10-Q 1 jjsf20220326_10q.htm FORM 10-Q jjsf20220326_10q.htm
0000785956 J&J SNACK FOODS CORP false --09-25 Q2 2022 1 1 10,000,000 10,000,000 0 0 0 0 50,000,000 50,000,000 19,173,000 19,173,000 19,084,000 19,084,000 0 0 0 0 0 343,000 267,000 22 00007859562021-09-262022-03-26 xbrli:shares 00007859562022-04-29 iso4217:USD 00007859562022-03-26 00007859562021-09-25 iso4217:USDxbrli:shares 00007859562021-12-262022-03-26 00007859562020-12-272021-03-27 00007859562020-09-272021-03-27 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-09-25 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-25 0000785956us-gaap:RetainedEarningsMember2021-09-25 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-09-262021-12-25 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-262021-12-25 0000785956us-gaap:RetainedEarningsMember2021-09-262021-12-25 00007859562021-09-262021-12-25 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-12-25 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-25 0000785956us-gaap:RetainedEarningsMember2021-12-25 00007859562021-12-25 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-12-262022-03-26 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-262022-03-26 0000785956us-gaap:RetainedEarningsMember2021-12-262022-03-26 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-03-26 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-26 0000785956us-gaap:RetainedEarningsMember2022-03-26 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-09-26 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-26 0000785956us-gaap:RetainedEarningsMember2020-09-26 00007859562020-09-26 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-09-272020-12-26 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-272020-12-26 0000785956us-gaap:RetainedEarningsMember2020-09-272020-12-26 00007859562020-09-272020-12-26 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-12-26 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-26 0000785956us-gaap:RetainedEarningsMember2020-12-26 00007859562020-12-26 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2020-12-272021-03-27 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-272021-03-27 0000785956us-gaap:RetainedEarningsMember2020-12-272021-03-27 0000785956us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-03-27 0000785956us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-27 0000785956us-gaap:RetainedEarningsMember2021-03-27 00007859562021-03-27 utr:Y 0000785956srt:MinimumMember2021-09-262022-03-26 0000785956srt:MaximumMember2021-09-262022-03-26 0000785956us-gaap:EmployeeStockOptionMember2021-12-262022-03-26 0000785956us-gaap:EmployeeStockOptionMember2020-12-272021-03-27 0000785956us-gaap:EmployeeStockOptionMember2021-09-262022-03-26 0000785956us-gaap:EmployeeStockOptionMember2020-09-272021-03-27 0000785956jjsf:StockPurchasePlanMember2021-12-262022-03-26 0000785956jjsf:StockPurchasePlanMember2020-12-272021-03-27 0000785956jjsf:StockPurchasePlanMember2021-09-262022-03-26 0000785956jjsf:StockPurchasePlanMember2020-09-272021-03-27 0000785956jjsf:StockIssuedToOutsideDirectorsMember2021-12-262022-03-26 0000785956jjsf:StockIssuedToOutsideDirectorsMember2020-12-272021-03-27 0000785956jjsf:StockIssuedToOutsideDirectorsMember2021-09-262022-03-26 0000785956jjsf:StockIssuedToOutsideDirectorsMember2020-09-272021-03-27 0000785956us-gaap:RestrictedStockUnitsRSUMember2021-12-262022-03-26 0000785956us-gaap:RestrictedStockUnitsRSUMember2020-12-272021-03-27 0000785956us-gaap:RestrictedStockUnitsRSUMember2021-09-262022-03-26 0000785956us-gaap:RestrictedStockUnitsRSUMember2020-09-272021-03-27 0000785956us-gaap:PerformanceSharesMember2021-12-262022-03-26 0000785956us-gaap:PerformanceSharesMember2020-12-272021-03-27 0000785956us-gaap:PerformanceSharesMember2021-09-262022-03-26 0000785956us-gaap:PerformanceSharesMember2020-09-272021-03-27 0000785956us-gaap:RestrictedStockUnitsRSUMember2021-11-012021-11-30 0000785956us-gaap:PerformanceSharesMember2021-11-012021-11-30 utr:M utr:Rate xbrli:pure 0000785956jjsf:SoftPretzelsMemberjjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:SoftPretzelsMemberjjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:SoftPretzelsMemberjjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:SoftPretzelsMemberjjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:ChurrosMemberjjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:ChurrosMemberjjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:ChurrosMemberjjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:ChurrosMemberjjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:HandheldsMemberjjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:HandheldsMemberjjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:HandheldsMemberjjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:HandheldsMemberjjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:BakeryMemberjjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:BakeryMemberjjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:BakeryMemberjjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:BakeryMemberjjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:OtherProductsMemberjjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:OtherProductsMemberjjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:OtherProductsMemberjjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:OtherProductsMemberjjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:FoodServiceMember2021-12-262022-03-26 0000785956jjsf:FoodServiceMember2020-12-272021-03-27 0000785956jjsf:FoodServiceMember2021-09-262022-03-26 0000785956jjsf:FoodServiceMember2020-09-272021-03-27 0000785956jjsf:SoftPretzelsMemberjjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:SoftPretzelsMemberjjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:SoftPretzelsMemberjjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:SoftPretzelsMemberjjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:FrozenJuicesAndIcesMemberjjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:BiscuitsMemberjjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:BiscuitsMemberjjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:BiscuitsMemberjjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:BiscuitsMemberjjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:HandheldsMemberjjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:HandheldsMemberjjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:HandheldsMemberjjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:HandheldsMemberjjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:CouponRedemtionMemberjjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:CouponRedemtionMemberjjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:CouponRedemtionMemberjjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:CouponRedemtionMemberjjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:OtherProductsMemberjjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:OtherProductsMemberjjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:OtherProductsMemberjjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:OtherProductsMemberjjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:RetailSupermarketMember2021-12-262022-03-26 0000785956jjsf:RetailSupermarketMember2020-12-272021-03-27 0000785956jjsf:RetailSupermarketMember2021-09-262022-03-26 0000785956jjsf:RetailSupermarketMember2020-09-272021-03-27 0000785956jjsf:BeverageMemberjjsf:FrozenBeveragesMember2021-12-262022-03-26 0000785956jjsf:BeverageMemberjjsf:FrozenBeveragesMember2020-12-272021-03-27 0000785956jjsf:BeverageMemberjjsf:FrozenBeveragesMember2021-09-262022-03-26 0000785956jjsf:BeverageMemberjjsf:FrozenBeveragesMember2020-09-272021-03-27 0000785956jjsf:RepairAndMaintenanceServiceMemberjjsf:FrozenBeveragesMember2021-12-262022-03-26 0000785956jjsf:RepairAndMaintenanceServiceMemberjjsf:FrozenBeveragesMember2020-12-272021-03-27 0000785956jjsf:RepairAndMaintenanceServiceMemberjjsf:FrozenBeveragesMember2021-09-262022-03-26 0000785956jjsf:RepairAndMaintenanceServiceMemberjjsf:FrozenBeveragesMember2020-09-272021-03-27 0000785956jjsf:MachineSalesMemberjjsf:FrozenBeveragesMember2021-12-262022-03-26 0000785956jjsf:MachineSalesMemberjjsf:FrozenBeveragesMember2020-12-272021-03-27 0000785956jjsf:MachineSalesMemberjjsf:FrozenBeveragesMember2021-09-262022-03-26 0000785956jjsf:MachineSalesMemberjjsf:FrozenBeveragesMember2020-09-272021-03-27 0000785956jjsf:OtherProductsMemberjjsf:FrozenBeveragesMember2021-12-262022-03-26 0000785956jjsf:OtherProductsMemberjjsf:FrozenBeveragesMember2020-12-272021-03-27 0000785956jjsf:OtherProductsMemberjjsf:FrozenBeveragesMember2021-09-262022-03-26 0000785956jjsf:OtherProductsMemberjjsf:FrozenBeveragesMember2020-09-272021-03-27 0000785956jjsf:FrozenBeveragesMember2021-12-262022-03-26 0000785956jjsf:FrozenBeveragesMember2020-12-272021-03-27 0000785956jjsf:FrozenBeveragesMember2021-09-262022-03-26 0000785956jjsf:FrozenBeveragesMember2020-09-272021-03-27 0000785956jjsf:FoodServiceMember2022-03-26 0000785956jjsf:FoodServiceMember2021-03-27 0000785956jjsf:RetailSupermarketMember2022-03-26 0000785956jjsf:RetailSupermarketMember2021-03-27 0000785956jjsf:FrozenBeveragesMember2022-03-26 0000785956jjsf:FrozenBeveragesMember2021-03-27 0000785956us-gaap:TradeNamesMemberjjsf:FoodServiceMember2022-03-26 0000785956us-gaap:TradeNamesMemberjjsf:FoodServiceMember2021-09-25 0000785956us-gaap:NoncompeteAgreementsMemberjjsf:FoodServiceMember2022-03-26 0000785956us-gaap:NoncompeteAgreementsMemberjjsf:FoodServiceMember2021-09-25 0000785956us-gaap:CustomerRelationshipsMemberjjsf:FoodServiceMember2022-03-26 0000785956us-gaap:CustomerRelationshipsMemberjjsf:FoodServiceMember2021-09-25 0000785956jjsf:LicenseAndRightsMemberjjsf:FoodServiceMember2022-03-26 0000785956jjsf:LicenseAndRightsMemberjjsf:FoodServiceMember2021-09-25 0000785956jjsf:FoodServiceMember2021-09-25 0000785956us-gaap:TradeNamesMemberjjsf:RetailSupermarketMember2022-03-26 0000785956us-gaap:TradeNamesMemberjjsf:RetailSupermarketMember2021-09-25 0000785956jjsf:FiniteLivedTradeNamesMemberjjsf:RetailSupermarketMember2022-03-26 0000785956jjsf:FiniteLivedTradeNamesMemberjjsf:RetailSupermarketMember2021-09-25 0000785956us-gaap:CustomerRelationshipsMemberjjsf:RetailSupermarketMember2022-03-26 0000785956us-gaap:CustomerRelationshipsMemberjjsf:RetailSupermarketMember2021-09-25 0000785956jjsf:RetailSupermarketMember2021-09-25 0000785956us-gaap:TradeNamesMemberjjsf:FrozenBeveragesMember2022-03-26 0000785956us-gaap:TradeNamesMemberjjsf:FrozenBeveragesMember2021-09-25 0000785956jjsf:DistributionRightsIndefinitelivedMemberjjsf:FrozenBeveragesMember2022-03-26 0000785956jjsf:DistributionRightsIndefinitelivedMemberjjsf:FrozenBeveragesMember2021-09-25 0000785956us-gaap:CustomerRelationshipsMemberjjsf:FrozenBeveragesMember2022-03-26 0000785956us-gaap:CustomerRelationshipsMemberjjsf:FrozenBeveragesMember2021-09-25 0000785956jjsf:LicenseAndRightsMemberjjsf:FrozenBeveragesMember2022-03-26 0000785956jjsf:LicenseAndRightsMemberjjsf:FrozenBeveragesMember2021-09-25 0000785956jjsf:FrozenBeveragesMember2021-09-25 0000785956us-gaap:CustomerRelationshipsMember2021-09-262022-03-26 0000785956jjsf:LicenseAndRightsMember2021-09-262022-03-26 0000785956us-gaap:CorporateBondSecuritiesMember2022-03-26 0000785956jjsf:MutualFundsMember2022-03-26 0000785956us-gaap:PreferredStockMember2022-03-26 0000785956us-gaap:CorporateBondSecuritiesMember2021-09-262022-03-26 0000785956us-gaap:CorporateBondSecuritiesMember2021-09-25 0000785956jjsf:MutualFundsMember2021-09-25 0000785956us-gaap:PreferredStockMember2021-09-25 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2021-12-25 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2021-09-25 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2021-12-262022-03-26 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2021-09-262022-03-26 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2022-03-26 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2020-12-26 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2020-09-26 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2020-12-272021-03-27 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2020-09-272021-03-27 0000785956us-gaap:AccumulatedTranslationAdjustmentMember2021-03-27 0000785956srt:MinimumMember2022-03-26 0000785956srt:MaximumMember2022-03-26 0000785956jjsf:PropertyPlantAndEquipmentNetMember2022-03-26 0000785956jjsf:PropertyPlantAndEquipmentNetMember2021-09-25 0000785956jjsf:DistributionAndShippingCostsMemberjjsf:NFIMember2021-12-262022-03-26 0000785956jjsf:DistributionAndShippingCostsMemberjjsf:NFIMember2021-09-262022-03-26 0000785956jjsf:DistributionAndShippingCostsMemberjjsf:NFIMember2020-12-272021-03-27 0000785956jjsf:DistributionAndShippingCostsMemberjjsf:NFIMember2020-09-272021-03-27
 
 

 

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the period ended March 26, 2022

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)

 

New Jersey

22-1935537

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

      

6000 Central Highway, Pennsauken, New Jersey 08109

(Address of principal executive offices)

 

Telephone (856) 665-9533

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

 

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange on Which Registered

Common Stock, no par value

 

JJSF

 

The NASDAQ Global Select Market

 

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.

Yes

No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

Accelerated filer

    

Non-accelerated filer

  
  

Smaller reporting company

  

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

No

 

At April 29, 2022 there were 19,174,920 shares of the Registrant’s Common Stock outstanding.

 

1

 

 

INDEX

 

Page
Number

Part I.   Financial Information

 
   

Item l.   Consolidated Financial Statements

 
   

Consolidated Balance Sheets – March 26, 2022 (unaudited) and September 25, 2021

3

   

Consolidated Statements of Earnings (unaudited) – Three and Six Months Ended March 26, 2022 and March 27, 2021

4

   

Consolidated Statements of Comprehensive Income (unaudited) – Three and Six Months Ended March 26, 2022 and March 27, 2021

5

   

Consolidated Statements of Changes In Stockholders’ Equity (unaudited) – Three and Six Months Ended March 26, 2022 and March 27, 2021

6

   

Consolidated Statements of Cash Flows (unaudited) – Six Months Ended March 26, 2022 and March 27, 2021

7

   

Notes to the Consolidated Financial Statements (unaudited)

8

   

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

   

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

30

   

Item 4.   Controls and Procedures

30

   

Part II.   Other Information

31

   

Item 6.   Exhibits

31

 

2

 

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

  

March 26,

     
  

2022

  

September 25,

 
  

(unaudited)

  

2021

 

Assets

        

Current assets

        

Cash and cash equivalents

 $221,017  $283,192 

Marketable securities held to maturity

  4,530   7,980 

Accounts receivable, net

  187,933   162,939 

Inventories

  158,991   123,160 

Prepaid expenses and other

  11,805   7,498 

Total current assets

  584,276   584,769 
         

Property, plant and equipment, at cost

        

Land

  2,494   2,494 

Buildings

  26,582   26,582 

Plant machinery and equipment

  340,534   343,716 

Marketing equipment

  263,494   258,624 

Transportation equipment

  10,912   10,315 

Office equipment

  44,641   34,648 

Improvements

  48,073   45,578 

Construction in progress

  45,418   35,285 

Total Property, plant and equipment, at cost

  782,148   757,242 

Less accumulated depreciation and amortization

  504,249   490,055 

Property, plant and equipment, net

  277,899   267,187 
         

Other assets

        

Goodwill

  121,833   121,833 

Other intangible assets, net

  76,599   77,776 

Marketable securities held to maturity

  -   4,047 

Marketable securities available for sale

  5,951   10,084 

Operating lease right-of-use assets

  53,892   54,555 

Other

  2,878   1,968 

Total other assets

  261,153   270,263 

Total Assets

 $1,123,328  $1,122,219 
         

Liabilities and Stockholders' Equity

        

Current Liabilities

        

Current finance lease liabilities

 $127  $182 

Accounts payable

  101,238   96,789 

Accrued insurance liability

  15,525   16,260 

Accrued liabilities

  6,456   10,955 

Current operating lease liabilities

  13,747   13,395 

Accrued compensation expense

  16,487   17,968 

Dividends payable

  12,136   12,080 

Total current liabilities

  165,716   167,629 
         

Noncurrent finance lease liabilities

  336   392 

Noncurrent operating lease liabilities

  45,501   46,557 

Deferred income taxes

  61,339   61,578 

Other long-term liabilities

  455   409 
         

Stockholders' Equity

        

Preferred stock, $1 par value; authorized 10,000,000 shares; none issued

  -   - 

Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,173,000 and 19,084,000 respectively

  87,688   73,597 

Accumulated other comprehensive loss

  (13,281)  (13,383)

Retained Earnings

  775,574   785,440 

Total stockholders' equity

  849,981   845,654 

Total Liabilities and Stockholders' Equity

 $1,123,328  $1,122,219 

 

The accompanying notes are an integral part of these statements.

 

3

 

 

 J & J SNACK FOODS CORP. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF EARNINGS

 (Unaudited)

 (in thousands, except per share amounts)

 

   

Three Months Ended

   

Six Months Ended

 
   

March 26,

   

March 27,

   

March 26,

   

March 27,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Net sales

  $ 281,513     $ 256,178     $ 600,003     $ 497,175  
                                 

Cost of goods sold

    216,165       195,282       455,280       386,154  

Gross profit

    65,348       60,896       144,723       111,021  
                                 

Operating expenses

                               

Marketing

    21,036       19,192       41,943       36,493  

Distribution

    28,349       25,443       61,664       48,332  

Administrative

    11,719       9,216       22,088       18,656  

Other general expense

    156       (185 )     95       (268 )

Total operating expenses

    61,260       53,666       125,790       103,213  
                                 

Operating income

    4,088       7,230       18,933       7,808  
                                 

Other income (expense)

                               

Investment income

    160       579       431       1,949  

Interest expense & other

    (57 )     4       (75 )     (11 )
                                 

Earnings before income taxes

    4,191       7,813       19,289       9,746  
                                 

Income taxes

    920       1,752       4,927       1,907  
                                 

NET EARNINGS

  $ 3,271     $ 6,061     $ 14,362     $ 7,839  
                                 

Earnings per diluted share

  $ 0.17     $ 0.32     $ 0.75     $ 0.41  
                                 

Weighted average number of diluted shares

    19,206       19,130       19,180       19,081  
                                 

Earnings per basic share

  $ 0.17     $ 0.32     $ 0.75     $ 0.41  
                                 

Weighted average number of basic shares

    19,134       19,006       19,110       18,971  

 

The accompanying notes are an integral part of these statements.

 

4

 

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

 

   

Three Months Ended

   

Six months ended

 
   

March 26,

   

March 27,

   

March 26,

   

March 27,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Net earnings

  $ 3,271     $ 6,061     $ 14,362     $ 7,839  
                                 

Foreign currency translation adjustments

    546       (531 )     102       1,748  

Total other comprehensive income (loss), net of tax

    546       (531 )     102       1,748  
                                 

Comprehensive income

  $ 3,817     $ 5,530     $ 14,464     $ 9,587  

 

The accompanying notes are an integral part of these statements.

 

5

 

 

 J & J Snack Foods Corp. and Subsidiaries

 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 (in thousands)

 

          

Accumulated

         
          

Other

         
  

Common Stock

  

Comprehensive

  

Retained

     
  

Shares

  

Amount

  

Loss

  

Earnings

  

Total

 
                     

Balance as September 25, 2021

  19,084  $73,597  $(13,383) $785,440  $845,654 

Issuance of common stock upon exercise of stock options

  5   706   -   -   706 

Foreign currency translation adjustment

  -   -   (444)  -   (444)

Dividends declared

  -   -   -   (12,092)  (12,092)

Share-based compensation

  -   1,083   -   -   1,083 

Net earnings

  -   -   -   11,091   11,091 
                     

Balance at December 25, 2021

  19,089  $75,386  $(13,827) $784,439  $845,998 

Issuance of common stock upon exercise of stock options

  76   10,012   -   -   10,012 

Issuance of common stock for employee stock purchase plan

  8   1,023   -   -   1,023 

Foreign currency translation adjustment

  -   -   546   -   546 

Dividends declared

  -   -   -   (12,136)  (12,136)

Share-based compensation

  -   1,267   -   -   1,267 

Net earnings

  -   -   -   3,271   3,271 
                     

Balance at March 26, 2022

  19,173  $87,688  $(13,281) $775,574  $849,981 

 

                   

Accumulated

                 
                   

Other

                 
   

Common Stock

   

Comprehensive

   

Retained

         
   

Shares

   

Amount

   

Loss

   

Earnings

   

Total

 
                                         

Balance as September 26, 2020

    18,915     $ 49,268     $ (15,587 )   $ 775,817     $ 809,498  

Issuance of common stock upon exercise of stock options

    41       4,390       -       -       4,390  

Foreign currency translation adjustment

    -       -       2,279       -       2,279  

Dividends declared

    -       -       -       (10,900 )     (10,900 )

Share-based compensation

    -       1,244       -       -       1,244  

Net earnings

    -       -       -       1,778       1,778  
                                         

Balance at December 26, 2020

    18,956     $ 54,902     $ (13,308 )   $ 766,695     $ 808,289  

Issuance of common stock upon exercise of stock options

    72       8,384       -       -       8,384  

Issuance of common stock for employee stock purchase plan

    6       714       -       -       714  

Foreign currency translation adjustment

    -       -       (531 )     -       (531 )

Dividends declared

    -       -       -       (10,943 )     (10,943 )

Share-based compensation

    -       1,026       -       -       1,026  

Net earnings

    -       -       -       6,061       6,061  
                                         

Balance at March 27, 2021

    19,034     $ 65,026     $ (13,839 )   $ 761,813     $ 813,000  

 

The accompanying notes are an integral part of these statements.

 

6

 

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

   

Six Months Ended

 
   

March 26,

   

March 27,

 
   

2022

   

2021

 

Operating activities:

               

Net earnings

  $ 14,362     $ 7,839  

Adjustments to reconcile net earnings to net cash provided by operating activities:

               

Depreciation of fixed assets

    23,868       24,253  

Amortization of intangibles and deferred costs

    1,183       1,457  

Loss from disposals of property & equipment

    100       -  

Share-based compensation

    2,350       2,270  

Deferred income taxes

    (251 )     (4 )

Loss (Gain) on marketable securities

    69       (768 )

Other

    (184 )     (163 )

Changes in assets and liabilities net of effects from purchase of companies

               

Increase in accounts receivable

    (25,031 )     (10,884 )

Increase in inventories

    (36,538 )     (6,432 )

Increase in prepaid expenses

    (4,308 )     (118 )

(Decrease) increase in accounts payable and accrued liabilities

    (2,055 )     9,331  

Net cash (used in) provided by operating activities

    (26,435 )     26,781  

Investing activities:

               

Purchases of property, plant and equipment

    (35,306 )     (18,829 )

Proceeds from redemption and sales of marketable securities

    11,526       41,337  

Proceeds from disposal of property and equipment

    589       1,262  

Other

    -       18  

Net cash (used in) provided by investing activities

    (23,191 )     23,788  

Financing activities:

               

Proceeds from issuance of stock

    11,741       13,582  

Payments on finance lease obligations

    (111 )     (173 )

Payment of cash dividend

    (24,163 )     (21,776 )

Net cash used in financing activities

    (12,533 )     (8,367 )

Effect of exchange rate on cash and cash equivalents

    (16 )     375  

Net (decrease) increase in cash and cash equivalents

    (62,175 )     42,577  

Cash and cash equivalents at beginning of period

    283,192       195,809  

Cash and cash equivalents at end of period

  $ 221,017     $ 238,386  

 

The accompanying notes are an integral part of these statements.

 

7

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

Note 1

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended September 25, 2021.

 

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.

 

The results of operations for the three and six months ended March 26, 2022 and March 27, 2021 are not necessarily indicative of results for the full year. Sales of our frozen beverages and frozen novelties are generally higher in the third and fourth quarters due to warmer weather. Also, approximately 2/3 of our sales are to venues and locations that previously shut down or sharply curtailed their foodservice operations as a result of COVID-19. While the majority of these venues have reopened, the extent of the future impact of COVID-19 on our operations depends on future developments of the virus and its effects which are uncertain at this time.

 

While we believe that the disclosures presented are adequate to make the information not misleading, we suggest that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 25, 2021.

 

8

 
 

Note 2

 

Revenue Recognition

 

When Performance Obligations Are Satisfied

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

 

The singular performance obligation of our customer contracts for product and machine sales is determined by each individual purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our customers when the product is delivered to, installed, or picked up by our customers based upon applicable shipping terms, as our customers can direct the use and obtain substantially all of the remaining benefits from the product at this point in time. The performance obligations in our customer contracts for product are generally satisfied within 30 days.

 

The singular performance obligation of our customer contracts for time and material repair and maintenance equipment service is the performance of the repair and maintenance with revenue being recognized at a point-in-time when the repair and maintenance is completed.

 

The singular performance obligation of our customer repair and maintenance equipment service contracts is the performance of the repair and maintenance with revenue being recognized over the time the service is expected to be performed. Our customers are billed for service contracts in advance of performance and therefore we have a contract liability recorded within Accrued liabilities on our balance sheet.

 

Significant Payment Terms

In general, within our customer contracts, the purchase order identifies the product, quantity, price, pick-up allowances, payment terms and final delivery terms. Although some payment terms may be more extended, presently the majority of our payment terms are 30 days. As a result, we have used the available practical expedient and, consequently, do not adjust our revenues for the effects of a significant financing component.

 

9

 

Shipping

All amounts billed to customers related to shipping and handling are classified as revenues; therefore, we recognize revenue for shipping and handling fees at the time the products are shipped or when services are performed. The cost of shipping products to the customer is recognized at the time the products are shipped to the customer and our policy is to classify them as Distribution expenses.

 

Variable Consideration

In addition to fixed contract consideration, our contracts include some form of variable consideration, including sales discounts, trade promotions and certain other sales and consumer incentives, including rebates and coupon redemptions. In general, variable consideration is treated as a reduction in revenue when the related revenue is recognized. Depending on the specific type of variable consideration, we use the most likely amount method to determine the variable consideration. We believe there will be no significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. We review and update our estimates and related accruals of variable consideration each period based on historical experience. Our recorded liability for allowances, end-user pricing adjustments and trade spending was $15.2 million at March 26, 2022 and $14.6 million at September 25, 2021.

 

 

Warranties & Returns

We provide all customers with a standard or assurance type warranty. Either stated or implied, we provide assurance the related products will comply with all agreed-upon specifications and other warranties provided under the law. No services beyond an assurance warranty are provided to our customers.

 

We do not grant a general right of return. However, customers may return defective or non-conforming products. Customer remedies may include either a cash refund or an exchange of the product. We do not estimate a right of return and related refund liability as returns of our products are rare.

 

Contract Balances

Our customers are billed for service contracts in advance of performance and therefore we have contract liabilities on our balance sheet as follows:

 

   

(in thousands)

 
   

Three Months Ended

   

Six Months Ended

 
   

March 26,

   

March 27,

   

March 26,

   

March 27,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Beginning Balance

  $ 1,030     $ 1,716     $ 1,097     $ 1,327  

Additions to contract liability

    1,374       1,201       2,573       2,945  

Amounts recognized as revenue

    (1,312 )     (1,827 )     (2,578 )     (3,182 )

Ending Balance

  $ 1,092     $ 1,090     $ 1,092     $ 1,090  

 

10

 

Disaggregation of Revenue

See Note 9 for disaggregation of our net sales by class of similar product and type of customer.

 

Allowance for Doubtful Receivables

 

We provide an allowance for doubtful receivables after taking into consideration historical experience and other factors. On September 27, 2020, the Company adopted guidance issued by the FASB in ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which requires companies to recognize an allowance that reflects a current estimate of credit losses expected to be incurred over the life of the asset. Adoption of this new guidance did not have a material impact on the consolidated financial statements. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The allowance for doubtful accounts considers a number of factors including the age of receivable balances, the history of losses, expectations of future credit losses and the customers’ ability to pay off obligations. The allowance for doubtful receivables was $1,564,000 and $1,405,000 on March 26, 2022 and September 25, 2021, respectively.

 

 

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, customer relationships and non-compete agreements arising from acquisitions are amortized by the straight-line method over periods ranging from 2 to 20 years. Depreciation expense was $11,945,000 and $11,984,000 for the three months ended March 26, 2022 and March 27, 2021, respectively and $23,868,000 and $24,253,000 for the six months ended March 26, 2022 and March 27, 2021, respectively.

 

 

Note 4

Basic earnings per common share (EPS) excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted EPS takes into consideration the potential dilution that could occur if securities (stock options) or other contracts to issue common stock were exercised and converted into common stock. Our calculation of EPS is as follows:

 

11

 

 

   

Three Months Ended March 26, 2022

 
   

Income

   

Shares

   

Per Share

 
   

(Numerator)

   

(Denominator)

   

Amount

 
                         
   

(in thousands, except per share amounts)

 

Basic EPS

                       

Net earnings available to common stockholders

  $ 3,271       19,134     $ 0.17  
                         

Effect of dilutive securities

                       

Options

    -       72       -  
                         

Diluted EPS

                       

Net earnings available to common stockholders plus assumed conversions

  $ 3,271       19,206     $ 0.17  

 

270,352 anti-dilutive shares have been excluded in the computation of EPS for the three months ended March 26, 2022.

 

   

Six Months ended March 26, 2022

 
   

Income

   

Shares

   

Per Share

 
   

(Numerator)

   

(Denominator)

   

Amount

 
                         
   

(in thousands, except per share amounts)

 

Basic EPS

                       

Net earnings available to common stockholders

  $ 14,362       19,110     $ 0.75  
                         

Effect of dilutive securities

                       

Options

    -       70       -  
                         

Diluted EPS

                       

Net earnings available to common stockholders plus assumed conversions

  $ 14,362       19,180     $ 0.75  

 

271,452 anti-dilutive shares have been excluded in the computation of EPS for the six months ended March 26, 2022.

 

12

 
   

Three Months Ended March 27, 2021

 
   

Income

   

Shares

   

Per Share

 
   

(Numerator)

   

(Denominator)

   

Amount

 
                         
   

(in thousands, except per share amounts)

 

Basic EPS

                       

Net earnings available to common stockholders

  $ 6,061       19,006     $ 0.32  
                         

Effect of dilutive securities

                       

Options

    -       124       -  
                         

Diluted EPS

                       

Net earnings available to common stockholders plus assumed conversions

  $ 6,061       19,130     $ 0.32  

 

163,072 anti-dilutive shares have been excluded in the computation of EPS for the three months ended March 27, 2021.

 

   

Six Months Ended March 27, 2021

 
   

Income

   

Shares

   

Per Share

 
   

(Numerator)

   

(Denominator)

   

Amount

 
                         
   

(in thousands, except per share amounts)

 

Basic EPS

                       

Net earnings available to common stockholders

  $ 7,839       18,971     $ 0.41  
                         

Effect of dilutive securities

                       

Options

    -       110       -  
                         

Diluted EPS

                       

Net earnings available to common stockholders plus assumed conversions

  $ 7,839       19,081     $ 0.41  

 

184,672 anti-dilutive shares have been excluded in the computation of EPS for the six months ended March 27, 2021.

 

 

Note 5

At March 26, 2022, the Company has three stock-based employee compensation plans. Share-based compensation expense was recognized as follows:

 

  

Three Months Ended

  

Six Months Ended

 
  

March 26,

  

March 27,

  

March 26,

  

March 27,

 
  

2022

  

2021

  

2022

  

2021

 
                 
                 
                 

Stock options

 $586  $447  $1,400  $993 

Stock purchase plan

  90   64   150   342 

Stock issued to an outside director

  11   22   22   22 

Restricted stock issued to an employee

  152   47   224   47 

Performance stock issued to employees

  82   -   121   - 

Total share-based compensation

 $921  $580  $1,917  $1,404 
                 

The above compensation is net of tax benefits

 $346  $446  $433  $866 

 

13

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model.

 

The Company did not grant any stock options during the fiscal year 2022 six-month period.

 

During the fiscal year 2021 six-month period, the Company granted 300 stock options. The weighted-average grant date fair value of these options was $29.54.

 

In November 2021, the Company issued 8,873 service share units (“RSU”)’s. Each RSU entitles the awardee to one share of common stock upon vesting. The fair value of RSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. No such RSU’s were issued in the three-months ended March 26, 2022 or in the three or six-months ended March 27, 2021.

 

In November 2021, the Company also issued 8,868 performance share units (“PSU”)’s. Each PSU may result in the issuance of up to two shares of common stock upon vesting, dependent upon the level of achievement of the applicable Performance Goal. The fair value of the PSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. Additionally, the Company applies a quarterly probability assessment in computing this non-cash compensation expense, and any change in estimate is reflected as a cumulative adjustment to expense in the quarter of the change. No such PSU’s were issued in the three months ended March 26, 2022 or in the three or six-months ended March 27, 2021.

 

Expected volatility is based on the historical volatility of the price of our common shares over the past 51 months for 5-year options and 10 years for 10-year options. We use historical information to estimate expected life and forfeitures within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation cost is recognized using a straight-line method over the vesting or service period and is net of estimated forfeitures.

 

 

Note 6

We account for our income taxes under the liability method. Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities.

 

Additionally, we recognize a liability for income taxes and associated penalties and interest for tax positions taken or expected to be taken in a tax return which are more likely than not to be overturned by taxing authorities (“uncertain tax positions”).  We have not recognized a tax benefit in our financial statements for these uncertain tax positions.  

 

14

 

The total amount of gross unrecognized tax benefits is $343,000 on both March 26, 2022 and September 25, 2021, respectively, all of which would impact our effective tax rate over time, if recognized. We recognize interest and penalties related to uncertain tax positions as a part of the provision for income taxes. As of March 26, 2022, and September 25, 2021, the Company has $267,000 of accrued interest and penalties.

 

In addition to our federal tax return and tax returns for Mexico and Canada, we file tax returns in all states that have a corporate income tax with virtually all open for examination for three to four years.

 

Our effective tax rate for the six months ended March 26, 2022 was 26%. Our effective tax rate for the six months ended March 27, 2021 was 20%, and was favorably impacted by the tax benefits related to share-based compensation. Our effective tax rate was 22% for the three months ended March 26, 2022 and for the three months ended March 27, 2021 as both were favorably impacted by the tax benefits related to share-based compensation.

 

Note 7

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the impairment model used to measure credit losses for most financial assets. We are required to recognize an allowance that reflects the Company’s current estimate of credit losses expected to be incurred over the life of the financial asset, including trade receivables and held-to-maturity debt securities.

 

The Company adopted this guidance in the first quarter of Fiscal 2021 using the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.

 

 

Note 8

Inventories consist of the following:

 

   

March 26,

   

September 25,

 
   

2022

   

2021

 
   

(unaudited)

         
   

(in thousands)

 
                 

Finished goods

  $ 74,457     $ 49,756  

Raw materials

    38,023       29,529  

Packaging materials

    13,130       11,168  

Equipment parts and other

    33,381       32,707  

Total inventories

  $ 158,991     $ 123,160  

 

15

 

 

 

Note 9

We principally sell our products to the food service and retail supermarket industries. Sales and results of our frozen beverages business are monitored separately from the balance of our food service business because of different distribution and capital requirements. We maintain separate and discrete financial information for the three operating segments mentioned above which is available to our Chief Operating Decision Maker.

 

Our three reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income. These segments are described below.

 

Food Service

 

The primary products sold by the food service segment are soft pretzels, frozen novelties, churros, handheld products and baked goods. Our customers in the food service segment include snack bars and food stands in chain, department and discount stores; malls and shopping centers; casual dining restaurants, 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 purchased by the consumer primarily for consumption at the point-of-sale.

 

Retail Supermarkets

 

The primary products sold to the retail supermarket channel are soft pretzel products – including SUPERPRETZEL, frozen novelties including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes and handheld products. Within the retail supermarket channel, our frozen and prepackaged products are purchased by the consumer for consumption at home.

 

Frozen Beverages

 

The Company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE which are sold primarily in the United States, Mexico and Canada. We also provide repair and maintenance service to customers for customers’ owned equipment.

 

16

 

The Chief Operating Decision Maker for Food Service, Retail Supermarkets and Frozen Beverages reviews monthly detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and operating income are key variables monitored by the Chief Operating Decision Maker and management when determining each segment’s, and the Company’s, financial condition and operating performance. In addition, the Chief Operating Decision Maker reviews and evaluates 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 three reportable segments is as follows:

 

   

Three Months Ended

   

Six Months Ended

 
   

March 26,

   

March 27,

   

March 26,

   

March 27,

 
   

2022

   

2021

   

2022

   

2021

 

Sales to external customers:

                               

Food Service

                               

Soft pretzels

  $ 43,261     $ 36,776     $ 93,682     $ 69,463  

Frozen novelties

    7,305       10,590       15,762       16,885  

Churros

    17,447       14,720       36,936       26,262  

Handhelds

    20,506       19,992       39,001       37,603  

Bakery

    83,967       82,910       191,798       171,874  

Other

    3,854       4,336       10,893       7,662  

Total Food Service

  $ 176,340     $ 169,324     $ 388,072     $ 329,749  
                                 

Retail Supermarket

                               

Soft pretzels

  $ 15,752     $ 15,789     $ 31,946     $ 29,677  

Frozen novelties

    18,919       19,386       36,721       34,702  

Biscuits

    5,687       6,495       13,958       14,155  

Handhelds

    1,069       2,243       2,345       5,023  

Coupon redemption

    (726 )     (608 )     (1,622 )     (1,683 )

Other

    56       601       104       1,126  

Total Retail Supermarket

  $ 40,757     $ 43,906     $ 83,452     $ 83,000  
                                 

Frozen Beverages

                               

Beverages

  $ 35,365     $ 18,529     $ 69,128     $ 34,384  

Repair and maintenance service

    21,000       18,218       43,011       37,114  

Machines revenue

    7,542       5,663       15,389       12,152  

Other

    509       538       951       776  

Total Frozen Beverages

  $ 64,416     $ 42,948     $ 128,479     $ 84,426  
                                 

Consolidated sales

  $ 281,513     $ 256,178     $ 600,003     $ 497,175  
                                 

Depreciation and amortization:

                               

Food Service

  $ 6,670     $ 7,116     $ 13,339     $ 13,902  

Retail Supermarket

    386       384       752       770  

Frozen Beverages

    5,484       5,648       10,960       11,424  

Total depreciation and amortization

  $ 12,540     $ 13,148     $ 25,051     $ 26,096  
                                 

Operating income:

                               

Food Service

  $ 536     $ 6,055     $ 9,537     $ 12,235  

Retail Supermarket

    1,091       6,364       6,075       11,087  

Frozen Beverages

    2,461       (5,189 )     3,321       (15,514 )

Total operating income

  $ 4,088     $ 7,230     $ 18,933     $ 7,808  
                                 

Capital expenditures:

                               

Food Service

  $ 13,851     $ 7,246     $ 24,084     $ 15,532  

Retail Supermarket

    1,094       80       3,623       101  

Frozen Beverages

    4,261       1,827       7,599       3,196  

Total capital expenditures

  $ 19,206     $ 9,153     $ 35,306     $ 18,829  
                                 

Assets:

                               

Food Service

  $ 799,710     $ 760,557     $ 799,710     $ 760,557  

Retail Supermarket

    33,206       33,395       33,206       33,395  

Frozen Beverages

    290,412       270,963       290,412       270,963  

Total assets

  $ 1,123,328     $ 1,064,915     $ 1,123,328     $ 1,064,915  

 

17

 
 

Note 10

Our three reporting units, which are also reportable segments, are Food Service, Retail Supermarkets and Frozen Beverages.

 

The carrying amounts of acquired intangible assets for the Food Service, Retail Supermarkets and Frozen Beverage segments as of March 26, 2022 and September 25, 2021 are as follows:

 

   

March 26, 2022

   

September 25, 2021

 
   

Gross

           

Gross

         
   

Carrying

   

Accumulated

   

Carrying

   

Accumulated

 
   

Amount

   

Amortization

   

Amount

   

Amortization

 
   

(in thousands)

 

FOOD SERVICE

                               
                                 

Indefinite lived intangible assets

                               

Trade names

  $ 9,596     $ -     $ 10,408     $ 812  
                                 

Amortized intangible assets

                               

Non compete agreements

    670       670       670       670  

Customer relationships

    13,000       6,838       13,000       6,188  

License and rights

    1,690       1,438       1,690       1,396  

TOTAL FOOD SERVICE

  $ 24,956     $ 8,946     $ 25,768     $ 9,066  
                                 

RETAIL SUPERMARKETS

                               
                                 

Indefinite lived intangible assets

                               

Trade names

  $ 12,316     $ -     $ 12,777     $ 461  
                                 

Amortized intangible Assets

                               

Trade names

    649       649       649       649  

Customer relationships

    7,907       6,308       7,907       5,931  

TOTAL RETAIL SUPERMARKETS

  $ 20,872     $ 6,957     $ 21,333     $ 7,041  
                                 
                                 

FROZEN BEVERAGES

                               
                                 

Indefinite lived intangible assets

                               

Trade names

  $ 9,315     $ -     $ 9,315     $ -  

Distribution rights

    36,100       -       36,100       -  
                                 

Amortized intangible assets

                               

Customer relationships

    1,439       473       1,439       400  

Licenses and rights

    1,400       1,107       1,400       1,072  

TOTAL FROZEN BEVERAGES

  $ 48,254     $ 1,580     $ 48,254     $ 1,472  
                                 

CONSOLIDATED

  $ 94,082     $ 17,483     $ 95,355     $ 17,579  

 

Amortizing intangible assets are being amortized by the straight-line method over periods ranging from 2 to 20 years and amortization expense is reflected throughout operating expenses. Aggregate amortization expense of intangible assets for the three months ended March 26, 2022 and March 27, 2021 was $594,000 and $777,000, respectively. Aggregate amortization expense of intangible assets for the six months ended March 26, 2022 and March 27, 2021 was $1,174,000 and $1,457,000, respectively.

 

18

 

Estimated amortization expense for the next five fiscal years is approximately $2,300,000 in 2022, $2,300,000 in 2023, $2,000,000 in 2024, $1,400,000 in 2025, and $1,400,000 in 2026.

 

The weighted amortization period of the intangible assets, in total, is 11.2 years. The weighted amortization period by intangible asset class is 10.0 years for Customer relationships and 20.0 years for Licenses & rights.

 

Goodwill          

 

The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverage segments are as follows:

 

   

Food

   

Retail

   

Frozen

   

 

 
   

Service

   

Supermarket

   

Beverages

    Total  
   

(in thousands)

 

Balance at March 26, 2022

  $ 61,189     $ 4,146     $ 56,498     $ 121,833  
                                 

Balance at September 25, 2021

  $ 61,189     $ 4,146     $ 56,498     $ 121,833  

 

 

Note 11

We have classified our investment securities as marketable securities held to maturity and available for sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB has established three levels of inputs that may be used to measure fair value:

 

Level 1

Observable input such as quoted prices in active markets for identical assets or liabilities;

 

Level 2

Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

 

Level 3

Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

19

 

Marketable securities held to maturity and available for sale consist primarily of investments in mutual funds, preferred stock, and corporate bonds.  The fair values of mutual funds are based on quoted market prices in active markets and are classified within Level 1 of the fair value hierarchy.  The fair values of preferred stock and corporate bonds are based on quoted prices for identical or similar instruments in markets that are not active.  As a result, preferred stock and corporate bonds are classified within Level 2 of the fair value hierarchy. 

 

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at March 26, 2022 are summarized as follows:

 

           

Gross

   

Gross

   

Fair

 
   

Amortized

   

Unrealized

   

Unrealized

   

Market

 
   

Cost

   

Gains

   

Losses

   

Value

 
   

(in thousands)

 
                                 

Corporate bonds

  $ 4,530     $ 2     $ 59     $ 4,473  

Total marketable securities held to maturity

  $ 4,530     $ 2     $ 59     $ 4,473  

 

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at March 26, 2022 are summarized as follows:

 

           

Gross

   

Gross

   

Fair

 
   

Amortized

   

Unrealized

   

Unrealized

   

Market

 
   

Cost

   

Gains

   

Losses

   

Value

 
   

(in thousands)

 
                                 

Mutual funds

  $ 3,588     $ -     $ 549     $ 3,039  

Preferred stock

    2,816       96       -       2,912  

Total marketable securities available for sale

  $ 6,404     $ 96     $ 549     $ 5,951  

 

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. The Fixed-to-Floating Perpetual Preferred Stock generate fixed income to call dates in 2025 and then income is based on a spread above LIBOR if the securities are not called. The mutual funds and Fixed-to-Floating Perpetual Preferred Stock do not have contractual maturities; however, we classify them as long-term assets as it is our intent to hold them for a period of over one year, although we may sell some or all of them depending on presently unanticipated needs for liquidity or market conditions. The corporate bonds generate fixed income to maturity dates in 2022 through 2023, with $4.5 million maturing within the next 12 months. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

 

20

 

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at September 25, 2021 are summarized as follows:

 

           

Gross

   

Gross

   

Fair

 
   

Amortized

   

Unrealized

   

Unrealized

   

Market

 
   

Cost

   

Gains

   

Losses

   

Value

 
   

(in thousands)

 
                                 
                                 

Corporate bonds

    12,027       123       18       12,132  

Total marketable securities held to maturity

  $ 12,027     $ 123     $ 18     $ 12,132  

 

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September 25, 2021 are summarized as follows:

 

           

Gross

   

Gross

   

Fair

 
   

Amortized

   

Unrealized

   

Unrealized

   

Market

 
   

Cost

   

Gains

   

Losses

   

Value

 
    (in thousands)  
                                 

Mutual funds

  $ 3,588     $ -     $ 536     $ 3,052  

Preferred stock

    6,892       175       35       7,032  

Total marketable securities available for sale

  $ 10,480     $ 175     $ 571     $ 10,084  

 

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at March 26, 2022 and September 25, 2021 are summarized as follows:

 

   

March 26, 2022

   

September 25, 2021

 
                                 
           

Fair

           

Fair

 
   

Amortized

   

Market

   

Amortized

   

Market

 
   

Cost

   

Value

   

Cost

   

Value

 
    (in thousands)  
                                 

Due in one year or less

  $ 4,530     $ 4,473     $ 7,980     $ 8,080  

Due after one year through five years

    -       -       4,047       4,052  

Total held to maturity securities

  $ 4,530     $ 4,473     $ 12,027     $ 12,132  

Less current portion

    4,530       4,473       7,980       8,080  

Long term held to maturity securities

  $ -     $ -     $ 4,047     $ 4,052  

 

Proceeds from the redemption and sale of marketable securities were $4,326,000 and $11,526,000 in the three and six months ended March 26, 2022 and were $15,189,000 and $41,337,000 in the three and six months ended March 27, 2021, respectively. Losses of $25,000 and $69,000 were recorded in the three and six months ended March 26, 2022, and a gain of $41,000 and $119,000 were recorded in the three and six months ended March 27, 2021. Included in the gains and losses were unrealized losses of $58,000 and unrealized gains of $649,000 in the six months ended March 26, 2022 and March 27, 2021, respectively. Unrealized losses of $53,000 and $46,000 were recorded in the three months ended March 26, 2022, and March 27, 2021, respectively. We use the specific identification method to determine the cost of securities sold.

 

21

 

Total marketable securities held to maturity as of March 26, 2022, with credit ratings of BBB/BB/B had an amortized cost basis totaling $4,530,000. This rating information was obtained March 31, 2022.

 

 

Note 12

Changes to the components of accumulated other comprehensive loss are as follows:

 

   

Three Months Ended

   

Six Months Ended

 
   

March 26, 2022

   

March 26, 2022

 
                 
   

Foreign Currency

   

Foreign Currency

 
   

Translation

   

Translation

 
   

Adjustments

   

Adjustments

 
     

(unaudited)

(in thousands)

     

(unaudited)

(in thousands)

 
                 

Beginning balance

  $ (13,827 )   $ (13,383 )
                 

Other comprehensive income

    546       102  
                 

Ending balance

  $ (13,281 )   $ (13,281 )

 

 

   

Three Months Ended

   

Six Months Ended

 
   

March 27, 2021

   

March 27, 2021

 
                 
   

Foreign Currency

   

Foreign Currency

 
   

Translation

   

Translation

 
   

Adjustments

   

Adjustments

 
     

(unaudited)

(in thousands)

     

(unaudited)

(in thousands)

 
                 

Beginning balance

  $