John B. Sanfilippo & Son, Inc. News Release.Net Income for the Second Quarter was $1.2 million or $.12 Per Share ELK GROVE VILLAGE Elk Grove Village, village (1990 pop. 33,429), Cook and Du Page counties, NE Ill., a suburb of Chicago; inc. 1956. With a population of c.100 at the time of its establishment on open farmland, the village has grown dramatically and steadily, largely because of its , Ill. -- John B. Sanfilippo & Son, Inc. (Nasdaq: JBSS JBSS Jamaica Burial Society Scheme ) today announced operating results for its fiscal 2007 second quarter. Net income for the current quarter was $1.2 million, or $.12 per share diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared to a net loss of approximately $0.1 million, or $.01 per share diluted, for the second quarter of fiscal 2006. Including the $3.0 million gain related to real estate sales that occurred in the first quarter, the current year to date net loss was $3.6 million, or $.34 per share diluted, compared to a net loss of $1.2 million, or $.11 per share diluted, for the first two quarters of fiscal 2006. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight decreased from approximately $191.1 million for the second quarter of fiscal 2006 to $177.7 million for the second quarter of fiscal 2007. Net sales increases in the export and contract manufacturing distribution channels were more than offset by decreases in net sales in the industrial, consumer and food service distribution channels. The net sales decrease in the quarterly comparison is almost completely attributable to a decline in the overall average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. per pound shipped of 7.3%. The decline in the overall average selling price per pound was generated mainly from a significant decrease in selling prices in the industrial channel as a result of lower market prices for most new crop tree nuts. As a result of lower consumption over the last twelve months and in some cases larger crop sizes, selling prices declined for all key commodities except walnuts. The increase in total unit volume sold, which is measured in pounds shipped, for the industrial and contract manufacturing channels was slightly higher than the total decrease in unit volume sold for the consumer, export and food service channels. The increase in the total unit volume sold for pecans, peanuts pea·nut n. 1. A prostrate southern Brazilian plant (Arachis hypogaea) widely cultivated in tropical and warm temperate regions, having yellow flowers on stalks that bend over so that the seed pods ripen underground. 2. and macadamia macadamia (măk'ədā`mēə), name for the nut of the Macadamia ternifolia, an evergreen tree native to Australia, but cultivated in Hawaii. The nuts, also called Queensland nuts, are eaten roasted or raw. nuts was slightly higher than the decrease in the total unit volume sold for almonds, walnuts and cashews. For the first two quarters of fiscal 2007, net sales decreased to $311.4 million from $329.7 million for the first two quarters of fiscal 2006. The decrease in net sales for the year to date comparison was attributable primarily to lower average selling prices. Unit volume sold increased by 1.7% in the year to date comparison. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , as a percentage of net sales, increased from 8.4% for the second quarter of fiscal 2006 to 10.8% for the current quarter. The current second quarter gross profit margin increased in the consumer, industrial and contract manufacturing distribution channels, while gross profit margins remained unchanged in the food service and export distribution channels when compared to the gross profit margin for those channels for the second quarter of fiscal 2006. Mainly as a result of lower acquisition costs, the current quarter gross profit margin, as a percentage of net sales, increased on sales of macadamias, almonds, pecans, cashews and peanuts in comparison to the gross profit margin for the sales of those commodities in the second quarter of fiscal 2006. The increase in gross profit margin on the sales of those commodities was partially offset by a decrease in the gross profit margin on sales of walnuts, because the Company shipped higher cost new crop walnuts against lower priced old crop sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. during the current quarter. The current year to date gross profit margin, as a percentage of net sales, decreased from 8.9% for the second quarter of fiscal 2006 to 8.0%. The benefits derived from lower acquisition costs for most new crop tree nuts in the latter part of the current second quarter were not sufficient to offset the negative impact of high commodity costs on gross profit margin for the first five months of fiscal 2007. Selling and administrative expenses for the current quarter increased to 8.6% of net sales from 7.8% of net sales for the second quarter of fiscal 2006 primarily as a result of a lower sales base while certain costs remained relatively fixed. Additionally, the significant decrease in shipping costs to customers was more than offset by increases in costs related to the new distribution center and audit and legal costs. Selling and administrative expenses, as a percentage of net sales, were relatively unchanged at 8.7% in the year to date comparison after considering the gains related to the sales of properties that occurred in the first quarter of fiscal 2007. For the second quarter of fiscal 2007, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $3.8 million compared to $1.3 million for the second quarter of fiscal 2006. The current year to date operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $2.1 million compared to operating income of $1.2 million for the same year to date period in fiscal 2006. Interest expense for the second quarter of fiscal 2007 increased to $1.8 million from $1.1 million for the second quarter of fiscal 2006. Interest expense for the current year to date period was approximately $3.5 million compared to $2.7 million for the first two quarters of fiscal 2006. Increased short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. levels and higher interest rates led to the increase in interest expense for both comparisons. For the most part, capital expenditures, related primarily to the facility consolidation project, led to the increase in notes payable. Inventories on hand at the end of the current second quarter declined by $43.7 million or 20.9% when compared to the value of inventories on hand at the end of the second quarter of fiscal 2006. Pounds of raw nuts declined by approximately 17.5 million pounds or 16.8% when compared to the quantity of raw nuts on hand at the end of the second quarter of fiscal 2006. The weighted average cost per pound of raw nuts decreased by 20.1% in the year over year comparison. As a result of the improvement in the gross profit margin, the Company was in compliance with quarterly financial covenants in its Note Agreement and Bank Credit Facility as of the end of the current second quarter. Because there continues to be uncertainty as to whether the Company will comply with financial covenants at the end of the third and fourth quarters of fiscal 2007, the Company has appropriately classified the balance due under the Note Agreement as current maturities on its balance sheet as of December December: see month. 28, 2006. "Although net sales declined in the quarter mainly due to lower selling prices in the industrial channel, net income improved primarily because of lower nut acquisition costs," stated Jeffrey T. Sanfilippo, Chief Executive Officer. "The Company has cycled through its negative margin almond almond, name for a small tree (Prunus amygdalus) of the family Rosaceae (rose family) and for the nutlike, edible seed of its drupe fruit. The "nuts" of sweet-almond varieties are eaten raw or roasted and are pressed to obtain almond oil. contracts, and gross profit margin on December almond sales improved significantly in comparison to gross profit margin on almonds sales made earlier in the second quarter. Walnut walnut, common name for some members of the Juglandaceae, a family of chiefly deciduous, resinous trees characterized by large and aromatic compound leaves. Species of the walnut family are indigenous mostly to the north temperate zone, but also range from Central gross margins should also improve as the Company begins to ship against higher priced new crop walnut sales contracts. Margin gains in other nuts may be mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by a negative impact on pecan margins as field prices for inshell In`shell´ v. t. 1. To hide in a shell. pecans have risen in recent weeks," Mr. Sanfilippo explained. "Net sales in the consumer channel were negatively impacted by declines in the Company's private label business as a result of heavy promotional activity from the national brand and lost business at a major retailer. These declines were partially offset by sales to new private label customers as well as new items developed for existing customers. In addition, sales of Fisher branded products increased by 15% in the quarter as a result of new distribution and increased promotional activity," Mr. Sanfilippo stated. "The move to our new corporate headquarters is on schedule, and we are now manufacturing some products and shipping products to our customers out of the new Elgin Elgin, town, Scotland Elgin, town (1991 pop. 18,702), Moray, NE Scotland, on the Lossie River. Lossiemouth is its port. Elgin is the market town for Moray's farm belt. Woolen textiles are manufactured, and scotch is distilled. facility. Our corporate offices will move this February February: see month. while we continue to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. production lines from our existing facilities," Mr. Sanfilippo noted. "The Elgin facility recently was awarded the highest possible rating from an independent auditing firm in its first food processing Food processing is the set of methods and techniques used to transform raw ingredients into food for consumption by humans or animals. The food processing industry utilises these processes. facility audit, and we are now in the process of obtaining facility approvals from our customers," Mr. Sanfilippo concluded. The statement of Jeffrey T. Sanfilippo in this release is forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . This forward-looking statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. is based on the Company's current expectations and involves risks and uncertainties. Consequently, the Company's actual results could differ materially. Among the factors that could cause results to differ materially from current expectations are: (i) if the Company sustains losses, the ability of the Company to continue as a going concern, (ii) sales activity for the Company's products, including a decline in sales to one or more key customers; (iii) changes in the availability and costs of raw materials and the impact of fixed price commitments with customers; (iv) fluctuations in the value and quantity of the Company's nut inventories due to fluctuations in the market prices of nuts and routine bulk inventory estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. adjustments, respectively, and decreases in the value of inventory held for other entities, where the Company is financially responsible for such losses; (v) the Company's ability to lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. the negative impact of competitive and pricing pressures; (vi) the potential for lost sales or product liability if our customers lose confidence in the safety of our products or are harmed as a result of using our products; (vii) risks and uncertainties regarding the Company's facility consolidation project; (viii) sustained losses, which would, among other things, negatively impact the Company's ability to comply with the financial covenants in its amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. credit agreements; (ix) the ability of the Company to satisfy its customers' supply needs; (x) the ability of the Company to retain key personnel; (xi) the potential negative impact of government regulations, including the 2002 Farm Bill and the Public Health Security and Bioterrorism bi·o·ter·ror·ism n. The use of biological agents, such as pathogenic organisms or agricultural pests, for terrorist purposes. Bioterrorism Preparedness pre·par·ed·ness n. The state of being prepared, especially military readiness for combat. Noun 1. preparedness - the state of having been made ready or prepared for use or action (especially military action); "putting them and Response Act; (xii) the Company's ability to do business in emerging markets; (xiii) the Company's ability to properly measure and maintain its inventory; (xiv) the effect of the group that owns the majority of the Company's voting securities, including the effect of the agreements pursuant to which such group has pledged a substantial amount of the Company's securities that they own; and (xv) the timing and occurrence (or nonoccurrence Noun 1. nonoccurrence - absence by virtue of not occurring absence - the state of being absent; "he was surprised by the absence of any explanation" ) of other transactions and events which may be subject to circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or beyond the Company's control. John B. Sanfilippo & Son, Inc. is a processor, packager, marketer and distributor of shelled and in-shell nuts and extruded snacks that are sold under a variety of private labels and under the Company's Fisher[R], Evon's[R], Snack 'N Serve Nut Bowl(TM), Sunshine Country[R], Flavor Tree[R] and Texas Pride(TM) brand names. The Company also markets and distributes a diverse product line of other food and snack items.
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JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
December 28, June 29,
2006 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,498 $2,232
Accounts receivable, net 43,627 35,481
Inventories 165,784 164,390
Deferred income taxes 3,022 2,984
Income taxes receivable 8,847 6,427
Prepaid expenses and other current assets 1,631 2,248
227,409 213,762
PROPERTIES, NET 169,939 156,859
OTHER ASSETS 20,999 20,291
$418,347 $390,912
December 28, June 29,
2006 2006
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings $56,755 $64,341
Current maturities of long-term debt 58,535 67,717
Accounts payable 60,408 27,944
Book overdraft 11,700 14,301
Accrued expenses 18,419 16,842
205,817 191,145
LONG-TERM LIABILITIES:
Long-term debt 20,368 5,618
Retirement plan 8,318 7,654
Deferred income taxes 6,667 6,385
Other 404 -
35,757 19,657
STOCKHOLDERS' EQUITY:
Class A common stock 26 26
Common stock 81 81
Capital in excess of par value 100,068 99,820
Retained earnings 77,802 81,387
Treasury stock (1,204) (1,204)
176,773 180,110
$418,347 $390,912
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