UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended December 27, 2003
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-14616
J & J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6000 Central Highway, Pennsauken, NJ 08109
(Address of principal executive offices)
Telephone (856) 665-9533
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
X Yes No
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act)
X Yes No
As of January 15, 2004, there were 8,800,678 shares of the Registrant's
Common Stock outstanding.
INDEX
Page
Number
Part I. Financial Information
Item l. Consolidated Financial Statements
Consolidated Balance Sheets - December 27, 2003
(unaudited) and September 27, 2003 3
Consolidated Statements of Operations - Three
Months Ended December 27, 2003 and December
28, 2002 (unaudited) 5
Consolidated Statements of Cash Flows - Three
Months Ended December 27, 2003 and December
28, 2002 (unaudited) 6
Notes to the Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 17
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 19
Item 4. Controls and Procedures 19
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 21
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
December 27, September 27,
2003 2003
(Unaudited)
Current assets
Cash and cash equivalents $ 40,243 $ 37,694
Accounts receivable 32,349 38,161
Inventories 25,250 23,202
Prepaid expenses and other 1,154 1,348
98,996 100,405
Property, plant and equipment,
at cost
Land 606 606
Buildings 5,106 5,106
Plant machinery and
equipment 93,552 93,122
Marketing equipment 174,285 173,360
Transportation equipment 934 909
Office equipment 7,699 7,394
Improvements 15,759 15,654
Construction in progress 2,767 2,458
300,708 298,609
Less accumulated deprecia-
tion and amortization 216,094 211,494
84,614 87,115
Other assets
Goodwill, less accumulated
amortization 46,529 45,850
Other intangible assets,
less accumulated
amortization 1,154 1,231
Long term investment
securities held to
maturity - 275
Sundry 2,185 1,807
49,868 49,163
$233,478 $236,683
See accompanying notes to the consolidated financial statements.
3
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
(in thousands)
LIABILITIES AND December 27, September 27,
STOCKHOLDERS' EQUITY 2003 2003
(unaudited)
Current liabilities
Accounts payable $ 24,420 $ 27,252
Accrued liabilities 10,338 12,806
34,758 40,058
Deferred income taxes 13,374 13,374
Other long-term liabilities 644 687
14,018 14,061
Stockholders' equity
Capital stock
Preferred, $1 par value;
authorized, 5,000
shares; none issued - -
Common, no par value;
authorized 25,000
shares; issued and
outstanding, 8,784
and 8,757, respectively 28,523 28,143
Accumulated other comprehen-
sive loss (2,024) (1,957)
Retained earnings 158,203 156,378
184,702 182,564
$233,478 $236,683
See accompanying notes to the consolidated financial statements.
4
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
December 27, December 28,
2003 2002
Net Sales $79,945 $77,244
Cost of goods sold 55,307 55,179
Gross profit 24,638 22,065
Operating expenses
Marketing 11,224 10,863
Distribution 6,960 6,128
Administrative 3,708 3,322
Other general income (33) (58)
21,859 20,255
Operating income 2,779 1,810
Other income (expenses)
Investment income 117 98
Interest expense (29) (32)
Earnings before
income taxes 2,867 1,876
Income taxes 1,042 675
NET EARNINGS $ 1,825 $ 1,201
Earnings per diluted
share $ .20 $ .13
Weighted average number
of diluted shares 9,039 9,235
Earnings per basic share $ .21 $ .14
Weighted average number
of basic shares 8,792 8,730
See accompanying notes to the consolidated financial statements.
5
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands)
Three Months Ended
December 27, December 28,
2003 2002
Operating activities:
Net earnings $ 1,825 $ 1,201
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization
of fixed assets 5,872 7,019
Amortization of intangibles
and deferred costs 194 189
Other (35) (249)
Changes in assets and liabilities,
net of effects from purchase of
companies
Decrease in accounts receivable 5,814 6,370
Increase in inventories (1,985) (1,386)
Decrease (increase) in
prepaid expenses 194 (404)
Decrease in accounts payable
and accrued liabilities (5,342) (7,229)
Net cash provided by operating
activities 6,537 5,511
Investing activities:
Purchase of property, plant
and equipment (3,252) (3,196)
Payments for purchase of companies,
net of cash acquired (1,631) -
Proceeds from investments
held to maturity 275 150
Proceeds from disposal of
property and equipment 200 1,640
Other 40 (189)
Net cash used in investing
activities (4,368) (1,595)
Financing activities:
Proceeds from issuance of stock 380 -
Net cash provided by
financing activities 380 -
Net increase in cash
and cash equivalents 2,549 3,916
Cash and cash equivalents at
beginning of period 37,694 14,158
Cash and cash equivalents at
end of period $40,243 $18,074
See accompanying notes to the consolidated financial statements.
6
J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly the financial position and the results of
operations and cash flows. Certain prior year amounts have
been reclassified to conform to the current period
presentation. These reclassifications had no effect on
reported net earnings.
The results of operations for the three months ended December
27, 2003 and December 28, 2002 are not necessarily indicative
of results for the full year. Sales of our retail stores are
generally higher in the first quarter due to the holiday
shopping season. Sales of our frozen beverages and frozen
juice bars and ices are generally higher in the third and
fourth quarters due to warmer weather.
While we believe that the disclosures presented are adequate to
make the information not misleading, it is suggested that these
consolidated financial statements be read in conjunction with
the consolidated financial statements and the notes included in
our Annual Report on Form 10-K for the year ended September 27,
2003.
Note 2 We recognize revenue from Food Service, Retail Supermarkets,
The Restaurant Group and Frozen Beverage products at the time
the products are shipped to third parties. When we perform
services for others under time and material agreements, revenue
is recognized upon the completion of the services. We also sell
fixed-fee service contracts. The terms of coverage range
between 12 and 60 months. We record deferred income on service
contracts which is amortized by the straight-line method over
the term of the contracts. We provide an allowance for doubtful
receivables after taking into account historical experience and
other factors.
Note 3 Depreciation of equipment and buildings is provided for by the
straight-line method over the assets' estimated useful lives.
Amortization of improvements is provided for by the straight-
line method over the term of the lease or the assets' estimated
useful lives, whichever is shorter. Licenses and rights
arising from acquisitions are amortized by the
7
straight-line method over periods ranging from 4 to 20 years.
Note 4 Our calculation of earnings per share in accordance with SFAS
No. 128, "Earnings Per Share," is as follows:
Three Months Ended December 27, 2003
Income Shares Per Share
(Numerator) (Denominator) Amount
(in thousands, except per share amounts)
Basic EPS
Net Earnings available
to common stockholders $1,825 8,792 $ .21
Effect of Dilutive Securities
Options - 247 (.01)
Diluted EPS
Net Earnings available to
common stockholders plus
assumed conversions $1,825 9,039 $ .20
92,394 anti-dilutive weighted shares have been excluded in the
computation of the three months ended December 27, 2003 diluted EPS
because the options' exercise price is greater than the average market
price of the common stock.
Three Months Ended December 28, 2002
Income Shares Per Share
(Numerator) (Denominator) Amount
(in thousands, except per share amounts)
Basic EPS
Net Earnings available
to common stockholders $1,201 8,730 $ .14
Effect of Dilutive Securities
Options - 505 (.01)
Diluted EPS
Net Earnings available to
common stockholders plus
assumed conversions $1,201 9,235 $ .13
110,000 anti-dilutive weighted shares have been excluded in the
computation of the three months ended December 28, 2002 diluted EPS
because the options' exercise price is greater than the average market
price of the common stock.
8
Note 5 The Company accounts for stock options under SFAS No. 123,
"Accounting for Stock-Based Compensation", as amended by SFAS
No. 148, which contains a fair value-based method for valuing
stock-based compensation that entities may use, which measures
compensation cost at the grant date based on the fair value of
the award. Compensation is then recognized over the service
period, which is usually the vesting period. Alternatively,
SFAS No. 123 permits entities to continue accounting for
employee stock options and similar equity instruments under
Accounting Principles Board (APB) Opinion 25, "Accounting for
Stock Issued to Employees". Entities that continue to account
for stock options using APB Opinion 25 are required to make pro
forma disclosures of net income and earnings per share, as if
the fair value-based method of accounting defined in SFAS No.
123 had been applied.
At December 27, 2003, the Company has one stock-based employee
compensation plan. The Company accounts for this plan under
the recognition and measurement principles of APB No. 25,
"Accounting for Stock Issued to Employees", and related
interpretations. Stock-based employee compensation costs are
not reflected in net income, as all options granted under the
plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following
table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition
provisions of SFAS No. 123, to stock-based employee
compensation.
9
Three Months Ended
December 27, December 28,
2003 2002
(in thousands, except
per share amounts)
Net income,
as reported $1,825 $1,201
Less: stock-based
compensation
costs determined
under fair value
based method for
all awards 281 341
Net income, pro
forma $1,544 $ 860
Earnings per share
of common stock -
basic:
As reported $ .21 $ .14
Pro forma $ .18 $ .09
Earnings per share
of common stock -
diluted:
As reported $ .20 $ .13
Pro forma $ .17 $ .09
The fair value of each option grant is estimated on the date of
grant using the Black-Scholes options-pricing model with the
following weighted average assumptions used for grants in
fiscal 2003 and fiscal 2004: expected volatility of 43% and
36%; risk-free interest rate of 3.07% and rates ranging between
2.27% and 3.49%; and expected lives ranging between 5 and 10
years.
Note 6 In November 2002, FASB Interpretation 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" (FIN
45), was issued. FIN 45 requires a guarantor entity, at the
inception of a guarantee covered by the measurement provisions
of the interpretation, to record a liability for the fair value
of the obligation undertaken in issuing the guarantee.
10
We previously did not record a liability when guaranteeing
obligations unless it became probable that we would have to
perform under the guarantee. FIN 45 applies prospectively to
guarantees we issue or modify subsequent to December 31, 2002,
but has certain disclosure requirements effective for interim
and annual periods ending after December 15, 2002. The
adoption of FIN 45 did not have a significant impact on our
consolidated financial position, results of operations or cash
flows.
In January 2002, the FASB issued Interpertation 46 (FIN 46),
"Consolidation of Variable Interest Entities." FIN 46
clarifies the application of Accounting Research Bulletin 51,
Consolidated Financial Statements, for certain entities that do
not have sufficient equity at risk for the entity to finance
its activities without additional subordinated financial
support from other parties or in which equity investors do not
have the characteristics of a controlling financial interest
("variable interest entities"). Variable interest entities
within the scope of FIN 46 will be required to be consolidated
by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that
absorbs a majority of the entity's expected losses, receives a
majority of its expected returns, or both. FIN 46 applies
immediately to variable interest entities created after January
31, 2002, and to variable interest entities in which an
enterprise obtains an interest after that date. It applies in
the first fiscal year or interim period beginning after June
15, 2002, to variable interest entities in which an enterprise
holds a variable interest that it acquired before February 1,
2002. The adoption of FIN 46 did not have a material effect on
our consolidated financial position, results of operations, or
cash flows.
On May 15, 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of Both
Liabilities and Equity." SFAS No. 150 establishes standards
for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and
equity.
Most of the guidance in SFAS No. 150 is effective for all
financial instruments entered into or modified after May 31,
2003, and otherwise is
11
effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of SFAS No. 150
did not have a material effect on our consolidated financial
position, results of operations or cash flows.
Note 7 Inventories consist of the following:
December 27, September 27,
2003 2003
(unaudited)
(in thousands)
Finished goods $11,637 $10,537
Raw materials 3,232 2,775
Packaging materials 3,166 2,975
Equipment parts & other 7,215 6,915
$25,250 $23,202
Note 8 We principally sell our products to the food service and retail
supermarket industries. We also distribute our products
directly to the consumer through our chain of retail stores
referred to as The Restaurant Group. Sales and results of our
frozen beverages business are monitored separately from the
balance of our food service business and restaurant group
because of different distribution and capital requirements. We
maintain separate and discrete financial information for the
four operating segments mentioned above which is available to
our Chief Operating Decision Makers. We have applied no
aggregate criteria to any of
these operating segments in order to determine reportable
segments. Our four reportable segments are Food Service, Retail
Supermarkets, The Restaurant Group and Frozen Beverages. All
inter-segment net sales and expenses have been eliminated in
computing net sales and operating income (loss). These
segments are described below.
Food Service
The primary products sold by the food service group are soft
pretzels, frozen juice treats and desserts, churros and baked
goods. Our customers in the food service industry include
snack bars and food stands in chain, department and discount
stores; malls and shopping centers; fast food outlets; stadiums
and sports arenas; leisure and theme parks; convenience
stores; movie theatres; warehouse club stores; schools,
colleges and other institutions. Within the food service
industry, our products are
12
purchased by the consumer primarily for consumption at the
point-of-sale.
Retail Supermarkets
The primary products sold to the retail supermarket industry
are soft pretzel products, including SUPERPRETZEL, LUIGI'S Real
Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade,
ICEE Squeeze Up Tubes and TIO PEPE'S Churros. Within the
retail supermarket industry, our frozen and prepackaged
products are purchased by the consumer for consumption at home.
The Restaurant Group
We sell direct to the consumer through our Restaurant Group,
which operates BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, our
chain of specialty snack food retail outlets.
Frozen Beverages
We sell frozen beverages to the food service industry,
including our restaurant group, primarily under the names ICEE
and ARCTIC BLAST in the United States, Mexico and Canada.
The Chief Operating Decision Maker for Food Service,
Retail Supermarkets and The Restaurant Group and the
Chief Operating Decision Maker for Frozen Beverages
monthly review and evaluate operating income and sales in order
to assess performance and allocate resources to each individual
segment. In addition, the Chief Operating Decision Makers
review and evaluate depreciation, capital spending and assets
of each segment on a quarterly basis to monitor cash flow and
asset needs of each segment. Information regarding the
operations in these four reportable segments is as follows:
13
Three Months Ended
December 27, December 28,
2003 2002
(in thousands)
Sales to external customers:
Food Service $ 47,941 $ 43,806
Retail Supermarket 6,277 5,739
The Restaurant Group 2,568 3,090
Frozen Beverages 23,159 24,609
$ 79,945 $ 77,244
Depreciation and Amortization:
Food Service $ 3,282 $ 3,340
Retail Supermarket - -
The Restaurant Group 111 157
Frozen Beverages 2,673 3,711
$ 6,066 $ 7,208
Operating Income(Loss):
Food Service $ 2,848 $ 2,663
Retail Supermarket 59 (414)
The Restaurant Group 52 130
Frozen Beverages (180) (569)
$ 2,779 $ 1,810
Capital Expenditures:
Food Service $ 1,236 $ 1,398
Retail Supermarket - -
The Restaurant Group 9 20
Frozen Beverages 2,007 1,778
$ 3,252 $ 3,196
Assets:
Food Service $149,318 $128,690
Retail Supermarket - -
Restaurant Group 2,292 2,815
Frozen Beverages 81,868 82,474
$233,478 $213,979
Note 9 We follow SFAS No. 142 "Goodwill and Intangible Assets."
SFAS No. 142 includes requirements to test goodwill and
indefinite lived intangible assets for impairment rather than
amortize them; accordingly, we no longer amortize goodwill.
Our four reporting units, which are also reportable segments,
are Food Service, Retail Supermarkets, The Restaurant Group and
Frozen Beverages. Each of the segments have goodwill and
indefinite lived intangible assets.
14
The carrying amount of acquired intangible assets for the Food
Service, Retail Supermarkets, The Restaurant Group and Frozen Beverage
segments as of December 27, 2003 are as follows:
Gross Net
Carrying Accumulated Carrying
Amount Amortization Amount
(in thousands)
FOOD SERVICE
Amortized intangible assets
Licenses and rights $2,066 $981 $1,085
RETAIL SUPERMARKETS
Amortized intangible assets
Licenses and rights $ - $ - $ -
THE RESTAURANT GROUP
Amortized intangible assets
Licenses and rights $ 20 $ 20 $ -
FROZEN BEVERAGES
Amortized intangible assets
Licenses and rights $ 201 $132 $ 69
Licenses and rights are being amortized by the straight-line
method over periods ranging from 4 to 20 years and amortization expense
is reflected throughout operating expenses. There were no changes in
the gross carrying amount of intangible assets for the three months
ended December 27, 2003. Aggregate amortization expense of
intangible assets for the 3 months ended December 27, 2003 and December
28, 2002 was $78,000 and $78,000, respectively.
Estimated amortization expense for the next five fiscal years is
approximately $300,000 in 2004, $200,000 in 2005 and $140,000 in 2006,
2007 and 2008.
Goodwill
The carrying amounts of goodwill for the Food Service, Retail
Supermarket, Restaurant Group and Frozen Beverage segments are as
follows:
15
Food Retail Restaurant Frozen
Service Supermarket Group Beverages Total
(in thousands)
Balance at
December 27,
2003 $14,241 $ - $438 $31,850 $46,529
The $679,000 increase in the goodwill in the frozen beverage
segment was the result of an acquisition made in the quarter.
Note 10 Subsequent Event
On January 5, 2004, we acquired the assets of Country Home
Bakers, Inc. for approximately $13 million in cash. Country
Home Bakers, Inc., with its manufacturing facility in
Atlanta, GA, manufactures and distributes bakery products to
the food service and supermarket industries. Its product
line includes cookies, biscuits, and frozen doughs sold
under the names READI-BAKE, COUNTRY HOME and private labels
sold through supermarket in-store bakeries. Total annual
sales are estimated to be approximately $55 million.
16
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Our current cash and marketable securities balances and cash
expected to be provided by future operations are our primary sources of
liquidity. We believe that these sources, along with our borrowing
capacity, are sufficient to fund future growth and expansion.
In the quarters ended December 27, 2003 and December 28, 2002
fluctuations in the valuation of the Mexican peso caused a decrease of
$67,000 and an decrease of $29,000 in stockholders' equity,
respectively, because of the translation of the net assets of the
Company's Mexican frozen beverage subsidiary.
On January 5, 2004, we acquired the assets of Country Home Bakers,
Inc. for approximately $13 million in cash. Country Home Bakers, Inc.,
with its manufacturing facility in Atlanta, GA, manufactures and
distributes bakery products to the food service and supermarket
industries. Its product line includes cookies, biscuits, and frozen
doughs sold under the names READI-BAKE, COUNTRY HOME and private labels
sold through supermarket in-store bakeries. Total annual sales are
estimated to be approximately $55 million.
Our general-purpose bank credit line provides for up to a
$50,000,000 revolving credit facility. The agreement contains
restrictive covenants and requires commitment fees in accordance with
standard banking practice. There were no outstanding balances under this
facility at December 27, 2003.
Results of Operations
Net sales increased $2,701,000 or 3% to $79,945,000 for the three
months ended December 27, 2003 compared to the three months ended
December 28, 2002.
FOOD SERVICE
Sales to food service customers increased $4,135,000 or 9% in
the first quarter to $47,941,000. Soft pretzel sales increased
$1,576,000 or 9% from last year to $18,884,000 in this year's quarter
due primarily to increased sales of PRETZEL FILLERS to one customer.
Italian ice and frozen juice treat and dessert sales increased 9% to
$5,652,000 in the three months primarily due to increased sales to
school food service. Churro sales to food service customers increased 2%
to $3,183,000 in the quarter. Sales of bakery
17
products increased 11% to $19,080,000 from $17,152,000 last year due to
increased sales across our customer base.
RETAIL SUPERMARKETS
Sales of products to retail supermarkets increased
$538,000 or 9% in the first quarter. Soft pretzel sales for
the first quarter were up 13% to $4,207,000 due mainly to sales of our
recently introduced PRETZELFILS. Sales of frozen juices and ices
increased $147,000 or 6% to $2,490,000 in the quarter due to lower trade
spending; case sales of frozen juices and ices were down approximately
12% in the quarter.
THE RESTAURANT GROUP
Sales of our Restaurant Group decreased 17% to $2,568,000 in the
first quarter. The sales decrease was caused primarily by decreased
mall traffic and the closing of unprofitable stores.
FROZEN BEVERAGES
Frozen beverage and related product sales decreased
$1,450,000 or 6% to $23,159,000 in the first quarter. Excluding the
sale of equipment to one customer in last year's quarter, sales would
have been down about 1/2 of 1% of sales. Beverage sales alone decreased
2% to $17,411,000 for the quarter. Lower sales to one customer accounted
for the entire decrease in beverage sales. Service revenue increased
$883,000 or 27% from the first quarter of fiscal year 2003 to $4,115,000
in this year's first quarter.
CONSOLIDATED
Gross profit as a percentage of sales increased two percentage
points to 31% from 29% from last year. The increase was caused
primarily by a lower level of allowances in our retail supermarket
business and reduced depreciation of our frozen beverage dispensing
machines.
Total operating expenses increased $1,604,000 in the first quarter
and as a percentage of sales increased to 27% from 26% in last year's
same quarter. Marketing expenses were 14% of sales in both year's first
quarter. Distribution expenses increased to 9% of sales from 8% last
year. The increase was caused by higher fuel and trucking costs and
shifts in product mix. Administrative expenses increased about 1/3 of 1%
as a percentage of sales to 5% this year due to attorney costs.
18
Operating income increased 54% to $2,779,000 this year from
$1,810,000 a year ago.
The effective income tax rate has been estimated at 36% this year.
Net earnings increased 52% to $1,825,000 in this year's first
quarter compared to net earnings of $1,201,000 in the year ago period.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the Company's assessment
of its sensitivity to market risk since its presentation set
forth, in item 7a. "Quantitative and Qualitative Disclosures
About Market Risk," in its 2003 annual report on Form 10-K
filed with the SEC.
Item 4. Controls and Procedures
Quarterly evaluation of the Company's Disclosure and Internal
Controls. The Company evaluated (i) the effectiveness of the
design and operation of its disclosure controls and procedures
(the "Disclosure Controls") as of the end of the period
covered by this Form 10-Q and (ii) any changes in internal
controls over financial reporting that occurred during the
first quarter of its fiscal year. This evaluation ("Controls
Evaluation") was done under the supervision and with the
participation of management, including the Chief Executive
Officer ("CEO") and Chief Financial Officer ("CFO").
Limitations on the Effectiveness of Controls. A control
system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of
the control system are met. Further, the design of a control
system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. Because
of the inherent limitations in a cost effective control system,
misstatements due to
19
error or fraud may occur and not be detected. The Company
conducts periodic evaluations of its internal controls to
enhance, where necessary, its procedures and controls.
Conclusions. Based upon the Controls Evaluation, the CEO and
CFO have concluded that the Disclosure Controls are effective
in reaching a reasonable level of assurance that management is
timely alerted to material information relating to the Company
during the period when its periodic reports are
being prepared. In accord with the U.S. Securities and
Exchange Commission's requirements, the CEO
and CFO conducted an evaluation of the Company's internal
control over financial reporting (the "Internal Controls") to
determine whether there have been any changes in Internal
Controls that occurred during the quarter which have materially
affected or which are reasonable likely to materially affect
Internal Controls. Based on this evaluation, there have been
no such changes in Internal Controls during the quarter covered
by this report.
20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
31.1 & Certification Pursuant to Section 302 of
31.2 the Sarbanes-Oxley Act of 2002
99.5 Certification Pursuant to the 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
b) Reports on Form 8-K - Reports on Form 8-K were filed on
November 5, 2003 and December 23, 2003.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
J & J SNACK FOODS CORP.
Dated: September 9, 2004 /s/ Gerald B. Shreiber
Gerald B. Shreiber
President
Dated: September 9, 2004 /s/ Dennis G. Moore
Dennis G. Moore
Senior Vice President and
Chief Financial Officer
22