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Note A - Summary of Significant Accounting Policies | 12 Months Ended
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Sep. 27, 2025
Notes to Financial Statements |
Significant Accounting Policies [Text Block] | NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES J & J Snack Foods Corp. and Subsidiaries (“the Company”) manufactures, markets and distributes a variety of nutritional snack foods and beverages to the foodservice and retail supermarket industries. A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows. Our 2025, 2024, and 2023 fiscal years comprised 52 weeks, 52 weeks, and 53 weeks, respectively.
1. | Principles of Consolidation
The consolidated financial statements were prepared in accordance with U.S. GAAP. These 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.
2. | Revenue Recognition
We recognize revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” Revenue-related taxes collected on behalf of customers and remitted to taxing authorities, principally sales and use taxes, are not included in revenues. 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 performance obligations 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 contract liability 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. 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 approximately $22.3 million at September 27, 2025 and $21.9 million at September 28, 2024. 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 a contract liability on our balance sheet as follows:
|  | Fiscal year ended |
|  | September 27, |  |  | September 28, |
|  | 2025 |  |  | 2024 |
|  | (in thousands) |
Beginning Balance |  | $ | 4,798 |  |  | $ | 5,306 |
Additions to contract liability |  |  | 6,447 |  |  |  | 6,763 |
Amounts recognized as revenue |  |  | (7,356 | ) |  |  | (7,271 | )
Ending Balance |  | $ | 3,889 |  |  | $ | 4,798 |
Disaggregation of Revenue See Note M for disaggregation of our net sales by class of similar product and type of customer. Allowance for Estimated Credit Losses The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The allowance for estimated credit losses 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 estimated credit losses was $3.3 million at September 27, 2025 and $3.2 million at September 28, 2024.
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.
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.
5. | Cash Equivalents
Cash equivalents are short-term, highly liquid investments with original maturities of three months or less.
6. | Concentrations and related risks
We maintain cash balances at financial institutions located in various states and internationally. We maintain cash balances at multiple domestic banks totaling approximately $47 million, and at banks in multiple foreign jurisdictions totaling approximately $56 million, that is in excess of domestic and international federally insured limits. 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 have approximately 21 customers with accounts receivable balances of between $1 million and $10 million and five customers with a balance greater than $10 million, with the largest being approximately $25 million. We have several large customers that account for a significant portion of our sales. Our top ten customers accounted for 46%, 45% and 43% of our sales during fiscal years 2025, 2024, and 2023, respectively, with our largest customer accounting for 10% of our sales in 2025, 9% of our sales in 2024, and 9% of our sales in 2023. Five of the ten customers are food distributors who sell our product to many end users. About 28% of our employees are covered by collective bargaining agreements. None of our vendors supplied more than 10% of our ingredients and packaging in 2025, 2024 or 2023. Virtually all of our accounts receivable are due from trade customers. Credit is extended based on evaluation of our customers’ financial condition and collateral is typically not required. Accounts receivable payment terms vary and are stated in the financial statements at amounts due from customers net of an allowance for estimated credit losses. At September 27, 2025, September 28, 2024, and September 30, 2023, our accounts receivables were $184.1 million, $189.2 million, and $198.1 million, net of an allowance for estimated credit losses of $3.3 million, $3.2 million, and $3.2 million. 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 estimated credit losses.
7. | Inventories
Inventories are valued at the lower of cost (determined by the first-in, first-out method) or net realizable value. 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 several 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.
8. | Investment Securities
We classify our investment securities in one of three categories: held to maturity, trading, or available for sale. We held no investment securities at September 27, 2025 or September 28, 2024.
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 leasehold 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, technology, non-compete agreements, and franchise agreements and certain tradenames are being amortized by the straight-line method over periods ranging from 2 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.
10. | Fair Value of Financial Instruments
We follow the provisions of ASC 820-10, Fair Value Measurements and Disclosure Topic, or ASC 820-10, for our financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value under GAAP and requires expanded disclosures regarding fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted process included in Level 1, such as quoted prices for similar assets and liabilities in active markets. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Our certificates of deposits are measured using Level 2 inputs and are based on indicative third-party price quotations. We held $5.2 million of certificates of deposits as of September 27, 2025, and as of September 28, 2024, respectively. Certificates of deposits are included within cash and cash equivalents on our Consolidated Balance Sheets. 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.
11. | Income Taxes
We account for our income taxes in accordance with the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance reduces the deferred tax assets to the amount that is more likely than not to be realized. 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 27, 2025, and September 28, 2024, the total amount of gross unrecognized tax benefits was $0.3 million and $0.3 million, 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. As of September 27, 2025 and September 28, 2024, we had $0.3 million of accrued interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | (in thousands) |
Balance at September 28, 2024 |  | $ | 343 |
Additions based on tax positions related to the current year |  |  | - |
Reductions for tax positions of prior years |  |  | - |
Settlements |  |  | - |
Balance at September 27, 2025 |  | $ | 343 |
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. Our effective tax rate in fiscal 2025 was 24.1%. Our effective tax rate in our fiscal 2024 year was 27.2% and in fiscal 2023 was 26.6%.
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, service share units (“RSU”)’s and performance share units (“PSU”)’s) 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 27, 2025 |
|  | Income |  |  | Shares |  |  | Per Share |
|  | (Numerator) |  |  | (Denominator) |  |  | Amount |
|  | (in thousands, except per share amounts) |
Basic EPS |  |  |  |  |  |  |  |  |  |  |  |
Net earnings available to common stockholders |  | $ | 65,595 |  |  |  | 19,467 |  |  | $ | 3.37 |
Effect of dilutive securities |  |  |  |  |  |  |  |  |  |  |  |
RSU's, PSU's and options |  | $ | - |  |  |  | 81 |  |  |  | (0.01 | )
Diluted EPS |  |  |  |  |  |  |  |  |  |  |  |
Net earnings available to common stockholders plus assumed conversions |  | $ | 65,595 |  |  |  | 19,548 |  |  | $ | 3.36 |
207,171 anti-dilutive shares have been excluded in the computation of fiscal year 2025 diluted EPS.
|  | Fiscal year ended September 28, 2024 |
|  | Income |  |  | Shares |  |  | Per Share |
|  | (Numerator) |  |  | (Denominator) |  |  | Amount |
|  | (in thousands, except per share amounts) |
Basic EPS |  |  |  |  |  |  |  |  |  |  |  |
Net earnings available to common stockholders |  | $ | 86,551 |  |  |  | 19,389 |  |  | $ | 4.46 |
Effect of dilutive securities |  |  |  |  |  |  |  |  |  |  |  |
RSU's, PSU's and options |  | $ | - |  |  |  | 60 |  |  |  | (0.01 | )
Diluted EPS |  |  |  |  |  |  |  |  |  |  |  |
Net earnings available to common stockholders plus assumed conversions |  | $ | 86,551 |  |  |  | 19,449 |  |  | $ | 4.45 |
152,381 anti-dilutive shares have been excluded in the computation of fiscal year 2024 diluted EPS.
|  | Fiscal year ended September 30, 2023 |
|  | Income |  |  | Shares |  |  | Per Share |
|  | (Numerator) |  |  | (Denominator) |  |  | Amount |
|  | (in thousands, except per share amounts) |
Basic EPS |  |  |  |  |  |  |  |  |  |  |  |
Net earnings available to common stockholders |  | $ | 78,906 |  |  |  | 19,257 |  |  | $ | 4.10 |
Effect of dilutive securities |  |  |  |  |  |  |  |  |  |  |  |
RSU's, PSU's and options |  | $ | - |  |  |  | 67 |  |  |  | (0.02 | )
Diluted EPS |  |  |  |  |  |  |  |  |  |  |  |
Net earnings available to common stockholders plus assumed conversions |  | $ | 78,906 |  |  |  | 19,324 |  |  | $ | 4.08 |
252,044 anti-dilutive shares have been excluded in the computation of fiscal year 2023 diluted EPS.
13. | Accounting for Stock-Based Compensation
At September 27, 2025, the Company has two stock-based employee compensation plans. Pre-tax share-based compensation was recognized as follows:
|  | Fiscal year ended |
|  | September 27, |  |  | September 28, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Stock options |  | $ | 416 |  |  | $ | 1,281 |  |  | $ | 2,321 |
Stock purchase plan |  |  | 434 |  |  |  | 508 |  |  |  | 555 |
Stock issued to outside directors |  |  | 140 |  |  |  | 188 |  |  |  | 145 |
Service share units issued to employees |  |  | 3,887 |  |  |  | 2,565 |  |  |  | 1,440 |
Performance share units issued to employees |  |  | 1,443 |  |  |  | 1,678 |  |  |  | 857 |
Total share-based compensation |  | $ | 6,320 |  |  | $ | 6,220 |  |  | $ | 5,318 |
Tax benefits |  | $ | 1,584 |  |  | $ | 1,538 |  |  | $ | 1,099 |
The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model. No grants of options were made in fiscal 2025, 2024 or 2023. The following weighted average assumptions were used for grants in fiscal 2022: expected volatility of 25.8%; weighted average risk-free interest rates of 0.8%; dividend rate of 1.6%; and expected lives ranging between 4 and 10 years. 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. The Company issued 34,868 service share units (“RSU”)’s in fiscal 2025, 25,957 in fiscal 2024, and 21,864 in fiscal 2023. Each RSU entitles the awardee to one share of common stock upon vesting. The fair value of the RSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. The Company also issued 17,500 performance share units (“PSU”)’s in fiscal 2025, 14,506 in fiscal 2024 and 21,260 in fiscal 2023. 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.
14. | Advertising Costs
Advertising costs are expensed as incurred. Total advertising expense was $11.9 million, $11.1 million, and $9.7 million for the fiscal years 2025, 2024, and 2023, respectively.
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 27, 2025, we have approximately $133 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. At each of the last three fiscal year ends, we did not have any material losses on our purchase commitments.
16. | Research and Development Costs
Research and development costs are expensed as incurred. Total research and development expense was $1.4 million, $1.2 million, and $1.2 million for the fiscal years 2025, 2024, and 2023, respectively.
17. | Recent Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This guidance requires all public entities to provide enhanced disclosures about significant segment expenses. The amendments in this ASU are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. We adopted this guidance and included the required disclosure in the notes to our annual consolidated financial statements for fiscal year ended September 27, 2025. This guidance will become effective for our interim period disclosures beginning in fiscal 2026. In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance enhances the transparency around income tax information through improvements to income tax disclosures, primarily related to the effective rate reconciliation and income taxes paid, to improve the overall effectiveness of income tax disclosures. The amendments in the ASU are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures. In November 2024, the FASB issued ASU No. 2024-03 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.” This guidance improves disclosure requirements and provides more detailed information around an entity’s expenses, specifically amounts related to purchases of inventory, employee compensation, depreciation, intangible asset amortization, and selling expenses, along with qualitative descriptions of certain other types of expenses. This guidance is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures. In July 2025, the FASB issued ASU No. 2025-05 “Financial Instruments – Credit Losses (Topic 326).” This guidance introduces a practical expedient for all entities with qualifying assets to assume that current conditions remain unchanged for the remaining life of the asset with estimated credit losses. The amendments in the ASU are effective for fiscal years beginning after December 15, 2025, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures. In September 2025, the FASB issued ASU No. 2025-06 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40).” This authoritative guidance modernizes the accounting for internal-use software costs including the elimination of the stage-based capitalization model and updated disclosure requirements. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Amendments can be applied using a prospective transition approach, a modified transition approach, or a retrospective transition approach. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures.
18. | Reclassifications
Certain prior year financial statement amounts have been reclassified to be consistent with the presentation for the current year.

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