Exhibit 99.1
J & J Snack Foods Reports Dip in Fourth Quarter Earnings
PENNSAUKEN, N.J.--(BUSINESS WIRE)--Nov. 8, 2007--J & J Snack Foods Corp.
(NASDAQ:JJSF) today reported record sales and earnings for its 2007 fiscal year.
Sales for the fiscal year ended September 29, 2007 (52 weeks) increased 11%
to $568.9 million from $514.8 million in the fiscal year ended September 30,
2006 (53 weeks). Net earnings increased 9% to $32.1 million in fiscal 2007 from
$29.5 million in fiscal 2006. On a per diluted share basis, earnings increased
8% to $1.69 from $1.57. Operating income increased 8% to $48.6 million this year
from $45.1 million in the year ago period.
For the fourth quarter ended September 29, 2007 (13 weeks), sales increased
5% to $162.2 million from $154.1 million in the fourth quarter ended September
30, 2006 (14 weeks). Net earnings decreased 9% to $10.5 million in the current
year quarter from $11.5 million. Earnings per diluted share were $.55 this year
compared to $.61 last year. Operating income decreased 9% to $16.4 million from
$18.1 million in the year ago period.
Gerald B. Shreiber, J & J's President and Chief Executive Officer,
commented, "Although our ICEE and Frozen Beverages group did contribute both
increased sales and earnings in the quarter, our other business' segments were
impacted by sharply increasing raw material and packaging costs."
J & J Snack Foods Corp.'s principal products include SUPERPRETZEL, PRETZEL
FILLERS and other soft pretzels, ICEE, SLUSH PUPPIE and ARCTIC BLAST frozen
beverages, LUIGI'S, MAMA TISH'S, SHAPE UPS, MINUTE MAID* and BARQ'S** and
CHILL*** frozen juice bars and ices, WHOLE FRUIT sorbet, FRUIT-A-FREEZE frozen
fruit bars, MARY B'S biscuits and dumplings, DADDY RAY'S fig and fruit bars, 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,
Hatfield and Chambersburg, Pennsylvania; Carrollton, Texas; Atlanta, Georgia;
Moscow Mills, Missouri; Pensacola, Florida and Vernon and Newport, California.
*MINUTE MAID is a registered trademark of The Coca-Cola Company.
**BARQ'S is a registered trademark of Barq's Inc.
***CHILL is a registered trademark of Wells Dairy, Inc.
Consolidated Statements of Operations
---------------------------------------------
Three Months Ended Fiscal Year Ended
---------------------- ----------------------
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
2007 2006 2007 2006
(13 weeks) (14 weeks) (52 weeks) (53 weeks)
---------- ----------- ----------- ----------
(in thousands)
Net sales $ 162,209 $ 154,084 $ 568,901 $ 514,831
Cost of goods sold 108,995 100,741 382,374 342,412
---------- ----------- ----------- ----------
Gross profit 53,214 53,343 186,527 172,419
Operating expenses 36,770 35,218 137,947 127,355
---------- ----------- ----------- ----------
Operating income 16,444 18,125 48,580 45,064
Other income 664 863 2,578 3,008
---------- ----------- ----------- ----------
Earnings before income
taxes 17,108 18,988 51,158 48,072
Income taxes 6,631 7,471 19,046 18,622
---------- ----------- ----------- ----------
Net earnings $ 10,477 $ 11,517 $ 32,112 $ 29,450
========== =========== =========== ==========
Earnings per diluted
share $ .55 $ .61 $ 1.69 $ 1.57
Earnings per basic share $ .56 $ .62 $ 1.72 $ 1.60
Weighted average number
of diluted shares 19,056 18,850 19,005 18,807
Weighted average number
of basic shares 18,731 18,505 18,635 18,421
Consolidated Balance Sheets
-------------------------------------
September 29, 2007 September 30, 2006
------------------ ------------------
(in thousands)
Cash & cash equivalents $ 15,819 $ 17,621
Marketable securities available
for sale 41,200 59,000
Other current assets 108,345 95,623
Property, plant & equipment, net 93,222 85,447
Goodwill 60,314 57,948
Other intangible assets, net 58,333 22,669
Other 3,055 2,500
------------------ ------------------
Total $ 380,288 $ 340,808
================== ==================
Current liabilities $ 64,601 $ 58,306
Long-term obligations under
capital leases 474 -
Deferred income taxes 19,180 18,211
Other long-term liabilities 451 635
Stockholders' equity 295,582 263,656
------------------ ------------------
Total $ 380,288 $ 340,808
================== ==================
Consolidated Statements of
Cash Flows
----------------------------
Fiscal Year Ended
----------------------------
September 29, September 30,
2007 2006
(52 weeks) (53 weeks)
-------------- -------------
(in thousands)
Operating activities:
Net earnings $ 32,112 $ 29,450
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization of
fixed assets 22,451 22,848
Amortization of intangibles and
deferred costs 4,557 1,760
(Gains) losses from disposals and
write-downs of property & equipment (49) 1,062
Other (150) -
Share-based compensation 1,740 1,586
Deferred income taxes 557 (96)
Changes in assets and liabilities,
net of effects from purchase of
companies:
Increase in accounts receivable (569) (4,223)
Increase in inventories (5,722) (2,160)
Increase in prepaid expenses and
other (65) (167)
Increase in accounts payable and
accrued liabilities 2,981 4,905
-------------- -------------
Net cash provided by operating
activities 57,843 54,965
-------------- -------------
Investing activities:
Purchases of property, plant and
equipment (22,765) (19,739)
Payments for purchase of companies, net
of cash acquired (52,747) (26,264)
Purchase of marketable securities (60,875) (40,825)
Proceeds from sales of marketable
securities 78,882 36,050
Proceeds from disposal of property &
equipment 592 1,046
Other (921) (897)
-------------- -------------
Net cash used in investing activities (57,834) (50,629)
-------------- -------------
Financing activities:
Proceeds from issuance of common stock 4,369 2,809
Payments of cash dividend (6,123) (5,273)
Payments on capitalized lease
obligations (15) -
-------------- -------------
Net cash used in financing activities (1,769) (2,464)
Effect of exchange rate on cash and
cash equivalents (42) (46)
-------------- -------------
Net (decrease) increase in cash &
cash equivalents (1,802) 1,826
Cash and cash equivalents at beginning of
year 17,621 15,795
-------------- -------------
Cash and cash equivalents at end of year $ 15,819 $ 17,621
============== =============
Segment Reporting
--------------------------------------
Fiscal Year End
--------------------------------------
September 29, 2007 September 30, 2006
------------------- ------------------
(in thousands)
Sales to external customers:
Food Service $ 355,764 $ 320,167
Retail Supermarket 52,131 46,948
The Restaurant Group 2,766 3,897
Frozen Beverages 158,240 143,819
------------------- ------------------
$ 568,901 $ 514,831
=================== ==================
Depreciation and Amortization:
Food Service $ 16,176 $ 13,992
Retail Supermarket - -
The Restaurant Group 60 102
Frozen Beverages 10,772 10,514
------------------- ------------------
$ 27,008 $ 24,608
=================== ==================
Operating Income (Loss):
Food Service $ 33,417 $ 32,083
Retail Supermarket (2) 1,945
The Restaurant Group 31 (253)
Frozen Beverages 15,134 11,289
------------------- ------------------
$ 48,580 $ 45,064
=================== ==================
Capital Expenditures:
Food Service $ 12,755 $ 11,111
Retail Supermarket - -
The Restaurant Group 102 3
Frozen Beverages 9,908 8,625
------------------- ------------------
$ 22,765 $ 19,739
=================== ==================
Assets:
Food Service 252,843 $ 218,834
Retail Supermarket - -
The Restaurant Group 690 838
Frozen Beverages 126,755 121,136
------------------- ------------------
$ 380,288 $ 340,808
=================== ==================
RESULTS OF OPERATIONS
Fiscal 2007 (52 weeks) Compared to Fiscal 2006 (53 weeks)
Net sales increased $54,070,000 or 11% to $568,901,000 in fiscal 2007 from
$514,831,000 in fiscal 2006. Adjusting for sales related to the acquisitions of
ICEE of Hawaii in January 2006, SLUSH PUPPIE in May 2006, DADDY RAY'S in January
2007, HOM/ADE Foods in January 2007, and WHOLE FRUIT Sorbet and FRUIT-A-FREEZE
Frozen Fruit Bar brands in March 2007, sales increased approximately 2%, or
$9,236,000.
We have four reportable segments, as disclosed in the accompanying 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 $35,597,000 or 11% to
$355,764,000 in fiscal 2007. Excluding the benefit of Hom/Ade sales of
$22,409,000, DADDY RAY sales of $15,468,000, and WHOLE FRUIT and FRUIT-A-FREEZE
sales of $1,781,000, sales increased approximately 1%. Soft pretzel sales to the
food service market decreased $722,000, or 1%, to $98,859,000 for the year.
Sales of bakery products excluding Hom/Ade and DADDY RAY'S, increased
$3,648,000, or 3%, for the year. Churro sales were essentially unchanged for the
year with $22,069,000 of sales in 2007. Frozen juice bar and ices sales
increased $3,235,000 or 7% to $47,571,000 for the year. Without WHOLE FRUIT and
FRUIT-A-FREEZE, sales increased 3% for the year with sales to school food
service customers accounting for most of the increase. Sales of our funnel cake
products were down $1,198,000, or 15%, as sales declined to one customer. 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 increased $5,183,000 or 11% to
$52,131,000 in fiscal 2007. Total soft pretzel sales to retail supermarkets were
$24,867,000, an increase of 10% from fiscal 2006 due to volume and pricing.
Sales of frozen juice bars and ices increased $3,626,000 or 14% to $29,426,000
in 2007 from $25,800,000 in 2006 due to volume and pricing. Coupon costs, a
reduction of sales, were up $687,000, or 33%, for the year, because of increased
distribution of coupons.
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 29%
primarily due to closings or licensings of stores in the past year. At September
29, 2007, we had 9 stores open. Sales of stores open for both years were down 8%
for the year.
Frozen Beverages
Frozen beverage and related product sales increased $14,421,000 or 10% to
$158,420,000 in fiscal 2007. Excluding the benefit of sales from the
acquisitions of ICEE of Hawaii and SLUSH PUPPIE, frozen beverages and related
product sales would have been up 2% for the year. Beverage sales alone were up
9% for the year. Excluding sales from the acquisitions, beverage sales alone
would have been up 1% for the year. Gallon sales were down 3% for the year in
our base ICEE business. Service revenue increased $5,831,000, or 23%, to
$31,249,000 for the year as we continue to emphasize growing this part of our
business. Frozen carbonated machine sales decreased $1,111,000 to $16,473,000
for the year.
Consolidated
Gross profit as a percent of sales decreased .71 of a percentage point in
2007 from 2006 although it remained at 33% of sales for both 2007 and 2006.
Excluding the lower gross profit margin of the acquired DADDY RAY'S business,
gross profit percentage would have declined only .26 of a percentage point for
the year.
We were impacted by higher commodity costs of over $8,000,000 for the year
with over $3,500,000 impacting us in the fourth quarter. Reduced trade spending
in our retail supermarket segment, other pricing and lower utility and insurance
costs of approximately $1,100,000 helped to offset some of the commodity costs
increase.
We expect to continue to be impacted by higher commodity costs going
forward.
Total operating expenses increased $10,592,000 to $137,947,000 in fiscal
2007 but as a percentage of sales decreased .49 of a percentage point to 24% of
sales in 2007. An impairment charge last year of $1,193,000 in the Food Service
segment for the writedown of robotic packaging equipment and an increase of
other general income of $1,312,000 this year accounted for virtually all of the
..49 percentage point decrease. Other general income of $1,388,000 this year
primarily consists of $495,000 and $321,000 insurance gains in the Frozen
Beverages and The Restaurant Group segments, respectively and a royalty
settlement of $569,000 in the Food Service segment reduced by other general
expense items. Marketing expenses increased .38 of a percentage point but stayed
at 12% of sales. Marketing expenses this year include $1,940,000 of costs for a
TV/Internet advertising campaign for our retail SUPERPRETZEL product.
Operating income increased $3,516,000 or 8% to $48,580,000 in fiscal 2007
as a result of the aforementioned items. Excluding the writedown of robotic
packaging equipment last year, operating income increased $2,323,000, or 5%.
Excluding the impact of the writedown of the robotic packaging equipment last
year and the increase in other general income this year, operating income was up
$1,011,000, or 2%, this year.
Investment income decreased by $417,000 to $2,720,000 primarily due lower
investable balances of cash and marketable securities.
The effective income tax rate decreased to 37% in fiscal year 2007 from 39%
in 2006 due primarily from the resolution of state and foreign tax matters.
Net earnings increased $2,662,000 or 9% in fiscal 2007 to $32,112,000 or
$1.69 per fully diluted share as a result of the aforementioned items.
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
Senior Vice President
Chief Financial Officer
856-665-9533, ext. 268