SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM 10-Q
(Mark One)
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 25, 1997
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to ______________
Commission file number 0-19681
JOHN B. SANFILIPPO & SON, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2419677
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
2299 Busse Road
Elk Grove Village, Illinois 60007
(Address of Principal Executive Offices)
Registrant's telephone number, including area code
(847) 593-2300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No __________
As of November 7, 1997, 5,460,240 shares of the Registrant's
Common Stock, $.01 par value per share, excluding 117,900 treasury
shares and 3,687,426 shares of the Registrant's Class A Common
Stock, $.01 par value per share, were outstanding.
JOHN B. SANFILIPPO & SON, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
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Item 1 -- Consolidated Financial Statements:
Consolidated Statements of Operations for
the quarters ended September 25, 1997 and September 26, 1996
Consolidated Balance Sheets as of September 25, 1997
and June 26, 1997
Consolidated Statements of Cash Flows for the
quarters ended September 25, 1997 and September 26, 1996
Notes to Consolidated Financial Statements
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 2 -- Changes in Securities
Item 6 -- Exhibits and Reports on Form 8-K
SIGNATURE
OMITTED FINANCIAL STATEMENTS
None
PART I. FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
- ------------------------------
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Quarter Ended
--------------------------------
September 25, September 26,
1997 1996
------------- -------------
Net sales $ 77,256 $ 70,373
Cost of sales 64,452 64,198
------- -------
Gross profit 12,804 6,175
------- -------
Selling expenses 6,893 5,945
Administrative expenses 2,491 2,528
------- -------
9,384 8,473
------- -------
Income (loss) from operations 3,420 (2,298)
------- -------
Other income (expense):
Interest expense (1,809) (2,073)
Interest income 6 5
Rental income 118 93
------- -------
(1,685) (1,975)
------- -------
Income (loss) before income taxes 1,735 (4,273)
Income tax (expense) benefit (720) 1,683
------- -------
Net income (loss) $ 1,015 $ (2,590)
======= =======
Earnings (loss) per common share $ 0.11 $ (0.28)
======= =======
The accompanying notes are an integral part of these financial statements.
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 25, June 26,
1997 1997
------------- --------
(Unaudited)
ASSETS
- ------
CURRENT ASSETS:
Cash $ 719 $ 631
Accounts receivable, net 24,738 25,200
Inventories 83,090 62,988
Deferred income taxes 618 618
Income taxes receivable 2,311 2,830
Prepaid expenses and other
current assets 2,594 1,419
------- -------
TOTAL CURRENT ASSETS 114,070 93,686
------- -------
PROPERTIES:
Buildings 55,231 55,211
Machinery and equipment 66,957 66,019
Furniture and leasehold
improvements 4,956 4,956
Vehicles 4,230 4,190
------- -------
131,374 130,376
Less: Accumulated depreciation 55,573 53,749
------- -------
75,801 76,627
Land 1,892 1,892
------- -------
77,693 78,519
------- -------
OTHER ASSETS:
Goodwill and other intangibles 8,434 8,667
Miscellaneous 8,181 6,545
------- -------
16,615 15,212
------- -------
$208,378 $187,417
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Notes payable $ 21,289 $ 19,034
Current maturities 4,785 4,937
Accounts payable 30,338 11,193
Accrued expenses 8,497 8,656
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TOTAL CURRENT LIABILITIES 64,909 43,820
------- -------
LONG-TERM DEBT 67,719 68,862
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LONG-TERM DEFERRED INCOME TAXES 1,664 1,664
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock -- --
Class A Common Stock 37 37
Common Stock 56 56
Capital in excess of par value 57,191 57,191
Retained earnings 18,006 16,991
Treasury stock (1,204) (1,204)
------- -------
74,086 73,071
------- -------
$208,378 $187,417
======= =======
The accompanying notes are an integral part of these financial statements.
JOHN B. SANFILIPPO & SON, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Quarter Ended
--------------------------------
September 25, September 26,
1997 1996
------------- -------------
Cash flows from operating activities:
Net income (loss) $ 1,015 $ (2,590)
Adjustments:
Depreciation and amortization 2,158 2,110
Change in current assets and
current liabilities:
Accounts receivable, net 462 (3,242)
Inventories (20,102) 7,111
Prepaid expenses and other
current assets (1,175) (344)
Accounts payable 19,145 9,951
Accrued expenses (159) 105
Income taxes payable/receivable 519 (1,794)
------- -------
Net cash provided by operating
activities 1,863 11,307
------- -------
Cash flows from investing activities:
Acquisition of properties (864) (1,125)
Other (1,763) (542)
------- -------
Net cash (used in) investing activities (2,627) (1,667)
------- -------
Cash flows from financing activities:
Net borrowings (repayments) on
notes payable 2,256 (8,583)
Principal payments on long-term debt (1,404) (1,228)
------- -------
Net cash provided by (used in)
financing activities 852 (9,811)
------- -------
Net increase (decrease) in cash 88 (171)
Cash:
Beginning of period 631 276
------- -------
End of period $ 719 $ 105
======= =======
Supplemental disclosures:
Interest paid $ 2,205 $ 2,482
Taxes paid 201 81
Supplemental disclosure of noncash
investing and financing activities:
Capital lease obligation incurred 110 --
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
NOTE 1 - INVENTORIES
- --------------------
Inventories are stated at the lower of cost (first in, first out)
or market. Inventories consist of the following:
September 25, June 26,
1997 1997
------------- --------
Raw material and supplies $ 44,474 $ 29,713
Work-in-process and
finished goods 38,616 33,275
------- -------
$ 83,090 $ 62,988
======= =======
NOTE 2 - EARNINGS PER COMMON SHARE
- ----------------------------------
Earnings per common share is calculated using the weighted average
number of shares of Common Stock and Class A Common Stock
outstanding during the period. Common stock equivalents (stock
options) had an immaterial effect on earnings per share for the
quarters ended September 25, 1997 and September 26, 1996 and,
accordingly, have not been included in the weighted average shares
outstanding. Fully diluted earnings per common share, which
include the effect of conversion of common stock equivalents for
the quarters ended September 25, 1997 and September 26, 1996 are
not materially different from the earnings per share presented.
The weighted average number of shares aggregated 9,147,666 for the
quarters ended September 25, 1997 and September 26, 1996.
NOTE 3 - MANAGEMENT'S STATEMENT
- -------------------------------
The unaudited financial statements included herein have been
prepared by the Company. In the opinion of the Company's
management, these statements present fairly the consolidated
statements of operations, consolidated balance sheets and
consolidated statements of cash flows, and reflect all normal
recurring adjustments which, in the opinion of management, are
necessary for the fair presentation of the results of the interim
periods. The interim results of operations are not necessarily
indicative of the results to be expected for a full year. The
data presented on the balance sheet for the transition period
ended June 26, 1997 were derived from audited financial
statements. It is suggested that these financial statements be
read in conjunction with the financial statements and notes
thereto included in the Company's Transition Report on Form 10-K
for the transition period from January 1, 1997 to June 26, 1997.
ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
On April 30, 1997 the Company's Board of Directors voted to, upon
the approval of its lendors, change the Company's fiscal year from
a calendar year end to a fiscal year that ends on the final
Thursday of June of each year. A Transition Report on Form 10-K
was filed for the transition period from January 1, 1997 to June
26, 1997. This Quarterly Report on Form 10-Q is for the Company's
first quarter for the fiscal year ending June 25, 1998.
The Company's business is seasonal. Demand for peanut and other
nut products is highest during the months of October through
December. Peanuts, pecans, walnuts, almonds and cashews, the
Company's principal raw materials, are purchased primarily during
the period from August to February and are processed throughout
the year. As a result of this seasonality, the Company's
personnel and working capital requirements peak during the last
four months of the calendar year. Also, due primarily to the
seasonal nature of the Company's business, the Company maintains
significant inventories of peanuts, pecans, walnuts, almonds and
other nuts at certain times of the year, especially during the
first and fourth quarters of each calendar year. Fluctuations in
the market prices of such nuts may affect the value of the
Company's inventory and thus the Company's profitability. At
September 25, 1997, the Company's inventories totalled
approximately $83.1 million compared to approximately $63.0
million at June 26, 1997, and approximately $76.1 million at
September 26, 1996. The increase in inventories at September 25,
1997 when compared to September 26, 1996 is primarily due to
purchasing peanuts, walnuts and almonds earlier in calendar year
1997 than in calendar year 1996. See "Factors That May Affect
Future Results -- Availability of Raw Materials and Market Price
Fluctuations."
RESULTS OF OPERATIONS
- ---------------------
NET SALES. Net sales increased from approximately $70.4 million
for the quarter ended September 26, 1996 to approximately $77.3
million in the first quarter of fiscal 1998, an increase of
approximately $6.9 million or 9.8%. The increase in net sales was
due primarily to increased unit volume sales to the Company's
retail and food service customers. The increase in net sales to
retail customers was due primarily to increased unit volume sales
to existing and new customers. The increase in net sales to food
service customers was due primarily to additional unit volume
sales to airline customers.
GROSS PROFIT. Gross profit margin increased from 8.8% for the
quarter ended September 26, 1996 to 16.6% in the first quarter of
fiscal 1998. This increase was due primarily to (i) a $2.6
million write-down of pecan inventory to market value as of
September 26, 1996, (ii) declines in the market price for
processed pecan meats relative to the cost of pecan inventory
throughout the quarter ended September 26, 1996, and (iii)
increases in net sales as a percentage of total sales to retail
customers, which generally carry higher margins than sales to the
Company's other customers.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses as a percentage of net sales increased slightly from
12.0% for the quarter ended September 26, 1996 to 12.1% in the
first quarter of fiscal 1998. Selling expenses as a percentage of
net sales increased from 8.4% for the quarter ended September 26,
1996 to 8.9% in the first quarter of fiscal 1998. This increase
was due primarily to higher promotional allowances in the first
quarter of fiscal 1998. Administrative expenses as a percentage
of net sales decreased from 3.6% for the quarter ended September
26, 1996 to 3.2% in the first quarter of fiscal 1998. This
decrease was due primarily to controlling administrative expenses
with an increasing revenue base.
INCOME FROM OPERATIONS. Due to the factors discussed above,
income from operations increased from a loss of approximately $2.3
million, or 3.3% of net sales, for the quarter ended September 26,
1996 to income of approximately $3.4 million, or 4.4% of net
sales, in the first quarter of fiscal 1998.
INTEREST EXPENSE. Interest expense decreased from approximately
$2.1 million for the quarter ended September 26, 1996 to
approximately $1.8 million in the first quarter of fiscal 1998.
This decrease was due primarily to a lower average level of
borrowings during the first quarter of fiscal 1998 compared to the
quarter ended September 26, 1996 due to improved operating results
and reduced fixed asset expenditures.
INCOME TAXES. The Company recorded income tax expense of
approximately $0.7 million, or 41.5% of income before income
taxes, in the first quarter of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the first quarter of fiscal 1998, the Company continued to
finance its activities through a bank credit facility (the "Bank
Credit Facility"), $35.0 million borrowed under a long-term
financing facility originally entered into by the Company in 1992
(the "Long-Term Financing Facility") and $25.0 million borrowed on
September 12, 1995 under a long-term financing arrangement (the
"Additional Long-Term Financing").
Net cash provided by operating activities was approximately $1.9
million in the first quarter of fiscal 1998 compared to
approximately $11.3 million for the quarter ended September 26,
1996. The net cash provided by operating activities decreased
significantly in the first quarter of fiscal 1998 when compared to
the quarter ended September 26, 1996 due primarily to the early
harvest of peanuts, walnuts and almonds. The largest component of
net cash provided by operating activities in the first quarter of
fiscal 1998 was an increase of approximately $19.1 million in
accounts payable. This amount was offset by an increase in
inventories of approximately $20.1 million. During the first
quarter of fiscal 1998, the Company spent approximately $0.9
million in capital expenditures, compared to approximately $1.1
million in the quarter ended September 26, 1996. During the
first quarter of fiscal 1998, the Company repaid approximately
$1.4 million of long-term debt, compared to approximately $1.2
million in the quarter ended September 26, 1996.
The Bank Credit Facility is comprised of (i) a working capital
revolving loan which (as described below, depending on the time of
year) provides for working capital financing of up to
approximately $51.7 million, in the aggregate, and matures on
March 27, 1998, and (ii) an $8.3 million letter of credit to
secure the industrial development bonds which matures on June 1,
2002. Borrowings under the working capital revolving loan accrue
interest at a rate (the weighted average of which was 6.91% at
September 25, 1997) determined pursuant to a formula based on the
agent bank's quoted rate, the Federal Funds Rate and the
Eurodollar Interbank rate. The aggregate amount outstanding under
the Bank Credit Facility is limited to specified amounts which
vary, because of the seasonal nature of the Company's business,
from $60.0 million during January through March, to $50.0 million
during April through May, to $40.0 million during June through
September, and to $50.0 million during October through December.
Of the total $35.0 million of borrowings under the Long-Term
Financing Facility, $25.0 million matures on August 15, 2004,
bears interest rates ranging from 7.34% to 9.18% per annum payable
quarterly, and requires equal semi-annual principal installments
based on a ten-year amortization schedule. The remaining $10.0
million of this indebtedness matures on May 15, 2006, bears
interest at the rate of 9.16% per annum payable quarterly, and
requires equal semi-annual principal installments based on a ten-
year amortization schedule. As of September 25, 1997, there was
approximately $26.6 million outstanding under the Long-Term
Financing Facility.
The Additional Long-Term Financing has a maturity date of
September 1, 2005 and (i) as to $10.0 million of the principal
amount thereof, bears interest at an annual rate of 8.3% payable
semiannually and, beginning on September 1, 1999, requires annual
principal payments of approximately $1.4 million each through
maturity, and (ii) as to the other $15.0 million of the principal
amount thereof, bears interest at an annual rate of 9.38% payable
semiannually and requires principal payments of $5.0 million each
on September 1, 2003 and September 1, 2004, with a final payment
of $5.0 million at maturity on September 1, 2005.
The Bank Credit Facility, the Long-Term Financing Facility and the
senior portion of the Additional Long-Term Financing are secured
by a first priority perfected security interest in, and lien on,
substantially all of the Company's assets. The obligations under
the subordinated portion of the Additional Long-Term Financing are
secured by a junior security interest in the Company's assets.
The terms of the Company's financing facilities, as amended,
include certain restrictive covenants that, among other things,
(i) require the Company to maintain specified financial ratios,
(ii) limit the amount of the Company's capital expenditures in
calendar 1997 to $7.2 million and $10.0 million thereafter, and
(iii) require that Jasper B. Sanfilippo (the Company's Chairman of
the Board and Chief Executive Officer) and Mathias A. Valentine (a
director and the Company's President) together with their
respective immediate family members and certain trusts created for
the benefit of their respective sons and daughters, continue to
own shares representing the right to elect a majority of the
directors of the Company. In addition, (i) the Bank Credit
Facility and the Long-Term Financing Facility limit the Company's
payment of dividends to a cumulative amount not to exceed 25% of
the Company's cumulative net income from and after January 1,
1996, (ii) the Additional Long-Term Financing limits cumulative
dividends to the sum of (a) 50% of the Company's cumulative net
income (or minus 100% of the Company's cumulative net loss) from
and after January 1, 1995 to the date the dividend is declared,
(b) the cumulative amount of the net proceeds received by the
Company during the same period from any sale of its capital stock,
and (c) $5.0 million, and (iii) the Bank Credit Facility and the
Long-Term Financing Facility prohibit the Company from spending
more than $1.0 million to redeem shares of capital stock.
As of September 25, 1997, the Company had approximately $16.0
million of available credit under the Bank Credit Facility.
Approximately $0.9 million were incurred on capital expenditures
in the first quarter of 1998. No significant capital expenditures
are anticipated for fiscal 1998, The Company is currently
negotiating with lendors to replace the Bank Credit Facility
which, as noted above, expires on March 27, 1998 (the "Replacement
Credit Facility"). The Company believes that cash flow from
operating activities and funds available under the Bank Credit
Facility and the Replacement Credit Facility will be sufficient to
meet working capital requirements and anticipated capital
expenditures for the foreseeable future. See "Factors That May
Affect Future Results - Growth Initiatives".
FACTORS THAT MAY AFFECT FUTURE RESULTS
- --------------------------------------
(A) AVAILABILITY OF RAW MATERIALS AND MARKET PRICE FLUCTUATIONS
The availability and cost of raw materials for the production of
the Company's products, including peanuts, pecans, other nuts,
dried fruit and chocolate, are subject to crop size and yield
fluctuations caused by factors beyond the Company's control, such
as weather condition and plant diseases. Additionally, the supply
of edible nuts and other raw materials used in the Company's
products could be reduced upon any determination by the United
States Department of Agriculture or other government agency that
certain pesticides, herbicides or other chemicals used by growers
have left harmful residues on portions of the crop or that the
crop has been contaminated by aflatoxin or other agents.
Shortages in the supply of and increases in the prices of nuts and
other raw materials used by the Company in its products could have
an adverse impact on the Company's profitability. Furthermore,
fluctuations in the market prices of nuts, dried fruit or
chocolate may affect the value of the Company's inventory and the
Company's profitability. For example, during the quarter ended
September 26, 1996 the Company was required to record a $2.6
million charge against its earnings to reflect the impact of a
lower cost or market adjustment of its pecan inventory. The
Company has a significant inventory of nuts, dried fruit and
chocolate that would be adversely affected by any decrease in the
market price of such raw materials. See "General".
(B) COMPETITIVE ENVIRONMENT
The Company operates in a highly competitive environment. The
Company's principal products compete against food and snack
products manufactured and sold by numerous regional and national
companies, some of which are substantially larger and have greater
resources than JBSS, such as Planters Livesavers Company (a
subsidiary of RJR Nabisco, Inc.). JBSS also competes with other
shellers in the industrial market and with regional processors in
the retail and wholesale markets. In order to maintain or
increase its market share, the Company must continue to price its
products competitively, which may lower revenue per unit and cause
declines in gross margin, if the Company is unable to increase
unit volumes as well as reduce its costs.
(C) SALES TO INDUSTRIAL CUSTOMERS
The increase in the Company's processing and shelling capacity
created by its facility construction and expansion programs over
the past five years and increased sales by Sunshine may result in
further increases in net sales to industrial customers, both in
amount and as a percentage of the Company's total sales. Because
sales to industrial customers are generally made at lower margins
than sales to other customers, increases in such sales may
adversely affect the Company's profit margins.
(D) FIXED PRICE COMMITMENTS
From time to time, the Company enters into fixed price commitments
with its customers. However, such commitments typically represent
10% or less of the Company's annual net sales and are normally
entered into after the Company's cost to acquire the nut products
necessary to satisfy the fixed price commitment is substantially
fixed. The Company will continue to enter into fixed price
commitments in respect to certain of its nut products prior to
fixing its acquisition cost when, in management's judgment, market
or crop harvest conditions so warrant. To the extent the Company
does so, these fixed price commitments may result in losses.
Historically, however, such losses have generally been offset by
gains on other fixed price commitments. However, there can be no
assurance that losses from fixed price commitments may not have a
material adverse effect on the Company's results of operations.
(E) FEDERAL REGULATION OF PEANUT PRICES, QUOTAS AND POUNDAGE
ALLOTMENTS
Peanuts are an important part of the Company's product line.
Approximately 50% of the total pounds of products processed
annually by the Company are peanuts, peanut butter and other
products containing peanuts. The production and marketing of
peanuts are regulated by the USDA under the Agricultural
Adjustment Act of 1938 (the "Agricultural Adjustment Act"). The
Agricultural Adjustment Act, and regulations promulgated
thereunder, support the peanut crop by: (i) limiting peanut
imports, (ii) limiting the amount of peanuts that American farmers
are allowed to take to the domestic market each year, and (iii)
setting a minimum price that a sheller must pay for peanuts which
may be sold for domestic consumption. The amount of peanuts that
American farmers can sell each year is determined by the Secretary
of Agriculture and is based upon the prior year's peanut
consumption in the United States. Only peanuts that qualify under
the quota may be sold for domestic food products and seed. The
peanut quota for the 1997 calendar year is 1,236 million tons.
Peanuts in excess of the quota are called "additional peanuts" and
generally may only be exported or used domestically for crushing
into oil or meal. Current regulations permit additional peanuts
to be domestically processed and exported as finished goods to any
foreign country. The quota support price for the 1997 calendar
year is $610 per ton.
The 1996 Farm Bill extended the federal support and subsidy
program for peanuts for seven years. However, there are no
assurances that Congress will not change or eliminate the program
prior to its scheduled expiration. Changes in the federal peanut
program could significantly affect the supply of, and price for,
peanuts. While JBSS has successfully operated in a market shaped
by the federal peanut program for many years, JBSS believes that
it could adapt to a market without federal regulation if that were
to become necessary. However, JBSS has no experience in operating
in such a peanut market, and no assurances can be given that the
elimination or modification of the federal peanut program would
not adversely affect JBSS's business. Future changes in import
quota limitations or the quota support price for peanuts at a time
when the Company is maintaining a significant inventory of peanuts
or has significant outstanding purchase commitments could
adversely affect the Company's business by lowering the market
value of the peanuts in its inventory or the peanuts which it is
committed to buy. While the Company believes that its ability to
use its raw peanut inventories in its own processing operations
gives it greater protection against these changes than is
possessed by certain competitors whose operations are limited to
either shelling or processing, no assurances can be given that
future changes in, or the elimination of, the federal peanut
program or import quotas will not adversely affect the Company's
business.
The North American Free Trade Agreement ("NAFTA"), effective
January 1, 1994, committed the United States, Mexico and Canada to
the elimination of quantitative restrictions and tariffs on the
cross-border movement of industrial and agricultural products.
Under NAFTA, United States import restrictions on Mexican shelled
and inshell peanuts are replaced by a tariff rate quota, initially
set at 3,377 tons, which will increase by a 3% compound rate each
year until 2001. Shipments within the quota's parameters enter
the U.S. duty-free, while imports above-quota parameters from
Mexico face tariff rates equivalent to approximately 120% on
shelled and 185% on inshell peanuts. The tariffs will be phased-
out gradually by 2001.
The Uruguay Round Agreement of the General Agreement on Trade and
Tariffs ("GATT") took effect on July 1, 1995. Under GATT, the
United States must allow peanut imports to grow to 5% of domestic
consumption by 2001. Import quotas on peanuts have been replaced
by high ad valorem tariffs, which must be reduced by 15% annually
for each of the next six years. Also under GATT, the United
States may limit imports of peanut butter, but must establish a
tariff rate quota for peanut butter imports based on 1993 import
levels. Peanut butter imports above the quota will be subject to
an over-quota ad valorem tariff, which also will be reduced by 15%
annually for each of the next six years.
Although NAFTA and GATT do not directly affect the federal peanut
program, the federal government may, in future legislative
initiatives, reconsider the federal peanut program in light of
these agreements. The Company does not believe that NAFTA and
GATT have had a material impact on the Company's business or will
have a material impact on the Company's business in the near term.
PART II. OTHER INFORMATION
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ITEM 2 - CHANGES IN SECURITIES
- -------------------------------
As described above under "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and
Capital Resources" under Part I of this report, there are
restrictive covenants under the Company's financing facilities
which limit the payment of dividends.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Exhibits: The exhibits required by Item 601 of Regulation
S-K follow:
Exhibit
Number Description
- --------------------------------------------------------------------------
2 None
3.1 Restated Certificate of Incorporation of Registrant(2)
3.2 Certificate of Correction to Restated Certificate(2)
3.3 Bylaws of Registrant(1)
4.1 Specimen Common Stock Certificate(3)
4.2 Specimen Class A Common Stock Certificate(3)
4.3 Amended and Restated Note Purchase and Private Shelf Agreement
by and between the Registrant and The Prudential Insurance
Company of America ("Prudential") dated as of October 19, 1993
(the "Long-Term Financing Facility)(8)
4.4 7.87% Series A Senior Note dated September 29, 1992 in the
original principal amount of $4.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(5)
4.5 8.22% Series B Senior Note dated September 29, 1992 in the
original principal amount of $6.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(5)
4.6 8.22% Series C Senior Note dated September 29, 1992 in the
original principal amount of $4.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(5)
4.7 8.33% Series D Senior Note dated January 15, 1993 in the
original principal amount of $3.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(6)
4.8 6.49% Series E Senior Note dated September 15, 1993 in the
original principal amount of $8.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(9)
4.9 8.31% Series F Senior Note dated June 23, 1994 in the original
principal amount of $8.0 million due May 15, 2006 executed by
the Registrant in favor of Prudential(10)
4.10 8.31% Series F Senior Note dated June 23, 1994 in the original
principal amount of $2.0 million due May 15, 2006 executed by
the Registrant in favor of Prudential(10)
4.11 Amended and Restated Guaranty Agreement dated as of October 19,
1993 by Sunshine in favor of Prudential(8)
4.12 First Amendment to the Long-Term Financing Facility dated as of
August 31, 1994 by and between Prudential, Sunshine Nut Co.,
Inc. ("Sunshine") and the Registrant(11)
4.13 Second Amendment to the Long-Term Financing Facility dated as
of September 12, 1995 by and among Prudential, Sunshine and the
Registrant(16)
4.14 Third Amendment to the Long-Term Financing Facility dated as of
February 20, 1996 by and between Prudential, Sunshine and the
Registrant (18)
4.15 Second Amendment and Restated Note Agreement dated January 24,
1997 to the Long Term Financing Facility by and among
Prudential, Sunshine, and the Registrant (20)
4.16 Amendment to the Second Amended and Restated Note Agreement
dated May 21, 1997 by and among Prudential, Sunshine and the
Registrant(21)
4.17 $1.8 million Promissory Note dated March 31, 1989 evidencing a
loan by Cohen Financial Corporation to LaSalle National Bank
("LNB"), as Trustee under Trust Agreement dated March 17, 1989
and known as Trust No. 114243(13)
4.18 Modification Agreement dated as of September 29, 1992 by and
among LaSalle National Trust, N.A. ("LaSalle Trust"), a
national banking association, not personally but as Successor
Trustee to LNB under Trust Agreement dated March 17, 1989 known
as Trust Number 114243; the Registrant; Jasper B. Sanfilippo
and Mathias A. Valentine; and Mutual Trust Life Insurance
Company(5)
4.19 Note Purchase Agreement dated as of August 30, 1995 between the
Registrant and Teachers Insurance and Annuity Association of
America ("Teachers")(16)
4.20 8.30% Senior Note due 2005 in the original principal amount of
$10.0 million, dated September 12, 1995 and executed by the
Registrant in favor of Teachers(16)
4.21 9.38% Senior Subordinated Note due 2005 in the original
principal amount of $15.0 million, dated September 12, 1995 and
executed by the Registrant in favor of Teachers(16)
4.22 Guaranty Agreement dated as of August 30, 1995 by Sunshine in
favor of Teachers (Senior Notes)(16)
4.23 Guaranty Agreement dated as of August 30, 1995 by Sunshine in
favor of Teachers (Senior Subordinated Notes)(16)
4.24 Amendment, Consent and Waiver, dated as of March 27, 1996, by
and among Teachers, Sunshine and the Registrant(18)
4.25 Amendment No. 2 to Note Purchase Agreement dated as of January
24, 1997 by and among Teachers, Sunshine and the Registrant(20)
4.26 Amendment to Note Purchase Agreement dated May 19, 1997 by and
among Teachers, Sunshine and the Registrant(21)
10.1 Certain documents relating to $8.0 million Decatur County-
Bainbridge Industrial Development Authority Industrial
Development Revenue Bonds (John B. Sanfilippo & Son, Inc.
Project) Series 1987 dated as of June 1, 1987(1)
10.2 Industrial Building Lease dated as of October 1, 1991 between
JesCorp, Inc. and LNB, as Trustee under Trust Agreement dated
March 17, 1989 and known as Trust No. 114243(15)
10.3 Industrial Building Lease (the "Touhy Avenue Lease") dated
November 1, 1985 between Registrant and LNB, as Trustee under
Trust Agreement dated September 20, 1966 and known as Trust No.
34837(12)
10.4 First Amendment to the Touhy Avenue Lease dated June 1, 1987(12)
10.5 Second Amendment to the Touhy Avenue Lease dated December 14,
1990(12)
10.6 Third Amendment to the Touhy Avenue Lease dated September 1,
1991(17)
10.7 Industrial Real Estate Lease (the "Lemon Avenue Lease") dated
May 7, 1991 between Registrant, Majestic Realty Co. and
Patrician Associates, Inc(1)
10.8 First Amendment to the Lemon Avenue Lease dated January 10,
1996(18)
10.9 Mortgage, Assignment of Rents and Security Agreement made on
September 29, 1992 by LaSalle Trust, not personally but as
Successor Trustee under Trust Agreement dated February 7, 1979
known as Trust Number 100628 in favor of the Registrant
relating to the properties commonly known as 2299 Busse Road
and 1717 Arthur Avenue, Elk Grove Village, Illinois(5)
10.10 Industrial Building Lease dated June 1, 1985 between Registrant
and LNB, as Trustee under Trust Agreement dated February 7,
1979 and known as Trust No. 100628(1)
10.11 First Amendment to Industrial Lease dated September 29, 1992 by
and between the Registrant and LaSalle Trust, not personally
but as Successor Trustee under Trust Agreement dated February
7, 1979 and known as Trust Number 100628(5)
10.12 Second Amendment to Industrial Building Lease dated March 3,
1995, by and between the Registrant and LaSalle Trust, not
personally but as Successor Trustee under Trust Agreement dated
February 7, 1979 and known as Trust Number 100628(13)
10.13 Ground Lease dated January 1, 1995, between the Registrant and
LaSalle Trust, not personally but as Successor Trustee under
Trust Agreement dated February 7, 1979 and known as Trust
Number 100628(13)
10.14 Party Wall Agreement, dated March 3, 1995, between the
Registrant, LaSalle Trust, not personally but as Successor
Trustee under Trust Agreement dated February 7, 1979 and known
as Trust Number 100628 and the Arthur/Busse Limited
Partnership(13)
10.15 Secured Promissory Note in the amount of $6,223,321.81 dated
September 29, 1992 executed by Arthur/Busse Limited Partnership
in favor of the Registrant(5)
10.16 Tax Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public
offering(2)
10.17 Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public
offering(2)
10.18 The Registrant's 1991 Stock Option Plan(1)
10.19 First Amendment to the Registrant's 1991 Stock Option Plan(4)
10.20 John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement
Number One among John E. Sanfilippo, as trustee of the Jasper
and Marian Sanfilippo Irrevocable Trust, dated September 23,
1990, Jasper B. Sanfilippo, Marian R. Sanfilippo and
Registrant, and Collateral Assignment from John E. Sanfilippo
as trustee of the Jasper and Marian Sanfilippo Irrevocable
Trust, dated September 23, 1990, as assignor, to Registrant, as
assignee(7)
10.21 John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement
Number Two among Michael J. Valentine, as trustee of the
Valentine Life Insurance Trust, dated May 15, 1991, Mathias
Valentine, Mary Valentine and Registrant, and Collateral
Assignment from Michael J. Valentine, as trustee of the
Valentine Life Insurance Trust, dated May 15, 1991, as
assignor, and Registrant, as assignee(7)
10.22 Certain documents relating to Reverse Split-Dollar Insurance
Agreement between Sunshine and John Charles Taylor dated
November 24, 1987(13)
10.23 Outsource Agreement between the Registrant and Preferred
Products, Inc. dated January 19, 1995 [CONFIDENTIAL TREATMENT
REQUESTED](13)
10.24 Letter Agreement between the Registrant and Preferred Products,
Inc., dated February 24, 1995, amending the Outsource Agreement
dated January 19, 1994 [CONFIDENTIAL TREATMENT REQUESTED](13)
10.25 The Registrant's 1995 Equity Incentive Plan(14)
10.26 Promissory Note (the "ILIC Promissory Note") in the original
principal amount of $2.5 million, dated September 27, 1995 and
executed by the Registrant in favor of Indianapolis Life
Insurance Company ("ILIC")(17)
10.27 First Mortgage and Security Agreement (the "ILIC" Mortgage") by
and between the Registrant, as mortgagor, and ILIC, as
mortgagee, dated September 27, 1995, and securing the ILIC
Promissory Note and relating to the property commonly known as
3001 Malmo Drive, Arlington Heights, Illinois (17)
10.28 Assignment of Rents, Leases, Income and Profits dated September
27, 1995, executed by the Registrant in favor of ILIC and
relating to the ILIC Promissory Note, the ILIC Mortgage and the
Arlington Heights facility(17)
10.29 Environmental Risk Agreement dated September 27, 1995, executed
by the Registrant in favor of ILIC and relating to the ILIC
Promissory Note, the ILIC Mortgage and the Arlington Heights
facility(17)
10.30 Credit Agreement among the Registrant, Bank of America Illinois
("BAI") as agent, NCB, The Northern Trust Company ("NTC") and
BAI, dated as of March 27, 1996(18)
10.31 Reimbursement Agreement between the Registrant and BAI, dated
as of March 27, 1996(18)
10.32 Guaranty Agreement dated as March 27, 1996 by Sunshine in favor
of BAI as agent on behalf of NCB, NTC and BAI(18)
10.33 Amendment No. 1 and Waiver to Credit Agreement dated as of
August 1, 1996 by and among the Registrant, BAI, NCB and NTC(19)
10.34 Amendment No. 2 and Waiver to Credit Agreement dated as of
October 30, 1996 by and among the Registrant, BAI, NCB and
NTC(19)
10.35 Amendment No. 3 to Credit Agreement dated as of January 24,
1997 by and among the Registrant, BAI, NCB, and NTC(20)
10.36 Amendment No. 5 to Credit Agreement dated as of June 2, 1997 by
and among the Registrant, BAI, NCB, and NTC(21)
10.37 Employment Agreement by and between Sunshine and John C. Taylor
dated June 17, 1992(20)
10.38 Employment Agreement by and between Sunshine and Steven G.
Taylor dated June 17, 1992(20)
11 None
15 None
17 None
18 None
24-26 None
27 Financial Data Schedule
99 None
- --------------------------------------------------------------------------
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Registration No. 33-43353, as filed
with the Commission on October 15, 1991 (Commission File No.
0-19681).
(2) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991
(Commission File No. 0-19681).
(3) Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (Amendment No. 3), Registration No. 33-
43353, as filed with the Commission on November 25, 1991
(Commission File No. 0-19681).
(4) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the second quarter ended June 25, 1992
(Commission File No. 0-19681).
(5) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated September 29, 1992 (Commission File No. 0-
19681).
(6) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated January 15, 1993 (Commission File No. 0-
19681).
(7) Incorporated by reference to the Registrant's Registration
Statement on Form S-1, Registration No. 33-59366, as filed
with the Commission on March 11, 1993 (Commission File No. 0-
19681).
(8) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the third quarter ended September 30, 1993
(Commission File No. 0-19681).
(9) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated September 15, 1993 (Commission file No. 0-
19681).
(10) Incorporated by reference to the Registrant's Current
Report and Form 8-K dated June 23, 1994 (Commission File No.
0-19681).
(11) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the third quarter ended September 29,
1994 (Commission File No. 0-19681).
(12) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 (Commission File No. 0-19681).
(13) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994 (Commission File No. 0-19681).
(14) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the first quarter ended March 30, 1995
(Commission File No. 0-19681).
(15) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the second quarter ended June 29, 1995
(Commission File No. 0-19681).
(16) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated September 12, 1995 (Commission File
No. 0-19681).
(17) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the third quarter ended September 28,
1995 (Commission file No. 0-19681).
(18) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1995 (Commission file No. 0-19681).
(19) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated January 24, 1997 (Commission
file No. 0-19681).
(20) Incorporated by reference to the Registrant's Annual
Report Form 10-K for the fiscal year ended December 31, 1996
(Commission file No. 0-19681)
(21) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated May 21, 1997 (Commission
file No. 0-19681)
John B. Sanfilippo & Son, Inc. will furnish any of the above
exhibits to its stockholders upon written request addressed to the
Secretary at the address given on the cover page of this Form 10-
Q. The charge for furnishing copies of the exhibits is $.25 per
page, plus postage.
(b) Reports on Form 8-K: There were no Current Reports on Form 8-
K filed during the quarter ended September 25, 1997.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JOHN B. SANFILIPPO & SON, INC.
Date: November 7, 1997 By: /s/Gary P. Jensen
------------------
Gary P. Jensen
Executive Vice President, Finance
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the John B.
Sanfilippo and Son, Inc. Consolidated Statement of Operations for the quarter
ended September 25, 1997 and Consolidated Balance Sheet as of September 25, 1997
and is qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-25-1998
<PERIOD-END> SEP-25-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 24,738
<ALLOWANCES> 0
<INVENTORY> 83,090
<CURRENT-ASSETS> 114,070
<PP&E> 133,266
<DEPRECIATION> 55,573
<TOTAL-ASSETS> 208,378
<CURRENT-LIABILITIES> 64,909
<BONDS> 67,719
0
0
<COMMON> 93
<OTHER-SE> 73,993
<TOTAL-LIABILITY-AND-EQUITY> 208,378
<SALES> 77,256
<TOTAL-REVENUES> 77,256
<CGS> 64,452
<TOTAL-COSTS> 64,452
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,809
<INCOME-PRETAX> 1,735
<INCOME-TAX> 720
<INCOME-CONTINUING> 1,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,015
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
