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Selling, General and Administrative Expenses-Consolidated Selling, general and administrative expenses decreased $2,714 (6.2%) when compared to the prior year. After considering the additional week in fiscal 2006, average weekly expenses were lower compared to the prior year. Within this category costs for advertising and outsourced computer network security and support outpaced sales growth. Offsetting these increases were lower employee benefit expenses (pension, healthcare, workers’ compensation and vacation pay), increased gains on life insurance policies and reduced staff costs related to computer network outsourcing. Selling, General and Administrative Expenses-Frozen Food Products Segment Selling, general and administrative expenses in the Frozen Food Products segment increased by $382 (2.7%) compared to the prior year. Higher advertising costs were partially offset by lower employee benefit expenses when compared to the prior year. Selling, General and Administrative Expenses-Refrigerated and Snack Food Segment Selling, general and administrative expenses in the Refrigerated and Snack Food Segment decreased $3,095 (10.4%) compared to the prior year. This decrease was primarily caused by lower unit sales volume. Lower employee benefit expenses outpaced the impact of the sales decline. Depreciation Expense-Consolidated Depreciation expense decreased by $388 (10.3%) compared to the prior year. The decrease in depreciation expense reflects lower capital expenditure levels in recent years and certain significant assets becoming fully depreciated in the 2007 fiscal year. Offsetting these decreases was the addition of a new major manufacturing line put into service in the last quarter of the 2007 fiscal year. Depreciation Expense-Frozen Food Products Segment Depreciation expense in the Frozen Food Products segment decreased by $390 (27.9%) compared to the prior year. The decrease in depreciation expense reflects lower capital expenditure levels in recent years and certain significant assets becoming fully depreciated in the 2007 fiscal year. Depreciation Expense- Refrigerated and Snack Food Segment Depreciation expense in the Refrigerated and Snack Food Segment was essentially equal as compared to the prior year. Recent lower capital expenditure levels were off-set by the addition of a new major manufacturing line put into service in the last quarter of the 2007 fiscal year. Gain on Sale of Equity Securities The Company did not engage in the sale of equity securities during fiscal year 2007 and recorded a pre-tax gain of $106 in fiscal 2006. Income Taxes The effective income tax rate was (56.6)% and 17.2% in fiscal years 2007 and 2006, respectively. In fiscal year 2007, the effective income tax rate differed from the applicable mixed statutory rate of approximately 38% primarily due to the Company’s current year claim for research and development tax credits and non-taxable life insurance. In fiscal year 2006, the effective income tax rate differed from the applicable mixed statutory rate of approximately 38% primarily due to the Company’s current year claim for research and development tax credits related to prior year activities. |
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