of identifying its
products.
The Company markets frozen beverages under the trademark ICEE in
all of the continental United States, except for portions of eleven
states, and in Mexico and
Canada. Additionally, the Company has the international rights to the
trademark ICEE.
7
The Company has numerous patents related to the manufacturing and
marketing of its product.
Supplies
The Company's manufactured products are produced from raw
materials which are readily available from numerous sources. With the
exception of the Company's soft pretzel twisting equipment and funnel
cake production equipment, which are made for J & J by independent third
parties, and certain specialized packaging equipment, the Company's
manufacturing equipment is readily available from various sources.
Syrup for frozen beverages is purchased from The Coca-Cola Company, the
Pepsi Cola Company, and Western Syrup Company. Cups, straws and lids
are readily available from various suppliers. Parts for frozen beverage
dispensing machines are manufactured internally and purchased from other
sources. Frozen beverage dispensers are purchased primarily from IMI
Cornelius, Inc.
Competition
Snack food and bakery products markets are highly competitive.
The Company's principal products compete against similar and different
food products manufactured and sold by numerous other companies, some of
which are substantially larger and have greater resources than the
Company. As the soft pretzel, frozen juice treat and dessert, bakery
products and related markets grow, additional competitors and new
competing products may enter the markets. Competitive factors in these
markets include product quality, customer service, taste, price,
identity and brand name awareness, method of distribution and sales
promotions.
The Company believes it is the only national distributor of soft
pretzels. However, there are numerous regional and local manufacturers
of food service and retail supermarket soft pretzels. Competition is
also increasing in that there are several chains of retail pretzel
stores that have aggressively expanded over the past several years.
These chains compete with the Company's products.
In Frozen Beverages the Company competes directly with other
frozen beverage companies. These include several companies which have
the right to use the ICEE name in portions of eleven states. There are
many other regional frozen beverage competitors throughout the country
and one large retail chain which uses its own frozen beverage brand.
8
The Company competes with large soft drink manufacturers for
counter and floor space for its frozen beverage dispensing machines at
retail locations and with products which are more widely known than the
ICEE and ARCTIC BLAST frozen beverages.
The Company competes with a number of other companies in the
frozen juice treat and dessert and bakery products markets.
Employees
The Company has approximately 2,300 full and part time employees
as of September 28, 2002. Certain production and distribution employees
at the Pennsauken, New Jersey plant are covered by a collective
bargaining agreement which expires in September 2005. The Company
considers its employee relations to be good.
9
Item 2. Properties
The Company's primary east coast manufacturing facility is located
in Pennsauken, New Jersey in a 70,000 square foot building on a two acre
lot. Soft pretzels are manufactured at this Company-owned facility
which also serves as the Company's corporate headquarters. This
facility operates at approximately 80% of capacity. The Company leases
a 101,200 square foot building adjacent to its manufacturing facility in
Pennsauken, New Jersey through March 2012. The Company has constructed
a large freezer within this facility for warehousing and distribution
purposes. The warehouse has a utilization rate of 80-90% depending on
product demand. The Company also leases, through September 2011, 16,000
square feet of office and warehouse space located next to the
Pennsauken, New Jersey plant.
The Company owns a 150,000 square foot building on eight acres in
Bellmawr, New Jersey. Approximately 30% of the facility is leased to a
third party. The remainder is used by the Company to manufacture some
of its products including funnel cake, pretzels, churros and cookies.
The Company's primary west coast manufacturing facility is located
in Vernon (Los Angeles), California. It consists of a 137,000 square
foot facility in which soft pretzels, churros and various lines of baked
goods are produced and warehoused. Included in the 137,000 square foot
facility is a 30,000 square foot freezer used for warehousing and
distribution purposes which was constructed in 1996. The facility is
leased through November 2017. The Company leases an additional 45,000
square feet of office and warehouse space, adjacent to its manufacturing
facility, through November 2017. The manufacturing facility operates at
approximately 60% of capacity.
The Company owns a 52,700 square foot building located on five
acres in Chicago Heights, Illinois which is presently for sale or lease.
The Company owns a 46,000 square foot frozen juice treat and
dessert manufacturing facility located on three acres in Scranton,
Pennsylvania. The facility, which was expanded from 26,000 square feet
in 1998, operates at approximately 60% of capacity.
The Company leases a 29,635 square foot soft pretzel manufacturing
facility located in Hatfield, Pennsylvania.
The lease runs through June 2017. The facility operates at
approximately 70% of capacity.
10
The Company leases a 19,200 square foot soft pretzel manufacturing
facility located in Carrollton, Texas. The lease runs through April
2004. The facility operates at less than 50% of capacity.
The Company's fresh bakery products manufacturing facility offices
are located in Bridgeport, New Jersey in two buildings totaling 94,320
square feet. The buildings are leased through December 2011. The
manufacturing facility operates at approximately 50% of capacity.
The Company's Bavarian Pretzel Bakery headquarters and warehouse
and distribution facilities are located in a 11,000 square foot owned
building in Lancaster, Pennsylvania.
The Company also leases approximately 100 warehouse and
distribution facilities in 41 states, Mexico and Canada.
Item 3. Legal Proceedings
The Company has no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which the
Company or any of its subsidiaries is a party or of which any of their
property is subject.
Item 4. Submission Of Matters To A Vote Of Security Holders
None.
11
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the executive officers of the Company
and their principal past occupations or employment. All such persons
serve at the pleasure of the Board of Directors and have been elected to
serve until the Annual Meeting of Shareholders on February 6, 2003 or
until their successors are duly elected.
Name Age Position
Gerald B. Shreiber 61 Chairman of the Board, President,
Chief Executive Officer and Director
Dennis G. Moore 47 Senior Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Robert M. Radano 53 Senior Vice President, Sales,
Chief Operating Officer and
Director
Dan Fachner 42 President of The ICEE Company
Subsidiary
Michael Karaban 56 Senior Vice President, Marketing
Gerald B. Shreiber is the founder of the Company and has served as
its Chairman of the Board, President, and Chief Executive Officer since
its inception in 1971. His term as a director expires in 2005.
Dennis G. Moore joined the Company in 1984. He served in various
controllership functions prior to becoming the Chief Financial Officer
in June 1992. His term as a director expires in 2007.
Robert M. Radano joined the Company in 1972 and in May 1996 was
named Chief Operating Officer of the Company. Prior to becoming Chief
Operating Officer, he was Senior Vice President, Sales responsible for
national food service sales of J & J. His term as a director expires in
2006.
Dan Fachner has been an employee of ICEE-USA Corp., which was
acquired by the Company in May 1987, since 1979 He was named Senior
Vice President of The ICEE Company in April 1994 and became President in
May 1997.
Michael Karaban has been an employee of the Company in charge of
its marketing department since 1992 and in February 2002 was elected
Senior Vice President, Marketing.
12
PART II
Item 5. Market For Registrant's Common Equity And
Related Stockholder Matters
The Company's common stock is traded on the over-the-counter
market on the NASDAQ National Market System under the symbol JJSF. The
following table sets forth the high and low final sale price quotations
as reported by NASDAQ for the common stock for each quarter of the years
ended September 28, 2002 and September 29, 2001.
High Low
Fiscal 2001
First quarter $18.50 $12.50
Second quarter 17.88 15.00
Third quarter 23.79 16.50
Fourth quarter 24.10 14.82
Fiscal 2002
First quarter $26.25 $18.10
Second quarter 40.40 23.22
Third quarter 45.15 32.42
Fourth quarter 44.97 34.85
On December 9, 2002, there were 8,904,680 shares of common stock
outstanding. Those shares were held by approximately 2,200 beneficial
shareholders and shareholders of record.
The Company has never paid a cash dividend on its common stock and
does not anticipate paying cash dividends in the foreseeable future.
Item 6. Selected Financial Data
The information set forth under the caption ''Financial
Highlights'' of the 2002 Annual Report to Shareholders is incorporated
herein by reference.
Item 7. Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
The information set forth under the caption ''Management's
Discussion and Analysis of Financial Condition and Results of
Operations'' of the 2002 Annual Report to Shareholders is incorporated
herein by reference.
13
Item 7a. Quantitative And Qualitative Disclosures
About Market Risk
The following is the Company's quantitative and qualitative
analysis of its financial market risk:
Interest Rate Sensitivity
The table below provides information about the Company's
derivative financial instruments and other financial instruments as of
September 28, 2002 that are sensitive to changes in interest rates.
These instruments include interest rate swaps. At September 28, 2002,
the Company had no long-term debt obligations. For interest rate swaps,
the table presents notional amounts and weighted-average interest rates
by expected (contractual) maturity dates. The notional amounts are used
to calculate the contractual payments to be exchanged under the swap
contract. Weighted-average variable rates are based on implied forward
rates in the yield curve at the reporting date.
Expected Maturity Date
(in thousands)
There Fair
2003 2004 2005 2006 2007 after Total Value
Interest Rate Swaps
Receive variable/pay
fixed $2,000 $ - $ - $ - $ - $ - $2,000 $ -
Average pay rate 1.81% - - - - - 1.81%
Average receive rate 6.11% - - - - - 6.11%
Interest Rate Risk
At September 28, 2002, the Company had no long-term debt
obligations. Additionally, the interest rate swap described above
expired on December 8, 2002.
The Company's most significant raw material requirements include
flour, shortening, corn syrup, chocolate, and macadamia nuts. The
Company attempts to minimize the effect of future price fluctuations
related to the purchase of raw materials primarily through forward
purchasing to cover future manufacturing requirements, generally for
periods from 1 to 24 months. Futures contracts are not used in
combination with forward purchasing of these raw materials. The
Company's procurement practices are intended to reduce the risk of
future price increases, but also may potentially limit the ability to
benefit from possible price decreases.
Foreign Exchange Rate Risk
The Company has not entered into any forward exchange contracts to
hedge its foreign currency rate risk as of
14
September 28, 2002 because it does not believe its foreign exchange
exposure is significant.
Item 8. Financial Statements And Supplementary Data
The following consolidated financial statements of the Company set
forth in the 2002 Annual Report to Shareholders are incorporated herein
by reference:
Consolidated Balance Sheets as of September 28, 2002 and
September 29, 2001
Consolidated Statements of Earnings for the fiscal years
ended September 28, 2002, September 29, 2001 and
September 30, 2000
Consolidated Statement of Stockholders' Equity for the
three fiscal years ended September 28, 2002
Consolidated Statements of Cash Flows for the fiscal
years ended September 28, 2002, September 29, 2001
and September 30, 2000
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accounts
Item 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure
None.
15
PART III
Item 10. Directors And Executive Officers Of The Registrant
Information concerning directors, appearing under the captions
''Information Concerning Nominee For Election To Board'' and
''Information Concerning Continuing Directors And Executive Officers''
in the Company's Proxy Statement filed with the Securities and Exchange
Commission in connection with the Annual Meeting of Shareholders to be
held on February 6, 2003, is incorporated herein by reference.
Information concerning the executive officers is included on page 11
following Item 4 in Part I hereof.
Item 11. Executive Compensation
Information concerning executive compensation appearing in the
Company's Proxy Statement under the caption ''Management Remuneraton''
is incorporated herein by reference.
Item 12. Security Ownership Of Certain Beneficial Owners And
Management
Information concerning the security ownership of certain beneficial
owners and management appearing in the Company's Proxy Statement under
the caption ''Principal Shareholders'' is incorporated herein by
reference.
Item 13. Certain Relationships And Related Transactions
Not applicable.
Item 14. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The management of the Company, including the Chief Executive
Officer and the Chief Financial Officer, have conducted an evaluation of
the effectiveness of the Company's disclosure controls and procedures
pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 as of
a date (the ''Evaluation Date'') within 90 days prior to the filing date
of this report. Based on that evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that, as of the Evaluation
Date, the Company's disclosure controls and procedures were effective in
ensuring that all material information relating to the Company,
including our consolidated subsidiaries, required to be filed in this
annual report has been made known to them in a timely manner.
16
(b) Changes in internal controls.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect internal
controls subsequent to the Evaluation Date.
17
PART IV
Item 15. Exhibits, Financial Statement Schedules And
Reports On Form 8-K
(a) Financial Statements
The following are incorporated by reference in Part II of this
report:
Report of Independent Certified Public Accounts
Consolidated Balance Sheets as of September 28, 2002 and
September 29, 2001
Consolidated Statements of Earnings for the fiscal years
ended September 28, 2002, September 29, 2001 and
September 30, 2000
Consolidated Statement of Stockholders' Equity for the
three fiscal years ended September 28, 2002
Consolidated Statements of Cash Flows for the fiscal
years ended September 28, 2002, September 29, 2001
and September 30, 2000
Notes to Consolidated Financial Statements
Financial Statement Schedule
The following are included in Part IV of this
report:
Page
Report of Independent Certified Public
Accounts on Schedule 26
Schedule:
II. Value and Qualifying Accounts 27
All other schedules are omitted either because they are not
applicable or because the information required is contained in the
financial statements or notes thereto.
Exhibits
3.1 Amended and Restated Certificate of Incorporation
filed February 28, 1990. (Incorporated by reference
from the Company's Form 10-Q dated May 4, 1990.)
3.2 Amended and Restated Bylaws adopted May 15, 1990.
(Incorporated by reference from the Company's Form
10-Q dated August 3, 1990.)
4.3 Loan Agreement dated as of December 4, 2001 by and
among J & J Snack Foods Corp. and Certain of its
Subsidiaries and Citizens Bank of Pennsylvania, as
Agent. (Incorporated by reference from the Company's Form 10-
K dated December 21, 2001.)
18
10.1 Proprietary Exclusive Manufacturing Agreement dated July 17,
1984 between J & J Snack Foods Corp. and Wisco Industries,
Inc. (Incorporated by reference from the Company's Form S-1
dated February 4, 1986, file no. 33-2296).
10.2* J & J Snack Foods Corp. Stock Option Plan.
(Incorporated by reference from the Company's Form
S-8 dated July 24, 1992, file no. 33-50036.)
10.3* J & J Snack Foods Corp. 401(k) Profit Sharing Plan, As
Amended, Effective January 1, 1989.
(Incorporated by reference from the Company's 10-K
dated December 18, 1992.)
10.4* First, Second and Third Amendments to the J & J
Snack Foods Corp. 401(k) Profit Sharing Plan.
(Incorporated by reference from the Company's 10-K
dated December 19, 1996.)
10.6 Lease dated September 24, 1991 between J & J Snack
Foods Corp. of New Jersey and A & H Bloom
Construction Co. for the 101,200 square foot
building next to the Company's manufacturing
facility in Pennsauken, New Jersey. (Incorporated
by reference form the Company's Form 10-K dated
December 17, 1991.)
10.7 Lease dated August 29, 1995 between J & J Snack
Foods Corp. and 5353 Downey Associated Ltd. for the lease of
the Vernon, CA facility. (Incorporated by reference from
the Company's Form 10-K dated December 21, 1995.)
10.8* J & J Snack Foods Corp. Employee Stock Purchase
plan (Incorporated by reference from the Company's
Form S-8 dated May 16, 1996).
10.9* Amendments to the J & J Snack Foods Corp. Stock
Option Plan and the J & J Snack Foods Corp. Non-
Statutory Stock Option Plan for Non-Employee
Directors and Chief Executive Officer.
(Incorporated by reference from the Company's
Definitive Proxy Statement dated December 15,
1999.)
10.10 Certifications Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of
2002. (Pages 28-29.)
10.11 Amendment No. 1 to Lease dated August 29, 1995 between J & J
Snack Foods Corp. and 5353 Downey
19
Associated Ltd. for the lease of the Vernon, CA facility.
(Pages 30-34.)
10.12* Fourth and Fifth Amendments to the J & J Snack Foods Corp.
401(k) Profit Sharing Plan. (Pages 35-37.)
13.1 Company's 2002 Annual Report to Shareholders
(except for the captions and information thereof
expressly incorporated by reference in this Form
10-K, the Annual Report to Shareholders is
provided solely for the information of the
Securities and Exchange Commission and is not
deemed ''filed'' as part of the Form 10-K.)
(Page 38.)
22.1 Subsidiaries of J & J Snack Foods Corp. (Page 70.).
24.1 Consent of Independent Certified Public Accountants.(Page
71.)
*Compensatory Plan
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Company during the
last quarter of the period covered by this report.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
J & J SNACK FOODS CORP.
December 18, 2002 By /s/ Gerald B. Shreiber
Gerald B. Shreiber,
Chairman of the Board,
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
December 18, 2002 /s/ Robert M. Radano
Robert M. Radano, Senior Vice
President, Sales, Chief
Operating Officer and Director
December 18, 2002 /s/ Dennis G. Moore
Dennis G. Moore, Senior Vice
President, Chief Financial
Officer and Director
December 18, 2002 /s/ Stephen N. Frankel
Stephen N. Frankel, Director
December 18, 2002 /s/ Peter G. Stanley
Peter G. Stanley, Director
December 18, 2002 /s/ Leonard M. Lodish
Leonard M. Lodish, Director
21
CERTIFICATIONS
I, Dennis G. Moore, certify that:
1. I have reviewed this annual report on Form 10-K of J & J Snack Foods
Corp.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures 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 annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, 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 in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the
22
registrant's auditors any material weaknesses in internal controls; 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; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: December 18, 2002
/s/ Dennis G. Moore
Dennis G. Moore
Chief Financial Officer
23
CERTIFICATIONS
I, Gerald B. Shreiber, certify that:
1. I have reviewed this annual report on Form 10-K of J & J Snack Foods
Corp.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures 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 annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, 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 in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the
24
registrant's auditors any material weaknesses in internal
controls; 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; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: December 18, 2002
/s/ Gerald B. Shreiber
Gerald B. Shreiber
Chief Executive Officer
25
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS ON SCHEDULE
Board of Directors
J & J Snack Foods Corp.
In connection with our audit of the consolidated financial statements
of J & J Snack Foods Corp. and Subsidiaries referred to in our report
dated November 6, 2002 which is included in the Annual Report to
Shareholders and incorporated by reference in Part II of this form, we
have also audited Schedule II for each of the three fiscal years in the
period ended September 28, 2002 (52 weeks, 52 weeks and 53 weeks,
respectively). In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
/s/ GRANT THORNTON LLP
Philadelphia, Pennsylvania
November 5, 2002
26
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Opening Charged to
Year Description Balance expense Deductions
2002 Allowance for
doubtful accounts $1,672,000 $ 372,000 $205,000(1) $1,839,000
2001 Allowance for
doubtful accounts 1,573,000 438,000 339,000(1) 1,672,000
2000 Allowance for
doubtful accounts 806,000 1,384,000 617,000(1) 1,573,000
________
(1) Write-off uncollectible accounts receivable.
27