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 28, 2000
[ ] 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 8, 2000, 5,461,139 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
PAGE NO.
PART I. FINANCIAL INFORMATION
------------------------------
Item 1 -- Consolidated Financial Statements:
Consolidated Statements of Operations for the quarters
ended September 28, 2000 and September 23, 1999 3
Consolidated Balance Sheets as of September 28, 2000
and June 29, 2000 4
Consolidated Statements of Cash Flows for the
quarters ended September 28, 2000 and September 23, 1999 5
Notes to Consolidated Financial Statements 6
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3 -- Quantitative and Qualitative Disclosures About
Market Risk 12
PART II. OTHER INFORMATION
---------------------------
Item 2 -- Changes in Securities 13
Item 6 -- Exhibits and Reports on Form 8-K 13
SIGNATURE 14
---------
EXHIBIT INDEX 15
-------------
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 28, 2000 September 23, 1999
------------------ ------------------
Net sales $87,183 $79,524
Cost of sales 72,813 66,975
------------------ ------------------
Gross profit 14,370 12,549
------------------ ------------------
Selling expenses 8,134 8,048
Administrative expenses 2,230 1,723
------------------ ------------------
10,364 9,771
------------------ ------------------
Income from operations 4,006 2,778
------------------ ------------------
Other income (expense):
Interest expense (2,073) (1,886)
Rental income 148 143
Miscellaneous 4 33
------------------ ------------------
(1,921) (1,710)
------------------ ------------------
Income before income taxes 2,085 1,068
Income tax expense 834 427
------------------ ------------------
Net income and comprehensive income $ 1,251 $ 641
================== ==================
Basic and diluted earnings per
common share $ 0.14 $ 0.07
================== ==================
The accompanying notes are an integral part of these financial statements.
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 28, June 29,
2000 2000
------------- -----------
ASSETS
CURRENT ASSETS:
Cash $ 627 $ 1,113
Accounts receivable, net 31,404 24,068
Inventories 97,964 105,760
Deferred income taxes 910 910
Prepaid expenses and other current assets 2,450 2,708
------------- -----------
TOTAL CURRENT ASSETS 133,355 134,559
------------- -----------
PROPERTIES:
Buildings 55,640 55,462
Machinery and equipment 79,468 77,108
Furniture and leasehold improvements 5,288 5,175
Vehicles 4,178 4,163
------------- -----------
144,574 141,908
Less: Accumulated depreciation 75,845 74,039
------------- -----------
68,729 67,869
Land 1,892 1,892
------------- -----------
70,621 69,761
------------- -----------
OTHER ASSETS:
Goodwill and other intangibles 5,926 6,129
Miscellaneous 5,251 5,364
------------- -----------
11,177 11,493
------------- -----------
$215,153 $215,813
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 30,590 $ 41,874
Current maturities of long-term debt 5,704 5,702
Accounts payable 19,642 11,851
Drafts payable 8,311 5,747
Accrued expenses 10,018 8,756
Income taxes payable 871 461
------------- -----------
TOTAL CURRENT LIABILITIES 75,136 74,391
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LONG-TERM DEBT 49,123 51,779
------------- -----------
LONG-TERM DEFERRED INCOME TAXES 2,892 2,892
------------- -----------
STOCKHOLDERS' EQUITY
Class A Common Stock, cumulative voting
rights of ten votes per share, $.01 par
value; 10,000,000 shares authorized,
3,687,426 issued and outstanding 37 37
Common Stock, non-cumulative voting rights
of one vote per share, $.01 par value;
10,000,000 shares authorized, 5,461,139
issued and outstanding 56 56
Capital in excess of par value 57,196 57,196
Retained earnings 31,917 30,666
Treasury stock (1,204) (1,204)
------------- -----------
88,002 86,751
------------- -----------
$215,153 $215,813
============= ===========
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 28, September 23,
2000 1999
------------- -------------
Cash flows from operating activities:
Net income $ 1,251 $ 641
Adjustments:
Depreciation and amortization 2,085 1,965
Gain on disposition of properties -- (27)
Change in current assets and
current liabilities:
Accounts receivable, net (7,336) (1,283)
Inventories 7,796 13,103
Prepaid expenses and other
current assets 258 (78)
Accounts payable 7,791 2,346
Drafts payable 2,564 757
Accrued expenses 1,262 (1,843)
Income taxes payable/receivable 410 381
------------- -------------
Net cash provided by operating activities 16,081 15,962
------------- -------------
Cash flows from investing activities:
Acquisition of properties (2,666) (1,217)
Proceeds from disposition of properties -- 27
Other 37 585
------------- -------------
Net cash used in investing activities (2,629) (605)
------------- -------------
Cash flows from financing activities:
Net repayments on notes payable (11,284) (12,184)
Principal payments on long-term debt (2,654) (2,691)
------------- -------------
Net cash used in financing activities (13,938) (14,875)
------------- -------------
Net (decrease) increase in cash (486) 482
Cash:
Beginning of period 1,113 1,393
------------- -------------
End of period $ 627 $ 1,875
============= =============
Supplemental disclosures:
Interest paid $ 2,510 $ 2,374
Taxes paid 425 46
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Note 1 - Basis of Presentation
------------------------------
The consolidated financial statements include the accounts of John B.
Sanfilippo & Son, Inc. and its wholly-owned subsidiary (collectively,
the "Company"). The Company's fiscal year ends on the last Thursday of
June each year, and typically consists of fifty-two weeks (four
thirteen week quarters). The fiscal year ending June 28, 2001 will
consist of fifty-two weeks, whereas the fiscal year ended June 29,
2000 consisted of fifty-three weeks.
Note 2 - Inventories
--------------------
Inventories are stated at the lower of cost (first in, first out) or
market. Inventories consist of the following:
September 28, June 29,
2000 2000
------------- --------
Raw material and supplies $ 41,579 $ 56,755
Work-in-process and finished goods 56,385 49,005
------------- --------
$ 97,964 $105,760
============= ========
Note 3 - 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. The following tables present the required
disclosures:
For the Quarter Ended September 28, 2000
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
------------ ------------- ----------
Net Income $1,251
Basic Earnings Per Share
Income available to common
Stockholders $1,251 9,148,565 $0.14
==========
Effect of Dilutive Securities
Stock options --
Diluted Earnings Per Share
Income available to common
Stockholders $1,251 9,148,565 $0.14
=========== ============= ==========
For the Quarter Ended September 23, 1999
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
------------ ------------- ----------
Net Income $641
Basic Earnings Per Share
Income available to common
Stockholders 641 9,148,565 $0.07
Effect of Dilutive Securities
Stock options --
Diluted Earnings Per Share
Income available to common
Stockholders $641 9,148,565 $0.07
=========== ============= ==========
The following table summarizes the weighted-average number of options
which were outstanding for the periods presented but were not included
in the computation of diluted earnings per share because the exercise
prices of the options were greater than the average market price of the
common shares for the period:
Weighted-Average
Number of Options Exercise Price
----------------- ----------------
Quarter Ended September 28, 2000 538,078 $8.12
Quarter Ended September 23, 1999 360,900 $9.40
Note 4 - Recent Accounting Pronouncements
-----------------------------------------
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement
No. 133 and SFAS No. 138", "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", is effective for fiscal
2001. SFAS No. 133 requires that all derivative instruments be recorded
on the balance sheet at fair value. The accounting for changes in the
fair value of a derivative depends on the use of the derivative. Based
on the Company's current portfolio, the adoption of this statement did
not have a material effect on the Company's results of operations,
financial condition or cash flows for the first quarter of fiscal 2001,
and, due to the nature of the Company's business, is not expected to
have a material effect in the foreseeable future.
Note 5 - 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 fiscal year ended June
29, 2000 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
1999 Annual Report to Stockholders for the year ended June 29, 2000.
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
---------------------------------------------------------------------
General
-------
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
second and third quarters of the Company's fiscal 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 28, 2000,
the Company's inventories totaled approximately $98.0 million compared
to approximately $105.8 million at June 29, 2000, and approximately
$75.9 million at September 23, 1999. The increase in inventories at
September 28, 2000 when compared to September 23, 1999 is primarily due
to increased levels of pecans on hand because of higher purchases in the
1999 crop year when compared to the preceding year due to a larger crop
size. This increase in inventories is partially offset by lower levels
of peanuts on hand due to the 2000 crop year peanuts being harvested
later in the year compared to 1999. See "Factors That May Affect Future
Results -- Availability of Raw Materials and Market Price Fluctuations."
The Company's fiscal year ends on the last Thursday of June each year,
and references herein to "fiscal" years are to the fiscal years ended in
the indicated calendar year (for example, "fiscal 2001" refers to the
Company's fiscal year ending June 28, 2001). The Company's fiscal year
typically consists of fifty-two weeks (four thirteen week quarters).
Fiscal 2001 will consist of fifty-two weeks, whereas fiscal 2000
consisted of fifty-three weeks, as the fourth quarter of fiscal 2000
consisted of fourteen, rather than thirteen, weeks.
Results of Operations
---------------------
Net Sales. Net sales increased from approximately $79.5 million for the
first quarter of fiscal 2000 to approximately $87.2 million for the
first quarter of fiscal 2001, an increase of approximately $7.7 million,
or 9.6%. The increase was due primarily to higher unit volume sales to
the Company's industrial and retail customers. The increase in retail
sales was due primarily to higher unit volume sales of private label
products.
Gross Profit. Gross profit for the first quarter of fiscal 2001
increased approximately 14.5% to approximately $14.4 million from
approximately $12.5 million for the first quarter of fiscal 2000. Gross
profit margin increased from approximately 15.8% for the first quarter
of fiscal 2000 to approximately 16.5% for the first quarter of fiscal
2001. The increase in gross profit margin for the first quarter of
fiscal 2001 was due primarily to the absorption of manufacturing
expenses, a substantial portion of which are fixed in nature, over a
larger revenue base.
Selling and Administrative Expenses. Selling and administrative
expenses as a percentage of net sales decreased from approximately 12.3%
for the first quarter of fiscal 2000 to approximately 11.9% for the
first quarter of fiscal 2001. Selling expenses as a percentage of net
sales decreased from approximately 10.1% for the first quarter of fiscal
2000 to approximately 9.3% for the first quarter of fiscal 2001. This
decrease was due primarily to absorbing selling expenses over a larger
revenue base. Administrative expenses as a percentage of net sales
increased from approximately 2.2% for the first quarter of fiscal 2000
to approximately 2.6% for the first quarter of fiscal 2001. The increase
in administrative expenses as a percentage of net sales for the
quarterly period was due primarily to increases in employee benefit
costs due to improved operating results.
Income from Operations. Due to the factors discussed above, income from
operations increased from approximately $2.8 million, or 3.5% of net
sales, for the first quarter of fiscal 2000, to approximately $4.0
million, or 4.6% of net sales, for the first quarter of fiscal 2001.
Interest Expense. Interest expense increased from approximately $1.9
million for the first quarter of fiscal 2000 to approximately $2.1
million for the first quarter of fiscal 2001. The increase in quarterly
interest expense was due primarily to higher average interest rates
associated with the Bank Credit Facility, as defined below.
Income Taxes. The Company recorded income tax expense of approximately
$0.8 million, or 40.0% of income before income taxes, for the first
quarter of fiscal 2001, compared to approximately $0.4 million, or 40.0%
of income before income taxes, for the first quarter of fiscal 2000.
Liquidity and Capital Resources
-------------------------------
During the first quarter of fiscal 2001, 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 $16.1
million for the first quarter of fiscal 2001 compared to approximately
$16.0 million for the first quarter of fiscal 2000. During the first
quarter of fiscal 2001, the Company spent approximately $2.7 million in
capital expenditures, compared to approximately $1.2 million for the
first quarter of fiscal 2000. This increase was due primarily to the
addition of processing lines at the Company's facilities. During each
of the first quarters of fiscal 2001 and fiscal 2000, the Company repaid
approximately $2.7 million of long-term debt.
The Bank Credit Facility is comprised of (i) a working capital revolving
loan, which provides for working capital financing of up to
approximately $62.3 million, in the aggregate, and matures on May 31,
2003, and (ii) a letter of credit of approximately $7.7 million 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 8.07% at September 28, 2000)
determined pursuant to a formula based on the agent bank's quoted rate
and the Eurodollar Interbank rate.
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 28, 2000,
the total principal amount outstanding under the Long-Term Financing
Facility was approximately $16.0 million.
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 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. As of September 28, 2000, the total
principal amount outstanding under the Additional Long-Term Financing
was approximately $22.1 million.
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 Company's
annual capital expenditures; 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 Long-Term Financing
Facility limits 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 limits dividends to the lesser of (a)
25% of net income for the previous fiscal year, or (b) $5.0 million and
prohibits the Company from redeeming shares of capital stock. As of
September 28, 2000, the Company was in compliance with all restrictive
covenants under its financing facilities.
As of September 28, 2000, the Company had approximately $29.3 million of
available credit under the Bank Credit Facility. Approximately $2.7
million was incurred on capital expenditures for the first quarter of
fiscal 2001. The Company believes that capital expenditures for fiscal
2001 will be more substantial than in recent years with the planned
expansion of its walnut shelling operations at the Gustine, California
facility. The Company expects to remain in compliance with all
restrictive covenants regarding capital expenditures under its financing
facilities. The Company believes that cash flow from operating
activities and funds available under the Bank Credit Facility (assuming
the Company maintains compliance with the restrictive covenants under
the Bank Credit Facility currently in effect, or, in the event of any
subsequent non-compliance, is able to obtain any necessary waivers) will
be sufficient to meet working capital requirements and anticipated
capital expenditures for the foreseeable future.
Recent Accounting Pronouncements
--------------------------------
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement
No. 133 and SFAS No. 138", "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", is effective for fiscal
2001. SFAS No. 133 requires that all derivative instruments be recorded
on the balance sheet at fair value. The accounting for changes in the
fair value of a derivative depends on the use of the derivative. Based
on the Company's current portfolio, the adoption of this statement did
not have a material effect on the Company's results of operations,
financial condition or cash flows for the first quarter of fiscal 2001,
and, due to the nature of the Company's business, is not expected to
have a material effect in the foreseeable future.
Forward Looking Statements
--------------------------
The statements contained in this filing which are not historical
(including statements concerning the Company's expectations regarding
market risk) are "forward looking statements". These forward looking
statements, which are generally identified by the use of forward looking
words and phrases such as "intend", "may", "believes" and "expects",
represent the Company's present expectations or beliefs concerning
future events. The Company cautions that such statements are qualified
by important factors, including the factors described below under
"Factors That May Affect Future Results", that could cause actual
results to differ materially from those in the forward looking
statements, as well as the timing and occurrence (or nonoccurrence) of
transactions and events which may be subject to circumstances beyond the
Company's control. Consequently, results actually achieved may differ
materially from the expected results included in these statements.
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 and other nuts are subject
to crop size and yield fluctuations caused by factors beyond the
Company's control, such as weather conditions 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 ("USDA") 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 may affect the value of the Company's inventories
and the Company's profitability. The Company has significant inventories
of nuts 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 the Company, such
as Planters (which has recently agreed to be acquired by Philip Morris
Companies Inc. and may be combined with Kraft Foods, Inc.) and Ralcorp
Holdings, Inc. The Company 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) Fixed Price Commitments
---------------------------
From time to time, the Company enters into fixed price commitments with
its customers. Such commitments typically represent approximately 10%
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. However, the Company
expects to continue to enter into fixed price commitments with 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, 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.
(d) 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 poundage 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 2000 crop year is
approximately 1.2 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 2000 crop
year is approximately $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 the Company has
successfully operated in a market shaped by the federal peanut program
for many years, the Company believes that it could adapt to a market
without federal regulation if that were to become necessary. However,
the Company 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 the Company'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.
Item 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURESA ABOUT MARKET RISK
---------------------------------------------------------------------
The Company has not entered into transactions using derivative financial
instruments. The Company believes that its exposure to market risk
related to its other financial instruments (which are the debt
instruments under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources")
is not material.
PART II. OTHER INFORMATION
---------------------------
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, such information which is incorporated herein by reference.
Item 6 -- Exhibits and Reports on Form 8-K
------------------------------------------
(a) The exhibits filed herewith are listed in the exhibit index that
follows the signature page and immediately precedes the exhibits
filed.
(b) Reports on Form 8-K: There were no Current Reports on Form 8-K
filed during the quarter ended September 28, 2000.
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 8, 2000 By: /s/ Gary P. Jensen
------------------
Gary P. Jensen
Executive Vice President
Finance and Chief Financial
Officer
EXHIBIT INDEX
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 Second Amended and Restated Note Agreement by and between the
Registrant and The Prudential Insurance Company of America
("Prudential") dated January 24, 1997 (the "Long-Term Financing
Facility")(18)
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 Amendment to the Second Amended and Restated Note Agreement dated May
21, 1997 by and among Prudential, Sunshine and the Registrant(19)
4.13 Amendment to the Second Amended and Restated Note Agreement dated
March 31, 1998 by and among Prudential, the Registrant, Sunshine, and
Quantz Acquisition Co., Inc. ("Quantz") (20)
4.14 Guaranty Agreement dated as of March 31, 1998 by JBS International,
Inc. ("JBSI") in favor of Prudential(20)
4.15 Amendment and Waiver to the Second Amended and Restated Note
Agreement dated February 5, 1999 by and among Prudential, the
Registrant, Sunshine, JBSI and Quantz(23)
4.16 Note Purchase Agreement dated as of August 30, 1995 between the
Registrant and Teachers Insurance and Annuity Association of America
("Teachers")(15)
4.17 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(15)
4.18 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(15)
4.19 Guaranty Agreement dated as of August 30, 1995 by Sunshine in favor of
Teachers (Senior Notes)(15)
4.20 Guaranty Agreement dated as of August 30, 1995 by Sunshine in favor of
Teachers (Senior Subordinated Notes)(15)
4.21 Amendment, Consent and Waiver dated as of March 27, 1996 by and among
Teachers, Sunshine and the Registrant(17)
4.22 Amendment No. 2 to Note Purchase Agreement dated as of January 24,
1997 by and among Teachers, Sunshine and the Registrant(18)
4.23 Amendment to Note Purchase Agreement dated May 19, 1997 by and among
Teachers, Sunshine and the Registrant(20)
4.24 Amendment No. 3 to Note Purchase Agreement dated as of March 31, 1998
by and among Teachers, Sunshine, Quantz and the Registrant(20)
4.25 Guaranty Agreement dated as of March 31, 1998 by JBSI in favor of
Teachers (Senior Notes) (20)
4.26 Guaranty Agreement dated as of March 31, 1998 by JBSI in favor of
Teachers (Senior Subordinated Notes) (20)
4.27 Amendment and Waiver to Note Purchase Agreement dated February 5, 1999
by and among Teachers, Sunshine, Quantz, JBSI and the Registrant(23)
4.28 Amendment and Waiver to Note Purchase Agreement dated October 26, 1999
between Teachers and the Registrant(24)
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(14)
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(11)
10.4 First Amendment to the Touhy Avenue Lease dated June 1, 1987(11)
10.5 Second Amendment to the Touhy Avenue Lease dated December 14, 1990(11)
10.6 Third Amendment to the Touhy Avenue Lease dated September 1, 1991(16)
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(17)
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 and 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 Building 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(12)
10.13 Third Amendment to Industrial Building Lease dated August 15, 1998 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(21)
10.14 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(12)
10.15 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(12)
10.16 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)
10.17 Tax Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public offering(2)
10.18 Indemnification Agreement between Registrant and certain Stockholders
of Registrant prior to its initial public offering(2)
10.19 The Registrant's 1991 Stock Option Plan(1)
10.20 First Amendment to the Registrant's 1991 Stock Option Plan(4)
10.21 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)
10.22 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)
10.23 Outsource Agreement between the Registrant and Preferred Products,
Inc. dated January 19, 1995 [CONFIDENTIAL TREATMENT REQUESTED](12)
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](12)
10.25 The Registrant's 1995 Equity Incentive Plan(13)
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")(16)
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 (16)
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(16)
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(16)
10.30 Credit Agreement dated as of March 31, 1998 among the Registrant,
Sunshine, Quantz, JBSI, U.S. Bancorp Ag Credit, Inc. ("USB") as Agent,
Keybank National Association ("KNA"), and LNB(20)
10.31 Revolving Credit Note in the principal amount of $35.0 million
executed by the Registrant, Sunshine, Quantz and JBSI in favor of
USB, dated as of March 31, 1998(20)
10.32 Revolving Credit Note in the principal amount of $15.0 million
executed by the Registrant, Sunshine, Quantz and JBSI in favor of
KNA, dated as of March 31, 1998(20)
10.33 Revolving Credit Note in the principal amount of $20.0 million
executed by the Registrant, Sunshine, Quantz and JBSI in favor of
LSB, dated as of March 31, 1998(20)
10.34 The Registrant's 1998 Equity Incentive Plan(22)
10.35 Employment Agreement by and between Sunshine and Steven G. Taylor
dated May 1, 1999(25)
10.36 Second Amendment to Credit Agreement dated May 10, 2000 by and among
the Registrant, JBSI, USB as Agent, LNB and SunTrust Bank, N.A.
(replacing KNA)(26)
11 Not applicable
15 Not applicable
18 Not applicable
19 Not applicable
22-24 Not applicable
27 Financial Data Schedule
99 Not applicable
(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 Annual Report on Form
10-K for the fiscal year ended December 31, 1993 (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, 1994 (Commission File
No. 0-19681).
(13) 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).
(14) 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).
(15) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated September 12, 1995 (Commission File No. 0-19681).
(16) 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).
(17) 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).
(18) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 (Commission file
No. 0-19681).
(19) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated May 21, 1997 (Commission file No. 0-19681).
(20) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the third quarter ended March 26, 1998 (Commission file
No. 0-19681).
(21) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 25, 1998
(Commission file No. 0-19681).
(22) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the first quarter ended September 24, 1998 (Commission
file No. 0-19681).
(23) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the second quarter ended December 24, 1998 (Commission
file No. 0-19681).
(24) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the first quarter ended September 23, 1999 (Commission
file No. 0-19681).
(25) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the second quarter ended December 23, 1999 (Commission
file No. 0-19681).
(26) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 29, 2000
(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.
