Good morning ladies and gentlemen and welcome to the J&J Snack Foods Second Quarter 2008 Earnings Conference Call. (Operator Instructions) This conference is being recorded. I will now turn the call over to Mr. Gerald Shreiber, President and CEO. Mr. Shreiber, you may begin.

Good morning everybody, and thank you for joining us today. I am Gerry Shreiber, and with me today is Dennis Moore, our senior vice president and chief financial officer, Bob Radano, our senior vice president, and Vince Melchiorre, our executive vice president of sales and marketing. I will begin with the obligatory statement: The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statement. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Results of operations: net sales increased 11% for the quarter at 13% for the six months. Adjusting for sales related to acquisitions we have made over the past year, sales increased approximately 9% for the quarter and 5% for the six months. For the quarter, our net earnings decreased by 25% to $4 million, 21 cents a share, from 5.3 million, or 28 cents a share a year ago. For the six months, our net earnings decreased by 35% to 31 cents a share from 48 cents a share a year ago period. Our EBITDA for the past 12 months was $73.5 million. Food service: sales to food service customers increased 12% for the quarter and 15% for the six months. Without sales of HOM/ADE foods, DADDY RAY’S and WHOLE FRUIT and FRUIT-A-FREEZE, acquisitions made a year ago, sales were still up 9% for the quarter and 4% for the six months. Soft pretzel sales were up about 4% in the quarter and 2% for the six months. Italian ice and frozen juice bars and…

Thank you. We will now begin the question and answer session. (Operator instructions) Our first question is from Mitch Pinheiro; please go ahead?

Yes, good morning.

Mitch who?

Mitch Pinheiro with Janney Montgomery Scott.

Good morning, Mitch, how are you?

Good, how are you doing?

Good.

Good. So, a couple of questions. So, specifically how much pricing do you think you got in the quarter? On average?

Well, we had a range from- it could have gone as high as 10 to 12% but roughly it is balanced- our sales game was roughly 50% between volume and pricing.

Okay. If I- so $8 million of higher ingredient costs would take about a 6% increase to offset, if you had the pricing fully in place for the quarter. So, I guess you did not get- it was not a full- was the quarter- did the pricing increase come halfway through the quarter? Is that-

We did not jump out of bed on the first day of January and suddenly get a 6% increase from everybody. Some of these things have to- you know they take a bit of time to engage in distributor [Inaudible], but-

So, if for the next quarter, with the full impact of your price increases plus the second round that is-

Mitch, this is Dennis. Just let me interrupt for a second. I think that when Gerry said half, he was referring to the increase, the organic growth increase-

Right.

-the full increase. So the increase would be 4 to 5%, from sales having a price increase, not 6%.

Right. I know, I got it. Okay, I understand. But to next quarter we should see maybe better than 4.5% in pricing. Is that fair?

That is reasonable.

Okay. Have you seen any elasticity issues?

Well, we worry about these things, and you know we are watching, but, let us say that our people are closely monitoring this to make sure that we do not experience any issues with volume.

Have you seen any impact in any of your in channels relating to the consumer pressures here? I have heard and seen that transactions are lower in the C-store business. I have seen the ring is lower in the C-store. So is there- are you seeing that as well, or can you comment as to what you are seeing in your various end markets?

It is really a little bit too early for us to be able to really measure that. We hear some of the same things that you are referring to. We are just redoubling our marketing and sales efforts in there so that we can lessen the blows.

Okay. In terms of your commodity buying, can you talk about what kind of coverage you might have for this upcoming quarter and/or for the remainder of the year?

Well, we are going out between periods of 45 and 90 days, and we continue to watch closely the flour and Ag and other commodity markets, and we have designated a person to control that for- as the lead person on all of our basic commodities.

Okay. So you are still- I mean, the good news is that wheat has come down lately.

Mitch, it has not come down. Wheat is still double what it was a year ago. It has come down from these shoot to the moon prices back in February, which we really had not booked that either.

So- well, but in the first quarter you were buying a lot of wheat at the- when wheat was trading at well over $10 a bushel. Now it has come down under nine. I know that there is basis and all the other premiums, you can not hedge, and you have to factor in. But it still seems like that if you are buying on a spot basis, it is becoming a little more favorable than it was in Q1, it seems to me. I know you bought back in Q1, so now- but going forward, it looks like maybe even in Q3 you start to have- later Q3 you start to have a positive year over- not year over year, but you will-

We will see. We will see. The one thing that is predictable about what has happened is that it is totally unpredictable.

Okay. Yeah, right. (Laughter) Okay. Another question on the top line. Did you have any buy-in because of your price increases in the first quarter? Did buy-ins help you?

Your bigger retailers will buy in or want to get some- particularly in the supermarket chains, they will get a little buy-in or want to get some protection. But there is a little bit of that. But nothing so significant that it would make numbers-

Okay

-big-headed or lopsided.

Okay. And in terms of if you look at the marketing decline, I realize it looks like – it looks like marketing is down about – well marketing, I mean I think you said you took $1 million out of ads the TV, that internet campaign you did last year which did not seem to benefit you much. That’s an okay drop. But is it – are we – should I be concerned at all that you’re investing less than marketing here or –

Interesting. Vince has some great ideas and concepts that we plan on initiating there. And we realize the importance of investing in our sales or – and our marketing efforts for the future and we’re going to do that. I’m not so sure our campaign last year was the best use of our marketing dollars and I think that we’ll have a little bit better control and direction on future spending.

So if – so the kind in marketing – obviously you can look at it and say jeez, he did not just cut marketing out to make the numbers look better –

That’s not what we’re doing.

Okay. Yes, so –

Rest assured that I am not looking to cut out muscle or for that matter a fat in marketing area to improve numbers over the short-term. That is not the direction that our company – that our management and company is going.

Yes, and I’m not saying it is but I’m just looking at – so did – what was cut besides – and I totally, I’m on board with the TV internet campaign venture.

The only thing that was cut was that viral campaign that went on YouTube in there with the wrestlers that I know three people in the country watched after I told six people about it.

Okay. Okay. And then last thing is on FCB. You talked about the challenge. It’s a challenging environment there. So what’s going to – what are you doing in the back half here, your strong FCB season, to try to shake things up?

Well, ICEE, the ICEE group had its best year ever last year in ’07 and we expect it to beat that this year. So we continue to be – to look at different ways that we can develop its growth. The managed service – the managed service continues to grow double digits and strongly. But the numbers from ICEE were probably a little bit better than what might have been reported on the Q2 because there was a higher – there was higher fuel costs and there was a one time write-off on some inventory.

Okay. One time write-off in inventory, was that in the – is that in the Q?

I believe yes.

Okay. I’ll look to that. All right. I will yield the floor. Thank you Gerry.

Thank you Mitch.

Thank you Dennis.

Our next question is from Robert Costello [ph]. Please go ahead.

Hi, I had two questions. One, was there any new restaurants that you signed up during the quarter? What’s the outlook for the year with market expansion? And I had a question about the Dippin’ Dots brand regarding your – I see there’s a new company out there, a new brand Itsy Bits. What’s going on with that?

All right Bob let me answer your questions first. Let me deal with the first part last. We expect to introduce a product line called Icy Bits which are kind of similar to a similar to a Dippin’ Dot which are little bits of ice pieces it would be under –

Yes, the kids love them.

– the Icy Bits label and we expect to introduce this at the NRA show in a couple of weeks. So far our early interest has been positive and we are excited about this opportunity. With respect to any new restaurants we have various tests going on right now with several chains including a couple of our core products. And we’re hopeful that by the first quarter of next year that we will be going from a controlled test perhaps into some limited expansion. But some of these things take years. We’re tracking into the going from the product being developed and accepted into going from the test kitchen into some store testing.

Right. Now are you going to be manufacturing the Icy Bits or is somebody else?

Somebody is manufacturing it for us on a copatent arrangement. It’s a – one of the premier –

Right.

– dairy companies in the country.

Right. Last question. Your Whole Fruit, I saw you had some couponing recently in the paper on Sunday. What do you anticipate for the year for that product since you bought it a year ago?

We have resurrected it. We have brought it back from the dead. We have –

No, it’s a great product. I agree.

– it some life and it is doing better than projected. We expect to have good sales this year and better sales next year.

Now is it mostly going to be sold through the C store or through the supermarket?

Mostly being sold for the supermarkets although we have gotten some interest in the club channel and some other mass merchandisers too.

Right. And how’s it going to be distributed into the supermarkets? By you or by another?

It’s going to be going ex-warehouse, all right? And to some limited extent from a DSD system using independent –

No, you gave it out at the annual meeting. It’s a great product. So keep up with it. Thank you.

Our next question is from Sarah Lester [ph]. Please go ahead.

Good morning.

Good morning Sarah, how are you?

I’m good how are you? I wanted to ask, could you just talk about more some of your new products coming out. I think you might have some things coming out in some mass merchandisers but anymore new products? And also talk about the – how far you’ve gotten along into the quick serve restaurants.

It’s Vince. You will see us, you’ll see us debut some things at NRA. You’ll see a couple of new pretzel products from us at NRA –

Okay.

– as well as a few others. So there are some things that are coming very quick in the pipe. You’ll also see us for the fall season introducing some new steam product in frozen novelty as well and some cup products. So there is a lot coming.

And the bite sized churros [inaudible]?

Right. And churros as well. There’s like – will be bite sized churros as well introduced at NRA. So you’ll see us introduce a lot of new things in the next few weeks.

Okay that’s great. Thank you.

Sure.

Our next question is from Cheryl Cortez. Please go ahead.

Hello.

Hello Cheryl.

I had a quick question if you were doing any sort of strategic planning on the additional rebate checks that all the tax payers might be getting. Talking to some grocers – I notice they’re doing some things there but is that on your radar?

I did not get a check. That’s an interesting question and I’m wondering if perhaps we can look into that.

Okay. Well thanks a lot.

(Operator Instructions)

Before we move on I just want to clarify a statement I made with respect to our ICEE company’s earnings. Even though their earnings were down about a million eight for the six months we do expect to have a much better second half. And it will be challenging for us to beat last year’s considering that. But we do expect to have a good second half with ICEE. We’re continuing to expand our efforts and manage service for others which is growing at a double digit rate and has been for several years.

We do have a question from Mitch Pinheiro. Please go ahead.

Yes, just a follow-up Gerry. On the – I could find – I looked through the queue – I could not find the asset write-off on the FCB. Is that the other – was that – Dennis, was that an other in the cash flow statement? Is that what that was?

Yes.

Where do I find the write-off?

That would just be in operating income.

Okay, about how much was it?

Well it was several adjustments, not necessarily all write-offs but I think we said approximately for the six month period totaling about $900,000.

For the six months?

Right.

Okay. And so was it about half and half?

Yes.

Okay. My final question, just Gerry getting back to FCB for a second, if I go back five years to 2002, you had EBITDA from FCB of 26.6 million and then in 2007 was a good year for you. It recovered finally back to 25.9 million. So in five years it was basically flat, down slightly. So clearly it’s been challenging over the last five years with the carbonated soft drinks declines probably paralleling or mirroring FCB. But I’m just concerned that all the growth in beverage is non-carb. And it’s all the alternative water and the juices and teas. And what can you do – is FCB going to separate itself from CSD as far as its growth pattern? Or are you going to start to get into – put more barrels in your FCB to do Monsters and Red Bulls, et cetera?

We’ve looked at these things from time to time and it’s true, we at ICEE are experiencing some of the same challenges and difficulties that the major beverage players, Coca-Cola, Pepsi-Cola, are experiencing with regular cola sales. That’s one of the reasons we’ve expanded, we acquired Slush Puppy. And we’re looking at other possibilities. We will continue to seek out new products and selective acquisitions in there to maintain its growth and profitability.

Okay. I just – it just – and then on an operating – on an EBIT margin basis it’s gone from 23% to 16 during that same time period. So you held dollars but you – but it’s less profitable sales dollars and your ROA has kind of helped. So I just was wondering whether this is – you’re going to continue to invest in FCB and try to grow the business. Or is going to be a cash, kind of hold on to the current level? I just do not know where it’s heading.

I hear your point and it’s still generating cash and very profitable cash. So we’re going to continue to keep that in the flow.

Okay. All right, thanks

Thank you. Any other questions or comments?

At this time we have no further questions.

Thank you for participating in the conference call and I look forward to talking to all of you again in our next quarter. Bye now.

Thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may all disconnect.