J&J Snack Foods Corp.

Posted On: 4/25/2003

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J&J Snack Foods Corp. reported that fiscal 2002 marked its 31st consecutive year of posting sales in excess of those of the previous year. Net sales were up 8% to a record $353.19 million, versus $328.34 million a year earlier. Net earnings soared 53% to $18.11 million, up from $11.88 million, with earnings per share up 46% to $1.99 per share, the highest in J&J's history, compared with $1.36 in 2001.

Sales to foodservice customers increased 8%, from $171.37 million in 2001 to $185.22 million in 2002. "Pretzel Fillers," soft, filled and topped pretzels introduced in 2001, helped increase foodservice soft pretzel sales by 8% in 2002. The company expects the recent addition of a smaller-size, individually wrapped "Pretzel Filler" version should pave the way for the penetration of more distribution channels, including vending. "Gourmet Twists" - hearth-baked soft pretzels packaged with sweet and savory toppings which debuted in 2002  , also contributed to the rise in foodservice soft pretzel sales.

The company's sales of products to retail supermarkets increased 6% to $41.37 million, up from $39.08 million in 2001.

J&J's Restaurant Group, which operates Bavarian Pretzel Bakery and Pretzel Gourmet retail stores in the mid-Atlantic region, experienced an 11% decline in sales after closing under-performing stores, which reflects the impact of decreased mall traffic.

Frozen beverage sales increased a healthy 9% to $115.88 million in fiscal 2002, up from $105.84 million a year earlier. While beverage sales alone increased, managed service revenue grew sharply at a 64% clip. In 2002, J&J installed more of its proprietary frozen beverage dispensing equipment, giving "Icee" and its other frozen beverages a presence in more than 25,000 foodservice outlets across the country.

J&J continues to leverage its long-term marketing partnership with The Coca-Cola Co. with its "Icee" program. One aspect of this marketing alliance is that The Icee Co. provides the ongoing managed services in Burger King locations, while The Coca-Cola Co. provides the syrup.

To commemorate the "Icee" brand's 35th anniversary, J&J has added a sweepstakes and a series of collector's cups to its promotional programs, and is continuing its ongoing major movie, video/DVD and video game release tie-ins, on-cup offers and NFL and NASCAR cup promotions.

"Smoothee by Icee," made with real fruit juice in a variety of flavors, has made inroads with school children and foodservice directors; "Java Freeze" coffee-flavored beverage is increasingly popular on college campuses; and "California Natural" has found a niche in entertainment and sporting venues, according to J&J.

In 2002, J&J's frozen juice bars and desserts posted a 10% gain in foodservice sales, attributable to increased sales of "Minute Maid Juice Bars" to schools, increased sales of "Minute Maid Soft Frozen Lemonade" to club stores, and strong performances from other brands including "Luigi's," "Icee," "Chill," "Shape Ups" and "Mama Tish's."

J&J holds the exclusive rights to manufacture, sell and distribute licensed frozen juice products under the "Minute Maid" brand. In the summer of 2002, "Minute Maid Soft Frozen Lemonade" was added to the McDonald's Dollar Menu in key Mid-Atlantic locations. During the year, J&J added "Minute Maid Juice Bars" in blue raspberry flavor, and also expanded its "Chill" brand with the addition of "Chill Cotton Candy Meltdown" in squeeze tubes. The line extension was introduced nationwide in prominent leisure and theme parks.

Sales of J&J's foodservice branded cookies continued to gain momentum, finishing 2002 with an 18% increase. These products include frozen cookie dough, pre-baked cookies and packaged cookies bearing the brand names "Mrs. GoodCookie," "Camden Creek" and others.

In 2002, J&J reformulated its "Mrs. GoodCookie" product to offer an even better taste and a more aesthetically pleasing look. To capitalize on consumer recognition of the "Icee" brand, J&J added "Icee Cookies" to its lineup. The cookies are red and blue, and bear "Icee" brand images.

With nationwide growth of the Hispanic consumer base, "Tío Pepe's Churros" (crisp cinnamon doughnut-like snacks), available in bulk and individually wrapped, continued to grow in both the foodservice and retail supermarket sectors, posting a 7% gain. Fruit-filled churros have been especially well-received by school foodservice directors.

"This past year our company, in addition to its record-setting performance, achieved another milestone , we are debt free," said president and chairman Gerald B. Shreiber. "We have zero debt, excellent cash flow and surplus cash for our everyday needs. Putting that money to work and paying close attention to its well-being is what we do best. Our capable management team will see that we continue to do the same in fiscal year '03."