SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K/A
AMENDMENT NO. 1
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 26, 2003
[ ] 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, Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 593-2300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE PER SHARE
--------------------------------------
(Title of Class)
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, as amended (the "Exchange Act"), 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 [ ].___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X].
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [ ] No [X].
The aggregate market value of the voting Common Stock held by
non-affiliates was $50,142,971 as of December 26, 2002 (5,111,414 shares at
$9.81 per share).
As of September 2, 2003, 5,777,764 shares of the Company's Common
Stock, $.01 par value ("Common Stock"), including 117,900 treasury shares, and
3,667,426 shares of the Company's Class A Common Stock, $.01 par value ("Class A
Stock"), were outstanding.
EXPLANATORY NOTE
John B. Sanfilippo & Son, Inc. (the "Company") is filing this Amendment No. 1 to
its Annual Report on Form 10-K for the fiscal year ended June 26, 2003,
originally filed September 15, 2003 (the "Form 10-K"), principally to amend
specific items of the Form 10-K to reflect the change in classification of
freight costs, which had previously been recorded as a reduction in net sales
rather than selling expenses, in accordance with the guidance of Emerging Issues
Task Force No. 00-10, "Accounting for Shipping and Handling Fees and Costs." See
Note 12 to the consolidated financial statements. In addition, the Company has
enhanced certain previously included disclosures within the accounting policies
and commitments and contingencies footnotes. The changes in classification had
no effect on the Company's income from operations, including no effect on net
income or earnings per share, nor our consolidated balance sheet, stockholders
equity and cash flows for the periods stated above. This Amendment No. 1 amends
only portions of the Form 10-K; the remainder of the Form 10-K is unchanged and
is not reproduced in this Amendment No. 1. This Amendment No. 1 does not reflect
events occurring after the original filing of the Form 10-K.
This Amendment No. 1 contains changes to the following disclosures:
- Part II - Item 6. Selected Financial Data
- Part II - Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Results of Operations.
- Part II - Item 8. Financial Statements and Supplementary Data -- John B.
Sanfilippo & Son, Inc. Consolidated Statements of Operations for the years ended
June 26, 2003, June 27, 2002, June 28, 2001.
- Part II - Item 8. Financial Statements and Supplementary Data --
Supplementary Quarterly Data.
- Part IV - Item 15. Exhibits, Financial Statements Schedules and Reports on
Form 8-K.
PART II
ITEM 6 -- SELECTED FINANCIAL DATA
The following is the Company's historical consolidated financial data as of and
for the years ended June 26, 2003, June 27, 2002, June 28, 2001, June 29, 2000
and June 24, 1999. Information for the three most recent fiscal years has been
derived from the Company's audited consolidated financial statements. The
financial data should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto, which are included
elsewhere herein, and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The information below is not necessarily
indicative of the results of future operations. No dividends have been declared
since 1995.
STATEMENT OF OPERATIONS DATA: ($ in thousands, except per share data)
Year Ended
-----------------------------------------------------------------------
June 26, June 27, June 28, June 29, June 24,
2003 2002 2001 2000(1) 1999
-------- -------- -------- -------- --------
Restated (2) Restated (2) Restated (2) Restated (2) Restated (2)
Net sales $419,676 $352,799 $342,357 $326,619 $312,966
Cost of sales 347,041 294,931 283,278 272,025 268,333
-------- -------- -------- -------- --------
Gross profit 72,635 57,868 59,079 54,594 44,633
Selling and administrative expenses 43,806 39,966 38,678 35,997 32,705
-------- -------- -------- -------- --------
Income from operations 28,829 17,902 20,401 18,597 11,928
Interest expense (4,681) (5,757) (8,365) (8,036) (9,269)
Other income 486 590 622 701 510
-------- -------- -------- -------- --------
Income before income taxes 24,634 12,735 12,658 11,262 3,169
Income tax expense 9,607 5,044 5,063 4,505 1,373
-------- -------- -------- -------- --------
Net income $ 15,027 $ 7,691 $ 7,595 $ 6,757 $ 1,796
======== ======== ======== ======== ========
Basic earnings per common share $ 1.63 $ 0.84 $ 0.83 $ 0.74 $ 0.20
Diluted earnings per common share $ 1.61 $ 0.84 $ 0.83 $ 0.74 $ 0.20
BALANCE SHEET DATA: ($ in thousands)
June 26, June 27, June 28, June 29, June 24,
2003 2002 2001 (1) 2000 1999
-------- -------- -------- -------- --------
Working capital $ 75,182 $ 67,645 $ 55,055 $ 60,168 $ 53,515
Total assets 223,727 206,815 211,007 217,031 207,331
Long-term debt, less current maturities 29,640 40,421 39,109 51,779 57,508
Total debt 70,118 69,623 89,307 99,355 99,591
Stockholders' equity 118,781 102,060 94,346 86,751 79,994
(1) The fiscal year ended June 29, 2000 consists of 53 weeks. All other fiscal
years presented consist of 52 weeks.
(2) The Company has restated its financial statements to change the
classification of freight costs, which had previously been reported as a
reduction in net sales rather than selling expenses. The change in its
classification increases net sales and selling expenses by a corresponding
amount and had no effect on income from operations or net income, nor the
Company's consolidated balance sheet and cash flows. See Note 12 in Notes
to Consolidated Financial Statements.
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's fiscal year ends on the final Thursday of June each year, and
typically consists of fifty-two weeks (four thirteen week quarters). References
herein to fiscal 2003 are to the fiscal year ended June 26, 2003. References
herein to fiscal 2002 are to the fiscal year ended June 27, 2002. References
herein to fiscal 2001 are to the fiscal year ended June 28, 2001. As used
herein, unless the context otherwise indicates, the terms "Company" and "JBSS"
refer collectively to John B. Sanfilippo & Son, Inc. and its wholly owned
subsidiary, JBS International, Inc.
The Company's business is seasonal. Demand for peanut and other nut products is
highest during the months of October, November and 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. There can be no assurance that future write-downs of
the Company's inventory may not be required from time to time because of market
price fluctuations, competitive
2
pricing pressures, the effects of various laws or regulations or other factors.
See "Forward Looking Statements -- Factors That May Affect Future Results --
Availability of Raw Materials and Market Price Fluctuations".
At June 26, 2003, the Company's inventories totaled approximately $112.0 million
compared to approximately $99.5 million at June 27, 2002. The increase in
inventories at June 26, 2003 when compared to June 27, 2002 is primarily due to
(i) an increase in finished goods to support the increase in sales volume, (ii)
an increase in the quantity of almonds on hand due to higher purchases during
fiscal 2003 than fiscal 2002, and (iii) an increase in the purchase price of
pecans. These increases in inventories were partially offset by decreases in
inshell peanuts on hand due to a smaller domestic crop in fiscal 2003. See
"Forward Looking Statements -- Factors That May Affect Future Results --
Availability of Raw Materials and Market Price Fluctuations."
To enhance consumer awareness of dietary issues associated with the consumption
of peanuts and other nut products, the Company has taken steps to educate
consumers about the benefits of nut consumption. Also, there have been various
medical studies detailing the healthy attributes of nuts and the Mediterranean
Diet Pyramid promotes the daily consumption of nuts as part of a healthy diet.
The Company has no experience or data that indicates that the growth in the
number of health conscious consumers will cause a change in nut consumption.
Also, over the last few years there has been some publicity concerning allergic
reactions to peanuts and other nuts. However, the Company has no experience or
data that indicates peanut and other nut related allergies have affected the
Company's business. Furthermore, the Company does not presently believe that nut
related allergies will have a material adverse affect on the Company's financial
results in the foreseeable future.
CRITICAL ACCOUNTING POLICIES
The accounting policies as disclosed in the Notes to Consolidated Financial
Statements are applied in the preparation of the Company's financial statements
and accounting for the underlying transactions and balances. The policies
discussed below are considered by management to be critical for an understanding
of the Company's financial statements because the application of these policies
places the most significant demands on management's judgment, with financial
reporting results relying on estimation about the effect of matters that are
inherently uncertain. Specific risks, if applicable, for these critical
accounting policies are described in the following paragraphs. For a detailed
discussion on the application of these and other accounting policies, see Note 1
of the Notes to Consolidated Financial Statements. Preparation of this Annual
Report on Form 10-K/A requires us to make estimates and assumptions that affect
the reported amount of assets and liabilities, disclosure of contingent assets
and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting period. Actual results may
differ from those estimates.
ACCOUNTS RECEIVABLE
Accounts receivable are stated at the amounts charged to customers, less: (i) an
allowance for doubtful accounts; (ii) a reserve for estimated cash discounts;
and (iii) a reserve for customer deductions. The allowance for doubtful accounts
is calculated by specifically identifying customers that are credit risks. The
reserve for estimated cash discounts is estimated using historical payment
patterns. The reserve for customer deductions represents an estimate of future
credit memos that will be issued to customers and is based on historical
experience.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market.
Inventory costs are reviewed quarterly. Fluctuations in the market price of
peanuts, pecans, walnuts, almonds and other nuts may affect the value of the
Company's inventory and thus the Company's gross profit and gross profit margin.
If expected market sales prices were to move below cost, the Company would
record adjustments to write down the carrying values of inventories to fair
market value.
3
INTRODUCTORY FUNDS
The ability to sell to certain retail customers often requires upfront payments
by the Company. Such payments are made pursuant to contracts that usually
stipulate the term of the agreement, the quantity and type of products to be
sold and any exclusivity requirements. The cost of these payments is initially
recorded as an asset and is amortized on a straight-line basis over the term of
the contract and is recorded as a reduction in net sales.
RELATED PARTY TRANSACTIONS
As discussed in Note 7 and Note 9 of the Notes to Consolidated Financial
Statements, the Company leases space from related parties and transacts with
other related parties in the normal course of business. These related party
transactions are conducted on an arm's-length basis.
NET SALES AND SELLING EXPENSE RESTATEMENT
In accordance with authoritative accounting literature, we have changed the
classification of our freight costs. As a result, we have restated our
Consolidated Statements of Operations included in our annual financial
statements on Form 10-K for the fiscal years ended June 26, 2003, June 27, 2002,
and June 28, 2001 and our quarterly filing for the thirteen weeks ended
September 25, 2003. The purpose of this restatement is to change the
classification of our freight costs, which had previously been reflected as a
reduction in net sales as selling expenses, in accordance with the guidance of
Emerging Issues Task Force No. 00-10 ("EITF 00-10"), "Accounting for Shipping
and Handling Fees and Costs." We have included a disclosure of our accounting
policy related to shipping and handling costs (Note 1 to our financial
statements) and have made the appropriate modifications to the Consolidated
Statements of Operations to give effect to this change in classification.
As a result of this restatement, our net sales, gross profit, selling expenses
and total selling, general and administrative expenses each increased by the
corresponding amount of our freight costs. These changes, however, had no effect
on our balance sheet, stockholders' equity, cash flows or income, including net
income and earnings per share.
EITF 00-10 allows companies to classify shipping and handling costs in either
or both of costs of goods sold or selling, general and administrative costs. We
have elected to classify our shipping and handling costs (including freight
costs) as selling expenses. We believe our presentation makes our financial
statements comparable to similar companies in our industry. Some other
comparable companies, however, include shipping and handling costs in their
costs of goods sold and others include portions of shipping and handling costs
in both their costs of goods sold and selling, general and administrative
expenses.
As a result of classifying our freight costs as selling expenses, we report
higher gross profit than if we had classified these costs as costs of goods
sold. Our income from operations, net income and earnings per share would be
the same under either approach.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain items to
net sales for the periods indicated and the percentage increase or decrease of
such items from fiscal 2002 to fiscal 2003 and from fiscal 2001 to fiscal 2002.
Percentage of Net Sales Percentage Increase (Decrease)
----------------------- ------------------------------
Fiscal 2003 Fiscal 2002 Fiscal 2001 Fiscal 2003 vs. 2002 Fiscal 2002 vs. 2001
----------- ----------- ----------- -------------------- --------------------
Net sales 100.0% 100.0% 100.0% 19.0% 3.1%
Gross profit 17.3 16.4 17.3 25.5 (2.0)
Selling expenses 7.9 8.7 8.7 8.5 2.9
Administrative expenses 2.5 2.6 2.6 13.1 4.7
Income from operations 6.9 5.1 6.0 61.0 (12.2)
FISCAL 2003 COMPARED TO FISCAL 2002
NET SALES. Net sales increased from approximately $352.8 million for fiscal 2002
to approximately $419.7 million for fiscal 2003, an increase of approximately
$66.9 million or 19.0%. The increase in net sales was due primarily to higher
unit volume sales to the Company's retail, export and industrial customers. The
increase in net sales to retail customers was due primarily to an increase in
private label business through the addition of new customers and the expansion
of business to existing customers. The increase in net sales to export customers
is due primarily to higher almond sales to the Asian market and increased snack
nut sales to the Canadian market. The increase in sales to industrial customers
is due primarily to the increased usage of nuts as ingredients in food products.
The Company believes that a portion of the overall increase in net sales is
attributable to the growing awareness of the health benefits of nuts in the
daily diet.
The following table shows an annual comparison of sales by distribution channel,
as a percentage of total net sales:
Year Ended
----------
Distribution Channel June 26, 2003 June 27, 2002
-------------------- ------------- -------------
Consumer 56.7% 56.9%
Industrial 20.5 20.5
Food Service 8.8 10.8
Contract Packaging 6.2 6.4
Export 7.8 5.4
--- ---
Total 100.0% 100.0%
===== =====
4
The following table shows an annual comparison of sales by product type, as a
percentage of total gross sales:
Year Ended
----------
Product Type June 26, 2003 June 27, 2002
------------ ------------- -------------
Peanuts 25.3% 27.8%
Pecans 17.7 18.8
Cashews & Mixed Nuts 24.1 21.4
Walnuts 10.9 11.7
Almonds 10.1 7.7
Other 11.9 12.6
---- ----
Total 100.0% 100.0%
===== =====
GROSS PROFIT. Gross profit in fiscal 2003 increased 25.5% to approximately $72.6
million from approximately $57.9 million for fiscal 2002. Gross profit margin
increased from 16.4% for fiscal 2002 to 17.3% for fiscal 2003. The increase in
gross profit margin was due primarily to: (i) the increase in unit volume as
certain costs of sales are of a fixed nature, (ii) changes in the sales mix, and
(iii) generally lower commodity costs, especially for peanuts which were
directly impacted by the 2002 Farm Bill.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses as a
percentage of net sales decreased from 11.3% for fiscal 2002 to 10.4% for fiscal
2003. Selling expenses as a percentage of net sales decreased from 8.7% for
fiscal 2002 to 7.9% for fiscal 2003. This decrease was due primarily to: (i)
continuous efforts to control expenses and (ii) the fixed nature of certain of
these expenses relative to a larger revenue base. Administrative expenses as a
percentage of net sales decreased from 2.6% for fiscal 2002 to 2.5% for fiscal
2003. This decrease was due primarily to the fixed nature of these expenses over
a larger revenue base. Administrative expenses, in gross dollars, increased from
approximately $9.4 million in fiscal 2002 to approximately $10.6 million in
fiscal 2003, an increase of approximately $1.2 million, or 13.1%. This increase
is due primarily to higher incentive compensation expenses due to improved
operating results.
INCOME FROM OPERATIONS. Due to the factors discussed above, income from
operations increased from approximately $17.9 million, or 5.1% of net sales, for
fiscal 2002 to approximately $28.8 million, or 6.9% of net sales, for fiscal
2003.
INTEREST EXPENSE. Interest expense decreased from approximately $5.8 million for
fiscal 2002 to approximately $4.7 million for fiscal 2003. The decrease in
interest expense was due primarily to: (i) lower average levels of borrowings
and (ii) lower interest rates associated with the Bank Credit Facility, as
defined below.
INCOME TAXES. Income tax expense was approximately $9.6 million, or 39.0% of
income before income taxes, for fiscal 2003, compared to approximately $5.0
million, or 39.6% of income before income taxes, for fiscal 2002.
FISCAL 2002 COMPARED TO FISCAL 2001
NET SALES. Net sales increased from approximately $342.4 million for fiscal 2001
to approximately $352.8 million for fiscal 2002, an increase of approximately
$10.4 million or 3.1%. The increase in net sales was due primarily to higher
unit volume sales to the Company's retail and contract packaging customers,
partially offset by lower unit volume sales to the Company's industrial
customers during the first half of fiscal 2002. The increase in sales to retail
customers was due primarily to increased sales of private label products. The
decrease in sales to industrial customers was due primarily to high sales of
pecans during the first half of fiscal 2001. The increase in net sales was
accomplished despite lower average selling prices during the last half of fiscal
2002, due to lower commodity costs for pecans, cashews and almonds.
5
GROSS PROFIT. Gross profit in fiscal 2002 decreased 2.0% to approximately $57.9
million from approximately $59.1 million for fiscal 2001. Gross profit margin
decreased from 17.3% for fiscal 2001 to 16.4% for fiscal 2002. The decrease in
gross profit margin was due primarily to: (i) a decrease in gross profit margin
on sales to industrial customers, (ii) an increase in private label sales to
retail customers, which sales generally carry lower gross profit margins than
sales of branded products and (iii) an increase in sales to contract packaging
customers, which sales generally carry lower margins than sales to the Company's
other customers.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses as a
percentage of net sales were 11.3% for both fiscal 2001 and fiscal 2002. Selling
expenses as a percentage of net sales were 8.7% for both fiscal 2001 and fiscal
2002. Administrative expenses as a percentage of net sales were 2.6% for both
fiscal 2002 and fiscal 2001.
INCOME FROM OPERATIONS. Due to the factors discussed above, income from
operations decreased from approximately $20.4 million, or 6.0% of net sales, for
fiscal 2001 to approximately $17.9 million, or 5.1% of net sales, for fiscal
2002.
INTEREST EXPENSE. Interest expense decreased from approximately $8.4 million for
fiscal 2001 to approximately $5.8 million for fiscal 2002. The decrease in
interest expense was due primarily to: (i) lower average levels of borrowings
due to lower average levels of inventories and (ii) lower interest rates
associated with the Bank Credit Facility, as defined below.
INCOME TAXES. Income tax expense was approximately $5.0 million, or 39.6% of
income before income taxes, for fiscal 2002, compared to approximately $5.1
million, or 40.0% of income before income taxes, for fiscal 2001.
LIQUIDITY AND CAPITAL RESOURCES
General
During fiscal 2003, the Company continued to finance its activities through the
combination of a bank revolving credit facility entered into on March 31, 1998
and last amended on May 30, 2003 (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 $7.4 million for
fiscal 2003 compared to approximately $24.4 million for fiscal 2002. The
decrease in cash provided by operating activities for fiscal 2003 when compared
to fiscal 2002 was due largely to an increase in inventories of approximately
$12.5 million that occurred primarily as a result of (i) purchasing a
significantly greater quantity of almonds in fiscal 2003, and (ii) an increase
in the purchase price of pecans in fiscal 2003. The largest component of net
cash used in investing activities during fiscal 2003 was approximately $7.9
million in capital expenditures, compared to approximately $4.6 million during
fiscal 2002. This increase in capital expenditures was due primarily to the
expansion of processing capacities and capabilities at the Company's Gustine,
California facility. Notes payable increased to approximately $29.7 million at
June 26, 2003 from approximately $23.5 million at June 27, 2002, due primarily
to the increase in the purchase of inventories. During both fiscal 2003 and
fiscal 2002, the Company repaid approximately $5.7 million of long-term debt.
Financing Arrangements
The Bank Credit Facility is comprised of (i) a working capital revolving loan
which provides working capital financing of up to approximately $73.1 million,
in the aggregate, and matures, as amended, on May 31, 2006, and (ii) a $6.9
million letter of credit (the "IDB Letter of Credit") to secure the industrial
development bonds described below which matures on June 1, 2006. The IDB Letter
of
6
Credit replaced a prior letter of credit that matured on June 1, 2002. The Bank
Credit Facility was amended on May 30, 2003 to, among other things: (i) extend
the maturity of the facility for three additional years and (ii) increase the
total amount of the facility from $70.0 million to $80.0 million. Borrowings
under the working capital revolving loan accrue interest at a rate (the weighted
average of which was 2.76% at June 26, 2003) determined pursuant to a formula
based on the agent bank's quoted rate and the Eurodollar Interbank rate.
As of June 26, 2003, the total principal amount outstanding under the Long-Term
Financing Facility was $6.6 million of the original amount borrowed of $35.0
million. Of the remaining balance of $6.6 million, $3.75 million bears interest
at rates ranging from 7.34% to 9.18% per annum payable quarterly, and requires
equal semi-annual principal installments of approximately $1.3 million, with the
final installment due on August 16, 2004. The remaining $2.85 million of this
indebtedness bears interest at a rate of 9.16% per annum payable quarterly, and
requires equal semi-annual principal installments of approximately $0.5 million,
with the final installment due on May 15, 2006.
As of June 26, 2003, the total principal amount outstanding under the Additional
Long-Term Financing was approximately $19.3 million of the original amount
borrowed of $25.0 million. Of the remaining balance of approximately $19.3
million, approximately $4.3 million bears interest at a rate of 8.3% per annum
payable semiannually, and requires equal annual principal installments of
approximately $1.4 million, with the final installment due on September 1, 2005.
The remaining $15.0 million of this indebtedness (which is subordinated to the
Company's other financing facilities) bears interest at a rate of 9.38% per
annum payable semiannually, and requires equal annual principal installments of
$5.0 million, with the final installment due on September 1, 2005.
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
June 26, 2003, the Company was in compliance with all restrictive covenants, as
amended, under its financing facilities.
The Company has $6.75 million in aggregate principal amount of industrial
development bonds outstanding which was used to finance the acquisition,
construction and equipping of the Company's Bainbridge, Georgia facility (the
"IDB Financing"). The bonds bear interest payable semiannually at 4.00% (which
was reset on June 1, 2002) through May 2006. On June 1, 2006, and on each
subsequent interest reset date for the bonds, the Company is required to redeem
the bonds at face value plus any accrued and unpaid interest, unless a
bondholder elects to retain his or her bonds. Any bonds redeemed by the Company
at the demand of a bondholder on the reset date are required to be remarketed by
the underwriter of the bonds on a "best efforts" basis. Funds for the redemption
of bonds on the demand of any bondholder are required to be obtained from the
following sources in the following order of priority: (i) funds supplied by the
Company for redemption; (ii) proceeds from the remarketing of the bonds; (iii)
proceeds from a drawing under the IDB Letter of Credit; or (iv) in the event
funds from the foregoing sources are insufficient, a mandatory payment by the
Company. Drawings under the IDB Letter of Credit to redeem bonds on the demand
of any bondholder are payable in full by the Company upon demand of the lenders
under the Bank Credit Facility. In addition, the Company is required to redeem
the bonds in varying annual installments, ranging from approximately $0.3
million in fiscal 2004 to approximately $0.8 million in fiscal 2017. The Company
7
is also required to redeem the bonds in certain other circumstances; for
example, within 180 days after any determination that interest on the bonds is
taxable. The Company has the option, subject to certain conditions, to redeem
the bonds at face value plus accrued interest, if any.
Capital Expenditures
For fiscal 2003, capital expenditures were approximately $7.9 million. The
Company believes that capital expenditures for fiscal 2004 will be in the $9.0 -
$10.0 million range. The most significant planned capital expenditure for fiscal
2004 is approximately $2.5 - $3.0 million for an increase in storage capacity of
inshell pecans at the Selma, Texas facility. Approximately $1.1 million was
incurred on this project during fiscal 2003. The Company is currently exploring
the possible consolidation of certain of its production facilities into a single
location through the construction of a new production facility. If the
consolidation proceeds, it is unlikely that such a facility could be financed
using the Company's existing credit facilities. In that event, the Company would
consider evaluating other financing alternatives, including but not limited to
debt financing and/or the issuance of common stock in a private placement.
Capital Resources
As of June 26, 2003, the Company had approximately $40.5 million of available
credit under the Bank Credit Facility. Scheduled long-term debt payments for
fiscal 2004 are approximately $10.8 million. Scheduled operating lease payments
are approximately $1.3 million. The Company believes that cash flow from
operating activities and funds available under the Bank Credit Facility will be
sufficient to meet working capital requirements and anticipated capital
expenditures for the foreseeable future. However, if the Company elects to
construct a new processing facility, additional financing sources may be
required to fund the capital expenditures that would be necessary for that
project.
Contractual Cash Obligations
At June 26, 2003, the Company had the following contractual cash obligations
(amounts in thousands):
Year Year Year Year Year
Ending Ending Ending Ending Ending
June 24, June 30, June 29, June 28, June 26,
2004 2005 2006 2007 2008 Thereafter
---- ---- ---- ---- ---- ----------
Long-term debt $13,922 $11,816 $15,724 $ 1,575 $ 1,575 $ 4,519
Minimum operating lease
commitments 1,252 1,355 1,000 214 133 10
------- ------- ------- ------- ------- ----------
Total contractual cash
obligations $15,174 $13,171 $16,724 $ 1,789 $ 1,708 $ 4,529
======= ======= ======= ======= ======= ==========
RECENT ACCOUNTING PRONOUNCEMENTS
The Company adopted Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets", effective June 28, 2002. SFAS 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, SFAS 142 includes
provisions for the reclassification of certain existing recognized intangible
assets as goodwill, reassessment of the useful lives of existing recognized
intangible assets, reclassification of certain intangible assets out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. The Company's
recorded assets at June 28, 2002 included both an intangible asset and goodwill.
Based upon the results of management's impairment testing, which included an
independent
8
valuation, no adjustment to the carrying amount of goodwill and the intangible
asset is required. As required under SFAS 142, amortization of goodwill has been
discontinued.
In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations". This statement requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS 143 became effective in the first quarter of fiscal 2003.
The implementation of SFAS 143 did not have an effect on the Company's cash
flows, financial position or results of operations.
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". This statement provides a single, comprehensive
accounting model for impairment and disposal of long-lived assets and
discontinued operations. SFAS 144 became effective in the first quarter of
fiscal 2003. The adoption of SFAS 144 had no impact on the Company's cash flows,
financial position or results of operations.
In June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities". This statement addresses financial accounting and
reporting for costs associated with exit or disposal activities. SFAS 146 became
effective in the third quarter of fiscal 2003. The adoption of SFAS 146 had no
impact on the Company's cash flows, financial position or results of operations.
In November 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". Interpretation 45 requires a guarantor to include
disclosure of certain obligations and, if applicable, at the inception of the
guarantee, recognize a liability for the fair value of other certain obligations
undertaken in issuing a guarantee. The recognition requirement became effective
for guarantees issued or modified after December 31, 2002 and did not have an
impact on the Company. The Company adopted the disclosure requirements of
Interpretation 45 effective December 2002. The Company has no obligations from
guarantees that require disclosure at June 26, 2003, except for a $6,896 standby
letter of credit to secure industrial revenue bonds (as discussed in Note 6) and
a $1,833 standby letter of credit related to self-insurance requirements.
In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". SFAS 148 amends certain provisions of
SFAS 123 and is effective for fiscal years beginning after December 15, 2002.
The Company is currently evaluating the reporting alternatives of SFAS 148.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51".
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 is effective
immediately for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 will become effective during the
first quarter of fiscal 2004. The Company enters into various transactions with
certain related parties including the rental of buildings under capital leases
and purchases from entities owned either directly or indirectly by certain
directors, officers and stockholders of the Company. Based on management's
initial analysis, it is at least reasonably possible that the Company may be
required to consolidate or disclose information for one or more of these
entities once the provisions of FIN 46 become effective during the first quarter
of 2004. These related party transactions are more fully described in Notes 7
and 9 of the Notes to Consolidated Financial Statements.
In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," which amends and clarifies
financial accounting and reporting for certain derivative instruments. The
Company does not anticipate the adoption of this statement to have a material
impact on its consolidated financial statements, as the Company is not currently
a party to
9
derivative financial instruments included in this standard.
In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity," which
establishes standards for the classification and measurement of certain
financial instruments with characteristics of both liabilities and equity. The
Company does not anticipate the adoption of this statement to have a material
impact on its consolidated financial statements, as the Company is not currently
a party to such instruments included in this standard.
FORWARD LOOKING STATEMENTS
The statements contained in this Annual Report on Form 10-K, and in the
Chairman's letter to stockholders accompanying the Annual Report on Form 10-K
delivered to stockholders, that are not historical (including statements
concerning the Company's expectations regarding market risk) are "forward
looking statements". These forward looking statements, which generally are
followed (and therefore identified) by a cross reference to "Factors That May
Affect Future Results" or are 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 that could
cause actual results to differ materially from those in the forward looking
statements, including the factors described below under "Factors That May Affect
Future Results", as well as the timing and occurrence (or non-occurrence) 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
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 a
determination by the United States Department of Agriculture (the "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
and resulting increases in the prices of nuts and other raw materials used by
the Company in its products (to the extent that cost increases cannot be passed
on to customers) 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 "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- General."
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 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. This competitive pricing 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.
10
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, 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.
2002 FARM BILL
The Farm Security and Rural Investment Act of 2002 (the "2002 Farm Bill")
terminated the federal peanut quota program beginning with the 2002 crop year.
The 2002 Farm Bill replaced the federal peanut quota program with a fixed
payment system through the 2007 crop year that can be either coupled or
decoupled. A coupled system is tied to the actual amount of production, while a
decoupled system is not. The series of loans and subsidies established by the
2002 Farm Bill is similar to the systems used for other crops such as grains and
cotton. To compensate farmers for the elimination of the peanut quota, the 2002
Farm Bill provides a buy-out at a specified rate for each pound of peanuts that
had been in that farmer's quota under the prior program. Additionally, among
other provisions, the Secretary of Agriculture may make certain counter-cyclical
payments whenever the Secretary believes that the effective price for peanuts is
less than the target price.
The termination of the federal peanut quota program has resulted in a decrease
in the Company's cost for peanuts. Selling prices have not been adversely
affected in a material manner during fiscal 2003, resulting in a favorable
impact on the Company's gross profit and gross profit margin. There are no
assurances that selling prices for peanuts will not be adversely affected in the
future or that the termination of the federal peanut quota program will not have
an adverse effect on the Company's business
PEANUT SHELLING INDUSTRY ANTITRUST INVESTIGATION
On June 17, 2003, the Company received a subpoena for the production of
documents and records from the Antitrust Division of the U.S. Department of
Justice in connection with an antitrust investigation of the peanut shelling
industry. The Company expects to cooperate fully in the investigation. There can
be no assurances as to the impact of the investigation on the peanut shelling
industry or that the investigation will not have a material adverse effect on
the Company.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF MANAGEMENT
The management of John B. Sanfilippo & Son, Inc. has prepared and is responsible
for the integrity of the information presented in this Annual Report on Form
10-K/A, including the Company's financial statements. These statements have been
prepared in conformity with generally accepted accounting principles and
include, where necessary, informed estimates and judgments by management.
The Company maintains systems of accounting and internal controls designed to
provide assurance that assets are properly accounted for, as well as to ensure
that the financial records are reliable for preparing financial statements. The
systems are augmented by qualified personnel and are reviewed on a periodic
basis.
Our independent auditors, PricewaterhouseCoopers LLP, conduct annual audits of
our financial statements in accordance with generally accepted auditing
standards, which include the review of internal controls for the purpose of
establishing audit scope and the issuance of an opinion on the fairness of such
financial statements.
The Company has an Audit Committee that meets periodically with management and
the independent accountants to review the manner in which they are performing
their responsibilities and to discuss auditing, internal accounting controls and
financial reporting matters. The independent accountants periodically meet alone
with the Audit Committee and have free access to the Audit Committee at any
time.
/s/ Michael J. Valentine
------------------------
Michael J. Valentine
Executive Vice President Finance, Chief Financial Officer and Secretary
11
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
and Stockholders of
John B. Sanfilippo & Son, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of John B.
Sanfilippo & Son, Inc. and its subsidiary at June 26, 2003 and June 27, 2002,
and the results of their operations and their cash flows for the each of the
three years in the period ended June 26, 2003, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 12 to the consolidated financial statements, the Company
has restated its consolidated statements of operations for each of the three
years in the period ended June 26, 2003, to reflect a change in the
classification of freight costs.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
August 18, 2003, except Note 12,
as to which the date is January 23, 2004
Chicago, Illinois
12
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended June 26, 2003, June 27, 2002 and June 28, 2001
(dollars in thousands, except for earnings per share)
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 26, 2003 JUNE 27, 2002 JUNE 28, 2001
------------- ------------- -------------
Restated Restated Restated
(Note 12) (Note 12) (Note 12)
Net sales $ 419,676 $ 352,799 $ 342,357
Cost of sales 347,041 294,931 283,278
---------- ---------- ----------
Gross profit 72,635 57,868 59,079
---------- ---------- ----------
Selling expenses 33,213 30,601 29,730
Administrative expenses 10,593 9,365 8,948
---------- ---------- ----------
Total selling and administrative expenses 43,806 39,966 38,678
---------- ---------- ----------
Income from operations 28,829 17,902 20,401
---------- ---------- ----------
Other income (expense):
Interest expense ($842, $899 and $956 to
related parties) (4,681) (5,757) (8,365)
Rental income 484 576 605
Miscellaneous 2 14 17
---------- ---------- ----------
Total other (expense) (4,195) (5,167) (7,743)
---------- ---------- ----------
Income before income taxes 24,634 12,735 12,658
Income tax expense 9,607 5,044 5,063
---------- ---------- ----------
Net income $ 15,027 $ 7,691 $ 7,595
========== ========== ==========
Basic earnings per common share $ 1.63 $ 0.84 $ 0.83
========== ========== ==========
Diluted earnings per common share $ 1.61 $ 0.84 $ 0.83
========== ========== ==========
Weighted average shares outstanding - basic 9,198,957 9,149,672 9,148,565
========== ========== ==========
Weighted average shares outstanding - diluted 9,332,889 9,194,951 9,150,332
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
13
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
June 26, 2003 and June 27, 2002
(dollars in thousands)
JUNE 26, JUNE 27,
2003 2002
-------- --------
ASSETS
CURRENT ASSETS:
Cash $ 2,448 $ 1,272
Accounts receivable, less allowances of $1,552 and $1,406 29,142 24,133
Inventories 112,016 99,485
Deferred income taxes 1,257 861
Income taxes receivable 469 --
Prepaid expenses and other current assets 2,192 3,032
-------- --------
TOTAL CURRENT ASSETS 147,524 128,783
-------- --------
PROPERTIES:
Buildings 61,485 60,348
Machinery and equipment 89,980 84,420
Furniture and leasehold improvements 5,385 5,399
Vehicles 3,185 3,684
Construction in progress 1,057 --
-------- --------
161,092 153,851
Less: Accumulated depreciation 95,838 88,252
-------- --------
65,254 65,599
Land 1,863 1,863
-------- --------
TOTAL PROPERTIES 67,117 67,462
-------- --------
OTHER ASSETS:
Goodwill and other intangibles, less accumulated amortization of
$6,054 and $5,628 4,370 4,796
Miscellaneous 4,716 5,774
-------- --------
TOTAL OTHER ASSETS 9,086 10,570
-------- --------
TOTAL ASSETS $223,727 $206,815
======== ========
The accompanying notes are an integral part of these financial statements.
14
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
June 26, 2003 and June 27, 2002
(dollars in thousands, except per share amounts)
JUNE 26, JUNE 27,
2003 2002
--------- ---------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 29,702 $ 23,519
Current maturities of long-term debt 10,776 5,683
Accounts payable, including related party payables of $543 and $337 13,658 17,741
Drafts payable 5,507 4,049
Accrued expenses 12,699 10,098
Income taxes payable -- 298
--------- ---------
TOTAL CURRENT LIABILITIES 72,342 61,388
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 29,640 40,421
Deferred income taxes 2,964 2,946
--------- ---------
TOTAL LONG-TERM LIABILITIES 32,604 43,367
--------- ---------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Class A Common Stock, convertible to Common Stock on a per 37 37
share basis, cumulative voting rights of ten votes
per share, $.01 par value; 10,000,000 shares authorized,
3,667,426 and 3,687,426 shares issued and outstanding
Common Stock, noncumulative voting rights of one vote per 58 56
share, $.01 par value; 10,000,000 shares authorized,
5,775,564 and 5,583,939 shares issued and outstanding
Capital in excess of par value 58,911 57,219
Retained earnings 60,979 45,952
Treasury stock, at cost; 117,900 shares (1,204) (1,204)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 118,781 102,060
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 223,727 $ 206,815
========= =========
The accompanying notes are an integral part of these financial statements.
15
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended June 26, 2003, June 27, 2002 and June 28, 2001
(dollars in thousands)
CLASS A
COMMON COMMON CAPITAL IN EXCESS RETAINED TREASURY
STOCK STOCK OF PAR VALUE EARNINGS STOCK TOTAL
---------------------------------------------------------------------------
Balance, June 29, 2000 $ 37 $ 56 $57,196 $ 30,666 $ (1,204) $86,751
Net income and comprehensive income 7,595 7,595
------- ------ ------- -------- -------- --------
Balance, June 28, 2001 37 56 57,196 38,261 (1,204) 94,346
Net income and comprehensive 7,691 7,691
income
Stock options exercised 23 23
------- ------ ------- -------- -------- --------
Balance, June 27, 2002 37 56 57,219 45,952 (1,204) 102,060
Net income and comprehensive 15,027 15,027
income
Stock options exercised 2 1,173 1,175
Tax benefit of stock options 519 519
exercised
------- ------ ------- -------- -------- --------
Balance, June 26, 2003 $ 37 $ 58 $58,911 $ 60,979 $ (1,204) $118,781
======= ====== ======= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
16
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 26, 2003, June 27, 2002 and June 28, 2001
(dollars in thousands)
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 26, 2003 JUNE 27, 2002 JUNE 28, 2001
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,027 $ 7,691 $ 7,595
Adjustments:
Depreciation and amortization 11,248 10,428 9,974
(Gain) loss on disposition of properties (14) (13) 57
Deferred income taxes (378) (123) 226
Tax benefit of option exercises 519 -- --
Change in current assets and current liabilities:
Accounts receivable, net (5,009) 2,524 (1,822)
Inventories (12,531) (918) 7,193
Prepaid expenses and other current assets 840 (1,101) 777
Accounts payable (4,083) 6,312 (422)
Drafts payable 1,458 (895) (803)
Accrued expenses 2,601 1,958 (1,383)
Income taxes receivable/payable (767) 1,178 (1,341)
Other (1,508) (2,675) (1,716)
-------- -------- --------
Net cash provided by operating activities 7,403 24,366 18,335
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of properties (7,926) (4,559) (8,382)
Proceeds from disposition of properties 29 51 80
-------- -------- --------
Net cash used in investing activities (7,897) (4,508) (8,302)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on notes payable 6,183 (14,013) (4,342)
Principal payments on long-term debt (5,688) (5,671) (5,706)
Issuance of Common Stock 1,175 -- --
-------- -------- --------
Net cash provided by (used in) financing activities 1,670 (19,684) (10,048)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 1,176 174 (15)
CASH:
Beginning of period 1,272 1,098 1,113
-------- -------- --------
End of period $ 2,448 $ 1,272 $ 1,098
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 4,579 $ 5,846 $ 8,359
Income taxes paid 10,287 4,062 6,178
The accompanying notes are an integral part of these financial statements.
17
JOHN B. SANFILIPPO & SON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements include the accounts of John B. Sanfilippo
& Son, Inc. and its wholly owned subsidiary (collectively, "JBSS" or the
"Company"). Intercompany balances and transactions have been eliminated. Certain
prior years' amounts have been reclassified to conform with the current year's
presentation. 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).
All years presented consist of fifty-two week periods.
Nature of business
The Company processes and sells shelled and inshell nuts and other snack foods
in both retail and wholesale markets. The Company has plants located throughout
the United States. Revenues are generated from sales to a variety of customers,
including several major retailers and the U.S. government. The related accounts
receivable from sales are unsecured.
Revenue recognition
The Company records revenue when a persuasive arrangement exists, title has
transferred (based upon terms of shipment), price is fixed, delivery occurs and
collection is reasonably assured. While customers do have the right to return
products, past experience has demonstrated that product returns have been
insignificant. The Company offers annual volume rebates to certain customers and
estimates the amount of these rebates based upon projected volumes for the year.
Provisions for returns and rebates are reflected as a reduction in net sales.
Accounts Receivable
Accounts receivable are stated at the amounts charged to customers, less: (i) an
allowance for doubtful accounts; (ii) a reserve for estimated cash discounts;
and (iii) a reserve for customer deductions. The allowance for doubtful accounts
is calculated by specifically identifying customers that are credit risks. The
reserve for estimated cash discounts is estimated using historical payment
patterns. The reserve for customer deductions represents an estimate of future
credit memos that will be issued to customers and is based on historical
experience.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
Inventory costs are reviewed each quarter. Fluctuations in the market price of
peanuts, pecans, walnuts, almonds and other nuts may affect the value of
inventory and gross profit and gross profit margin. If expected market sales
prices were to move below cost, the Company would record adjustments to write
down the carrying values of inventories to fair market value. The results of the
Company's shelling process can also result in changes to its inventory costs.
Introductory Funds
The ability to sell to certain retail customers often requires upfront payments
by the Company. Such payments are made pursuant to contracts that usually
stipulate the term of the agreement, the quantity and type of products to be
sold and any exclusivity requirements. The cost of these payments is initially
recorded as an asset and is amortized on a straight-line basis over the term of
the contract. Total customer incentives included in the Miscellaneous assets and
Prepaid expenses and other current assets captions are $2,329 at June 26, 2003
and $3,399 at June 27, 2002. Amortization expense, which is recorded as a
reduction in sales, was $2,262, $1,865 and $1,528 for the years ended June 26,
2003, June 27, 2002 and June 28, 2001, respectively.
Shipping and Handling Costs
Shipping and handling costs which include freight and other expenses to prepare
finished goods for shipment are included in selling expenses. For the years
ended June 26, 2003, June 27, 2002 and June 28, 2001, shipping and handling
costs totalled $14,047, $12,352, and $9,979, respectively.
Properties
Properties are stated at cost. Cost is depreciated using the straight-line
method over the following estimated useful lives: buildings -- 30 to 40 years,
machinery and equipment -- 5 to 10 years, furniture and leasehold improvements
-- 5 to 10 years and vehicles -- 3 to 5 years.
The cost and accumulated depreciation of assets sold or retired are removed from
the respective accounts, and any gain or loss is recognized currently.
Maintenance and repairs are charged to operations as incurred.
18
Certain lease transactions relating to the financing of buildings are accounted
for as capital leases, whereby the present value of future rental payments,
discounted at the interest rate implicit in the lease, is recorded as a
liability. A corresponding amount is capitalized as the cost of the assets and
is amortized on a straight-line basis over the estimated lives of the assets or
over the lease terms which range from 20 to 30 years, whichever is shorter. See
also Note 7.
Income taxes
The Company accounts for income taxes using an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been reported in the Company's
financial statements or tax returns. In estimating future tax consequences, the
Company considers all expected future events other than changes in tax law or
rates.
Fair value of financial instruments
Based on borrowing rates presently available to the Company under similar
borrowing arrangements, the Company believes the recorded amount of its
long-term debt obligations approximates fair market value. The carrying amount
of the Company's other financial instruments approximates their estimated fair
value based on market prices for the same or similar type of financial
instruments.
Significant customers
The highly competitive nature of the Company's business provides an environment
for the loss of customers and the opportunity for new customers. Net sales to
Wal-Mart Stores, Inc. represented approximately 17% and 16% of the Company's net
sales for the years ended June 26, 2003 and June 27, 2002, respectively.
Segment reporting
The Company operates in a single reportable operating segment by selling various
nut products procured and processed in a vertically integrated manner through
multiple distribution channels.
Management estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Significant estimates include reserves for customer deductions, allowance for
doubtful accounts and the costing of inventory. Actual results could differ from
those estimates.
Goodwill and other long-lived assets
The Company adopted Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets", effective June 28, 2002. SFAS 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, SFAS 142 includes
provisions for the reclassification of certain existing recognized intangible
assets as goodwill, reassessment of the useful lives of existing recognized
intangible assets, reclassification of certain intangible assets out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. The Company's
recorded assets at June 28, 2002 included both an intangible asset and goodwill.
The intangible asset consists of the Fisher brand name that was acquired in
1995. The Company determined that the brand name is of a finite life and is
being amortized over a fifteen-year period. Amortization expense for the next
five fiscal years is expected to be approximately $427 annually.
The goodwill represents the excess of the purchase price over the fair value of
the net assets in the Company's acquisition of Sunshine Nut Co., Inc. in 1992.
The Company determined that it has no separate reporting units; therefore, the
goodwill impairment test was performed using the fair value of the entire
Company.
Based upon the results of management's impairment testing, which included an
independent valuation, no adjustment to the carrying amount of goodwill and the
intangible asset is required. As required under SFAS 142, amortization of
goodwill has been discontinued.
19
The Company reviews the carrying value of goodwill and other long-lived assets
for impairment when events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. If an impairment was
determined to exist, any related impairment loss would be calculated based on
fair value. Impairment losses, if any, on assets to be disposed of would be
based on the estimated proceeds to be received, less costs of disposal.
The following table details goodwill and other intangible assets as of June 26,
2003:
GROSS CARRYING ACCUMULATED NET CARRYING
AMOUNT AMORTIZATION AMOUNT
-------------- ------------ ------------
Goodwill $2,504 $1,262 $1,242
Finite-lived amortized
intangible assets 6,368 3,240 3,128
------ ------ ------
Total $8,872 $4,502 $4,370
====== ====== ======
As required under SFAS 142, the results for the years ended June 27, 2002 and
June 28, 2001 have not been restated. The tables below present the effect on net
income and earnings per share as if SFAS 142 had been in effect for those years:
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 26, 2003 JUNE 27, 2002 JUNE 28, 2001
------------- ------------- -------------
Reported net income $ 15,027 $ 7,691 $ 7,595
Add back:
Goodwill amortization (net of tax) -- 75 75
---------- --------- ---------
Adjusted net income $ 15,027 $ 7,766 $ 7,670
========== ========= =========
Basic and diluted earnings per share:
Reported earnings per common share (basic) $ 1.63 $ 0.84 $ 0.83
Adjusted earnings per common share (basic) $ 1.63 $ 0.85 $ 0.84
Reported earnings per common share (diluted) $ 1.61 $ 0.84 $ 0.83
Adjusted earnings per common share (diluted) $ 1.61 $ 0.84 $ 0.84
Recent accounting pronouncements
In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations". This statement requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS 143 became effective in the first quarter of fiscal 2003.
The implementation of SFAS 143 did not have an effect on the Company's cash
flows, financial position or results of operations.
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". This statement provides a single, comprehensive
accounting model for impairment and disposal of long-lived assets and
discontinued operations. SFAS 144 became effective in the first quarter of
fiscal 2003. The adoption of SFAS 144 had no impact on the Company's cash flows,
financial position or results of operations.
In June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities". This statement addresses financial accounting and
reporting for costs associated with exit or disposal activities. SFAS 146 became
effective in the third quarter of fiscal 2003. The adoption of SFAS 146 had no
impact on the Company's cash flows, financial position or results of operations.
20
In November 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". Interpretation 45 requires a guarantor to include
disclosure of certain obligations and, if applicable, at the inception of the
guarantee, recognize a liability for the fair value of other certain obligations
undertaken in issuing a guarantee. The recognition requirement became effective
for guarantees issued or modified after December 31, 2002 and did not have an
impact on the Company. The Company adopted the disclosure requirements of
Interpretation 45 effective December 2002. The Company has no obligations from
guarantees that require disclosure at June 26, 2003.
In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". SFAS 148 amends certain provisions of
SFAS 123 and is effective for fiscal years beginning after December 15, 2002.
The Company is currently evaluating the reporting alternatives of SFAS 148.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51".
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 is effective
immediately for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 will become effective during the
first quarter of fiscal 2004. The Company enters into various transactions with
certain related parties including the rental of buildings under capital leases
and purchases from entities owned either directly or indirectly by certain
directors, officers and stockholders of the Company. Based on management's
initial analysis, it is at least reasonably possible that the Company may be
required to consolidate or disclose information for one or more of these
entities once the provisions of FIN 46 become effective during the first quarter
of 2004. These related party transactions are more fully described in Notes 7
and 9 of the Notes to Consolidated Financial Statements.
In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," which amends and clarifies
financial accounting and reporting for certain derivative instruments. The
Company does not anticipate the adoption of this statement to have a material
impact on its consolidated financial statements, as the Company is not currently
a party to derivative financial instruments included in this standard.
In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity," which
establishes standards for the classification and measurement of certain
financial instruments with characteristics of both liabilities and equity. The
Company does not anticipate the adoption of this statement to have a material
impact on its consolidated financial statements, as the Company is not currently
a party to such instruments included in this standard.
NOTE 2 - EARNINGS PER 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 table presents the required earnings per share disclosures:
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 26, 2003 JUNE 27, 2002 JUNE 28, 2001
------------- ------------- -------------
Net income $ 15,027 $ 7,691 $ 7,595
Weighted average shares outstanding 9,198,957 9,149,672 9,148,565
Basic earnings per common share $ 1.63 $ 0.84 $ 0.83
Effect of dilutive securities:
Stock options 133,932 45,279 1,767
Weighted average shares outstanding 9,332,889 9,194,951 9,150,332
Diluted earnings per common share $ 1.61 $ 0.84 $ 0.83
21
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 Stock:
WEIGHTED AVERAGE
NUMBER OF OPTIONS EXERCISE PRICE
----------------- --------------
Year ended June 26, 2003 51,666 $ 10.38
Year ended June 27, 2002 166,256 $ 10.07
Year ended June 28, 2001 450,735 $ 8.16
NOTE 3 - COMMON STOCK
Each share of the Company's Common Stock, $.01 par value (the "Common Stock")
has noncumulative voting rights of one vote per share. The Company's Class A
Common Stock, $.01 par value (the "Class A Stock"), has cumulative voting rights
with respect to the election of those directors which the holders of Class A
Stock are entitled to elect, and 10 votes per share on all other matters on
which holders of the Company's Class A Stock and Common Stock are entitled to
vote. In addition, each share of Class A Stock is convertible at the option of
the holder at any time into one share of Common Stock and automatically converts
into one share of Common Stock upon any sale or transfer other than to related
individuals. The Class A Stock and the Common Stock are entitled to share
equally, on a share-for-share basis, in any cash dividends declared by the Board
of Directors, and the holders of the Common Stock are entitled to elect 25% of
the members comprising the Board of Directors.
NOTE 4 - INCOME TAXES
The provision for income taxes for the years ended June 26, 2003, June 27, 2002
and June 28, 2001 are as follows:
JUNE 26, JUNE 27, JUNE 28,
2003 2002 2001
------- ------- --------
Current:
Federal $ 8,263 $ 4,183 $ 3,921
State 1,722 984 916
Deferred (378) (123) 226
------- ------- -------
Total provision for income taxes $ 9,607 $ 5,044 $ 5,063
======= ======= =======
The differences between income taxes at the statutory federal income tax rate
and income taxes reported in the statements of operations for the years ended
June 26, 2003, June 27, 2002 and June 28, 2001 are as follows:
JUNE 26, JUNE 27, JUNE 28,
2003 2002 2001
-------- -------- --------
Federal statutory income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 4.8 5.0 5.1
Surtax exemption -- (0.8) (0.8)
Nondeductible items -- 0.6 1.2
Other (0.8) (0.2) (0.5)
---- ---- ----
Effective tax rate 39.0% 39.6% 40.0%
==== ==== ====
22
The deferred tax assets and liabilities are comprised of the following:
JUNE 26, 2003 JUNE 27, 2002
------------- -------------
ASSET LIABILITY ASSET LIABILITY
----------------------- -----------------------
Current:
Allowance for doubtful accounts $ 236 $ -- $ 204 $ --
Employee compensation 754 -- 560 --
Inventory 47 -- -- 19
Accounts receivable -- -- -- --
Other 220 -- 116 --
------ ------ ------ ------
Total current $1,257 $ -- $ 880 $ 19
------ ------ ------ ------
Long-term:
Depreciation $ -- $5,054 $ -- $5,070
Capitalized leases 1,503 -- 1,524 --
Other 587 -- 600 --
------ ------ ------ ------
Total long-term $2,090 $5,054 $2,124 $5,070
------ ------ ------ ------
Total $3,347 $5,054 $3,004 $5,089
====== ====== ====== ======
NOTE 5 - INVENTORIES
Inventories consist of the following:
JUNE 26, JUNE 27,
2003 2002
-------- ---------
Raw material and supplies $ 36,852 $ 45,229
Work-in-process and finished goods 75,164 54,256
-------- --------
Total $112,016 $ 99,485
======== ========
NOTE 6 - NOTES PAYABLE
Notes payable consist of the following:
JUNE 26, JUNE 27,
2003 2002
-------- --------
Revolving bank loan $29,702 $23,519
======= =======
On March 31, 1998, the Company entered into a new unsecured credit facility,
with certain banks, totaling $70,000 (the "Bank Credit Facility"). On May 30,
2003, the Bank Credit Facility was amended to, among other things, increase the
total amount available under the facility to $80,000. The Bank Credit Facility,
as amended, is comprised of (i) a working capital revolving loan, which provides
for working capital financing of up to approximately $73,104, in the aggregate,
and matures on May 31, 2006, and (ii) a $6,896 standby letter of credit, which
matures on June 1, 2006. Borrowings under the working capital revolving loan
accrue interest at a rate (the weighted average of which was 2.76% at June 26,
2003) determined pursuant to a formula based on the agent bank's quoted rate and
the Eurodollar Interbank Rate. The standby letter of credit replaced a prior
letter of credit securing certain industrial development bonds that financed the
original acquisition, construction, and equipping of the Company's Bainbridge,
Georgia facility.
The Bank Credit Facility, as amended, includes certain restrictive covenants
that, among other things: (i) require the Company to maintain a minimum tangible
net worth; (ii) comply with specified ratios; (iii) limit annual capital
expenditures to $12,000; (iv) restrict dividends to the lesser of 25% of net
income for the previous fiscal year or $5,000; (v) prohibit the Company from
redeeming shares of capital stock; and (vi) require that certain officers and
stockholders of the Company, together with their respective family members and
certain trusts created for the benefits of their respective children, continue
to own shares representing the right to elect a majority of the directors of the
Company. As of June 26, 2003, the Company was in compliance with all restrictive
covenants, as amended, under the Bank Credit Facility.
23
NOTE 7 - LONG-TERM DEBT
Long-term debt consists of the following:
JUNE 26, JUNE 27,
2003 2002
-------- --------
Industrial development bonds, secured by building,
machinery and equipment with a cost aggregating $8,000 $ 6,750 $ 7,000
Capitalized lease obligations 5,786 6,260
Series A note payable, interest payable quarterly at 8.72%,
principal payable in semi-annual installments of $200 600 1,000
Series B note payable, interest payable quarterly at 9.07%,
principal payable in semi-annual installments of $300 900 1,500
Series C note payable, interest payable quarterly at 9.07%,
principal payable in semi-annual installments of $200 600 1,000
Series D note payable, interest payable quarterly at 9.18%,
principal payable in semi-annual installments of $150 450 750
Series E note payable, interest payable quarterly at 7.34%,
principal payable in semi-annual installments of $400 1,200 2,000
Series F notes payable, interest payable quarterly at 9.16%,
principal payable in semi-annual installments of $475 2,850 3,800
Note payable, interest payable semi-annually at 8.30%, principal payable in
annual installments of approximately $1,429 4,286 5,714
Note payable, subordinated, interest payable semi-annually at 9.38%,
principal payable in annual installments of $5,000 beginning on
September 1, 2003 15,000 15,000
Arlington Heights facility, first mortgage, principal and interest payable
at 8.875%, in monthly installments of $22 through October 1, 2015 1,994 2,080
Current maturities (10,776) (5,683)
-------- --------
Total long-term debt $ 29,640 $ 40,421
======== ========
JBSS financed the construction of a peanut shelling plant with industrial
development bonds in 1987. On June 1, 1997, the Company remarketed the bonds,
resetting the interest rate at 5.375% through May 2002, and at a market rate to
be determined thereafter. On June 1, 2002, the Company remarketed the bonds,
resetting the interest rate at 4% through May 2006, and at a market rate to be
determined thereafter. On June 1, 2006, and on each subsequent interest reset
date for the bonds, the Company is required to redeem the bonds at face value
plus any accrued and unpaid interest, unless a bondholder elects to retain his
or her bonds. Any bonds redeemed by the Company at the demand of a bondholder on
the reset date are required to be remarketed by the underwriter of the bonds on
a "best efforts" basis. The agreement requires the Company to redeem the bonds
in varying annual installments, ranging from $250 to $780 annually through 2017.
The Company is also required to redeem the bonds in certain other circumstances,
for example, within 180 days after any determination that interest on the bonds
is taxable. The Company has the option at any time, however, subject to certain
conditions, to redeem the bonds at face value plus accrued interest, if any.
On September 29, 1992, the Company entered into a long-term financing facility
with a major insurance company (the "Long-Term Financing Facility") which
provided financing to the Company evidenced by promissory notes in the aggregate
principal amount of $14,000 (the "Initial Financing"). The Initial Financing was
comprised of (i) a $4,000 7.87% Senior Secured Term Note due 2004 (the "Series A
Note"), (ii) a $6,000 8.22% Senior Secured Term Note due 2004 (the "Series B
Note"), and (iii) a $4,000 8.22% Senior Secured Term Note due 2004 (the "Series
C Note"). In addition, the Long-Term Financing Facility included a shelf
facility providing for the issuance by the Company of additional promissory
notes with an aggregate original principal amount of up to $11,000 (the "Shelf
Facility"). On January 15, 1993, the Company borrowed $3,000 under the Shelf
Facility evidenced by an 8.33% Senior Secured Term Note due 2004 (the "Series D
Note"). On September 15, 1993, the Company borrowed the remaining $8,000
available under the Shelf Facility evidenced by a 6.49% Senior Secured Term Note
due 2004 (the "Series E Note").
24
On October 19, 1993, the Long-Term Financing Facility was amended to provide for
an additional shelf facility providing for the issuance by the Company of
additional promissory notes with an aggregate original principal amount of
$10,000 and to terminate and release all liens and security interests in Company
properties. On June 23, 1994, the Company borrowed $10,000 under the additional
shelf facility evidenced by an $8,000 8.31% Series F Senior Note due May 15,
2006 (the "Series F-1 Note") and a $2,000 8.31% Series F Senior Note due May 15,
2006 (the "Series F-2 Note").
Effective January 1, 1997, the interest rates on each promissory note comprising
the Long-Term Financing Facility were increased by 0.85%, due to the Company not
meeting the required ratio of (a) net income plus interest expense to (b) senior
funded debt for the year ended December 31, 1996.
The Long-Term Financing Facility includes certain restrictive covenants that,
among other things: (i) require the Company to maintain specified financial
ratios; (ii) require the Company to maintain a minimum tangible net worth; (iii)
restrict dividends to a maximum of 25% of cumulative net income from and after
January 1, 1995 to the date the dividend is declared; and (iv) require that
certain officers and stockholders of the Company, together with their respective
family members and certain trusts created for the benefits of their respective
children, continue to own shares representing the right to elect a majority of
the directors of the Company. As of June 26, 2003, the Company was in compliance
with all restrictive covenants, as amended, under the Long-Term Financing
Facility.
On September 12, 1995, the Company borrowed an additional $25,000 under an
unsecured long-term financing arrangement (the "Additional Long-Term
Financing"). The Additional Long-Term Financing has a maturity date of September
1, 2005 and (i) as to $10,000 of the principal amount thereof, bears interest at
an annual rate of 8.30% and requires annual principal payments of approximately
$1,429 through maturity, and (ii) as to the other $15,000 of the principal
amount thereof (which is subordinated to the Company's other debt facilities),
bears interest at an annual rate of 9.38% and requires annual principal payments
of $5,000 beginning on September 1, 2003 through maturity.
The Additional Long-Term Financing includes certain restrictive covenants that,
among other things: (i) require the Company to maintain specified financial
ratios; (ii) require the Company to maintain a minimum tangible net worth; and
(iii) limit cumulative dividends to the sum of (a) 50% of the Company's
cumulative net income (or minus 100% of a 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) $5,000. As of June 26, 20032, the Company was in
compliance with all restrictive covenants, as amended, under the Additional
Long-Term Financing.
Aggregate maturities of long-term debt, excluding capitalized lease obligations,
are as follows for the years ending:
June 24, 2004 $10,243
June 30, 2005 9,027
June 29, 2006 13,676
June 28, 2007 123
June 26, 2008 135
Subsequent years 1,426
-------
Total $34,630
=======
The accompanying financial statements include the following amounts related to
assets under capital leases:
JUNE 26, JUNE 27,
2003 2002
------- -------
Buildings $9,520 $9,520
Less: Accumulated amortization 7,444 7,032
------ ------
Total $2,076 $2,488
====== ======
As discussed in Note 1, these assets are being amortized over the terms of the
leases. Amortization expense aggregated $412 for the years ended June 26, 2003
and June 27, 2002, and $411 for the year ended June 28, 2001.
25
Buildings under capital leases are rented from entities that are owned by
certain directors, officers and stockholders of JBSS. Future minimum payments
under the leases, together with the related present value, are summarized as
follows for the years ending:
June 24, 2004 $1,308
June 30, 2005 1,308
June 29, 2006 1,308
June 28, 2007 1,308
June 26, 2008 1,308
Subsequent years 2,578
------
Total minimum lease payments 9,118
Less: Amount representing interest 3,332
------
Present value of minimum lease payments $5,786
======
JBSS also leases buildings and certain equipment pursuant to agreements
accounted for as operating leases. Rent expense under these operating leases
aggregated $730, $598 and $724 for the years ended June 26, 2003, June 27, 2002
and June 28, 2001, respectively. Aggregate noncancelable lease commitments under
these operating leases are as follows for the years ending:
June 24, 2004 $1,252
June 30, 2005 1,355
June 29, 2006 1,000
June 28, 2007 214
June 26, 2008 133
Subsequent years 10
------
$3,964
======
NOTE 8 - EMPLOYEE BENEFIT PLANS
JBSS maintains a contributory plan established pursuant to the provisions of
section 401(k) of the Internal Revenue Code. The plan provides retirement
benefits for all nonunion employees meeting minimum age and service
requirements. The Company contributes 50% of the amount contributed by each
employee up to certain maximums specified in the plan. Total Company
contributions to the 401(k) plan were $535, $451 and $453 for the years ended
June 26, 2003, June 27, 2002 and June 28, 2001, respectively.
JBSS contributed $99, $90 and $98 for the years ended June 26, 2003, June 27,
2002 and June 28, 2001, respectively, to multi-employer union-sponsored pension
plans. JBSS is presently unable to determine its respective share of either
accumulated plan benefits or net assets available for benefits under the union
plans.
NOTE 9 - TRANSACTIONS WITH RELATED PARTIES
In addition to the related party transactions described in Note 7, JBSS also
entered into transactions with the following related parties:
Purchases
JBSS purchases materials and manufacturing equipment from a company that is 7.8%
owned by the Company's Chairman of the Board and Chief Executive Officer. The
five children of the Company's Chairman of the Board and Chief Executive Officer
own the balance of the entity either directly or as equal beneficiaries of a
trust. Two of the children are officers of the Company, and one of the two is
also on the Company's
26
Board of Directors. Purchases aggregated $7,170, $6,491 and $5,512 for the years
ended June 26, 2003, June 27, 2002 and June 28, 2001, respectively. Accounts
payable aggregated $516 and $302 at June 26, 2003 and June 27, 2002,
respectively. In addition, JBSS previously leased office and warehouse space to
the entity. Rental income from the entity aggregated $79 and $154 for the years
ended June 27, 2002 and June 28, 2001, respectively. Accounts receivable
aggregated $2 at June 27, 2002.
JBSS purchases materials from a company that is 33% owned by an individual
related to the Company's Chairman of the Board and Chief Executive Officer.
Material purchases aggregated $473, $402 and $228 for the years ended June 26,
2003, June 27, 2002 and June 28, 2001, respectively. Accounts payable aggregated
$7 and $3 at June 26, 2003 and June 27, 2002, respectively.
JBSS purchases supplies from a company that is 33% owned by an individual
related to the Company's Chairman of the Board and Chief Executive Officer.
Material purchases aggregated $472, $408 and $290 for the years ended June 26,
2003, June 27, 2002 and June 28, 2001, respectively. Accounts payable aggregated
$27 and $32 at June 26, 2003 and June 27, 2002, respectively.
Product purchases and sales
JBSS previously purchased materials from and sells products to a company that is
owned 33% by the Company's Chairman of the Board and Chief Executive Officer.
Material purchases aggregated $526 and $408 for the years ended June 27, 2002
and June 28, 2001, respectively. The Company sold products to the same company
aggregating $831 and $1,414 for the years ended June 27, 2002 and June 28, 2001,
respectively. Accounts receivable aggregated $3 at June 27, 2002.
Legal services
A lawyer, who is related to an outside director of the Company, provides
services to JBSS. This lawyer was a partner in a firm that previously provided
services to JBSS. Legal services aggregated $24, $17 and $72 for the years ended
June 26, 2003, June 27, 2002 and June 28, 2001, respectively.
NOTE 10 - STOCK OPTION PLANS
The Company applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for its stock-based compensation plans. Had
compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under the plans
with the alternative method of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation, the effect on the Company's net
income for the years ended June 26, 2003, June 27, 2002 and June 28, 2001 would
not have been significant.
In October 1991, JBSS adopted a stock option plan (the "1991 Stock Option Plan")
which became effective on December 10, 1991 and was terminated early by the
Board of Directors on February 28, 1995. Pursuant to the terms of the 1991 Stock
Option Plan, options to purchase up to 350,000 shares of Common Stock could be
awarded to certain executives and key employees of JBSS and its subsidiaries.
The exercise price of the options was determined as set forth in the 1991 Stock
Option Plan by the Board of Directors. The exercise price for the stock options
was at least fair market value with the exception of nonqualified stock options
which had an exercise price equal to at least 33% of the fair market value of
the Common Stock on the date of grant. Except as set forth in the 1991 Stock
Option Plan, options expire upon termination of employment. All of the options
granted were intended to qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code (the "Code").
The termination of the 1991 Stock Option Plan, effective February 28, 1995, did
not affect options granted under the 1991 Stock Option Plan which remained
outstanding as of the effective date of termination. Accordingly, the
unexercised options outstanding under the 1991 Stock Option Plan at June 26,
2003 will continue to be governed by the terms of the 1991 Stock Option Plan.
27
The following is a summary of activity under the 1991 Stock Option Plan:
Number of Weighted Average
Shares Exercise Price
--------- ----------------
Outstanding at June 29, 2000 61,300 $ 12.12
Canceled (6,400) $ 12.09
--------
Outstanding at June 28, 2001 154,900 $ 12.12
Exercised (550) $ 6.00
Canceled (110,000) $ 12.16
--------
Outstanding at June 27, 2002 44,350 $ 11.55
Exercised (33,650) $ 11.32
Canceled (5,500) $ 15.00
--------
Outstanding at June 26, 2003 5,200 $ 9.43
========
Options exercisable at June 26, 2003 5,200 $ 9.43
Options exercisable at June 27, 2002 44,350 $ 11.55
Options exercisable at June 28, 2001 154,900 $ 12.12
Exercise prices for options outstanding as of June 26, 2003 ranged from $6.00 to
$13.75. The weighted average remaining contractual life of those options is 0.9
years. The options outstanding at June 26, 2003 may be segregated into two
ranges, as is shown in the following:
Option Price Per Option Price Per
Share Share
$6.00 $13.75
---------------- ----------------
Number of options 2,900 2,300
Weighted-average exercise price $ 6.00 $ 13.75
Weighted-average remaining life (years) 1.5 0.1
Number of options exercisable 2,900 2,300
Weighted average exercise price for exercisable options $ 6.00 $ 13.75
At the Company's annual meeting of stockholders on May 2, 1995, the Company's
stockholders approved, and the Company adopted, effective as of March 1, 1995, a
new stock option plan (the "1995 Equity Incentive Plan") to replace the 1991
Stock Option Plan. The 1995 Equity Incentive Plan was terminated early by the
Board of Directors on August 27, 1998. Pursuant to the terms of the 1995 Equity
Incentive Plan, options to purchase up to 200,000 shares of Common Stock could
be awarded to certain key employees and "outside directors" (i.e. directors who
are not employees of the Company or any of its subsidiaries). The exercise price
of the options was determined as set forth in the 1995 Equity Incentive Plan by
the Board of Directors. The exercise price for the stock options was at least
the fair market value of the Common Stock on the date of grant, with the
exception of nonqualified stock options which had an exercise price equal to at
least 50% of the fair market value of the Common Stock on the date of grant.
Except as set forth in the 1995 Equity Incentive Plan, options expire upon
termination of employment or directorship. The options granted under the 1995
Equity Incentive Plan are exercisable 25% annually commencing on the first
anniversary date of grant and become fully exercisable on the fourth anniversary
date of grant. All of the options granted, except those granted to outside
directors, were intended to qualify as incentive stock options within the
meaning of Section 422 of the Code.
The termination of the 1995 Equity Incentive Plan, effective August 27, 1998,
did not affect options granted under the 1995 Equity Incentive Plan which
remained outstanding as of the effective date of termination. Accordingly, the
unexercised options outstanding under the 1995 Equity Incentive Plan at June 26,
2003 will
28
continue to be governed by the terms of the 1995 Equity Incentive Plan.
The following is a summary of activity under the 1995 Equity Incentive Plan:
Number of Weighted Average
Shares Exercise Price
------ ----------------
Outstanding at June 29, 2000 124,200 $ 7.75
Canceled (16,600) $ 9.04
--------
Outstanding at June 28, 2001 107,600 $ 7.58
Exercised (600) $ 6.25
Canceled (20,700) $ 7.51
--------
Outstanding at June 27, 2002 86,300 $ 7.61
Exercised (57,200) $ 7.41
Canceled (7,000) $ 8.48
-------- --------
Outstanding at June 26, 2003 22,100 $ 7.86
========
Options exercisable at June 26, 2003 22,100 $ 7.86
Options exercisable at June 27, 2002 86,300 $ 7.61
Options exercisable at June 28, 2001 107,600 $ 7.58
Exercise prices for options outstanding as of June 26, 2003 ranged from $6.00 to
$10.50. The weighted average remaining contractual life of those options is 3.0
years. The options outstanding at June 26, 2003 may be segregated into two
ranges, as is shown in the following:
Option Price Per Option Price Per
Share Range Share Range
$6.00-$6.63 $9.38-$10.50
---------------- ----------------
Number of options 11,100 11,000
Weighted-average exercise price $ 6.26 $ 9.48
Weighted-average remaining life (years) 3.8 2.2
Number of options exercisable 11,100 11,000
Weighted average exercise price for exercisable options $ 6.26 $ 9.48
At the Company's annual meeting of stockholders on October 28, 1998, the
Company's stockholders approved, and the Company adopted, effective as of
September 1, 1998, a new stock option plan (the 1998 Equity Incentive Plan") to
replace the 1995 Equity Incentive Plan. Pursuant to the terms of the 1998 Equity
Incentive Plan, options to purchase up to 700,000 shares of Common Stock could
be awarded to certain key employees and "outside directors" (i.e. directors who
are not employees of the Company or any of its subsidiaries). The exercise price
of the options will be determined as set forth in the 1998 Equity Incentive Plan
by the Board of Directors. The exercise price for the stock options must be at
least the fair market value of the Common Stock on the date of grant, with the
exception of nonqualified stock options which have an exercise price equal to at
least 50% of the fair market value of the Common Stock on the date of grant.
Except as set forth in the 1998 Equity Incentive Plan options expire upon
termination of employment or directorship. The options granted under the 1998
Equity Incentive Plan are exercisable 25% annually commencing on the first
anniversary date of grant and become fully exercisable on the fourth anniversary
date of grant. All of the options granted, except those granted to outside
directors, were intended to qualify as incentive stock options within the
meaning of Section 422 of the Code.
29
The following is a summary of activity under the 1998 Equity Incentive Plan:
Number of Weighted Average
Shares Exercise Price
--------- ----------------
Outstanding at June 29, 2000 195,500 $ 4.38
Granted 3,000 $ 4.06
Canceled (28,750) $ 4.35
--------
Outstanding at June 28, 2001 169,750 $ 4.38
Granted 8,000 $ 5.68
Exercised (3,750) $ 4.50
Canceled (10,000) $ 4.33
--------
Outstanding at June 27, 2002 164,000 $ 4.35
Granted 144,500 $ 7.08
Exercised (82,975) $ 4.33
Canceled (1,250) $ 4.50
--------
Outstanding at June 26, 2003 224,275 $ 6.11
========
Options exercisable at June 26, 2003 42,775 $ 4.36
Options exercisable at June 27, 2002 84,125 $ 4.34
Options exercisable at June 28, 2001 50,750 $ 4.31
Exercise prices for options outstanding as of June 26, 2003 ranged from $3.44 to
$17.51. The weighted average remaining contractual life of those options is 8.3
years. The options outstanding at June 26, 2003 may be segregated into two
ranges, as is shown in the following:
Option Price Per Option Price Per
Share Range Share
$3.44-$7.80 $17.51
---------------- ----------------
Number of options 222,775 1,500
Weighted-average exercise price $ 6.03 $ 17.51
Weighted-average remaining life (years) 8.3 10.0
Number of options exercisable 42,775 --
Weighted average exercise price for exercisable options $ 4.36 --
NOTE 11 - COMMITMENTS AND CONTINGENCIES
On June 17, 2003, the Company received a subpoena for the production of
documents and records from the Antitrust Division of the U.S. Department of
Justice in connection with an antitrust investigation of the peanut shelling
industry. The Company expects to cooperate fully in the investigation. There can
be no assurances as to the impact of the investigation on the peanut shelling
industry or that the investigation will not have a material adverse effect on
the Company.
The Company is also party to various lawsuits, proceedings and other matters
arising out of the conduct of its business. It is management's opinion that the
ultimate resolution of these matters will not have a significant effect upon the
business, financial condition or results of operations of the Company.
NOTE 12 - NET SALES AND SELLING EXPENSES RESTATEMENT
The Company has restated its financial statements to change the classification
of freight costs, which had previously been reported as a reduction in net
sales rather than selling expenses, in accordance with the guidance of Emerging
Issues Task Force No. 00-10, "Accounting for Shipping and Handling Fees and
Costs." The Company has included a disclosure of its accounting policy related
to shipping and handling costs (Note 1) and has made the appropriate
modifications to the consolidated statements of operations to give effect to the
change in classification of freight costs. The effect of this change in
classification is to increase net sales and selling expenses by corresponding
amounts for all periods presented, as indicated below. The change in
classification has no effect on income from operations or net income, nor any
effect on the Company's consolidated balance sheet, changes in stockholders'
equity and cash flows. The table below summarizes the effect of the change in
classification.
As Reported As Restated
----------- -----------
Net Sales
Fiscal
2003 $408,534 $419,676
2002 343,245 352,799
2001 334,878 342,357
Twenty-six weeks ended
December 26, 2002 (unaudited) 227,305 233,434
Gross Profit
Fiscal
2003 61,493 72,635
2002 48,314 57,868
2001 51,600 59,079
Twenty-six weeks ended
December 26, 2002 (unaudited) 33,600 39,729
Selling Expenses
Fiscal
2003 22,071 33,213
2002 21,047 30,601
2001 22,251 29,730
Twenty-six weeks ended
December 26, 2002 (unaudited) 10,682 16,811
Total Selling and Administrative Expenses
Fiscal
2003 32,664 43,806
2002 30,412 39,966
2001 31,199 38,678
Twenty-six weeks ended
December 26, 2002 (unaudited) 15,299 21,428
NOTE 13 - UNAUDITED SUPPLEMENTARY QUARTERLY DATA
The following unaudited quarterly consolidated financial data are
presented for fiscal 2003 and 2002.
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
Year Ended June 26, 2003:
Net sales--
As previously reported $ 93,069 $134,236 $ 84,284 $ 96,945
As restated 95,327 138,107 86,951 99,291
Gross profit--
As previously reported 11,042 22,558 13,072 14,821
As restated 13,300 26,429 15,739 17,167
Income from operations 3,818 14,483 3,652 6,876
Net income 1,678 8,243 1,573 3,533
Basic earnings per common share $ 0.18 $ 0.90 $ 0.17 $ 0.38
Diluted earnings per common share $ 0.18 $ 0.89 $ 0.17 $ 0.37
Year Ended June 27, 2002:
Net sales--
As previously reported $ 84,759 $112,755 $ 67,114 $ 78,617
As restated 87,509 115,348 68,897 81,045
Gross profit--
As previously reported 11,192 17,331 8,633 11,158
As restated 13,942 19,924 10,416 13,586
Income from operations 3,284 9,205 1,732 3,681
Net income 1,079 4,773 268 1,571
Basic and diluted earnings per common
share $ 0.12 $ 0.52 $ 0.03 $ 0.17
As described in Note 12, the Company has revised its previously updated net
sales and gross profit to reflect a change in the classification of freight
costs. The change had no effect on income from operations or net income.
30
PART IV
ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
The following financial statements of the Company are included in Part II, Item
8 of this Report:
Report of Independent Accountants
Consolidated Statements of Operations for the Year Ended June 26, 2003,
the Year Ended June 27, 2002 and the Year Ended June 28, 2001
Consolidated Balance Sheets as of June 26, 2003 and June 27, 2002
Consolidated Statements of Stockholders' Equity for the Year Ended
June 26, 2003, the Year Ended June 27, 2002 and the Year Ended
June 28, 2001
Consolidated Statements of Cash Flows for the Year Ended June 26, 2003,
the Year Ended June 27, 2002 and the Year Ended June 28, 2001
Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULES
The following information included in this Report is filed as a part
hereof:
Report of Independent Accountants on Financial Statement Schedule
Schedule II -- Valuation and Qualifying Accounts and Reserves
All other schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial Statements
or Notes thereto.
(3) EXHIBITS
The exhibits required by Item 601 of Regulation S-K and filed herewith
are listed in the Exhibit Index which follows the signature page and
immediately precedes the exhibits filed.
31
(b) REPORTS ON FORM 8-K
On April 29, 2003, the Company filed a Current Report on Form
8-K, dated April 23, 2003, announcing quarterly financial
results.
(c) EXHIBITS
See Item 15(a)(3) above.
(d) FINANCIAL STATEMENT SCHEDULES
See Item 15(a)(2) above.
32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: January 26, 2004 By: /s/ Jasper B. Sanfilippo
--------------------------------
Jasper B. Sanfilippo
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Jasper B. Sanfilippo Chairman of the Board and Chief Executive Officer and January 26, 2004
------------------------- Director (Principal Executive Officer)
Jasper B. Sanfilippo
/s/ Michael J. Valentine Executive Vice President Finance, Chief Financial January 26, 2004
------------------------- Officer and Secretary and Director (Principal Financial
Michael J. Valentine Officer)
/s/ William R. Pokrajac Vice President of Finance (Principal Accounting Officer) January 26, 2004
-------------------------
William R. Pokrajac
/s/ Mathias A. Valentine Director January 26, 2004
-------------------------
Mathias A. Valentine
Director
-------------------------
Jim Edgar
Director
-------------------------
John W.A. Buyers
Director
-------------------------
Timothy R. Donovan
/s/ Jeffrey T. Sanfilippo Executive Vice President Sales and Marketing and Director January 26, 2004
-------------------------
Jeffrey T. Sanfilippo
/s/ Jasper B. Sanfilippo, Jr. Executive Vice President Operations and
------------------------------ Director January 26, 2004
Jasper B. Sanfilippo, Jr.
33
Report of Independent Auditors on
Financial Statement Schedule
To the Board of Directors
of John B. Sanfilippo & Son, Inc.
Our audits of the consolidated financial statements of John B. Sanfilippo & Son,
Inc. referred to in our report dated August 18, 2003, except for Note 12, as to
which the date is January 23, 2004, appearing on page 12 of this 2003 Annual
Report on Form 10-K/A also included an audit of the Financial Statement Schedule
listed in Item 15(a)(2). In our opinion, the Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
-----------------------------------
PricewaterhouseCoopers LLP
August 18, 2003, except for Note 12,
as to which the date is January 23, 2004
Chicago, Illinois
34
JOHN B. SANFILIPPO & SON, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the year ended June 26, 2003, the year ended June 27, 2002
and the year ended June 28, 2001
(Dollars in thousands)
BALANCE AT
BEGINNING BALANCE AT
DESCRIPTION OF PERIOD ADDITIONS DEDUCTIONS END OF PERIOD
----------- --------- --------- ---------- -------------
JUNE 26, 2003
Allowance for doubtful accounts $ 511 $ 314 $ (234) $ 591
Reserve for cash discounts 109 4,516 (4,485) 140
Reserve for customer deductions 786 7,355 (7,320) 821
------------ ------------ ------------ ------------
Total $ 1,406 $ 12,185 $ (12,039) $ 1,552
============ ============ ============ ============
JUNE 27, 2002
Allowance for doubtful accounts $ 390 $ 155 $ (34) $ 511
Reserve for cash discounts 109 3,928 (3,928) 109
Reserve for customer deductions 894 5,169 (5,277) 786
------------ ------------ ------------ ------------
Total $ 1,393 $ 9,252 $ (9,239) $ 1,406
============ ============ ============ ============
JUNE 28, 2001
Allowance for doubtful accounts $ 769 $ 13 $ (392) $ 390
Reserve for cash discounts 109 3,610 (3,610) 109
Reserve for customer deductions 2,299 3,959 (5,364) 894
------------ ------------ ------------ ------------
Total $ 3,177 $ 7,582 $ (9,366) $ 1,393
============ ============ ============ ============
35
JOHN B. SANFILIPPO & SON, INC.
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit
Number Description
--------------------------------------------------------------------------------
1 Not applicable
2 Not applicable
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")(17)
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(18)
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")(19)
4.14 Guaranty Agreement dated as of March 31, 1998 by JBS International,
Inc. ("JBSI") in favor of Prudential(19)
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(22)
4.16 Amendment to the Second Amended and Restated Note Agreement dated
May 30, 2003 by and among Prudential, the Registrant and JBSI(27)
36
Exhibit
Number Description
--------------------------------------------------------------------------------
4.17 Guaranty Agreement dated as of May 30, 2003 by JBSI in favor of
Prudential(27)
4.18 Note Purchase Agreement dated as of August 30, 1995 between the
Registrant and Teachers Insurance and Annuity Association of America
("Teachers")(14)
4.19 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(14)
4.20 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(14)
4.21 Guaranty Agreement dated as of August 30, 1995 by Sunshine in favor
of Teachers (Senior Notes)(14)
4.22 Guaranty Agreement dated as of August 30, 1995 by Sunshine in favor
of Teachers (Senior Subordinated Notes)(14)
4.23 Amendment, Consent and Waiver, dated as of March 27, 1996, by and
among Teachers, Sunshine and the Registrant(16)
4.24 Amendment No. 2 to Note Purchase Agreement dated as of January 24,
1997 by and among Teachers, Sunshine and the Registrant(17)
4.25 Amendment to Note Purchase Agreement dated May 19, 1997 by and among
Teachers, Sunshine and the Registrant(19)
4.26 Amendment No. 3 to Note Purchase Agreement dated as of March 31,
1998 by and among Teachers, Sunshine, Quantz and the Registrant(19)
4.27 Guaranty Agreement dated as of March 31, 1998 by JBSI in favor of
Teachers (Senior Notes)(19)
4.28 Guaranty Agreement dated as of March 31, 1998 by JBSI in favor of
Teachers (Senior Subordinated Notes)(19)
4.29 Amendment and Waiver to Note Purchase Agreement dated February 5,
1999 by and among Teachers, Sunshine, Quantz, JBSI and the
Registrant(22)
4.30 Amendment and waiver to Note Purchase Agreement dated October 26,
1999 between Teachers and the Registrant(23)
5-9 Not applicable
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 (the "Touhy Avenue Lease") dated November
1, 1985 between the Registrant and LNB, as Trustee under Trust
Agreement dated September 20, 1966 and known as Trust No. 34837(11)
10.3 First Amendment to the Touhy Avenue Lease dated June 1, 1987(11)
10.4 Second Amendment to the Touhy Avenue Lease dated December 14,
1990(11)
10.5 Third Amendment to the Touhy Avenue Lease dated September 1,
1991(15)
10.6 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)
10.7 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)
37
Exhibit
Number Description
--------------------------------------------------------------------------------
10.8 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)
10.9 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)
10.10 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(20)
10.11 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)
10.12 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)
10.13 Tax Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public offering(2)
*10.14 Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public offering(2)
*10.15 The Registrant's 1991 Stock Option Plan(1)
*10.16 First Amendment to the Registrant's 1991 Stock Option Plan(4)
*10.17 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)
*10.18 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)
10.19 Outsource Agreement between the Registrant and Preferred Products,
Inc. dated January 19, 1995 [CONFIDENTIAL TREATMENT REQUESTED](12)
10.20 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)
*10.21 The Registrant's 1995 Equity Incentive Plan(13)
10.22 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")(15)
10.23 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(15)
38
Exhibit
Number Description
--------------------------------------------------------------------------------
10.24 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(15)
10.25 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(15)
10.26 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(19)
*10.27 The Registrant's 1998 Equity Incentive Plan(22)
*10.28 First Amendment to the Registrant's 1998 Equity Incentive Plan(25)
10.29 Second Amendment to Credit Agreement dated May 10, 2000 by and among
the Registrant, JBSI, USB as Agent, LNB and SunTrust Bank,
N.A.("STB") (replacing KNA)(24)
10.30 Third Amendment to Credit Agreement dated May 20, 2002 by and among
the Registrant, JBSI, USB as Agent, LNB and STB)(26)
10.31 Fourth Amendment to Credit Agreement dated May 30, 2003 by and among
the Registrant, JBSI, USB as Agent, LNB and STB(27)
10.32 Revolving Credit Note in the principal amount of $40.0 million
executed by the Registrant and JBSI in favor of USB, dated as of May
30, 2003(27)
10.33 Revolving Credit Note in the principal amount of approximately $22.9
million executed by the Registrant and JBSI in favor of STB, dated
as of May 30, 2003(27)
10.34 Revolving Credit Note in the principal amount of approximately $17.1
million executed by the Registrant and JBSI in favor of LSB, dated
as of May 30, 2003(27)
10.35 Industrial Building Lease between the Registrant and Cabot
Acquisition, LLC dated April 18, 2003(27)
11-20 Not applicable
21 Subsidiaries of the Registrant(27)
22 Not applicable
23 Consent of PricewaterhouseCoopers LLP, filed herewith
24-31 Not applicable
31.1 Certification of Jasper B. Sanfilippo pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, as amended, filed herewith
31.2 Certification of Michael J. Valentine pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, as amended, filed herewith
32.1 Certification of Jasper B. Sanfilippo pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, filed herewith
32.2 Certification of Michael J. Valentine pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, filed herewith
33-99 Not applicable
--------------------
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-1,
39
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 Current Report
on Form 8-K dated September 12, 1995 (Commission File No.
0-19681).
(15) 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).
(16) 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).
(17) 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).
(18) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated May 21, 1997 (Commission File No. 0-19681).
(19) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the third
40
quarter ended March 26, 1998 (Commission File No. 0-19681).
(20) 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).
(21) 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).
(22) 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).
(23) 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).
(24) 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).
(25) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-Q for the second quarter ended December 28, 2000
(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 27, 2002 (Commission
File No. 0-19681).
(27) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 26, 2003 (Commission
File No. 0-19681).
* Indicates a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form
pursuant to Item 14(c).
41