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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 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 ].
As of March 14, 1997, 5,578,140 shares of the Company's Common
Stock, $.01 par value ("Common Stock"), including 117,900 treasury
shares, and 3,687,426 shares of the Company's Class A Common Stock,
$.01 par value ("Class A Stock"), were outstanding. On that date,
the aggregate market value of voting stock (based upon the last
sale price of the registrant's Common Stock on March 14, 1997) held
by non-affiliates of the registrant was $32,198,478 (5,366,413
shares at $6.00 per share).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's 1996 Annual Report to Stockholders are
incorporated by reference into Part II.
Portions of the Company's Proxy Statement for its 1997 Annual
Meeting are incorporated by reference into Part III.
PART I
ITEM 1 -- DESCRIPTION OF BUSINESS
a. GENERAL DEVELOPMENT OF BUSINESS
(i) BACKGROUND
John B. Sanfilippo & Son, Inc. (the "Company" or "JBSS") is a
processor, packager, marketer and distributor of shelled and
inshell nuts. These nuts are sold under a variety of private
labels and under the Company's Evon's, Fisher, Flavor Tree,
Sunshine Country and Texas Pride brand names. The Company also
markets and distributes, and in most cases manufactures or
processes, a diverse product line of food and snack items,
including peanut butter, candy and confections, natural snacks and
trail mixes, sunflower seeds, corn snacks and sesame sticks and
other sesame snack products.
The Company was incorporated under the laws of the State of
Delaware in 1979 as the successor by merger to an Illinois
corporation that was incorporated in 1959. As used herein, unless
the context otherwise indicates, the terms "Company" or "JBSS"
refer collectively to John B. Sanfilippo & Son, Inc., its Illinois
predecessor corporation and its wholly owned subsidiaries,
including Sunshine Nut Co., Inc. ("Sunshine"). See Note 1 to the
Consolidated Financial Statements.
The Company's headquarters and executive offices are located at
2299 Busse Road, Elk Grove Village, Illinois 60007 and its
telephone number for investor relations is (847) 593-2300,
extension 212.
(ii) CERTAIN ACQUISITIONS AND OTHER ARRANGEMENTS
(A) Preferred Products, Inc. Supply Contract and Related
Acquisition of Certain Equipment and Inventory
In February 1995, the Company entered into a long-term supply
contract (the "PPI Contract") with Preferred Products, Inc.
("PPI"), a wholly owned subsidiary of Supervalu, Inc.
("Supervalu"), a major food wholesaler and retailer. Under the
terms of the PPI Contract, the Company assumed the manufacturing
and distribution of Supervalu's private label peanut butter,
candy, salted and baking nuts and coconut products for up to 10
years. The PPI Contract also included the acquisition by the
Company of certain equipment and residual inventory used by PPI in
connection with its manufacturing operations. Sales and marketing
of the products to be produced by the Company under the PPI
Contract remain the responsibility of PPI. The Company integrated
all processing and manufacturing of these products into its
existing facilities. The Company paid PPI a total of $3.5 million
in the first quarter of 1995 for the equipment and inventory and
as partial consideration for the long-term supply agreement. The
Company is required to make additional payments to PPI under the
PPI Contract based on the Company's net annual sales to PPI. The
Company is also required to provide certain merchandising support
to PPI's private label marketing programs. This merchandising
support is being provided through reductions in sales invoice
prices to PPI. There are no material contingent liabilities
related to the PPI contract. The PPI Contract provides that PPI
is obligated to purchase an annual average of at least $35 million
of products from the Company during the first three years of the
agreement. A portion of the initial payment made by the Company
to PPI under the PPI Contract may be required to be repaid to the
Company in the event PPI fails to satisfy the minimum purchase
requirement. See Item 7 -- "Management's Discussion and
Analysis of Financial Condition and Results of Operations --
1995 Compared to 1994".
(B) Machine Design Acquisition
In May 1995, the Company acquired 100% of the issued and
outstanding capital stock of Machine Design Incorporated ("Machine
Design") from Machine Design's then existing stockholders in
exchange for shares of the Company's Common Stock valued at
approximately $1.5 million. The acquisition of Machine Design,
which is the holder of several patents pertaining to nut cracking
equipment but is not otherwise presently engaged in any active
business, was structured as a merger of a newly formed, wholly-
owned subsidiary of the Company into Machine Design, with Machine
Design continuing after the merger as the surviving corporation.
Subsequent to the merger, the Company changed the name of Machine
Design to Quantz Acquisition Co., Inc. See Note 1 to the
Consolidated Financial Statements.
(C) Flavor Tree Acquisition
In June 1995, the Company acquired, for a nominal price, the
Flavor Tree trademark and substantially all of the assets relating
to the products manufactured and sold under that trademark
(including certain inventory) from the Dolefam Corporation. See
Note 1 to the Consolidated Financial Statements.
(D) Arlington Heights Facility Acquisition
In September 1995, the Company purchased the Arlington Heights
facility which it previously leased from an unrelated third party
and used primarily for the processing and packaging of Fisher Nut
products pursuant to its contract manufacturing arrangement with
the Fisher Nut Company (the "Fisher Processing Agreement"). The
purchase price for the facility was approximately $2.2 million and
was financed pursuant to a first mortgage loan on the facility for
$2.5 million. See Item 7 -- "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and Note 1 to the Consolidated Financial
Statements.
(E) Fisher Nut Business Acquisition
In November 1995, the Company acquired substantially all of the
assets of the Fisher Nut business from The Procter & Gamble
Company and certain of its affiliates (the "Fisher Transaction").
The acquisition was divided into several parts, with the Company
acquiring: (i) the Fisher trademarks, brand names, product
formulas and other intellectual and proprietary property for $5.0
million, paid on November 6, 1995; (ii) certain specified items of
machinery and equipment for approximately $1.3 million, payable
pursuant to a note dated January 10, 1996 (secured by such
machinery and equipment) bearing interest at an annual rate of
8.5% and requiring eight equal quarterly installments of principal
(plus accrued interest) commencing in June 1996; (iii) certain of
the raw material and finished goods inventories of the Fisher Nut
business for approximately $15.8 million, payable monthly, in
cash, in amounts based on the amount of such inventories actually
used by the Company during each month with a final payment of the
balance, if any, of the purchase price on March 31, 1996; and (iv)
substantially all of the packaging materials of the Fisher Nut
business for approximately $1.1 million, payable monthly, in cash,
in amounts based on the amount of such materials actually used by
the Company during each month with a final payment of the balance,
if any, of the purchase price, on November 6, 1996. See Item 7 --
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- 1996 Compared to 1995 -- and -- 1995
Compared to 1994" and Note 1 to the Consolidated Financial
Statements.
The Company markets and sells a variety of nut and snack
products under the Fisher and related brand names. In connection
with the Fisher Transaction, the Fisher Processing Agreement was
terminated and the Company has integrated the Fisher processing
into its existing facilities.
(F) Pecan Shelling Plant Relocation
In the fourth quarter of 1995, the Company relocated its pecan
shelling operations from its Des Plaines, Illinois facility to its
facility in Selma, Texas. The Company also constructed certain
improvements at the Selma, Texas facility to accommodate the
processing operations. The total cost of the relocation,
including the construction and improvements, was approximately
$11.1 million. The Company began production at its new pecan
shelling facility in the first quarter of 1996.
b. NARRATIVE DESCRIPTION OF BUSINESS
(i) GENERAL
The Company is a processor, packager, marketer and distributor
of shelled and inshell nuts. The Company also markets and
distributes, and in most cases manufactures or processes, a
diverse product line of food and snack items including peanut
butter, candy and confections, natural snacks and trail mixes,
corn snacks, sesame sticks and other sesame snack products and
coconut products.
(ii) PRINCIPAL PRODUCTS
(A) Raw and Processed Nuts
The Company's principal products are raw and processed nuts.
These products accounted for approximately 83.8%, 84.9% and 85.5%
of the Company's gross sales in 1996, 1995 and 1994, respectively.
The nut product line includes peanuts, almonds, Brazil nuts,
pecans, pistachios, filberts, cashews, English walnuts, black
walnuts, pinenuts and macadamia nuts. The Company's nut products
are sold in numerous package styles and sizes, from
poly-cellophane packages, composite cans, vacuum packed tins and
glass jars for retail sales, to large cases and sacks for bulk
sales to industrial, food service and government customers. In
addition, the Company offers its nut products in a variety of
different styles and seasonings, including natural (with skins),
blanched (without skins), oil roasted, dry roasted, unsalted,
honey roasted and cinnamon toasted. The Company sells its
products domestically to retailers and wholesalers as well as to
industrial, food service and government customers. The Company
also sells certain of its products to foreign customers in the
retail and industrial markets.
The Company acquires a substantial portion of its peanut, pecan,
almond and walnut requirements directly from growers. The balance
of the Company's raw nut supply is purchased from importers and
domestic processors. In 1996, the majority of the Company's
peanuts, pecans and walnuts were shelled by the Company at its
four shelling facilities while the remainder were purchased
shelled from processors and growers. See "Raw Materials and
Supplies," below, and Item 2 -- "Properties -- Manufacturing
Capability, Technology and Engineering."
(B) Peanut Butter
The Company manufactures and markets peanut butter in several
sizes and varieties, including creamy, crunchy and natural.
Peanut butter accounted for approximately 5.3%, 5.0% and 3.9% of
the Company's gross sales in 1996, 1995 and 1994, respectively.
Approximately 4.9%, 16.5% and 51.3% of the Company's peanut butter
products were sold during 1996, 1995 and 1994, respectively, to
the United States Department of Agriculture ("USDA") and other
government agencies, with the remaining percentage sold under
private labels and PPI.
(C) Candy and Confections
The Company markets and distributes a wide assortment of candy
and confections, including such items as wrapped hard candy,
gummies, ju-ju's, brand name candies, chocolate peanut butter
cups, peanut clusters, pecan patties and sugarless candies. Candy
and confections accounted for approximately 4.6%, 4.4% and 2.5% of
the Company's gross sales in 1996, 1995 and 1994, respectively.
Most of these products are purchased from various candy
manufacturers and sold to retailers in bulk or retail packages
under private labels or the Evon's brand.
(D) Other Products
The Company also markets and distributes, and in many cases
processes and manufactures, a wide assortment of other food and
snack products. These products accounted for approximately 6.3%,
5.7%, and 8.1% of the Company's gross sales in 1996, 1995 and
1994, respectively. These other products include: natural snacks,
trail mixes and chocolate- and yogurt-coated products sold to
retailers and wholesalers; baking ingredients (including chocolate
chips, peanut butter chips, flaked coconut and chopped, diced,
crushed and sliced nuts) sold to retailers, wholesalers and
industrial and food service customers; bulk food products sold to
retail and food service customers; an assortment of corn snacks,
sunflower seeds, party mixes and sesame sticks and other sesame
snack products sold to retail supermarkets, vending companies,
mass merchandisers and industrial customers; and a wide variety of
toppings for ice cream and yogurt sold to food service customers.
(iii) CUSTOMERS
The Company sells its products to over 11,090 retail, wholesale,
industrial, government and food service customers on a national
level. Retailers of the Company's products include grocery
chains, mass merchandisers and membership clubs. The Company
markets many of its Evon's brand products directly to over 3,650
retail stores in Illinois and eight other states through its
store-door delivery system discussed below. Wholesale grocery
companies purchase products from the Company for resale to
regional retail grocery chains and convenience stores.
The Company's industrial customers include bakeries, ice cream
and candy manufacturers and other food and snack processors. The
Company's principal government customers are the Agricultural
Stabilization and Conservation Service of the USDA and the Defense
Personnel Support Center. Food service customers include
hospitals, schools, universities, airlines, retail and wholesale
restaurant businesses and national food service franchises. In
addition, the Company packages and distributes products
manufactured or processed by others. In 1996 and 1995, sales to
PPI accounted for approximately $34.8 and $29.3 million, or 11.7%
and 10.4%, respectively of the Company's gross sales. No customer
accounted for more than 10% of the Company's net sales in 1994.
In addition, sales to Sam's Club and Walmart accounted for
approximately $27.7 million, or 9.9%, of the Company's gross sales
for 1995. The Company was outbid for Sam's Club business (which
accounted for approximately $23.4 million of the Company's gross
sales for 1995) during the first quarter of 1996. See Item 7 --
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- 1996 Compared to 1995 and 1995 Compared
to 1994" and Note 1 to the Consolidated Financial Statements.
(iv) SALES, MARKETING AND DISTRIBUTION
The Company markets its products through its own sales
department and through a network of over 325 independent brokers
and various independent distributors and suppliers. The Company's
sales department of 39 employees includes 6 regional managers, 13
sales specialists and 7 telemarketers.
The Company's marketing and promotional campaigns include
regional and national trade shows and limited newspaper
advertisements done from time to time in cooperation with certain
of the Company's retail customers. The Company also designs and
manufactures point of purchase displays and bulk food dispensers
for use by certain of its retail customers. These displays, and
other shelving and pegboard displays purchased by the Company, are
installed by Company personnel. The Company believes that
controlling the type, style and format of display fixtures
benefits the customer and ultimately the Company by presenting the
Company's products in a consistent, attractive point of sale
presentation.
The Company distributes its products from its Illinois, Georgia,
California, North Carolina and Texas production facilities and
from public warehouse and distribution facilities located in
various other states. The majority of the Company's products are
shipped from the Company's production, warehouse and distribution
facilities by contract and common carriers.
In Illinois and eight other states, JBSS distributes its Evon's
brand products to over 3,650 convenience stores, supermarkets and
other retail customer locations through its store-door delivery
system. Under this system, JBSS uses its own fleet of Evon's
step-vans to market and distribute Evon's brand nuts, snacks and
candy directly to retail customers on a store-by-store basis.
Presently, the store-door delivery system consists of
approximately 56 route salespeople covering routes located in
Illinois, Indiana, Iowa, Wisconsin, Ohio, Minnesota, Michigan,
Kentucky, and Missouri. District and regional route managers, as
well as sales and marketing personnel operating out of JBSS's
corporate offices, are responsible for monitoring and managing the
route salespeople.
In the Chicago area, JBSS operates two thrift stores at its
production facilities and five other retail stores. These stores
sell bulk foods and other products produced by JBSS and other
vendors.
(v) COMPETITION
Snack food markets are highly competitive. The Company's nuts
and other snack food products compete against products
manufactured and sold by numerous other companies in the snack
food industry, some of which are substantially larger and have
greater resources than the Company. In the nut industry, the
Company competes with, among others, Planters Lifesavers Company
(a subsidiary of RJR Nabisco, Inc.) and numerous regional snack
food processors. Competitive factors in the Company's markets
include price, product quality, customer service, breadth of
product line, brand name awareness, method of distribution and
sales promotion.
(vi) RAW MATERIALS AND SUPPLIES
The Company purchases nuts from domestic and foreign sources.
Most of the Company's peanuts are purchased from the southeastern
United States and most of its walnuts and almonds are purchased
from California. The Company purchases most of its pecans from
the southern United States and Mexico. Cashew nuts are imported
from India, Africa, Brazil and Southeast Asia. The availability
of nuts is subject to market conditions and crop size fluctuations
caused by weather conditions, plant diseases and other factors
beyond the Company's control. These fluctuations can adversely
impact the Company's profitability. In 1996, less than 10% of the
Company's nut purchases were from foreign sources.
The Company generally purchases and shells peanuts, pecans and
walnuts instead of buying shelled nuts from shellers. Due, in
part, to the seasonal nature of the industry, the Company
maintains significant inventories of peanuts, pecans, walnuts and
almonds at certain times of the year. 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. See "General" and "1996
Compared to 1995 -- Gross Profit" and "1995 Compared to 1994 --
Gross Profit" under Item 7 -- "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
The Company purchases supplies, such as roasting oils,
seasonings, glass jars, labels, composite cans and other packaging
materials from third parties. The Company sponsors a seed
exchange program under which it provides peanut seed to growers in
return for a commitment to repay the dollar value of that seed,
plus interest, in the form of farmer stock (i.e., peanuts at
harvest). Approximately 75% of the farmer stock peanuts purchased
by the Company in 1996 were grown from seed provided by the
Company. The Company also contracts for the growing of a limited
number of generations of peanut seeds to increase seed quality and
maintain desired genetic characteristics of the peanut seed used
in processing.
The availability and cost of raw materials for the production of
the Company's products, including peanuts, pecans, walnuts,
almonds, other nuts, dried fruit, coconut and chocolate, are
subject to crop size and yield fluctuations caused by factors
beyond the Company's control, such as weather conditions and plant
diseases. Additionally, the supply of edible nuts and other raw
materials used in the Company's products could be reduced upon any
determination by the USDA or any 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.
Furthermore, the supply of peanuts is currently subject to federal
regulation that restricts peanut imports and the tonnage of
peanuts farmers may market domestically. See "Federal Regulation"
below.
(vii) TRADEMARKS
The Company markets its products primarily under private labels
and the Evon's, Fisher, Flavor Tree, Sunshine Country and Texas
Pride brand names, which are registered with the U.S. Patent and
Trademark Office.
(viii) EMPLOYEES
As of December 31, 1996, the Company had approximately 1,678
active employees, including 219 corporate staff employees and
1,459 production and distribution employees. As a result of the
seasonal nature of the Company's business, the number of employees
peaked to approximately 1,786 in the last four months of 1996 and
dropped to an average of approximately 1,479 during the remaining
portion of 1996. Approximately 23 of the Company's route
salespeople are covered by a collective bargaining agreement which
expires on June 30, 1998.
(ix) SEASONALITY
The Company's business is seasonal. Demand for peanut and other
nut products are highest during the months of October through
December, although large government contracts may alter the
typical sales pattern. Peanuts, pecans, walnuts and almonds, the
Company's principal raw materials, are purchased primarily during
August to February and are processed throughout the year until the
following harvest. As a result of this seasonality, the Company's
personnel, working capital requirements and inventories peak
during the last four months of the year. See Item 8 -- "Financial
Statements and Supplementary Data -- Quarterly Consolidated
Financial Data." See also Item 7 -- "Management's Discussion and
Analysis of Financial Condition and Results of Operations --
General."
(x) BACKLOG
Because the time between order and shipment is usually less than
three weeks, the Company believes that backlog as of a particular
date is not indicative of annual sales.
(xi) FEDERAL REGULATION
Peanuts are an important part of the Company's product line.
The Company processed approximately 94.7 million pounds of peanuts
in 1996, representing approximately 50% of the total pounds of
products processed by the Company for the year. The production
and marketing of peanuts are regulated by the USDA under the
Agricultural Adjustment Act of 1938 (the "Agricultural Adjustment
Act"). The Agricultural Adjustment Act, and regulations
promulgated thereunder, support the peanut crop: (i) by limiting
peanut imports, (ii) by limiting the amount of peanuts that
American farmers are allowed to bring to the domestic market each
year, and (iii) by setting a minimum price that a sheller must
pay for peanuts which may be sold for domestic consumption. The
amount of peanuts that American farmers can sell each year is
determined by the Secretary of Agriculture and is based upon the
prior year's peanut consumption in the United States. Only quota
peanuts may be sold for domestic food products and seed. The 1997
peanut quota is 1,236 million tons. Peanuts in excess of the
quota are called "additional peanuts" and generally may only be
exported or used domestically for crushing into oil or meal.
Current regulations permit additional peanuts to be domestically
processed and exported as finished goods to any foreign country.
The 1997 quota support price is $610 per ton. To be assured of
purchasing sufficient amounts of quota peanuts, the Company
contracts to buy additional peanuts.
Changes in the federal peanut program could significantly affect
the supply of, and price for, peanuts. While JBSS has
successfully operated in a market shaped by the federal peanut
program for many years, JBSS believes that it could adapt to a
market without federal regulation. However, JBSS has no
experience in operating in such a peanut market, and no assurances
can be given that the elimination or modification of the federal
peanut program would not adversely affect JBSS's business. Future
changes in import quota limitations or the quota support price for
peanuts at a time when the Company is maintaining a significant
inventory of peanuts or has significant outstanding purchase
commitments could adversely affect the Company's business by
lowering the market value of the peanuts in its inventory or the
peanuts which it is committed to buy. While the Company believes
that its ability to use its raw peanut inventories in its own
processing operations gives it greater protection against these
changes than is possessed by certain competitors whose operations
are limited to either shelling or processing, no assurances can be
given that future changes in, or the elimination of, the federal
peanut program or import quotas will not adversely affect the
Company's business.
The North American Free Trade Agreement ("NAFTA"), effective
January 1, 1994, committed the United States, Mexico and Canada to
the elimination of quantitative restrictions and tariffs on the
cross-border movement of industrial and agricultural products.
Under NAFTA, United States import restrictions on Mexican shelled
and inshell peanuts are replaced by a tariff rate quota, initially
set at 3,377 tons, which will grow by a 3% compound rate over a
15-year transition period. In-quota shipments enter the U.S.
duty-free, while above-quota imports from Mexico are subject to an
over-quota ad valorem tariff. The tariff rates will be phased-out
over the next nine years. The Company does not believe NAFTA will
have a material impact on the federal peanut program (assuming it
is not eliminated by the pending legislation discussed above) in
the near term. Because of the relatively small amount of peanuts
currently grown in Mexico, the full effect of NAFTA on the
Company's business and opportunities cannot yet be fully assessed.
However, there can be no assurance that NAFTA will not have a
material adverse effect on the federal peanut program (assuming it
is not eliminated) and the Company in the future.
The Uruguay Round Agreement of the General Agreement on Trade
and Tariffs ("GATT") took effect on July 1, 1995. Under GATT, the
United States generally must allow peanut imports to grow to 3% of
domestic consumption within the first year and to 5% within six
years. Import quotas on peanuts have been replaced by high ad
valorem tariffs, which must be reduced by 15% over the next six
years. The United States limits imports of peanut butter through
a tariff rate quota for peanut butter imports based on 1993 import
levels. Peanut butter imports above the quota are subject to an
over-quota ad valorem tariff, which will be reduced by 15% over
the next six years.
Although NAFTA and GATT do not directly affect the federal
peanut program, the federal government may, in future legislative
initiatives, reconsider the federal peanut program in light of
these agreements. The Company does not believe that NAFTA and
GATT have had a material impact on the Company's business or will
have a material impact on the Company's business in the near term.
(xii) OPERATING HAZARDS AND UNINSURED RISKS
The sale of food products for human consumption involves the
risk of injury to consumers as a result of product contamination
or spoilage, including the presence of foreign objects,
substances, chemicals, aflatoxin and other agents, or residues
introduced during the growing, storage, handling or transportation
phases. While the Company maintains rigid quality control
standards, inspects its products by visual examination, metal
detectors or electronic monitors at various stages of its shelling
and processing operations for all of its nut and other food
products, and the USDA inspects all lots of peanuts shipped to and
from the Company's production facilities, no assurance can be
given that some nut or other food products sold by the Company may
not contain or develop harmful substances. The Company currently
maintains product liability insurance of $1 million per occurrence
and umbrella coverage up to $35 million which it and its insurance
carriers believe to be adequate. All of the Company's products
comply with the Nutrition Labeling and Education Act by having
labels that disclose the specific ingredients and nutritional
content of each product.
ITEM 2 -- PROPERTIES
The Company presently owns or leases eight principal production
facilities. Two of these facilities are located in Elk Grove
Village, Illinois. The Busse Road facility serves as the
Company's corporate headquarters and main production facility.
The other Elk Grove Village facility is located on Arthur Avenue
adjacent to the Busse Road facility. The remaining principal
production facilities are located in Bainbridge, Georgia,
Garysburg, North Carolina, Selma, Texas, Walnut, California,
Gustine, California, and Arlington Heights, Illinois. The Company
uses the Des Plaines, Illinois facility for warehousing. The
Company also presently operates thrift stores out of the Busse
Road facility and the Des Plaines facility. The Company also owns
one retail store and leases four additional retail stores in
various Chicago suburbs. In addition, the Company leases space in
public warehouse facilities in various states.
The Company relocated its pecan shelling operations from its Des
Plaines facility to its facility in Selma, Texas in December 1995.
See Item 7 -- "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General." The Company
subleases approximately 29,000 square feet at its Des Plaines
facility to two related party lessees. See Item 13 --
"Compensation Committee Interlocks and Insider Participation --
Supplier, Vendor, Broker and Other Arrangements."
a. PRINCIPAL FACILITIES
The following table provides certain information regarding the
Company's principal facilities:
Date
Company Approx.
Constructed, Utilization
Type Acquired or at
Square of First December
Location Footage Interest Description of Use Occupied 31, 1996
- --------------------------------------------------------------------------------
Elk Grove 300,000 Leased/ Processing, 1981 59%
Village, Owned packaging,
Illinois(1) warehousing,
(Busse Road distribution, JBSS
facility) corporate offices
and thrift store
Elk Grove 83,000 Owned Processing, 1989 68%
Village, packaging,
Illinois(2) warehousing and
(Arthur distribution
Avenue
facility)
Des Plaines, 68,000 Leased Warehousing and 1974 N/A(9)
Illinois(3) thrift store
Bainbridge, 230,000 Owned Peanut shelling, 1987 58%
Georgia(4) purchasing,
processing,
packaging,
warehousing and
distribution
Garysburg, 120,000 Owned Peanut shelling, 1994 49%
North purchasing,
Carolina processing,
packaging,
warehousing and
distribution
Selma, 200,000 Owned Pecan shelling, 1992 74%
Texas(9) processing,
packaging,
warehousing,
distribution and
Sunshine corporate
offices
San Antonio,
Texas(5) 24,000 Owned Warehousing 1981 N/A(6)
(Ashby
facility)
San Antonio, 18,000 Owned Warehousing and 1977 N/A(6)
Texas(10) distribution
(San Fernando
facility)
Walnut, 50,000 Leased Processing, 1991 30%
California(7) packaging,
warehousing and
distribution
Gustine, 75,000 Owned Walnut shelling, 1993 37%
California processing,
packaging,
warehousing and
distribution
Arlington 83,000 Owned Processing, 1994 36%
Heights, packaging,
Illinois(8) warehousing and
distribution
___________________
(1) Approximately 240,000 square feet of the Busse Road
facility is leased from a related party land trust (the
"Busse Land Trust") under a lease which expires on May 31,
2015. Under the terms of the lease, the Company has a
right of first refusal and a right of first offer with
respect to this portion of Busse Road facility. The
remaining 60,000 square feet of space at the Busse Road
facility (the "Addition") was constructed by the Company
in 1994 on property owned by the Busse Land Trust and on
property owned by the Company. Accordingly, (i) the
Company and the Busse Land Trust entered into a ground
lease with a term beginning January 1, 1995 pursuant to
which the Company leases from the Busse Land Trust the
land on which a portion of the Addition is situated (the
"Busse Addition Property"), and (ii) the Company, the
Busse Land Trust and the sole beneficiary of the Busse
Land Trust entered into a party wall agreement effective
as of January 1, 1995, which sets forth the respective
rights and obligations of the Company and the Busse Land
Trust with respect to the common wall which separates the
existing Busse Road facility and the Addition. The ground
lease has a term which expires on May 31, 2015 (the same
date on which the Company's lease for the Busse Road
facility expires). The Company has an option to extend
the term of the ground lease for one five-year term, an
option to purchase the Busse Addition Property at its then
appraised fair market value at any time during the term of
the ground lease, and a right of first refusal with
respect to the Busse Addition Property. See Item 11 --
"Compensation Committee Interlocks and Insider
Participation -- Lease Arrangements" .
(2) This facility is subject to a mortgage dated March 1989
securing a note in the original principal amount of
$1.8 million with a maturity date of May 1, 1999.
(3) The Des Plaines facility is leased from a related party
lessor under a lease which expires on October 31, 2010.
The Des Plaines facility is also subject to a mortgage
securing a loan from an unrelated third party lender to
the related-party lessor in the original principal amount
of approximately $1.6 million. The rights of the Company
under the lease are subject and subordinate to the rights
of the lender. Accordingly, a default by the lessor under
the loan could result in foreclosure on the facility and
thereby adversely affect the Company's leasehold interest.
As noted above, the Company subleases approximately
29,000 square feet of space at the Des Plaines facility to
two related party lessees. See Item 1 -- "Description of
Business -- Recent Developments" and Item 11 --
"Compensation Committee Interlocks and Insider
Participation -- Supplier, Vendor, Broker and Other
Arrangements."
(4) The Bainbridge facility is subject to a mortgage and deed
of trust securing $8.0 million (excluding accrued and
unpaid interest) in industrial development bonds. See
Item 7 -- "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity
and Capital Resources."
(5) The Ashby facility is subject to a junior deed of trust.
The Company presently intends to sell this facility.
(6) All processing and packaging operations of the San
Fernando facility were moved to the Selma, Texas facility
in the fourth quarter of 1993, and all processing and
packaging operations of the Ashby facility were moved to
the Selma, Texas facility in the first quarter of 1994.
(7) The Walnut, California facility is leased from an
unrelated third party under a lease which, as amended,
expires on July 31, 1999. The Company has two renewal
options under the lease: an option to extend the lease
term until July 31, 2001; and, upon expiration of such
extended term, an option to extend the term of the lease
for an additional five years.
(8) In September 1995, the Company purchased the Arlington
Heights facility which was previously leased. The
purchase price was approximately $2.2 million and was
financed pursuant to a first mortgage loan on the facility
of $2.5 million.
(9) The Company's pecan shelling operations were relocated to
the Selma, Texas facility during the last quarter of 1995.
(10) The San Fernando facility was sold in January 1997.
b. MANUFACTURING CAPABILITY, TECHNOLOGY AND ENGINEERING
The Company's principal production facilities are equipped with
modern processing and packaging machinery and equipment. The
physical structure and the production line layout of the Busse
Road facility were designed so peanuts and other nuts can be
processed, jarred and packed in cases for distribution on a
completely automated basis. The facility also has production
lines for chocolate chips, candies, peanut butter and other
products processed or packaged by the Company.
The Selma facility contains the Company's automated pecan
shelling and bulk packaging operation. The facility's pecan
shelling production lines currently have the capacity to shell in
excess of 60 million inshell pounds of pecans annually. In 1996,
the Company processed approximately 35 million inshell pounds of
pecans at the Selma, Texas facility. The Company relocated its
pecan shelling and processing operations from the Des Plaines
facility to the Selma facility during the fourth quarter of 1995
and did not begin shelling at the Selma facility until January
1996. The Selma facility currently contains an almond processing
line with the capacity to process over 10 million pounds of
almonds annually. In 1996, the Selma facility processed
approximately 10 million pounds of almonds. See Item 1 --
"Description of Business -- Recent Developments" and Item 7 --
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- General."
The Bainbridge facility is located in the largest peanut
producing region in the United States. This facility takes direct
delivery of farmer stock peanuts and cleans, shells, sizes,
inspects, blanches, roasts and packages them for sale to the
Company's customers. The production line at the Bainbridge
facility is almost entirely automated and has the capacity to
shell approximately 120 million inshell pounds of peanuts
annually. During the 1996 peanut crop year, the Bainbridge
facility shelled approximately 78 million inshell pounds of
peanuts.
The North Carolina facility has the capacity to process
approximately 90 million inshell pounds of farmer stock peanuts
annually. During 1996 the North Carolina facility processed
approximately 35 million pounds of inshell peanuts.
The Gustine facility, which was purchased in 1993, is used for
walnut shelling, processing and marketing operations. This
facility was expanded during 1994 to increase the capacity to
shell from approximately 12 million inshell pounds of walnuts
annually to approximately 35 million inshell pounds of walnuts
annually. During 1996, the Gustine facility shelled approximately
18 million inshell pounds of walnuts.
The Arlington Heights facility was originally leased by the
Company from an unrelated third party and renovated and equipped
by the Company for use in the processing of Fisher Nut products in
connection with the Fisher Processing Agreement. In September
1995, the Company exercised its option to purchase the facility
for a purchase price of approximately $2.2 million and currently
uses the facility for the production and packaging of its Fisher
Nut products as well as the "stand-up pouch" packaging for its
Flavor Tree brand products.
ITEM 3 -- LEGAL PROCEEDINGS
The Company is party to various routine lawsuits, proceedings
and disputes arising out of the conduct of its business. The
Company presently believes that the resolution of any pending
matters will not materially affect its business, financial
condition or results of operations.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the
Company's 1996 fiscal year to a vote of security holders, through
solicitation of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K, the following
information is included as an unnumbered item in Part I of this
Report in lieu of being included in the Proxy Statement for the
Company's annual meeting of stockholders to be held on April 30,
1997.
JASPER B. SANFILIPPO, Chairman of the Board and Chief Executive
Officer, age 66 -- Mr. Sanfilippo has been employed by the Company
since 1953. Mr. Sanfilippo served as the Company's President from
1982 to December 1995 and was the Company's Treasurer from 1959 to
October 1991. He became the Company's Chairman of the Board and
Chief Executive Officer in October 1991 and has been a member of
the Company's Board of Directors since 1959. Mr. Sanfilippo is
also a member of the Company's Compensation Committee. Mr.
Sanfilippo was also a member of the Stock Option Committee until
February 27, 1997, at which time the committee was eliminated and
its duties were assumed by the Company's entire Board of
Directors. Since June 1992, Mr. Sanfilippo has been a member of
the Board of Directors and a Vice President of Sunshine.
MATHIAS A. VALENTINE, President, age 64 -- Mr. Valentine has
been employed by the Company since 1960 and was named its
President in December 1995. He served as the Company's Secretary
from 1969 to December 1995, as its Executive Vice President from
1987 to October 1991 and as its Senior Executive Vice President
and Treasurer from October 1991 to December 1995. He has been a
member of the Company's Board of Directors since 1969. Mr.
Valentine is also a member of the Company's Compensation
Committee. Mr. Valentine was also a member of the Stock Option
Committee until February 27, 1997, at which time the committee was
eliminated and its duties were assumed by the Company's entire
Board of Directors. Mr. Valentine has been a member of the Board
of Directors and a Vice President of Sunshine since June 1992.
JOHN C. TAYLOR, Executive Group Vice President, age 51 -- Mr.
Taylor has been the President and a director of Sunshine, which
the Company acquired in June 1992, since 1976. In August 1995,
Mr. Taylor was named a director of the Company and in December
1995 was appointed an Executive Group Vice President of the
Company (responsible for coordinating certain joint activities of
the Company and Sunshine). Mr. Taylor and Sunshine are parties to
an Employment Agreement pursuant to which Mr. Taylor is to be
employed by Sunshine as Sunshine's President until May 1997. See
Item 11 -- "Executive Compensation -- Employment Contract." As
President of Sunshine, Mr. Taylor is responsible for overseeing
that company's processing, packaging, marketing, and distribution
of shelled nuts.
GARY P. JENSEN, Executive Vice President, Finance and Chief
Financial Officer, age 52 -- Mr. Jensen became the Company's
Executive Vice President, Finance and Chief Financial Officer in
December 1995, having previously served as the Company's Vice
President, Finance and Chief Financial Officer from February 1995.
Prior to joining the Company, he served from August 1992 to
October 1994 as Vice President Finance of Amour Swift-Eckrich, a
meat processing and packaging company. In addition, Mr. Jensen
was employed by Vlasic Foods, Inc., a condiments processing
company, from 1975 to August 1992 and served as its Vice President
Finance and Chief Financial Officer from 1988 to August 1992.
WILLIAM R. POKRAJAC, Controller, age 43 -- Mr. Pokrajac has been
with the Company since 1985 and has served as the Company's
Controller since 1987. Mr. Pokrajac is responsible for the
Company's accounting, financial reporting and inventory control
functions.
MICHAEL J. VALENTINE, Vice President and Secretary, age 37 --
Mr. Valentine has been employed by the Company since 1987 and in
December 1995 was named the Company's Vice President and
Secretary. He is also a nominee for election as a director of the
Company at the Company's 1997 Annual Meeting of Stockholders. He
served as an Assistant Secretary and the General Manager of
External Operations for the Company from June 1987 and 1990,
respectively, to December 1995. Mr. Valentine is responsible for
the Company's peanut operations, including sales and procurement.
JASPER B. SANFILIPPO, JR., Vice President and Assistant
Secretary, age 28 -- Mr. Sanfilippo has been employed by the
Company since 1991 and served as General Manager of the Walnut
Processing Division from 1993 to December 1995. He has served as
an Assistant Secretary of the Company since 1993 and was named a
Vice President in December 1995. Mr. Sanfilippo is responsible
for the Company's walnut operations, including plant operations
and procurement.
JAMES J. SANFILIPPO, Vice President and Treasurer, age 35 -- Mr.
Sanfilippo has been employed by the Company since 1985 and has
served as Product Manager and General Manager of the Busse
Operations since June 1985 and December 1995 respectively. In
December 1995, he was also named a Vice President and the
Treasurer of the Company. Mr. Sanfilippo is responsible for
operations at the Company's Busse Road facility and Arlington
Heights facility, including plant operations and contract
manufacturing.
STEVEN G. TAYLOR, Executive Vice President, age 46 -- Mr. Taylor
has been the Vice President of Sunshine since 1982. In December
1995, Mr. Taylor became a Vice President of the Company and was
named an Executive Vice President of the Company in October 1996.
Mr. Taylor and Sunshine are parties to an Employment Agreement
pursuant to which Mr. Taylor is to be employed by Sunshine as
Sunshine's Vice President until June 2000. See item 11 -
"Executive Compensation - Employment Contract."
CERTAIN RELATIONSHIPS AMONG DIRECTORS AND EXECUTIVE OFFICERS
Jasper B. Sanfilippo, Chairman of the Board and Chief Executive
Officer and a director of the Company, is (i) the father of Jasper
B. Sanfilippo, Jr. and James J. Sanfilippo, each of whom is an
executive officer of the Company, as indicated above, (ii) the
brother-in-law of Mathias A. Valentine, President and a director
of the Company, and (iii) the uncle of Michael J. Valentine who is
an executive officer of the Company and is a nominee for election
as a director of the Company, as indicated above. Mathias A.
Valentine, President and a director of the Company, is (i) the
brother-in-law of Jasper B. Sanfilippo, (ii) the uncle of Jasper
B. Sanfilippo, Jr. and James J. Sanfilippo, and (iii) the father
Michael J. Valentine. Michael J. Valentine, Vice President and
Secretary, and nominee for election as a director of the Company,
is (i) the son of Mathias A. Valentine, (ii) nephew of Jasper B.
Sanfilippo, and (iii) cousin of Jasper B. Sanfilippo, Jr., and
James J. Sanfilippo. John C. Taylor, Executive Group Vice
President and a director of the Company, is the brother of Steven
G. Taylor, Vice President of the Company.
PART II
ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The section entitled "Markets for the Company's Securities and
Related Matters" on page 32 of the Company's 1996 Annual Report to
Stockholders is incorporated herein by reference.
For purposes of the calculation of the aggregate market value of
the Company's voting stock held by nonaffiliates of the Company as
set forth on the cover page of this Report, the Company did not
consider any of the siblings of Jasper B. Sanfilippo, or any of
the lineal descendants (all of whom are adults and some of whom
are employed by the Company) of either Jasper B. Sanfilippo,
Mathias A. Valentine or such siblings (other than those who are
officers of the Company), as an affiliate of the Company. See
Item 10 -- "Directors and Executive Officers of the Registrant,"
Item 11 -- "Executive Compensation," Item 12 -- "Security
Ownership of Certain Beneficial Owners and Management," and Item
13 -- "Compensation Committee Interlocks and Insider
Participation" and "Certain Relationships and Related
Transactions."
ITEM 6 -- SELECTED FINANCIAL DATA
The five-year Selected Historical Consolidated Financial Data
and accompanying notes contained on page 6 of the Company's 1996
Annual Report to Stockholders are incorporated herein by
reference.
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in pages 7 through 16, inclusive,
of the Company's 1996 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
a. QUARTERLY CONSOLIDATED FINANCIAL DATA
QUARTERLY CONSOLIDATED FINANCIAL DATA
The following table presents unaudited quarterly consolidated
financial data for the Company for the years ended December 31,
1996 and 1995. Such data are unaudited, but in the opinion of the
Company reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the information
for the periods presented. The consolidated financial data should
be read in conjunction with the Consolidated Financial Statements
and Notes thereto contained elsewhere herein. Such quarterly
consolidated data are not necessarily indicative of future results
of operations.
Quarter Ended
Mar.28, June 27, Sept.26, Dec.31, Mar.30, June 29, Sept.28, Dec.31,
1996 1996 1996 1996 1995 1995 1995 1995
------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
STATEMENT
OF INCOME
DATA:
Net sales $ 53,059 $ 64,909 $ 70,373 $106,063 $ 47,089 $ 58,818 $ 67,048 $104,786
Gross profit 8,176 9,299 6,175 15,550 8,089 11,848 12,089 15,024
Income (loss)
from operations 534 887 (2,298) 4,667 2,149 3,457 4,635 6,471
Net (loss) income (1,184) (763) (2,590) 1,546 191 1,062 1,784 2,751
(Loss) earnings
per common
share(1) (0.13) ( 0.08) (0.28) 0.17 0.02 0.12 0.20 0.29
BALANCE SHEET
DATA (AT END OF
PERIOD):
Working capital $ 54,467 $ 44,514 $ 40,965 $ 40,956 $ 35,764 $ 35,489 $ 63,120 $ 58,148
Long-term debt 74,213 65,603 64,202 63,319 49,782 49,255 75,485 74,681
Total debt 123,083 111,096 101,286 98,310 105,712 96,623 95,649 106,849
_________________________
(1) Earnings (loss) per common share calculations for each of
the quarters is based on the weighted average number of
shares of Common Stock and Class A Stock outstanding for
each period.
b. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information contained on the respective pages
indicated below in the Company's 1996 Annual Report to
Stockholders is incorporated herein by reference:
Report of Independent Accountants Page 17
Consolidated Balance Sheets at December 31, 1996 and 1995 Pages 18
and 19
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 Page 20
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994 Page 20
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 Page 21
Notes to Consolidated Financial Statements Pages 22
through 32
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements on any matters of accounting
principles or financial statement disclosure with the Company's
independent accountants during 1996, 1995 or 1994.
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Sections entitled "Nominees for Election by The Holders of
Common Stock," "Nominees for Election by The Holders of Class A
Stock" and "Other Matters" of the Company's Proxy Statement for
the 1997 Annual Meeting are incorporated herein by reference. The
Section entitled "Executive Officers of the Registrant" appearing
immediately after Part I of this Report is incorporated herein by
reference.
ITEM 11 -- EXECUTIVE COMPENSATION
The Sections entitled "Executive Compensation," "Committees and
Meetings of the Board of Directors" and "Compensation Committee
Interlocks and Insider Participation" of the Company's Proxy
Statement for the 1997 Annual Meeting are incorporated herein by
reference.
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Section entitled "Security Ownership of Certain Beneficial
Owners and Management" of the Company's Proxy Statement for the
1997 Annual Meeting is incorporated herein by reference.
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Sections entitled "Executive Compensation," "Committees and
Meetings of the Board of Directors," "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships
and Related Transactions" of the Company's Proxy Statement for the
1997 Annual Meeting are incorporated herein by reference.
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
The following financial statements of John B. Sanfilippo & Son,
Inc., included in the Annual Report to Stockholders for the year
ended December 31, 1996, are incorporated by reference in Part II,
Item 8 of this Report:
Report of Independent Accountants
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
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 (included at page 17, which follows the signature page)
Schedule II -- Valuation and Qualifying Accounts and Reserves
(included at page 24, which follows the signature page)
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.
(b) REPORTS ON FORM 8-K
On December 10, 1996, the Company field a Current Report on Form
8-K, dated December 10, 1996, with the Securities and Exchange
Commission. The Current Report dated December 10, 1996, reported
pursuant to Item 5 thereof that the date for which the Company was
required to grant security interests in and liens on substantially
all of the Company's assets was extended to December 20, 1996 from
November 27, 1996.
(c) EXHIBITS
See Item 14(a)(3) above.
(d) FINANCIAL STATEMENT SCHEDULES
See Item 14(a)(2) above.
This report contains the following trademarks of the Company, some
of which are registered: Evon's, Fisher, Flavor Tree, Sunshine
Country and Texas Pride. Any other product or brand names are
trademarks or registered trademarks of their respective companies.
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.
Date: March 31, 1997 JOHN B. SANFILIPPO & SON, INC.
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 March 31, 1997
- ------------------------ Chief Executive
Jasper B. Sanfilippo Officer and Director
(Principal Executive Officer)
/s/ Gary P. Jensen Executive Vice President, March 31, 1997
- ------------------ Finance and Chief Financial
Gary P. Jensen Officer (Principal Financial
Officer)
/s/ William R. Pokrajac Controller (Principal Accounting March 31, 1997
- ----------------------- Officer)
William R. Pokrajac
/s/ Mathias A. Valentine Director March 31, 1997
- ------------------------
Mathias A. Valentine
/s/ William D. Fischer Director March 31, 1997
- ----------------------
William D. Fischer
/s/ John W.A. Buyers Director March 31, 1997
- --------------------
John W.A. Buyers
/s/ John C. Taylor Director March 31, 1997
- ------------------
John C. Taylor
/s/ J. William Petty Director March 31, 1997
- --------------------
J. William Petty
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors
of John B. Sanfilippo & Son, Inc.
Our audits of the consolidated financial statements referred
to in our report dated February 13, 1997 appearing on page
17 of the 1996 Annual Report to Stockholders of John B.
Sanfilippo & Son, Inc. (which report and consolidated
financial statements are incorporated by reference in this
Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedule listed in Item 14(a) of this
Form 10-K. 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/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Chicago, Illinois
February 13, 1997
JOHN B. SANFILIPPO & SON, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands)
Balance at
Balance at End of
Description Beginning Additions Deductions Period
- ----------------------------------------------------------------------
1996
- ----
Allowance for
doubtful accounts $ 434 $ 443 $ (201) $ 676
1995
- ----
Allowance for
doubtful accounts $ 407 $ 195 $ (168) $ 434
1994
- ----
Allowance for
doubtful accounts $ 377 $ 309 $ (279) $ 407
JOHN B. SANFILIPPO & SON, INC.
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit Total
Number Description Pages
- -----------------------------------------------------------------------------
1 None
2 None
3.1 Restated Certificate of Incorporation of Registrant(2)
3.2 Certificate of Correction to Restated Certificate(2)
3.3 Bylaws of Registrant(1)
4.1 Specimen Common Stock Certificate(3)
4.2 Specimen Class A Common Stock Certificate(3)
4.3 Amended and Restated Note Purchase and Private Shelf
Agreement by and between the Registrant and The Prudential
Insurance Company of America ("Prudential") dated as of
October 19, 1993 (the "Long-Term Financing Facility)(8)
4.4 7.87% Series A Senior Note dated September 29, 1992 in the
original principal amount of $4.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(5)
4.5 8.22% Series B Senior Note dated September 29, 1992 in the
original principal amount of $6.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(5)
4.6 8.22% Series C Senior Note dated September 29, 1992 in the
original principal amount of $4.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(5)
4.7 8.33% Series D Senior Note dated January 15, 1993 in the
original principal amount of $3.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(6)
4.8 6.49% Series E Senior Note dated September 15, 1993 in the
original principal amount of $8.0 million due August 15, 2004
executed by the Registrant in favor of Prudential(9)
4.9 8.31% Series F Senior Note dated June 23, 1994 in the
original principal amount of $8.0 million due May 15, 2006
executed by the Registrant in favor of Prudential(11)
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(11)
4.11 Amended and Restated Guaranty Agreement dated as of
October 19, 1993 by Sunshine in favor of Prudential(8)
4.12 First Amendment to the Long-Term Financing Facility dated
as of August 31, 1994 by and between Prudential, Sunshine Nut Co.,
Inc. ("Sunshine") and the Registrant(12)
4.13 Second Amendment to the Long-Term Financing Facility dated
as of September 12, 1995 by and among Prudential, Sunshine and the
Registrant(17)
4.14 Third Amendment to the Long-Term Financing Facility dated
as of February 20, 1996 by and between Prudential, Sunshine and
the Registrant (20)
4.15 Second Amendment and Restated Note Agreement dated January
24, 1997 to the Long Term Financing Facility by and among
Prudential, Sunshine, and the Registrant (22)
4.16 $1.8 million Promissory Note dated March 31, 1989
evidencing a loan by Cohen Financial Corporation to LaSalle
National Bank ("LNB"), as Trustee under Trust Agreement dated
March 17, 1989 and known as Trust No. 114243(14)
4.17 Modification Agreement dated as of September 29, 1992 by
and among LaSalle National Trust, N.A. ("LaSalle Trust"), a
national banking association, not personally but as Successor
Trustee to LNB under Trust Agreement dated March 17, 1989 known as
Trust Number 114243; the Registrant; Jasper B. Sanfilippo and
Mathias A. Valentine; and Mutual Trust Life Insurance Company(5)
4.18 Note Purchase Agreement dated as of August 30, 1995
between the Registrant and Teachers Insurance and Annuity
Association of America ("Teachers")(17)
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(17)
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(17)
4.21 Guaranty Agreement dated as of August 30, 1995 by Sunshine
in favor of Teachers (Senior Notes)(17)
4.22 Guaranty Agreement dated as of August 30, 1995 by Sunshine
in favor of Teachers (Senior Subordinated Notes)(17)
4.23 Amendment, Consent and Waiver, dated as of March 27,
1996, by and among Teachers, Sunshine and the Registrant(20)
4.24 Amendment No. 2 to Note Purchase Agreement dated as of
January 24, 1997 by and among Teachers, Sunshine and the
Registrant(22)
5-9 None
10.1 Certain documents relating to $8.0 million Decatur County-
Bainbridge Industrial Development Authority Industrial Development
Revenue Bonds (John B. Sanfilippo & Son, Inc. Project) Series 1987
dated as of June 1, 1987(1)
10.2 Industrial Building Lease dated as of October 1, 1991
between JesCorp, Inc. and LNB, as Trustee under Trust Agreement
dated March 17, 1989 and known as Trust No. 114243(16)
10.3 Industrial Building Lease (the "Touhy Avenue Lease") dated
November 1, 1985 between Registrant and LNB, as Trustee under
Trust Agreement dated September 20, 1966 and known as Trust No.
34837(13)
10.4 First Amendment to the Touhy Avenue Lease dated June 1,
1987(13)
10.5 Second Amendment to the Touhy Avenue Lease dated December
14, 1990(13)
10.6 Third Amendment to the Touhy Avenue Lease dated September
1, 1991(18)
10.7 Industrial Real Estate Lease (the "Lemon Avenue Lease")
dated May 7, 1991 between Registrant, Majestic Realty Co. and
Patrician Associates, Inc(1)
10.8 First Amendment to the Lemon Avenue Lease dated January
10, 1996(20)
10.9 $4.0 million Promissory Note dated October 5, 1988
evidencing a loan to Registrant by Jasper B. Sanfilippo(1)
10.10 Form of Receivable Assignment Agreement between Registrant
and Jasper B. Sanfilippo and form of $1,153,801.36 Promissory Note
executed by Jasper B. Sanfilippo in connection therewith(14)
10.11 Mortgage, Assignment of Rents and Security Agreement made
on September 29, 1992 by LaSalle Trust, not personally but as
Successor Trustee under Trust Agreement dated February 7, 1979
known as Trust Number 100628 in favor of the Registrant relating
to the properties commonly known as 2299 Busse Road and 1717
Arthur Avenue, Elk Grove Village, Illinois(5)
10.12 Industrial Building Lease dated June 1, 1985 between
Registrant and LNB, as Trustee under Trust Agreement dated
February 7, 1979 and known as Trust No. 100628(1)
10.13 First Amendment to Industrial Lease dated September 29,
1992 by and between the Registrant and LaSalle Trust, not
personally but as Successor Trustee under Trust Agreement dated
February 7, 1979 and known as Trust Number 100628(5)
10.14 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(14)
10.15 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(14)
10.16 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(14)
10.17 Secured Promissory Note in the amount of $6,223,321.81
dated September 29, 1992 executed by Arthur/Busse Limited
Partnership in favor of the Registrant(5)
10.18 Tax Indemnification Agreement between Registrant and
certain Stockholders of Registrant prior to its initial public
offering(2)
*10.19 Indemnification Agreement between Registrant and certain
Stockholders of Registrant prior to its initial public offering(2)
*10.20 The Registrant's 1991 Stock Option Plan(1)
*10.21 First Amendment to the Registrant's 1991 Stock Option
Plan(4)
*10.22 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)
*10.23 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)
10.24 License to Use Trade Name, Trademarks and Service Marks,
dated April 15, 1993 by and among Bert S. Crane, Nancy M. Crane,
Bert A. Crane, Mary Crane Couchman, Karen N. Crane, Crane Walnut
Orchards Processing Division, Amsterdam Land and Cattle Company,
Inc. and the Registrant(10)
10.25 Credit Agreement among the Registrant, American National
Bank and Trust Company of Chicago ("ANB") as agent, LNB, National
City Bank ("NCB") and ANB, dated as of October 19, 1993(8)
10.26 Guaranty Agreement dated as of October 19, 1993 by
Sunshine in favor of ANB, as agent on behalf of LNB, NCB and ANB(8)
10.27 Amendment to Amended and Restated Reimbursement Agreement
dated as of October 19, 1993 by and among the Registrant, LNB and
ANB(8)
10.28 Amendment No. 1 to Bank Credit Facility entered into as of
August 31, 1994 by and among the Registrant, ANB, LNB and NCB(12)
10.29 Amendment No. 2 to Bank Credit Facility entered into as of
September 1, 1994 by and among the Registrant, ANB, LNB and NCB(12)
10.30 Amendment No. 3 to Bank Credit Facility dated as of
September 13, 1995 by and among the Registrant, ANB, LNB and
NCB.(17)
10.31 Memorandum of Agreement dated February 24, 1994, between
the Registrant and The Fisher Nut Company ("Fisher")(13)
10.32 Asset Purchase and Sales Agreement, dated as of October
10, 1995, by and among The Procter & Gamble Company, ("P&G"). The
Procter & Gamble Distribution Company ("P&GDC"), Fisher and the
Registrant(19)
10.33 Inventory Purchase Agreement, dated as of October 10,
1995, by and among P&G, P&GDC, Fisher and the Registrant(19)
10.34 Equipment Purchase Agreement, dated as of October 10,
1995, by and among Fisher and the Registrant(19)
10.35 Lease Agreement, dated as of December 10, 1993, by and
between LaSalle Trust and the Registrant for the premises at 3001
Malmo Drive, Arlington Heights, Illinois(16)
*10.36 Certain documents relating to Reverse Split-Dollar
Insurance Agreement between Sunshine and John Charles Taylor dated
November 24, 1987(14)
10.37 Outsource Agreement between the Registrant and Preferred
Products, Inc. dated January 19, 1995 [CONFIDENTIAL TREATMENT
REQUESTED](14)
10.38 Letter Agreement between the Registrant and Preferred
Products, Inc., dated February 24, 1995, amending the Outsource
Agreement dated January 19, 1994 [CONFIDENTIAL TREATMENT
REQUESTED](14)
*10.39 The Registrant's 1995 Equity Incentive Plan(15)
10.40 Merger Agreement dated May 31, 1995, among the Registrant,
Quantz Acquisition Co., Inc. James B. Quantz, the National Bank of
South Carolina, as Trustee of the James Bland Quantz Irrevocable
Trust dated May 6, 1980, and Machine Design Incorporated
[CONFIDENTIAL TREATMENT REQUESTED](16)
10.41 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")(18)
10.42 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 (18)
10.43 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(18)
10.44 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(18)
10.45 Credit Agreement among the Registrant, Bank of America
Illinois ("BAI") as agent, NCB, The Northern Trust Company ("NTC")
and BAI, dated as of March 27, 1996(20)
10.46 Reimbursement Agreement between the Registrant and BAI,
dated as of March 27, 1996(20)
10.47 Guaranty Agreement dated as March 27, 1996 by Sunshine in
favor of BAI as agent on behalf of NCB, NTC and BAI(20)
10.48 Amendment No. 1 and Waiver to Credit Agreement dated as of
August 1, 1996 by and among the Registrant, BAI, NCB and NTC(21)
10.49 Amendment No. 2 and Waiver to Credit Agreement dated as of
October 30, 1996 by and among the Registrant, BAI, NCB and NTC(21)
10.50 Amendment No. 3 to Credit Agreement dated as of January
24, 1997 by and among the Registrant, BAI, NCB, and NTC(22)
*10.51 Employment Agreement by and between Sunshine and John C.
Taylor dated June 17, 1992 8
*10.52 Employment Agreement by and between Sunshine and Steven G.
Taylor dated June 17, 1992 8
11-12 None
13 1996 Annual Report to Stockholders 33
14-20 None
21 Subsidiaries of the Registrant 1
22 None
23 Consent of Price Waterhouse LLP 1
24-26 None
27 Financial Data Schedule
28-98 None
99.1 Recast 1991 Statements of Operations and Balance Sheets(3)
(1) Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Registration No. 33-
43353, as filed with the Commission on October 15, 1991
(Commission File No. 0-19681).
(2) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1991 (Commission File No. 0-19681).
(3) Incorporated by reference to the Registrant's
Registration Statement on Form S-1 (Amendment No. 3),
Registration No. 33-43353, as filed with the Commission
on November 25, 1991 (Commission File No. 0-19681).
(4) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the second quarter ended June
25, 1992 (Commission File No. 0-19681).
(5) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated September 29, 1992 (Commission
File No. 0-19681).
(6) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated January 15, 1993 (Commission
File No. 0-19681).
(7) Incorporated by reference to the Registrant's
Registration Statement on Form S-1, Registration No. 33-
59366, as filed with the Commission on March 11, 1993
(Commission File No. 0-19681).
(8) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the third quarter ended
September 30, 1993 (Commission File No. 0-19681).
(9) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated September 15, 1993 (Commission
file No. 0-19681).
(10) Incorporated by reference to the Registrant's
Amendment No. 1 to Registration Statement on Form S-1,
Registration No. 33-59366, as filed with the commission
on April 19, 1993 (Commission File No. 0-19681).
(11) Incorporated by reference to the Registrant's
Current Report and Form 8-K dated June 23, 1994
(Commission File No. 0-19681).
(12) Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the third quarter
ended September 29, 1994 (Commission File No. 0-19681).
(13) 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).
(14) 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).
(15) 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).
(16) Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the second quarter
ended June 29, 1995 (Commission File No. 0-19681).
(17) Incorporated by reference to the Registrant's
Current Report on Form 8-K dated September 12, 1995
(Commission File No. 0-19681).
(18) 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).
(19) Incorporated by reference to the Registrant's
Current Report on Form 8-K dated November 6, 1995
(Commission file No. 0-19681).
(20) 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).
(21) Incorporated by reference to the Registrant's
Current Report on Form 8-K dated January 24, 1997
(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).
John B. Sanfilippo & Son, Inc. will furnish any of the above
exhibits to its stockholders upon written request addressed
to the Secretary at the address given on the cover page of
this Form 10-K. The charge for furnishing copies of the
exhibits is $.25 per page, plus postage.