Milling & Baking News - April 27, 2004 - 12

F I N A N C I A L

R E S U L T S

Grain-based foods prominent
in poor first quarter at Kraft

der of the year you'll see a continuous
stream of products from our biscuit portfolio that have reduced or zero grams of
trans fats per serving," he said.
NORTHFIELD, ILL. - Net income by increased marketing expenditure. The
A surge in cheese prices to historic
of Kraft Foods Inc. in the first quarter $75 million in extra spending was not highs adversely affected Kraft business
ended March 31 was $560 million, equal directed to grain-based foods - cheese, in the quarter, the company said.
to 33c per share on the common stock, cold cuts and snack nuts.
In a breakdown of operating results
down 34% from $848 million, or 49c per
At the same time, grain-based foods by reporting segment, Kraft said U.S.
share, in the first quarter of 2003. Net were central in new product introductions Snacks sustained an operating loss of
sales were $7,693 million, up 5%.
either recently unveiled or to be launched $15 million in the first quarter, versus inQuarterly results included $308 mil- shortly. These products include CarbWell come of $215 million last year. Revenues
lion in first-quarter
were $1,122 milasset
impairment
lion, down 1.8%.
Kraft North America, net revenues
and exit costs assoDouble-digit
by business segments
ciated with a corpogains in snack nut
(Dollars in millions)
U.S. Cheese,
rate restructuring.
sales partly salU.S.
U.S. Beverages U.S. and Canada U.S. Convenient
Kraft
blamed
vaged an otherwise
Snacks
and Grocery
Foodservice
Meals
Total
weakness in graindifficult quarter for
Quarter ended
based foods sales for
the division. "In
March 31
$1,122
$1,501
$1,728
$1,048
$5,399
lackluster volume
biscuits, consumChange from first
growth. The comers' focus on lowquarter, 2003
-1.8%
-0.7%
+10.1%
+0.7%
+2.5%
pany said declines
carbohydrate diets
and difficult comparisons in certain cereals, bars and cookies; Nabisco 100- continued to affect consumption in the first
categories and countries "masked solid Calorie Packs; Post Honey Bunches of quarter," Kraft said. "Cookie share was
growth" across much of the company's Oats varieties with peach and banana; and down just slightly, while cracker share was
portfolio. Overall volume was up 0.5% DiGiorno Thin Crispy Crust Pizza.
up one point. Within crackers, Ritz Chips
from the first quarter of 2003.
Mr. Dollive in the conference call continued to perform well."
"Volume strength across many busi- discussed biscuit spending and plans
U.S. Beverages and Grocery operating
nesses was partially offset by continued for its expansion later this year. "Market- income was $457 million, down 12%.
challenges in cookies and cereals, includ- ing spending behind biscuits was flat Sales were $1,501 million, down 0.7%
ing the low-carbohydrate diet phenom- in the quarter," he said. "Our increased from $1,512 million. "A double-digit
enon," Kraft said.
biscuits spending will occur later in the decline in cereal was driven by category
In an April 20 conference call, James P. year timed with the launch of our new softness reflecting consumers' focus on
Dollive, executive vice-president and chief items and other product news." He said lower carbohydrate products, the timing
executive officer, bluntly described eating that much of the expanded marketing of new product launches and aggressive
trends Kraft said are adversely affecting spending will be in connection with competition," Kraft said.
sales in several of its segments. "We believe "new product news that is focused priLooking forward, Kraft said its earnthere has been a fundamental shift in what marily on health-oriented options."
ings in 2004 are projected to be toward the
consumers buy and eat, and that consumIn addition to recently announced low end of its earlier guidance of $1.63 to
ers' focus on carbohydrates and weight products, Mr. Dollive discussed the $1.70, which includes 30c per share from
management is here to stay," he said.
prospective launch of Nabisco CarbWell asset impairment charges and exit costs
Earnings also were adversely affected cookies. "Finally, during the remain- for its restructuring program. MBN

J&J Snack Foods hits sales and earnings
records in second fiscal quarter
PENNSAUKEN, N.J. - Net income of J&J
Snack Foods Corp. in the second quarter
ended March 27 was $3,342,000, equal to
38c per share on the common stock, up 11%
from $3,001,000, or 34c per share, in the second quarter of fiscal 2003.
Second-quarter sales were $95,214,000,
up 17% from $81,408,000.
For the six months ended March 27, net
income increased 23% to $5,167,000, while
sales advanced 10% to $175,159,000.
The results in the second quarter and
six months include income and sales from
Country Home Bakers, Inc., which J&J
Snack acquired Jan. 5 (see Milling & Baking
News of Dec. 30, Page 17).
"We are pleased with our financial performance for the quarter and six-month period,"
said Gerald B. Shreiber, president and chief
12 / Milling & Baking News, April 27, 2004

executive officer. "Excluding our retail restaurant group, all of our businesses, including
the recently acquired Country Home Bakers,
contributed to our record-setting quarter."
In an April 21 conference call, Mr. Shreiber further detailed the company's quarterly results. He said that soft pretzel sales
in the quarter were down 1% in the quarter,
but up 4% for the six months. This compared with the year-ago quarter, in which
pretzel sales were up 19%, with about 70%
of that increase coming from one major
customer. This year, he said, sales to that
customer were down significantly, causing
the 1% overall decline in sales. Excluding
the drop-off in sales to that one customer,
pretzel sales would have been up 9% in the
quarter, Mr. Shreiber said.
Excluding Country Home, J&J Snack's

branded cookie sales to food service customers rose 6% and 12%, respectively, in the
second quarter and six months, Mr. Shreiber
said. Again excluding Country Home, overall
sales of bakery products were up 18% for the
quarter and 14% for the six months, he said.
"Country Home sales were approximately $11.8 million for the quarter, roughly in
line with our expectations," he said.
Commenting further on the impact of the
acquisition of Country Home Bakers, Mr. Shreiber said J&J Snack expects Country Home
"to add approximately $55 million in annual
sales and be accretive this year and provide
significant earnings in future years."
"During the quarter we closed down
Country Home's Connecticut headquarters
and transferred its operations to a J&J Snack
Food building in Bellmawr, N.J.," he said.
"We also began slimming down its management team and improving efficiencies at its
plant in Atlanta." MBN
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Milling & Baking News - April 27, 2004

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