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 28, 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)
New Jersey 22-1935537
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6000 Central Highway, Pennsauken, NJ 08109
(Address of principal executive offices)
Telephone (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 July 18, 2003, there were 8,693,331 shares of the Registrant's
Common Stock outstanding.
INDEX
Page
Number
Part I. Financial Information
Item l. Consolidated Financial Statements
Consolidated Balance Sheets - June 28, 2003
(unaudited) and September 28, 2002 3
Consolidated Statements of Operations - Three
Months and Nine Months Ended June 28, 2003
and June 29, 2002 (unaudited) 5
Consolidated Statements of Cash Flows - Three
Months and Nine Months Ended June 28, 2003
and June 29, 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 20
Item 4. Controls and Procedures 20
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
June 28, September 28,
2003 2002
(Unaudited)
Current assets
Cash and cash equivalents $ 22,897 $ 14,158
Accounts receivable 40,356 37,938
Inventories 26,174 22,199
Prepaid expenses and other 1,436 1,072
90,863 75,367
Property, plant and equipment,
at cost
Land 606 756
Buildings 5,106 5,456
Plant machinery and
equipment 91,950 88,908
Marketing equipment 172,962 171,429
Transportation equipment 919 828
Office equipment 7,265 6,832
Improvements 15,810 15,885
Construction in progress 2,163 24
296,781 290,340
Less accumulated deprecia-
tion and amortization 208,049 195,930
88,732 94,410
Other assets
Goodwill 45,850 45,850
Other intangible assets,
less accumulated
amortization 1,308 1,539
Long term investment
securities held to
maturity 275 675
Other 1,932 2,195
49,365 50,259
$228,960 $220,036
See accompanying notes to the consolidated financial statements.
3
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
(in thousands)
LIABILITIES AND June 28, September 28,
STOCKHOLDERS' EQUITY 2003 2002
Current liabilities
Accounts payable $ 30,880 $ 27,683
Accrued liabilities 13,493 12,561
44,373 40,244
Deferred income taxes 10,806 10,806
Other long-term liabilities 519 277
11,325 11,083
Stockholders' equity
Capital stock
Preferred, $1 par value;
authorized, 5,000,000
shares; none issued - -
Common, no par value;
authorized 25,000
shares; issued and
outstanding, 8,868
and 8,636, respectively 26,616 34,025
Accumulated other comprehen-
sive loss (1,840) (1,792)
Retained earnings 148,486 136,476
173,262 168,709
$228,960 $220,036
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 Nine months ended
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
Net Sales $102,529 $100,628 $261,181 $253,137
Cost of goods sold 64,146 64,198 173,857 169,507
Gross profit 38,383 36,430 87,324 83,630
Operating expenses
Marketing 14,486 14,483 37,219 37,425
Distribution 7,635 6,980 20,253 19,073
Administrative 4,114 3,353 11,323 10,282
Other general
(income)expense (9) 9 (61) 123
26,226 24,825 68,734 66,903
Operating income 12,157 11,605 18,590 16,727
Other income (deductions)
Investment income 84 42 270 184
Interest expense (42) (80) (96) (486)
Earnings before
income taxes 12,199 11,567 18,764 16,425
Income taxes 4,391 4,049 6,754 5,749
NET EARNINGS $ 7,808 $ 7,518 $ 12,010 $ 10,676
Earnings per
diluted share $.87 $.80 $1.32 $1.16
Weighted average number
of diluted shares 8,937 9,401 9,080 $ 9,213
Earnings per
basic share $.91 $.85 $1.38 $1.22
Weighted average number
of basic shares 8,574 8,840 8,680 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)
Nine months ended
June 28, June 29,
2003 2002
Operating activities:
Net earnings $12,010 $10,676
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization
of fixed assets 18,576 23,086
Amortization of intangibles
and deferred costs 535 558
Other (336) 250
Changes in assets and liabilities,
net of effects from purchase of
companies
Increase in accounts receivable (2,469) (4,058)
Increase in inventories (3,858) (2,738)
Increase in prepaid expenses (364) (433)
Increase in accounts payable
and accrued liabilities 4,372 3,027
Net cash provided by operating
activities 28,466 30,368
Investing activities:
Purchase of property, plant
and equipment (14,778) (13,724)
Proceeds from investments
held to maturity 400 730
Proceeds from disposals of
property and equipment 2,167 104
Other (107) (33)
Net cash used in investing
activities (12,318) (12,923)
Financing activities:
Proceeds from issuance of stock 1,156 2,614
Proceeds from borrowings - 24,000
Payments to repurchase common stock (8,565) -
Payments of long-term debt - (46,069)
Net cash used in financing
activities (7,409) (19,455)
Net increase (decrease) in cash
and cash equivalents 8,739 (2,010)
Cash and cash equivalents at
beginning of period 14,158 7,437
Cash and cash equivalents at
end of period $22,897 $ 5,427
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 and nine months
ended June 28, 2003 and June 29, 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
the Company's Annual Report on Form 10-K for the year ended
September 28, 2002.
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.
Effective December 30, 2001, we adopted the provisions of
Emerging Issues Task Force (EITF) Issue No. 01-9, "Accounting
for Consideration Given by a Vendor to a Customer or a Reseller
of the Vendor's Products." EITF Issue No. 01-9 addressed
various issues related to the income statement
7
classification of certain promotional payments, including
consideration from a vendor to a reseller or another party that
purchases the vendor's products.
As a result of the adoption, we reduced both net sales and
marketing expenses by $8,068,000 and $8,933,000 for the three
months ended June 28, 2003 and June 29, 2002, respectively,
and by $18,217,000 and $19,515,000 for the nine months ended
June 28, 2003 and June 29, 2002, respectively. EITF Issue No.
01-9 requires certain marketing expenses incurred by us, not
previously reclassified, to be classified as deductions from
revenue. These reclassifications have no impact on reported
operating income or net earnings or earnings per share.
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 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 June 28, 2003
Income Shares Per Share
(Numerator) (Denominator) Amount
(in thousands, except per share amounts)
Basic EPS
Net Earnings available
to common stockholders $ 7,808 8,574 $.91
Effect of Dilutive Securities
Options - 363 (.04)
Diluted EPS
Net Earnings available to
common stockholders plus
assumed conversions $ 7,808 8,937 $.87
8
93,894 anti-dilutive weighted shares have been excluded in the
computation of the three months ended June 28, 2003 diluted EPS because
the options' exercise price is greater than the average market price of
the common stock.
Nine Months Ended June 28, 2003
Income Shares Per Share
(Numerator) (Denominator) Amount
(in thousands, except per share amounts)
Basic EPS
Net Earnings available
to common stockholders $12,010 8,680 $1.38
Effect of Dilutive Securities
Options - 400 (.06)
Diluted EPS
Net Earnings available to
common stockholders plus
assumed conversions $12,010 9,080 $1.32
93,894 anti-dilutive weighted shares have been excluded in the
computation of the nine months ended June 28, 2003 diluted EPS because
the options' exercise price is greater than the average market price of
the common stock.
Three Months Ended June 29, 2002
Income Shares Per Share
(Numerator) (Denominator) Amount
(in thousands, except per share amounts)
Basic EPS
Net Earnings available
to common stockholders $7,518 8,840 $.85
Effect of Dilutive Securities
Options - 561 (.05)
Diluted EPS
Net Earnings available to
common stockholders plus
assumed conversions $7,518 9,401 $.80
9
Nine Months Ended June 29, 2002
Income Shares Per Share
(Numerator) (Denominator) Amount
(in thousands, except per share amounts)
Basic EPS
Net Earnings available
to common stockholders $10,676 8,730 $1.22
Effect of Dilutive Securities
Options - 483 (.06)
Diluted EPS
Net Earnings available to
common stockholders plus
assumed conversions $10,676 9,213 $1.16
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 June 28, 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
10
compensation (in thousands, except per share amounts).
Three Months Ended Nine Months Ended
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
Net income,
as reported $7,808 $7,518 $12,010 $10,676
Less: stock-based
compensation
costs determined
under fair value
based method for
all awards 317 321 983 958
Net income, pro
forma $7,491 $7,197 $11,027 $ 9,718
Earnings per share
of common stock -
basic:
As reported $ .91 $ .85 $ 1.38 $ 1.22
Pro forma $ .87 $ .81 $ 1.27 $ 1.11
Earnings per share
of common stock -
-
diluted:
As reported $ .87 $ .80 $ 1.32 $ 1.16
Pro forma $ .84 $ .77 $ 1.21 $ 1.05
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 2002: expected
volatility of 40%; risk-free interest rate of 3.58%; and expected lives
ranging between 5 and 10 years. There were no grants in fiscal 2003.
Note 6 In January 2003, the Financial Accounting Standards Board
issued Financial Interpretation No. 46, "Consolidation of
Variable Interest Entities," ("FIN 46"). This
interpretatioon addresses consolidation by business enterprises
of variable interest entities with certain defined
characteristics. The Company believes that the provisions of
FIN 46 will not have any impact on the Company's results of
operations or financial position at this time.
11
Note 7 Inventories consist of the following:
June 28, September 28,
2003 2002
(in thousands)
Finished goods $12,827 $10,001
Raw materials 2,919 2,846
Packaging materials 3,532 2,914
Equipment parts & other 6,896 6,438
$26,174 $22,199
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 to 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 purchased by the consumer primarily for
consumption at the point-of-sale.
12
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 Nine Months Ended
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
(in thousands)
Sales to External Customers:
Food Service $ 53,842 $ 51,074 $144,915 $134,902
Retail Supermarket 13,557 12,395 28,689 28,593
Restaurant Group 2,228 2,379 7,671 8,319
Frozen Beverages 32,902 34,780 79,906 81,323
$102,529 $100,628 $261,181 $253,137
Depreciation and Amortization:
Food Service $ 3,217 $ 3,310 $ 9,828 $ 10,193
Retail Supermarket - - - -
Restaurant Group 143 166 447 526
Frozen Beverages 2,531 4,319 8,836 12,925
$ 5,891 $ 7,795 $ 19,111 $ 23,644
Operating Income:
Food Service $ 5,250 $ 5,338 $ 12,782 $ 12,956
Retail Supermarket 1,389 409 1,535 1,008
Restaurant Group (417) (353) (600) (835)
Frozen Beverages 5,935 6,211 4,873 3,598
$ 12,157 $ 11,605 $ 18,590 $ 16,727
Capital Expenditures:
Food Service $ 3,271 $ 4,656 $ 7,538 $ 7,788
Retail Supermarket - - - -
Restaurant Group 7 50 55 115
Frozen Beverages 3,238 1,774 7,185 5,821
$ 6,516 $ 6,480 $ 14,778 $ 13,724
Assets:
Food Service $140,753 $124,603 $140,753 $124,603
Retail Supermarket - - - -
Restaurant Group 2,360 2,904 2,360 2,904
Frozen Beverages 85,847 91,095 85,847 91,095
$228,960 $218,602 $228,960 $218,602
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 June 28, 2003 are as follows:
Gross Net
Carrying Accumulated Carrying
Amount Amortization Amount
(in thousands)
FOOD SERVICE
Amortized intangible assets
Licenses and rights $2,066 $836 $1,230
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 $123 $ 78
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 and nine
months ended June 28, 2003. Aggregate amortization expense of intangible
assets for the three months ended June 28, 2003 and June 29, 2002
was $76,000 and $78,000, respectively and for the nine months ended
June 28, 2003 and June 29, 2002 was $231,000 and $231,000, respectively.
Estimated amortization expense for the next five fiscal years is
approximately $300,000 in 2003 and 2004, $200,000 in 2005 and $150,000
in 2006 and 2007.
Goodwill
The carrying amounts of goodwill for the Food Service, Restaurant
Group and Frozen Beverage segments are as follows:
15
Food Retail Restaurant Frozen
Service Supermarket Group Beverages Total
(in thousands)
Balance at
June 28,
2003 $14,241 $ - $438 $31,171 $45,850
There were no changes in the carrying amount of goodwill for the
three and nine months ended June 28, 2003.
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
In the three months ended June 28, 2003 and June 29, 2002,
fluctuations in the valuation of the Mexican peso caused an increase of
$51,000 and a decrease of $235,000, 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, there was
a decrease of $48,000 in fiscal year 2003 and a decrease of $126,000 in
fiscal year 2002.
In the three months ended June 28, 2003, we purchased and retired
79,000 shares of our common stock at a cost of $2,356,000. In the nine
months ended June 28, 2003, we purchased and retired 297,000 shares of
our common stock at a cost of $8,565,000. Under a buyback authorization
approved by the Board of Directors in April 2003, 478,000 shares remain
to be purchased as of the date of the filing of this Form 10-Q.
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 June 28, 2003.
Results of Operations
Net sales increased $1,901,000 or 2% for the three months to
$102,529,000 and $8,044,000 or 3% to $261,181,000 for the nine months
ended June 28, 2003 compared to the three and nine months ended June 29,
2002.
FOOD SERVICE
Sales to food service customers increased $2,768,000 or 5% in
the third quarter to $53,842,000 and increased $10,013,000 or 7% for
the nine months. Soft pretzel sales to the food service market increased
11% to $18,256,000 in the third quarter and 13% to $56,105,000 in the
nine months due primarily to increased sales of PRETZEL FILLERS and
GOURMET TWISTS. Sales to two customers accounted for approximately
17
70% of the soft pretzel sales' increases in both periods. Italian ice
and frozen juice treat and dessert sales decreased 1%, or $123,000, to
$12,964,000 in the three months and increased 5%, or $1,167,000, to
$25,861,000 in the nine months. Sales of Italian ice and frozen juice
treat and dessert sales to one customer were down $882,000 and $924,000
in the quarter and nine months compared to last year because of a
product discontinuation. Churro sales to food service customers
increased 2% to $3,419,000 in the third quarter and 3% to $9,644,000 in
the nine months. Sales of bakery products increased $1,283,000 or 8% in
the third quarter to $17,447,000 and increased $2,330,000 or 5% for the
nine months.
RETAIL SUPERMARKETS
Sales of products to retail supermarkets increased
$1,162,000 or 9% to $13,557,000 in the third quarter and were
essentially unchanged from last year with sales of $28,689,000 in
the nine months. Soft pretzel sales increased 10% to $6,344,000 for the
quarter and increased 3% to $21,280,000 for the nine months. Sales of
frozen juices and ices decreased $346,000 or 2% to $15,507,000 in the
third quarter and $1,531,000 or 6% to $26,000,000 in the nine months.
Case sales of frozen juices and ices products which were introduced last
year decreased 70% in the quarter and 64% in the nine months which
accounted for most of the decline in overall sales.
THE RESTAURANT GROUP
Sales of our Restaurant Group decreased 6% to $2,228,000 in the
third quarter and 8% to $7,671,000 for the nine month period. The sales
decreases were caused primarily by decreased mall traffic and the
closing of unprofitable stores.
FROZEN BEVERAGES
Frozen beverage and related product sales decreased
$1,878,000 or 5% to $32,902,000 in the third quarter and
$1,417,000 or 2% to $79,906,000 in the nine months. Beverage sales
alone decreased 3%, or $719,000, to $26,778,000 in the third quarter and
2%, or $1,486,000 to $61,120,000 for the nine months. Lower beverage
sales to two customers accounted for more than the entire decrease in
beverage sales for both periods. Managed service revenue decreased 21%
to $3,784,000 in the third quarter and 2% to $6,994,000 in the nine
months. Lower managed service revenue from one customer accounted for
more than the entire decrease for both periods.
18
CONSOLIDATED
Gross profit as a percentage of sales increased to 37% this year
from 36% in last year's quarter and was at 33% for both years' nine
months.
Total operating expenses increased $1,401,000 in the third quarter
and as a percentage of sales increased to 26% from 25% in last year's
same quarter. For the nine months, operating expenses increased
$1,831,000 but as a percentage of sales were 26% in both years.
Marketing expenses were 14% of sales in both years' third quarter and
decreased about 1/2 of 1 percent of sales to 14% in this year's nine
months from 15% last year. Distribution expenses increased about 1/2 of
1 percent of sales in the third quarter to 8% of sales and were at 8%
for both years' nine months. Administrative expenses as a percent of
sales increased to 4% in the quarter from 3% last year and were 4%
for the nine months in both years. Administrative expenses were
impacted by higher legal expenses of approximately $400,000 in this
year's quarter compared to last year.
Depreciation and Amortization expense was lower by $1,904,000 in
this year's quarter and by $4,533,000 in this year's nine month period
compared to last year.
Operating income increased $552,000 or 5% to $12,157,000 in the
third quarter and $1,863,000 or 11% to $18,590,000 in the nine months.
For the three and nine months, interest expense decreased $38,000
and $390,000, respectively, because we now have no outstanding long term
debt.
The effective income tax rate has been estimated at 36% for this
years' periods and 35% for 2002 periods.
Net earnings increased $290,000 or 4% in the three month period to
$7,808,000 and increased 12% or $1,334,000 in the nine months this year
from $10,676,000 last year.
19
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 2002 annual report on Form 10-K
filed with the SEC.
Item 4. 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 quarterly report has been made known to
them in a timely manner.
(b) Changes in internal controls
There have been no significant changes made in the Company's
internal controls or in other factors that could significantly
affect internal controls subsequent to the Evaluation Date.
20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
99.1 Certification Pursuant to the 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
99.2 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 - A report on Form 8-K was filed on
April 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: July 22, 2003 /s/ Gerald B. Shreiber
Gerald B. Shreiber
President
Dated: July 22, 2003 /s/ Dennis G. Moore
Dennis G. Moore
Senior Vice President and
Chief Financial Officer
22
CERTIFICATIONS
I, Gerald B. Shreiber, Chief Executive Officer of the Company, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of
J & J Snack Foods Corp.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in the 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
quarterly 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
we 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 quarterly 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 quarterly report (the Evaluation Date); and
c) presented in this quarterly 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 function):
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 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 quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: July 22, 2003
/s/ Gerald B. Shreiber
Chief Executive Officer
CERTIFICATIONS
I, Dennis G. Moore, Chief Financial Officer of the Company, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of
J & J Snack Foods Corp.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in the 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
quarterly 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
we 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 quarterly 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 quarterly report (the Evaluation Date); and
c) presented in this quarterly 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 function):
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 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 quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: July 22, 2003
/s/ Dennis G. Moore
Chief Financial Officer
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of J & J Snack
Foods Corp. (the "Company") on Form 10-Q for the quarter ended
June 28, 2003 filed with the Securities and Exchange Commission
(the "Report"), I, Gerald B. Shreiber, Chief Executive Officer
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the consolidated
financial condition of the Company as of the dates
presented and the consolidated result of operations
of the Company for the periods presented.
Dated: July 22, 2003
/s/ Gerald B. Shreiber
Chief Executive Officer
This certification has been furnished solely pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 and has not been filed as part of the
Report or as a separate disclosure document.
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of J & J Snack
Foods Corp. (the "Company") on Form 10-Q for the quarter ended
June 28, 2003 filed with the Securities and Exchange Commission
(the "Report"), I, Dennis G. Moore, Chief Financial Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the consolidated
financial condition of the Company as of the dates
presented and the consolidated result of operations
of the Company for the periods presented.
Dated: July 22, 2003
/s/ Dennis G. Moore
Chief Financial Officer
This certification has been furnished solely pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 and has not been filed as part of the
Report or as a separate disclosure document.