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 25, 1999
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 November 30, 1999, the latest practicable date, 9,007,435
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 $122,310,914 based on the last price on
that date of $18.75 per share, which is an average of bid and asked
prices.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's 1999 Annual Report to Shareholders for the
fiscal year ended September 25, 1999 and Proxy Statement for its
Annual Meeting of Shareholders to be held on February 3, 2000 are
incorporated herein by reference into Parts I, II, III, and IV as set
forth herein.
J & J SNACK FOODS CORP.
1999 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 Stock And
Related Stockholder Matters. . . . . . . . . . 14
Item 6 Selected Financial Data. . . . . . . . . . . . 14
Item 7 Management's Discussion And Analysis Of Finan-
cial Condition And Results Of Operations . . . 14
Item 7a Quantitative And Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . . 15
Item 8 Financial Statements And Supplementary Data. . 16
Item 9 Changes In And Disagreements With Accountants
On Accounting And Financial Disclosure . . . . 16
PART III
Item 10 Directors And Executive Officers Of The
Registrant . . . . . . . . . . . . . . . . . . 17
Item 11 Executive Compensation . . . . . . . . . . . . 17
Item 12 Security Ownership Of Certain Beneficial
Owners And Management. . . . . . . . . . . . . 17
Item 13 Certain Relationships And Related Transactions 17
PART IV
Item 14 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 which it markets nationally
to the food service and retail supermarket industries. Its
principal snack food products are soft pretzels marketed
principally under the brand name SUPERPRETZEL. J & J believes it
is the largest manufacturer of soft pretzels in the United
States. The Company also markets frozen beverages to the food
service industry under the brand names ICEE and ARCTIC BLAST in
the United States, Mexico and Canada. Other snack products
include Italian ice and frozen juice treats and desserts,
churros (a Hispanic pastry), funnel cake, popcorn and bakery
products.
The Company's 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 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.
Products in the Snack Foods Segment
Soft Pretzels
The Company's soft pretzels are sold under many brand
names; some of which are: SUPERPRETZEL, 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. The Company sells its soft pretzels to
the food service and the retail supermarket industries and
direct to the public through BAVARIAN PRETZEL BAKERY and PRETZEL
GOURMET, its chains of specialty snack food retail outlets. 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 a participating school to obtain
partial reimbursement of the cost of the Company's soft pretzels
1
from the USDA. Soft pretzel sales, including those sold through
the Company's retail stores, amounted to 32% and 34% of the
Company's revenue in fiscals 1999 and 1998, respectively.
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. Soft pretzels in customized shapes
and sizes and with fillings 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 food service marketing program includes
supplying ovens, mobil 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
primarily under the ICEE, FROSTAR, SHAPE-UPS, MAZZONE'S, MAMA
TISH'S and LUIGI'S brand names to the food service and to the
retail supermarket industries. Frozen juice treat and dessert
sales were 16% and 15% of the Company's revenue in fiscal years
1999 and 1998, respectively.
The Company's SHAPE-UPS and MAZZONE frozen juice bars are
manufactured from an apple or pear 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.
The FROSTAR product line includes frozen juice and other
frozen desserts on a stick and in a cup. The juice bar and
FROSTAR products are sold primarily to the school portion of the
food service industry.
LUIGI'S Real Italian Ice and MAMA TISH'S Italian Ice and
2
Sorbets are sold to the foodservice and to the retail
supermarket industries. They are manufactured from water,
sweeteners and fruit juice concentrates in various flavors and
are packaged in plastic cups for retail supermarket and
foodservice and in four and eight ounce squeeze up tubes for
foodservice.
ICEE Squeeze Tubes are sold to the foodservice and to the
retail supermarket industries. Designed to capture the
carbonated frozen taste of a traditional ICEE drink, they are
packaged in three and four ounce squeeze up tubes.
Churros
The Company sells frozen churros under the TIO PEPE'S brand
name to both the food service and retail supermarket industries,
primarily in the Western and Southwestern United States. Churro
sales were 5% and 4% of the Company's sales in fiscal 1999 and
1998, 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.
Baked Goods
The Company has a contract and private label bakery
business which manufactures cookies, muffins and other baked
goods for third parties. In addition, the Company produces and
markets these products under its own brand names, including MRS.
GOODCOOKIE, CAMDEN CREEK BAKERY and PRETZELCOOKIE. Baked goods
sales amounted to 12% and 10% of the Company's sales in fiscals
1999 and 1998, respectively.
Other Products
The Company also markets to the food service industry and
direct to the public other products including soft drinks,
funnel cakes sold under the FUNNEL CAKE FACTORY brand name,
popcorn sold under the AIRPOPT brand name, as well as smaller
amounts of various other food products.
Products in the Frozen Beverage Segment
Frozen Beverages
The Company markets frozen beverages to the food service
3
industry under the names ICEE and ARCTIC BLAST in the United
States, Mexico and Canada. The Company sells direct to the
public through BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, its
chains of specialty snack food retail outlets. Frozen beverage
business sales amounted to 32% of revenue in fiscal 1999 and 32%
of revenue in fiscal 1998. Under the Company's 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
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, which resulted in the
increase of Customer Owned beverage dispensers in 1999.
Each new customer location requires a frozen beverage
dispenser supplied by the Company or by the customer. Company
supplied dispensers are purchased from outside vendors,
built new or rebuilt by the Company at an approximate cost of
$6,000 each. The following shows the number of Company owned and
customer owned frozen beverage dispensers at customer locations
at the dates indicated:
Company Owned Customer Owned Total
September 27, 1997 8,546 711 9,257
September 26, 1998 16,520 223 16,743
September 25, 1999 18,056 4,342 22,398
The Company has the rights to market and distribute frozen
beverages under the name ICEE to all of the Continental United
States, except for portions of eleven states.
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 Italian ice.
Additionally, the Company sells soft pretzels, frozen beverages
and various other food products direct to the public
through BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, its chains
of specialty snack food retail outlets.
4
The Company's customers in the food service industry
include snack bars and food stands in chain, department and
discount stores such as KMart, Walmart, Bradlees and Target;
malls and shopping centers; fast food outlets; stadiums
and sports arenas; leisure and theme parks such as Disneyland,
Walt Disney World, Opryland, Universal Studios, Sea World, Six
Flags, Hershey Park and Busch Gardens; convenience stores such
as 7-Eleven, Circle K, AM/PM, White Hen Pantry 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, Ogden, Service America, Sportservice,
Marriott and Volume Services. 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.
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 and MAMA TISH'S Italian
Ice and sorbets and ICEE Squeeze Up Tubes. 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 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 products
include trade shows, newspaper advertisements with coupons,
in-store demonstrations, billboards and, periodically,
television advertisements.
The Company's products are sold through a network of about
180 food brokers and over 1,000 independent sales distributors
and the Company's own direct sales force. The Company maintains
frozen warehouse and distribution facilities in Pennsauken, New
Jersey; Vernon (Los Angeles) California; Scranton, Pittsburgh,
Hatfield and Lancaster, Pennsylvania; and Solon, Ohio. Frozen
beverages are distributed from 96 warehouse and distribution
facilities located in 41 states, Mexico and Canada which allow
5
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 Italian ice 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 soft pretzel 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 baked goods. 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.
The Company has numerous patents related to the
manufacturing and marketing of its products.
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
6
purchased from IMI Cornelius, Inc.
Competition
Snack food and baked goods 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, baked goods 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 which have been
aggressively expanding 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.
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 baked goods markets.
Divestitures
During the third quarter of fiscal year 1995, the Company
sold its syrup and flavor manufacturing subsidiary, Western
Syrup Company, to an unrelated third party for cash and notes.
The sale of Western did not have a material impact on the
Company's operations or financial position.
Employees
The Company had approximately 2,050 full and part time employees
as of September 25, 1999. Certain production and distribution
7
employees at the Pennsauken plant are covered by a collective
bargaining agreement which expires in September 2002. The
Company considers its employee relations to be good.
Year 2000
The Year 2000 ("Y2K") issue is the result of computer
programs using a two-digit format, as opposed to four digits, to
indicate the year. Such computer programs will be unable to
interpret dates beyond the year 1999, which could cause a system
failure or other computer errors, leading to disruptions in
operations.
In 1997 the Company commenced a program to evaluate and
determine the potential impact of Y2K issues on its operations
and the need to modify or replace its existing computer systems.
The scope of the program encompassed all phases of the
operational activities of the Company and its subsidiaries. In
1998 the program was expanded to develop an action plan for the
resolution of problem issues. The process of resolving problem
issues is ongoing. The Company has identified the following
areas to be critical for Y2K compliance: financial and
informational systems, manufacturing applications, third-party
relationships, and what was deemed to include environmental
areas of concern to include HVAC, telephone and communication
environments, and security systems.
The Company has been and is presently implementing enhanced
financial and informational application systems. The software
product is Y2K compliant and will satisfy the majority of the
informational processing requirements when fully implemented.
This process is in the final stages of implementation and it is
anticipated to be fully completed early in 2000. Additionally,
the Company is implementing a new, and fully Y2K compliant,
financial reporting system to enhance our future ability to
manage, control and report on the operation of the business. It
is anticipated that this system will be in place by early 2000.
Although completion of these non critical systems is not
anticipated to be fully completed until early 2000, management
believes that this will not cause a disruption in its normal
business operations. In the manufacturing area, the Company has
identified areas of exposure. The third party relationship area
has been addressed by directly contacting major trading
partners. Most of the parties who have so far responded to our
inquiries indicate that they will be Y2K compliant no later than
the end of 1999.
The Company has been utilizing outside consultants to
augment the efforts of its internal staff to address the Y2K
8
problem. Specific areas of activity include the Y2K monitoring
process and additional application programming effort.
The Company's Y2K compliance costs have not been
significantly higher than its normal management information
systems operating costs.
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 and churros 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 60-90% depending on product demand. The Company also leases
through September 2000 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 and pretzels.
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 2010. The Company leases an additional 15,000 square
feet of warehouse space, adjacent to its manufacturing facility,
through May 2002. 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 leased to a
third party.
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 less than 50% 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 two thirds 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 Bavarian Pretzel Bakery headquarters and
warehouse and distribution facilities are located in a 11,000
square foot owned building in Lancaster, Pennsylvania.
The Company owns a 25,000 square foot facility located on
11 acres in Hatfield, Pennsylvania which is leased to a third
party.
The Company also leases 98 warehouse and distribution
facilities.
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 3, 2000 or until their successors are
duly elected.
Name Age Position
Gerald B. Shreiber 58 Chairman of the Board, President,
Chief Executive Officer and
Director
Dennis G. Moore 44 Senior Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Robert M. Radano 50 Senior Vice President, Sales,
Chief Operating Officer and
Director
Robyn Shreiber Cook 39 Senior Vice President
Dan Fachner 39 President of The ICEE Company
Subsidiary
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 2000.
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 2002.
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 foodservice sales of J & J. His
term as a director expires in 2001.
Robyn Shreiber Cook joined the Company in 1982 and in
February 1996 was named Senior Vice President, West with
operating and sales responsibilities for the Company's West
Coast foodservice and bakery business. Prior to becoming Senior
Vice President, West she was responsible for Western region food
service sales.
Dan Fachner has been an employee of ICEE-USA Corp., which
was acquired by the Company in May 1987, since 1979. He was
12
named Senior Vice President of The ICEE Company in April 1994
and became President in May 1997.
13
PART II
Item 5. Market For Registrant's Common Stock 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 26, 1998 and September 25,
1999.
High Low
Fiscal 1998
First quarter ended December 30, 1997 17-3/8 13-1/2
Second quarter ended March 28, 1998 19-1/2 12-1/2
Third quarter ended June 27, 1998 20-3/4 17-7/8
Fourth quarter ended September 26, 1998 22-1/4 14-3/4
Fiscal 1999
First quarter ended December 26, 1998 22-1/2 15-3/4
Second quarter ended March 27, 1999 25 19-5/16
Third quarter ended June 26, 1999 24 19-3/4
Fourth quarter ended September 25, 1999 24-7/16 20-1/4
On November 30, 1999, there were 9,007,435 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 1999 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 1999 Annual Report to Shareholders is
incorporated herein by reference.
14
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 25, 1999 that are sensitive to changes in interest
rates. These instruments include debt obligations and interest
rate swaps. For debt obligations, the table presents principal
cash flows and related weighted-average interest rates by expected
maturity dates. 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
2000 2001 2002 2003 2004 after Total Value
Liabilities
Long-term debt
Fixed rate $ 214 $ 178 $ 113 $ 369 $ - $5,000 $ 5,874 $ 5,874
Average
interest rate 8.18% 8.01% 8.50% 9.27% - 7.25% 7.46%
Variable rate $8,000 $19,000 $8,000 $2,000 - - $37,000 $37,000
Average
interest rate 5.88% 5.92% 5.88% 5.88% - - 5.90%
Interest Rate Swaps
Receive variable
/pay fixed $8,000 $ 8,000 $8,000 $2,000 $ - $ - $26,000 $ 60
Average pay rate 6.27% 6.27% 6.27% 6.27% - - 6.27%
Average
receive rate 6.11% 6.11% 6.11% 6.11% - - 6.11%
Interest Rate Risk
The Company holds long-term debt with variable interest rates
indexed to LIBOR, which exposes it to the risk of increased
interest costs if interest rates rise. To reduce the risk related
to unfavorable interest rate movements, the Company enters into
interest rate swap contracts to pay a fixed rate and receive a
variable rate that is indexed to LIBOR. The ratio of the swap
notional amount to the principal amount of variable rate debt
issued changes periodically based on the Company's ongoing
assessment of the future trend in interest rate movements. At
September 25, 1999, this ratio was 70 percent and no change in the
ratio is expected at the current time. The percentage of variable
rate debt fixed under interest rate swap contracts is expected to
decrease as scheduled debt payments are made.
15
Foreign Exchange Rate Risk
The Company has not entered into any forward exchange
contracts to hedge its foreign currency rate risk as of September
25, 1999 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 1999 Annual Report to Shareholders are
incorporated herein by reference:
Consolidated Balance Sheets as of September 25, 1999 and
September 26, 1998
Consolidated Statements of Earnings for the fiscal years
ended September 25, 1999, September 26, 1998 and
September 27, 1997
Consolidated Statement of Stockholders' Equity for the three
fiscal years ended September 25, 1999
Consolidated Statements of Cash Flows for the fiscal years
ended September 25, 1999, September 26, 1998 and
September 27, 1997
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Item 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure
None.
16
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 3, 2000, is
incorporated herein by reference. Information concerning the
executive officers is included on page 10 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
Remuneration" 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.
17
PART IV
Item 14. 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 Accountants
Consolidated Balance Sheets as of September 25, 1999 and
September 26, 1998
Consolidated Statements of Earnings for the fiscal years
ended September 25, 1999, September 26, 1998 and
September 27, 1997
Consolidated Statement of Stockholders' Equity for the three
fiscal years ended September 26, 1998
Consolidated Statements of Cash Flows for the fiscal years
ended September 25, 1999, September 26, 1998 and
September 27, 1997
Notes to Consolidated Financial Statements
Financial Statement Schedule
The following are included in Part IV of this report:
Page
Report of Independent Certified Public
Accountants on Schedule 22
Schedule:
II. Value and Qualifying Accounts 23
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.)
18
4.1 New Jersey Economic Development Authority Economic
Development Revenue Bonds Trust Indenture dated as
of December 1, 1991. (Incorporated by reference from
the Company's 10-K dated December 18, 1992.)
4.2 Credit Agreement dated as of December 5, 1997 by and
among J & J Snack Foods Corp. and Certain of its
Subsidiaries, as borrowers, Mellon Bank, N.A. and
Corestates Bank, N.A., as lenders, and Mellon Bank,
N.A. as Administrative Agent (Incorporated by
reference from the Company's 10-K dated December 21,
1998).
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 from 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).
19
13.1 Company's 1999 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 24.)
22.1 Subsidiaries of J & J Snack Foods Corp. (Page 57.)
24.1 Consent of Independent Certified Public Accountants.
(Page 58.)
27.1 Financial Data Schedule. (Page 59.)
*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
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
J & J SNACK FOODS CORP.
December 21, 1999 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 21, 1999 /s/ Robert M. Radano
Robert M. Radano, Senior Vice
President, Sales, Chief
Operating Officer and Director
December 21, 1999 /s/ Dennis G. Moore
Dennis G. Moore, Senior Vice
President, Chief Financial
Officer and Director
December 21, 1999 /s/ Stephen N. Frankel
Stephen N. Frankel, Director
December 21, 1999 /s/ Peter G. Stanley
Peter G. Stanley, Director
December 21, 1999 /s/ Leonard M. Lodish
Leonard M. Lodish, Director
21
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 2, 1999 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 years in the period ended September 25, 1999. In our
opinion, this schedule presents fairly, in all material respects,
the information required to be set forth therein.
GRANT THORNTON LLP
Philadelphia, Pennsylvania
November 2, 1999
22
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Year Description Opening Charged to Closing
balance expense Deductions Balance
1999 Allowance for doubtful accounts $597,000 $321,000 $112,000(1) $806,000
1998 Allowance for doubtful accounts 392,000 250,000 45,000(1) 597,000
1997 Allowance for doubtful accounts 257,000 252,000 117,000(1) 392,000
(1) Write-off uncollectible accounts receivable.
23