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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 29, 2001
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, 2001, the latest practicable date, 8,650,458
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 $147,768,227 based on the last price on
that date of $23.90 per share, which is an average of bid and asked
prices.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's 2001 Annual Report to Shareholders for the
fiscal year ended September 29, 2001 and Proxy Statement for its
Annual Meeting of Shareholders to be held on February 5, 2002 are
incorporated herein by reference into Parts I, II, III and IV as set
forth herein.
J & J SNACK FOODS CORP.
2001 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Page
Item 1 Business . . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . . 8
Item 3 Legal Proceedings. . . . . . . . . . . . . . . 9
Item 4 Submission Of Matters To A Vote Of Security
Holders. . . . . . . . . . . . . . . . . . . . 9
Executive Officers Of The Registrant . . . . . 10
PART II
Item 5 Market For Registrant's Common Stock And
Related Stockholder Matters. . . . . . . . . . 11
Item 6 Selected Financial Data. . . . . . . . . . . . 11
Item 7 Management's Discussion And Analysis Of Finan-
cial Condition And Results Of Operations . . . 11
Item 7a Quantitative And Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . . 12
Item 8 Financial Statements And Supplementary Data. . 13
Item 9 Changes In And Disagreements With Accountants
On Accounting And Financial Disclosure . . . . 13
PART III
Item 10 Directors And Executive Officers Of The
Registrant . . . . . . . . . . . . . . . . . . 14
Item 11 Executive Compensation . . . . . . . . . . . . 14
Item 12 Security Ownership Of Certain Beneficial
Owners And Management. . . . . . . . . . . . . 14
Item 13 Certain Relationships And Related Transactions 14
PART IV
Item 14 Exhibits, Financial Statement Schedules And
Reports On Form 8-K. . . . . . . . . . . . . . 15
Item 1. Business
General
J & J Snack Foods Corp. (the "Company" or "J & J") manufactures
nutritional snack foods and distributes frozen beverages which it
markets nationally to the food service and retail supermarket
industries. Its principal snack food products are soft pretzels
marketed primarily under the brand name SUPERPRETZEL and frozen juice
treats and desserts marketed primarily under the LUIGI'S, ICEE and
MINUTE MAID* brand names. J & J believes it is the largest
manufacturer of soft pretzels in the United States. The Company
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 food products include churros (an 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's restaurant group sells direct to the public through its
chains of specialty snack food retail outlets, BAVARIAN PRETZEL
BAKERY and PRETZEL GOURMET, located primarily in the Mid-Atlantic
States.
The Company was incorporated in 1971 under the laws of the State
of New Jersey.
The Company operates in two business segments: snack foods and
frozen beverages.
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 its
restaurant group, which operates BAVARIAN PRETZEL BAKERY and PRETZEL
GOURMET, our chain 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
* Minute Maid is a registered trademark of The Coca-Cola Company
1
program, thereby enabling a participating school to obtain partial
reimbursement of the cost of the Company's soft pretzels from the
USDA. Soft pretzel sales, including those sold through the Company's
retail stores, amounted to 27% and 29% of theCompany's revenue in
fiscals 2001 and 2000, respectively.
The Company's soft pretzels are manufactured according to a
proprietary formula. Soft pretzels, ranging in size from one to ten
through the Company's retail stores, amounted to 27% and 29% of the
Company's revenue in fiscals 2001 and 2000, respectively.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 and
toppings 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
under the LUIGI'S, ICEE, MINUTE MAID, HI-C* , SHAPE-UPS, and MAMA
TISH'S brand names to the food service and to the retail supermarket
industries. Frozen juice treat and dessert sales were 20% and 17% of
the Company's revenue in fiscal years 2001 and 2000, respectively.
The Company's SHAPE-UPS, MINUTE MAID and HI-C frozen juice and
fruit 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.
LUIGI'S Real Italian Ice and MAMA TISH'S Italian Ice and
Sorbets are sold to the foodservice and to the retail supermarket
* Hi-C is a registered trademark of The Coca-Cola Company
2
industries. They are manufactured from water, sweeteners and fruit
juice concentrates in various flavors and are packaged in plastic
cups and in squeeze up tubes.
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.
MINUTE MAID soft frozen lemonade is sold to the foodservice and
to the retail supermarket industries and is packaged in squeeze up
tubes and cups.
Churros
The Company sells frozen churros under the TIO PEPE'S brand name
to both the food service and retail supermarket industries. Churro
sales were 4% of the Company's sales in both fiscals 2001 and 2000,
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, donuts 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 16%
and 13% of the Company's sales in fiscals 2001 and 2000,
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
industry primarily under the names ICEE and ARCTIC BLAST in the
United States, Mexico and Canada. The Company sells direct to the
3
public through its restaurant group, which operates BAVARIAN PRETZEL
BAKERY and PRETZEL GOURMET, our chain of specialty snack food retail
outlets. Frozen beverage business sales amounted to 30% of revenue in
fiscal 2001 and 33% of revenue in fiscal 2000. 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 and
others, which resulted in the increase of Customer Owned beverage
dispensers beginning 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 25, 1999 18,100 4,300 22,400
September 30, 2000 19,500 9,400 28,900
September 29, 2001 20,600 10,000 30,600
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 frozen juice treats and desserts. Additionally, the Company
sells soft pretzels, frozen beverages and various other food products
direct to the public through its restaurant group, which operates
BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, our chain of specialty
snack food retail outlets.
The Company's customers in the food service industry include
snack bars and food stands in chain, department and discount stores
such as Kmart, Wal-Mart and Target; malls and shopping centers; fast
food outlets; stadiums and sports arenas; leisure and theme parks
4
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,
Volume Services America and Sportservice. 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, MINUTE MAID
Juice Bars and Soft Frozen Lemonade, ICEE Squeeze Up Tubes and TIO
PEPE'S churros. Within the retail supermarket industry, the Company's
frozen and prepackaged products are purchased by the consumer for
consumption at home.
Marketing and Distribution
The Company has developed a national marketing program for its
products. For food service 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 130
food brokers and over 1,000 independent sales distributors and the
Company's own direct sales force. For its snack food products, the
Company maintains warehouse and distribution facilities in
Pennsauken, Bellmawr and Bridgeport, New Jersey; Vernon (Los Angeles)
California; Scranton, Pittsburgh, Hatfield and Lancaster,
Pennsylvania; Carrollton (Dallas), Texas; and Solon, Ohio. Frozen
beverages are distributed from 96 Company managed warehouse and
distribution facilities located in 41 states, Mexico and Canada which
allow the Company to directly service its customers in the
surrounding areas. The Company's products are shipped in
refrigerated and other vehicles from the Company's manufacturing and
warehouse facilities on a fleet of Company operated tractor-trailers,
trucks and vans, as well as by independent carriers.
5
Seasonality
The Company's sales are seasonal because frozen beverage sales
and frozen juice treats and desserts sales are generally higher
during the warmer months and sales of the Company's retail stores are
generally higher in the Company's first quarter during the holiday
shopping season.
Trademarks and Patents
The Company has numerous trademarks, the most important of which
are SUPERPRETZEL, DUTCH TWIST, TEXAS TWIST, MR. TWISTER, SOFT PRETZEL
BITES and SOFTSTIX for its 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 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
6
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 that have aggressively expanded over the past
several years. These chains compete with the Company's products.
In Frozen Beverages the Company competes directly with other
frozen beverage companies. These include several companies which
have the right to use the ICEE name in portions of eleven states.
There are many other regional frozen beverage competitors throughout
the country and one large retail chain which uses its own frozen
beverage brand.
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.
Employees
The Company had approximately 2,200 full and part time employees as
of September 29, 2001. Certain production and distribution
employees at the Pennsauken, New Jersey plant are covered by a
collective bargaining agreement which expires in September 2002. The
Company considers its employee relations to be good.
7
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 2011 16,000 square feet of
office and warehouse space located next to the Pennsauken, New Jersey
plant.
The Company owns a 150,000 square foot building on eight acres
in Bellmawr, New Jersey. Approximately 30% of the facility is leased
to a third party. The remainder is used by the Company to
manufacture some of its products including funnel cake, pretzels and
cookies.
The Company's primary west coast manufacturing facility is
located in Vernon (Los Angeles), California. It consists of a
137,000 square foot facility in which soft pretzels, churros and
various lines of baked goods are produced and warehoused. Included
in the 137,000 square foot facility is a 30,000 square foot freezer
used for warehousing and distribution purposes which was constructed
in 1996. The facility is leased through November 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 presently for sale or
lease.
The Company owns a 46,000 square foot frozen juice treat and
dessert manufacturing facility located on three acres in Scranton,
Pennsylvania. The facility, which was expanded from 26,000 square
feet in 1998, operates at approximately 60% of capacity.
The Company leases a 29,635 square foot soft pretzel
manufacturing facility located in Hatfield, Pennsylvania. The lease
runs through June 2017. The facility operates at approximately two
thirds of capacity.
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.
8
The Company's fresh bakery products manufacturing facility and
offices are located in Bridgeport, New Jersey in two buildings
totaling 94,320 square feet. The buildings are leased through
December 2011. The manufacturing facility operates at approximately
50% of capacity.
The Company's Bavarian Pretzel Bakery headquarters and warehouse
and distribution facilities are located in a 11,000 square foot owned
building in Lancaster, Pennsylvania.
The Company 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 approximately 100 warehouse and
distribution facilities in 41 states, Mexico and Canada.
Item 3. Legal Proceedings
The Company has no material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to which
the Company or any of its subsidiaries is a party or of which any of
their property is subject.
Item 4. Submission Of Matters To A Vote Of Security Holders
None.
9
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 5, 2002
or until their successors are duly elected.
Name Age Position
Gerald B. Shreiber 60 Chairman of the Board, President,
Chief Executive Officer and
Director
Dennis G. Moore 46 Senior Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Robert M. Radano 52 Senior Vice President, Sales,
Chief Operating Officer and
Director
Dan Fachner 41 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 2005.
Dennis G. Moore joined the Company in 1984. He served in
various controllership functions prior to becoming the Chief
Financial Officer in June 1992. His term as a director expires in
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 2005.
Dan Fachner has been an employee of ICEE-USA Corp., which was
acquired by the Company in May 1987, since 1979. He was named Senior
Vice President of The ICEE Company in April 1994 and became President
in May 1997.
10
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 30, 2000 and September 29, 2001.
High Low
Fiscal 2000
First quarter 22.75 15.50
Second quarter 21.88 16.81
Third quarter 20.50 14.00
Fourth quarter 19.00 12.50
Fiscal 2001
First quarter 18.50 12.50
Second quarter 17.88 15.00
Third quarter 23.79 16.50
Fourth quarter 24.10 14.82
On November 30, 2001, there were 8,650,458 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 2001 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 2001 Annual Report to Shareholders is incorporated
herein by reference.
11
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 29, 2001 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
2002 2003 2004 2005 2006 after Total Value
Liabilities
Long-term debt
Fixed rate $ 115 $ 368 $ - $ - $ - $ - $ 483 $ 483
Average interest
rate 9.50% 9.27% - - - - 9.32%
Variable rate - - - $28,000 - - $28,000 $28,000
Average interest
rate - - - 3.00% - - 3.00%
Interest Rate Swaps
Receive variable/pay
fixed $ 8,000 $2,000 $ - $ - $ - $ - $10,000 $ -
Average pay rate 3.58% 3.58% - - - - 3.58%
Average receive
rate 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 29, 2001, this ratio was 25 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.
12
The Company's most significant raw material requirements include
flour, shortening, corn syrup, chocolate, and macadamia nuts. The
Company attempts to minimize the effect of future price fluctuations
related to the purchase of raw materials primarily through forward
purchasing to cover future manufacturing requirements, generally for
periods from 1 to 24 months. Futures contracts are not used in
combination with forward purchasing of these raw materials. The
Company's procurement practices are intended to reduce the risk of
future price increases, but also may potentially limit the ability to
benefit from possible price decreases.
Foreign Exchange Rate Risk
The Company has not entered into any forward exchange contracts
to hedge its foreign currency rate risk as of September 29, 2001
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 2001 Annual Report to Shareholders are incorporated
herein by reference:
Consolidated Balance Sheets as of September 29, 2001 and
September 30, 2000
Consolidated Statements of Earnings for the fiscal years ended
September 29, 2001, September 30, 2000 and September 25,
1999
Consolidated Statement of Stockholders' Equity for the three
fiscal years ended September 29, 2001
Consolidated Statements of Cash Flows for the fiscal years
ended September 29, 2001, September 30, 2000 and September
25, 1999
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.
13
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 8, 2002, 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.
14
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 29, 2001 and
September 30, 2000
Consolidated Statements of Earnings for the fiscal years ended
September 29, 2001, September 30, 2000 and September 25,
1999
Consolidated Statement of Stockholders' Equity for the three
fiscal years ended September 29, 2001
Consolidated Statements of Cash Flows for the fiscal years ended
September 29, 2001, September 30, 2000 and September 25,
1999
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 19
Schedule:
II. Value and Qualifying Accounts 20
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.)
15
4.3 Loan Agreement dated as of December 4, 2001 by and
among J & J Snack Foods Corp. and Certain of its
Subsidiaries and Citizens Bank of Pennsylvania, as
Agent. (Page 21.)
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).
10.9*Amendments to the J & J Snack Foods Corp. Stock Option
Plan and the J & J Snack Foods Corp. Non-Statutory
Stock Option Plan for Non-Employee Directors and Chief
Executive Officer. (Incorporated by reference from the
Company's Definitive Proxy Statement dated December 15,
1999.)
13.1 Company's 2001 Annual Report to Shareholders (except
for the captions and information thereof expressly
incorporated by reference in this Form 10-K, the Annual
16
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 105.)
22.1 Subsidiaries of J & J Snack Foods Corp. (Page 138.)
24.1 Consent of Independent Certified Public Accountants.
(Page 139.)
*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.
17
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, 2001 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, 2001 /s/ Robert M. Radano
Robert M. Radano, Senior Vice
President, Sales, Chief Operating
Officer and Director
December 21, 2001 /s/ Dennis G. Moore
Dennis G. Moore, Senior Vice
President, Chief Financial
Officer and Director
December 21, 2001 /s/ Stephen N. Frankel
Stephen N. Frankel, Director
December 21, 2001 /s/ Peter G. Stanley
Peter G. Stanley, Director
December 21, 2001 /s/ Leonard M. Lodish
Leonard M. Lodish, Director
18
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS ON SCHEDULE
Board of Directors
J & J Snack Foods Corp.
In connection with our audit of the consolidated financial
statements of J & J Snack Foods Corp. and Subsidiaries referred to in
our report dated November 6, 2001 which is included in the Annual
Report to Shareholders and incorporated by reference in Part II of
this form, we have also audited Schedule II for each of the three
fiscal years in the period ended September 29, 2001 (52 weeks, 53
weeks and 52 weeks). 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 6, 2001
19
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Opening Charged to Closing
Year Description balance expense Deduction Balance
2001 Allowance for doubtful accounts $1,573,000 $438,000 $339,000(1) $1,672,000
2000 Allowance for doubtful accounts 806,000 1,384,000 617,000(1) 1,573,000
1999 Allowance for doubtful accounts 597,000 321,000 112,000(1) 806,000
(1) Write-off uncollectible accounts receivable.
20