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Accounting Policies, by Policy (Policies)
 12 Months Ended
Sep. 26, 2015
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block]

1.

Principles of Consolidation

The consolidated financial statements include the accounts of J & J Snack Foods Corp. and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in the consolidated financial statements.
Revenue Recognition, Policy [Policy Text Block]

2.

Revenue Recognition

We recognize revenue from our products when the products are shipped to our customers. Repair and maintenance equipment service revenue is recorded when it is performed provided the customer terms are that the customer is to be charged on a time and material basis or on a straight-line basis over the term of the contract when the customer has signed a service contract. Revenue is recognized only where persuasive evidence of an arrangement exists, our price is fixed or estimable and collectability is reasonably assured. We record offsets to revenue for allowances, end-user pricing adjustments, trade spending, coupon redemption costs and returned product. Customers generally do not have the right to return product unless it is damaged or defective. Our recorded liability for allowances, end-user pricing adjustments and trade spending was approximately $11.7 million at September 26, 2015 and $11.5 million at September 27, 2014.


All amounts billed to customers related to shipping and handling are classified as revenues. Our product costs include amounts for shipping and handling, therefore, we charge our customers 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. The cost of shipping products to the customer classified as Distribution expenses was $74,158,000, $71,159,000 and $65,025,000 for the fiscal years ended 2015, 2014 and 2013, respectively.


During the years ended September 26, 2015, September 27, 2014 and September 28, 2013, we sold $25,536,000, $22,826,000 and $22,836,000, respectively, of repair and maintenance service contracts in our frozen beverage business. At September 26, 2015 and September 27, 2014, deferred income on repair and maintenance service contracts was $1,579,000 and $1,577,000, respectively, of which $70,000 and $67,000 is included in other long-term liabilities as of September 26, 2015 and September 27, 2014, respectively and the balance is reflected as short-term and included in accrued liabilities on the consolidated balance sheet. Repair and maintenance service contract income of $25,534,000, $22,748,000 and $22,780,000 was recognized for the fiscal years ended 2015, 2014 and 2013, respectively.
Foreign Currency Transactions and Translations Policy [Policy Text Block]

3.

Foreign Currency

Assets and liabilities in foreign currencies are translated into U.S. dollars at the rate of exchange prevailing at the balance sheet date. Revenues and expenses are translated at the average rate of exchange for the period. The cumulative translation adjustment is recorded as a separate component of stockholders’ equity and changes to such are included in comprehensive income.
Use of Estimates, Policy [Policy Text Block]

4.

Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents, Policy [Policy Text Block]

5.

Cash Equivalents

Cash equivalents are short-term, highly liquid investments with original maturities of three months or less.
Concentration Risk, Credit Risk, Policy [Policy Text Block]

6.

Cash, Accounts Receivable, Customers, Vendors and Employees Covered by Collective Bargaining Agreements Concentration

We maintain cash balances at financial institutions located in various states. We have cash balances at two banks totalling approximately $84 million that is in excess of FDIC insurance of $250,000 per bank.


Financial instruments that could potentially subject us to concentrations of credit risk are trade accounts receivable; however, such risks are limited due to the large number of customers comprising our customer base and their dispersion across geographic regions. We usually have approximately 15 customers with accounts receivable balances of between $1 million and $10 million.


We have several large customers that account for a significant portion of our sales. Our top ten customers accounted for 43%, 43% and 43% of our sales during fiscal years 2015, 2014 and 2013, respectively, with our largest customer accounting for 8% of our sales in 2015, 8% of our sales in 2014 and 8% of our sales in 2013. Three of the ten customers are food distributors who sell our product to many end users.


About 25% of our employees are covered by collective bargaining agreements.


None of our vendors supplied more than 10% of our ingredients and packaging in 2015, 2014 or 2013.  


The majority of our accounts receivable are due from trade customers. Credit is extended based on evaluation of our customers’ financial condition and collateral is not required. Accounts receivable payment terms vary and are stated in the financial statements at amounts due from customers net of an allowance for doubtful accounts. At September 26, 2015 and September 27, 2014, our accounts receivables were $102,649,000 and $99,972,000 net of an allowance for doubtful accounts of $304,000 and $450,000. Accounts receivable outstanding longer than the payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss history, customers’ current ability to pay their obligations to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
Inventory, Policy [Policy Text Block]

7.

Inventories

Inventories are valued at the lower of cost (determined by the first-in, first-out or weighted-average method) or market.  We recognize abnormal amounts of idle facilities, freight, handling costs, and spoilage as charges of the current period.  Additionally, we allocate fixed production overhead to inventories based on the normal capacity of our production facilities.  We calculate normal capacity as the production expected to be achieved over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. This requires us to use judgment to determine when production is outside the range of expected variation in production (either abnormally low or abnormally high).  In periods of abnormally low production (for example, periods in which there is significantly lower demand, labor and material shortages exist, or there is unplanned equipment downtime) the amount of fixed overhead allocated to each unit of production is not increased.  However, in periods of abnormally high production the amount of fixed overhead allocated to each unit of production is decreased to assure inventories are not measured above cost.


We review for slow moving and obsolete inventory and a reserve is established for the value of inventory that we estimate will not be used. At September 26, 2015 and September 27, 2014, our reserve for inventory was $2,627,000 and $3,982,000, respectively.
Marketable Securities, Policy [Policy Text Block]

8.

Investment Securities

We classify our investment securities in one of three categories: held to maturity, trading, or available for sale. Our investment portfolio at September 26, 2015, consists of investments classified as held to maturity and available for sale. The securities that we have the positive intent and ability to hold to maturity are classified as held to maturity and are stated at amortized cost. Investments classified as available for sale are reported at fair market value with unrealized gains and losses related to the changes in fair value of the securities recognized in accumulated other comprehensive income (loss). The mutual funds and preferred stock in our available for sale portfolio 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. See Note C for further information on our holdings of investment securities.
Depreciation, Depletion, and Amortization [Policy Text Block]

9.

Depreciation and Amortization

 Depreciation of equipment and buildings is provided for by the straight-line method over the assets’ estimated useful lives. We review our equipment and buildings to ensure that they provide economic benefit and are not impaired. 


 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 are being amortized by the straight-line method over periods ranging from 3 to 20 years and amortization expense is reflected throughout operating expenses.


 Long-lived assets, including fixed assets and amortizing intangibles, are reviewed for impairment as events or changes in circumstances occur indicating that the carrying amount of the asset may not be recoverable.  Indefinite lived intangibles are reviewed annually for impairment. Cash flow and sales analyses are used to assess impairment. The estimates of future cash flows and sales involve considerable management judgment and are based upon assumptions about expected future operating performance.  Assumptions used in these forecasts are consistent with internal planning. The actual cash flows and sales could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition and consumer preferences.
Fair Value of Financial Instruments, Policy [Policy Text Block]

10.

Fair Value of Financial Instruments

The carrying value of our short-term financial instruments, such as accounts receivables and accounts payable, approximate their fair values, based on the short-term maturities of these instruments.
Income Tax, Policy [Policy Text Block]

11.

Income Taxes

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.  


As of September 26, 2015 and September 27, 2014, the total amount of gross unrecognized tax benefits is $334,000 and $315,000; respectively, all of which would impact our effective tax rate over time, if recognized.  We recognize interest and penalties related to income tax matters as a part of the provision for income taxes.  We had $199,000 of accrued interest and penalties as of September 26, 2015 and $180,000 as of September 27, 2014. We did not recognize any penalties and interest resulting from tax settlements in the years ended September 26, 2015 and September 27, 2014.  A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


   

(in thousands)

  
         

Balance at September 27, 2014

   $ 315  

Additions based on tax positions related to the current year

     19  

Reductions for tax positions of prior years

     -  

Settlements

     -  

Balance at September 26, 2015

   $ 334  

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. Virtually all the returns noted above are open for examination for three to four years.
Earnings Per Share, Policy [Policy Text Block]

12.

Earnings Per Common Share

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:


    Fiscal Year Ended September 26, 2015  
   

Income

    

Shares

    

Per Share

  
   

(Numerator)

    

(Denominator)

    

Amount

  
   

(in thousands, except per share amounts)

  
                         

Earnings Per Basic Share

                        

Net Income available to common stockholders

   $ 70,183       18,685     $ 3.76  
                         

Effect of Dilutive Securities

                        

Options

     -       134       (0.03 )
                         

Earnings Per Diluted Share

                        

Net Income available to common stockholders plus assumed conversions

   $ 70,183       18,819     $ 3.73  

1500 anti-dilutive shares have been excluded in the computation of  2015 diluted EPS.


    Fiscal Year Ended September 27, 2014  
   

Income

    

Shares

    

Per Share

  
   

(Numerator)

    

(Denominator)

    

Amount

  
   

(in thousands, except per share amounts)

  
                         

Earnings Per Basic Share

                        

Net Income available to common stockholders

   $ 71,814       18,677     $ 3.85  
                         

Effect of Dilutive Securities

                        

Options

     -       130       (0.03 )
                         

Earnings Per Diluted Share

                        

Net Income available to common stockholders plus assumed conversions

   $ 71,814       18,807     $ 3.82  

No anti-dilutive shares have been excluded in the computation of  2014 diluted EPS.


    Fiscal Year Ended September 28, 2013  
   

Income

    

Shares

    

Per Share

  
   

(Numerator)

    

(Denominator)

    

Amount

  
   

(in thousands, except per share amounts)

  
                         

Earnings Per Basic Share

                        

Net Income available to common stockholders

   $ 64,381       18,785     $ 3.43  
                         

Effect of Dilutive Securities

                        

Options

     -       93       (0.02 )
                         

Earnings Per Diluted Share

                        

Net Income available to common stockholders plus assumed conversions

   $ 64,381       18,878     $ 3.41  

No anti-dilutive shares have been excluded in the computation of 2013 diluted EPS
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

13.

Accounting for Stock-Based Compensation

At September 26, 2015, the Company has three stock-based employee compensation plans. Share-based compensation was recognized as follows:


   

Fiscal year ended

  
   

September 26,

   

September 27,

   

September 28,

 
   

2015

    

2014

    

2013

  
    (in thousands, except per share amounts)  
                         

Stock options

   $ 1,098     $ 1,262     $ 795  

Stock purchase plan

     328       329       363  

Stock issued to outside directors

     -       -       47  

Stock issued to employees

     6       17       18  

Total share-based compensation

  $ 1,432     $ 1,608     $ 1,223  
                         

The above compensation is net of tax benefits

   $ 734     $ 468     $ 647  

At September 26, 2015, the Company has unrecognized compensation expense of approximately $3.3 million to be recognized over the next three fiscal years.


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 2015, 2014 and 2013: expected volatility of 18.4% for fiscal year 2015, expected volatility of 21.2% for fiscal year 2014 and 25.7% for fiscal year 2013: weighted average risk-free interest rates of 1.7%, 1.6% and 2.5%; dividend rate of 1.4%, .9% and .8% and expected lives ranging between 5 and 10 years for all years. An expected forfeiture rate of 19% was used for 2015, 20% was used for 2014 and 20% was used for 2013.


Expected volatility is based on the historical volatility of the price of our common shares over the past 49 to 55 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.
Advertising Costs, Policy [Policy Text Block]

14.

Advertising Costs

Advertising costs are expensed as incurred. Total advertising expense was $4,290,000, $3,487,000 and $3,069,000 for the fiscal years 2015, 2014 and 2013, respectively.
Derivatives, Hedge Discontinuances [Policy Text Block]

15.

Commodity Price Risk Management

Our most significant raw material requirements include flour, packaging, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts. We attempt to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months. As of September 26, 2015, we have approximately $68 million of such commitments. Futures contracts are not used in combination with forward purchasing of these raw materials. Our procurement practices are intended to reduce the risk of future price increases, but also may potentially limit the ability to benefit from possible price decreases.
Research, Development, and Computer Software, Policy [Policy Text Block]

16.

Research and Development Costs

Research and development costs are expensed as incurred. Total research and development expense was $506,000, $499,000 and $478,000 for the fiscal years 2015, 2014 and 2013, respectively.
New Accounting Pronouncements, Policy [Policy Text Block]

17.

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance on revenue recognition which says that we should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services.  This guidance is effective for our fiscal year ending September 2019.  Early application is permitted.  We will assess the impact this guidance will have on our consolidated financial statements.


In September 2015, the FASB issued guidance on accounting for business combinations which require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. This guidance eliminates the requirement to retrospectively account for these adjustments. This guidance is effective for our fiscal year ended September 2018. Early adoption is permitted. We have not assessed the impact this guidance will have on our consolidated financial results.


In July 2015, the FASB issued guidance which requires an entity to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance will simplify the subsequent measurement of inventory, as current guidance requires an entity to measure inventory at the lower of cost or market. Under current guidance, market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. This guidance is effective for our fiscal year ended September 2018. Early adoption is permitted. We have not assessed the impact this guidance will have on our consolidated financial results.
Reclassification, Policy [Policy Text Block]

18.

Reclassifications

Certain prior year financial statement amounts have been reclassified to be consistent with the presentation for the current year.