Exhibit 99.1
Record Sales & Earnings Reported by J & J Snack Foods
PENNSAUKEN, N.J.--(BUSINESS WIRE)--Nov. 3, 2004--J & J Snack Foods
Corp. (NASDAQ:JJSF) today reported record sales and earnings for its
2004 fiscal year.
Sales for the fiscal year ended September 25, 2004 increased 14%
to $416.6 million from $364.6 million in the fiscal year ended
September 27, 2003. Net earnings increased 14% to $22.7 million in
fiscal 2004 from $19.9 million in fiscal 2003. On a per diluted share
basis, earnings increased 13% to $2.48 from $2.20. Operating income
increased 14% to $35.2 million this year from $30.8 million in the
year ago period.
For the fourth quarter ended September 25, 2004, sales increased
18% to $122.5 million from $103.4 million in the fourth quarter ended
September 27, 2003. Net earnings increased 12% to $8.8 million in the
current year quarter from $7.9 million. Earnings per diluted share
were $.96 this year compared to $.88 last year. Operating income
increased 12% to $13.7 million from $12.3 million in the year ago
period.
Gerald B. Shreiber, J & J's President and Chief Executive Officer,
commented, "In achieving our record year, we benefited from a strong
fourth quarter and continued improvements throughout the year in all
of our business segments. Our food service business, including our
core pretzel products and bakery products, delivered exceptional
performance. We once again delivered superb results despite the common
shared challenges of cost escalation and other economic factors that
have impacted food companies in general."
J & J Snack Foods Corp.'s principal products include SUPERPRETZEL,
PRETZEL FILLERS and other soft pretzels, ICEE and ARCTIC BLAST frozen
beverages, LUIGI'S, MAMA TISH'S, SHAPE UPS, MINUTE MAID(1) and
BARQ'S(2) and CHILL frozen juice bars and ices, TIO PEPE'S churros,
THE FUNNEL CAKE FACTORY funnel cakes, and MRS. GOODCOOKIE, CAMDEN
CREEK, COUNTRY HOME and READI-BAKE cookies. J & J has manufacturing
facilities in Pennsauken, Bridgeport and Bellmawr, New Jersey;
Scranton and Hatfield, Pennsylvania; Carrollton, Texas; Atlanta,
Georgia and Vernon (Los Angeles), California.
(1)MINUTE MAID is a registered trademark of The Coca-Cola Company.
(2)BARQ'S is a registered trademark of Barq's Inc.
Consolidated Statement of Operations
Three Months Ended Year Ended
Sept. 25, Sept. 27, Sept. 25, Sept. 27,
2004 2003 2004 2003
(in thousands)
Net sales $ 122,477 $103,386 $416,588 $ 364,567
Cost of goods sold 79,902 65,865 276,379 239,722
----------- --------- --------- ----------
Gross profit 42,575 37,521 140,209 124,845
Operating expenses 28,856 25,264 105,017 93,998
----------- --------- --------- ----------
Operating income 13,719 12,257 35,192 30,847
Other income 188 75 453 249
----------- --------- --------- ----------
Earnings before income
taxes 13,907 12,332 35,645 31,096
Income taxes 5,069 4,440 12,935 11,194
----------- --------- --------- ----------
Net earnings $ 8,838 $ 7,892 $ 22,710 $ 19,902
=========== ========= ========= ==========
Earnings per diluted share $ .96 $ .88 $ 2.48 $ 2.20
Earnings per basic share $ .98 $ .92 $ 2.55 $ 2.26
Weighted average number
of diluted shares 9,206 8,963 9,143 9,051
Weighted average number
of basic shares 9,015 8,606 8,909 8,800
Consolidated Balance Sheets
September 25, September 27,
2004 2003
(in thousands)
Cash & cash equivalents $ 56,100 $ 37,694
Other current assets 82,312 65,506
Property, plant & equipment, net 89,474 87,115
Goodwill 46,477 45,850
Other intangibles, net 1,804 1,231
Other assets 1,257 2,082
------------- -------------
Total $ 277,424 $ 239,478
============= =============
Current liabilities $ 47,646 $ 40,058
Deferred income taxes 19,153 16,169
Other long term obligations 529 687
Stockholders' equity 210,096 182,564
------------- -------------
Total $ 277,424 $ 239,478
============= =============
Consolidated Statements of Cash Flows
-------------------------------------
Sept. 25, Sept. 27,
2004 2003
--------- ---------
(in thousands)
Operating activities:
Net earnings $22,710 $19,902
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization of
fixed assets 23,170 24,234
Amortization of intangibles and
deferred costs 846 729
Gains from disposals and write-
downs of property & equipment (33) (389)
Increase in deferred income taxes 2,394 2,568
Changes in assets and liabilities, net of
effects from purchase of companies:
Increase in accounts receivable (6,887) (285)
Increase in inventories (2,423) (829)
Decrease (increase) in prepaid
expenses and other 83 (276)
Increase in accounts payable
and accrued liabilities 7,232 711
--------- ---------
Net cash provided by operating
activities 47,092 46,365
--------- ---------
Investing activities:
Purchases of property, plant and equipment (21,748) (19,292)
Payments for purchase of companies (12,668) -
Proceeds from investments held to maturity 275 400
Proceeds from disposal of property and
equipment 1,628 2,534
Other 17 (144)
--------- ---------
Net cash used in investing activities (32,496) (16,502)
--------- ---------
Financing activities:
Proceeds from issuance of common stock 3,810 2,238
Payments to repurchase common stock - (8,565)
--------- ---------
Net cash provided by (used in)
financing activities 3,810 (6,327)
--------- ---------
Net increase in cash & cash equivalents 18,406 23,536
Cash and cash equivalents at
beginning of year 37,694 14,158
--------- ---------
Cash and cash equivalents at end
of year $56,100 $37,694
========= =========
Segment Reporting
Fiscal Year End
September 25, 2004 September 27, 2003
------------------ -------------------
(in thousands)
Sales to external customers:
Food Service $ 250,523 $ 200,528
Retail Supermarket 38,843 39,702
The Restaurant Group 7,623 9,755
Frozen Beverages 119,599 114,582
------------- --------------
$ 416,588 $ 364,567
============= ==============
Depreciation and Amortization:
Food Service $ 13,504 $ 13,098
Retail Supermarket - -
The Restaurant Group 370 558
Frozen Beverages 10,142 11,307
------------- --------------
$ 24,016 $ 24,963
============= ==============
Operating Income (Loss):
Food Service $ 21,266 $ 17,804
Retail Supermarket 2,701 2,144
The Restaurant Group (988) (975)
Frozen Beverages 12,213 11,874
------------- --------------
$ 35,192 $ 30,847
============= ==============
Capital Expenditures:
Food Service $ 9,294 $ 9,929
Retail Supermarket - -
The Restaurant Group 22 61
Frozen Beverages 12,432 9,302
------------- --------------
$ 21,748 $ 19,292
============= ==============
Assets:
Food Service $ 183,740 $ 153,795
Retail Supermarket - -
The Restaurant Group 1,461 2,192
Frozen Beverages 92,223 83,491
------------- --------------
$ 277,424 $ 239,478
============= ==============
RESULTS OF OPERATIONS
Fiscal 2004 (52 weeks) Compared to Fiscal 2003 (52 weeks)
Net sales increased $52,021,000 or 14% to $416,588,000 in fiscal
2004 from $364,567,000 in fiscal 2003. Approximately $36,000,000 of
the sales increase resulted from the acquisition of Country Home
Bakers in January 2004. Excluding these sales, sales increased
approximately 4%.
We have four reportable segments, as disclosed in the notes to the
consolidated financial statements: Food Service, Retail Supermarkets,
The Restaurant Group and Frozen Beverages.
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.
Food Service
Sales to food service customers increased $49,995,000 or 25% to
$250,523,000 in fiscal 2004. Excluding Country Home Bakers, sales
increased $14,142,000, or 7%. Soft pretzel sales to the food service
market increased $4,661,000, or 6%, to $80,723,000 for the 2004 year
due primarily to increased sales of PRETZEL FILLERS and GOURMET
TWISTS. Significant decreases in sales to two customers were more than
offset by increases in sales to three other customers. The net
increase in sales to these five customers accounted for approximately
75% of the overall sales increase of soft pretzel sales to the food
service market. Sales of bakery products increased $46,546,000, or
69%, for the year. Excluding sales from the acquisition of Country
Home Bakers, sales of bakery products increased $10,693,000 or 16%
with approximately 80% of this increase coming from sales to four
customers resulting primarily from increased sales of existing and new
products to their customers. Approximately $700,000 of the balance of
the bakery sales increase was of our branded products sold primarily
to school food service accounts and approximately $1,000,000 of the
balance was of sales of private label products with increases and
decreases among many customers. Churro sales increased 2% to
$13,244,000 with no significant increases or decreases among our
customers. Frozen juice bar and ices sales decreased $1,109,000 or 3%
to $37,011,000 for the year. Continued strength in our school food
service business and sales of BARQ'S FLOATZ, a frozen root beer and
ice cream float, in warehouse club stores offset most of the decline,
approximately $2,800,000, which resulted from replacement of our
products with low carb products in some warehouse club stores. The
changes in sales throughout the food service segment were from a
combination of volume changes and price increases.
Retail Supermarkets
Sales of products to retail supermarkets decreased $859,000 or 2%
to $38,843,000 in fiscal 2004. Total soft pretzel sales to retail
supermarkets were $29,383,000, an increase of 6% from fiscal 2003. The
increase was entirely due to the introduction of PRETZELFILS just
prior to the beginning of fiscal year 2004 and a price increase. Sales
of frozen juice bars and ices decreased $4,417,000 or 11% to
$34,011,000 in 2004 from $38,428,000 in 2003. Even though case sales
of frozen juices and ices were down 19%, sales were down only 11%
because of reduced trade spending in 2004 compared to 2003. We believe
that our decline in frozen juices and ices sales was in line with
industry wide declines in the frozen novelty product category.
The Restaurant Group
Sales of our Restaurant Group, which operates BAVARIAN PRETZEL
BAKERY and PRETZEL GOURMET retail stores in the Mid-Atlantic region,
declined by 22%, primarily due to reduced mall traffic and closings or
licensings of 18 unprofitable stores. At September 25, 2004, we had 30
stores open with plans to continue to close down unprofitable stores
and reduce overhead costs in hopes of improving the operating results
of this business.
Frozen Beverages
Frozen beverage and related product sales increased $5,017,000 or
4% to $119,599,000 in fiscal 2004. Beverage sales alone were
essentially unchanged for the year. Excluding lower sales to one
customer, beverage sales alone would have been up about 2%. Sales to
this customer may decline further in 2005 although we do not believe
the impact on consolidated operating income would be material. Service
revenue increased $2,836,000, or 19%, to $18,108,000 for the year as
we continue to emphasize growing this part of our business. Machine
sales increased $2,803,000 to $11,228,000 for the year. Sales to one
customer accounted for all of the machine sales' increase.
Consolidated
Other than as commented upon above by segment, there are no
material specific reasons for the reported sales increases or
decreases. Sales levels can be impacted by the appeal of our products
to our customers and consumers and their changing tastes, competitive
and pricing pressures, sales execution, marketing programs, seasonal
weather, customer stability and general economic conditions.
Gross profit as a percent of sales, although at 34% of sales for
both 2004 and 2003, decreased .58 of a percentage point. Excluding the
lower margin of the acquired Country Home Bakers, gross margin as a
percentage of sales increased slightly over 2003. Gross profit of the
existing businesses was impacted by increases in the unit costs of raw
materials and packaging of about $1,800,000 and increases in insurance
costs of about $900,000 and benefited from lower depreciation of
approximately $1,600,000. Also helping to improve the gross profit
percentage were price increases and efficiencies related to higher
volume.
Total operating expenses increased $11,019,000 to $105,017,000 in
fiscal 2004 but as a percentage of sales decreased about 1/2 of one
percent to 25% in 2004. Marketing expenses decreased to 13% of sales
in fiscal 2004 from 14% in 2003. The decrease in marketing expense as
a percent of sales was the result of controlled spending throughout
all our business and the increased level of bakery sales. Distribution
expenses, which increased less than 1/2 of 1 percent of sales, were 8%
of sales in both years. Distribution expenses increased as a percent
of sales because of higher fuel and outside carrier costs as well as
by differences in product mix. Administrative expenses were 4% in both
years. Administrative expenses benefited from lower legal expenses of
about $300,000 this year compared to last year. Other general expense
of $29,000 in 2004 compared to other general income of $384,000 in
2003. The $384,000 of general income in 2004 included income from the
positive resolution of prior acquisition liabilities.
Operating income increased $4,345,000 or 14% to $35,192,000 in
fiscal 2004 as a result of the aforementioned items.
Interest expense was $113,000 in both 2004 and 2003.
The effective income tax rate was 36% in fiscal 2004 and 36% in
fiscal 2003.
Net earnings increased $2,808,000 or 14% in fiscal 2004 to
$22,710,000 or $2.48 per fully diluted share as a result of the
aforementioned items.
There are many factors which can impact our net earnings from year
to year and in the long run, among which are the supply and cost of
raw materials and labor, insurance costs, factors impacting sales as
noted above, the continuing consolidation of our customers, our
ability to manage our manufacturing, marketing and distribution
activities, our ability to make and integrate acquisitions and changes
in tax laws and interest rates.
The forward-looking statements contained herein are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those projected in the forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only
as of the date hereof. The Company undertakes no obligation to
publicly revise or update these forward-looking statements to reflect
events or circumstances that arise after the date hereof.
CONTACT: J & J Snack Foods Corp.
Dennis G. Moore, 856-665-9533