UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

(Mark one)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December ~~28, 2017~~26, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number0-19681

JOHN B. SANFILIPPO & SON, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		36-2419677
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1703 North Randall Road Elgin, Illinois		60123-7820
(Address of Principal Executive Offices)		(Zip Code)

(847)289-1800

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading

Symbol

Name of Each Exchange

on Which Registered

Common Stock, $.01 par value per share

JBSS

The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule~~Rule~~ 12b-2 of the Exchange Act. (Check One)

~~Emerging growth company ☐~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). ☐ Yes ☒ No

As of January ~~25, 2018, 8,744,197~~23, 2020, 8,821,490 shares of the Registrant’s Common Stock, $0.01 par value per share and 2,597,426 shares of the Registrant’s Class A Common Stock, $0.01 par value per share, were outstanding.

JOHN B. SANFILIPPO & SON, INC.

FORM10-Q

FOR THE QUARTER ENDED DECEMBER ~~28, 2017~~26, 2019

INDEX


	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Comprehensive Income for the Quarter andTwenty-Six Weeks Ended December ~~28, 2017~~26, 2019 and December ~~29, 2016~~27, 2018		3
Consolidated Balance Sheets as of December ~~28, 2017,~~26, 2019, June ~~29, 2017~~27, 2019 and December ~~29, 2016~~27, 2018		4
Consolidated Statements of Stockholders’ Equity for the Quarter andTwenty-Six Weeks Ended December 26, 2019 and December 27, 2018		6
Consolidated Statements of Cash Flows for theTwenty-Six Weeks Ended December ~~28, 2017~~26, 2019 and December ~~29, 2016~~27, 2018		67
Notes to Consolidated Financial Statements		78
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1719
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2729
Item 4. Controls and Procedures		2729
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		2729
Item 1A. Risk Factors		2729
Item 6. Exhibits		2829
SIGNATURE		35

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except share and per share amounts)


	For the Quarter Ended						For the Twenty-six Weeks Ended						For the Quarter Ended						For theTwenty-six Weeks Ended
	December 28, 2017			December 29, 2016			December 28, 2017			December 29, 2016			December 26, 2019			December 27, 2018			December 26, 2019			December 27, 2018
Net sales	$	259,118		$	249,375		$	473,909		$	471,668		$	246,423		$	253,317		$	464,269		$	457,605
Cost of sales		221,238			205,986			401,189			391,804			196,443			210,434			372,041			381,768

Gross profit		37,880			43,389			72,720			79,864			49,980			42,883			92,228			75,837

Operating expenses:
Selling expenses		15,844			15,370			26,789			26,641			16,103			18,189			30,215			32,260
Administrative expenses		7,787			7,744			14,346			15,859			9,411			8,054			18,485			16,885

Total operating expenses		23,631			23,114			41,135			42,500			25,514			26,243			48,700			49,145

Income from operations		14,249			20,275			31,585			37,364			24,466			16,640			43,528			26,692

Other expense:
Interest expense including $245, $201, $439 and $391 to related parties		805			608			1,586			1,230
Interest expense including $232, $293, $479 and $602 to related parties														435			798			956			1,677
Rental and miscellaneous expense, net		241			299			863			709			274			278			678			567
Other expense		493			533			985			1,066			567			486			1,133			973

Total other expense, net		1,539			1,440			3,434			3,005			1,276			1,562			2,767			3,217

Income before income taxes		12,710			18,835			28,151			34,359			23,190			15,078			40,761			23,475
Income tax expense		4,954			5,950			9,963			11,294			5,729			3,814			10,374			5,605

Net income	$	7,756		$	12,885		$	18,188		$	23,065		$	17,461		$	11,264		$	30,387		$	17,870
Other comprehensive income:
Amortization of prior service cost and actuarial loss included in net periodic pension cost		281			331			560			661			344			263			687			526
Income tax expense related to pension adjustments		(111	)		(126	)		(219	)		(251	)		(86	)		(66	)		(172	)		(132	)

Other comprehensive income, net of tax		170			205			341			410			258			197			515			394

Comprehensive income	$	7,926		$	13,090		$	18,529		$	23,475		$	17,719		$	11,461		$	30,902		$	18,264

Net income per common share-basic	$	0.68		$	1.14		$	1.60		$	2.04		$	1.52		$	0.99		$	2.65		$	1.57

Net income per common share-diluted	$	0.68		$	1.13		$	1.59		$	2.03		$	1.52		$	0.98		$	2.64		$	1.56

Cash dividends declared per share	$	—		$	2.50		$	2.50		$	5.00

The accompanying unaudited notes are an integral part of these consolidated financial statements.

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share amounts)


	December 28, 2017		June 29, 2017		December 29, 2016		December 26, 2019		June 27, 2019		December 27, 2018
ASSETS
CURRENT ASSETS:
Cash	$	3,052	$	1,955	$	2,031	$	1,393	$	1,591	$	2,583
Accounts receivable, less allowance for doubtful accounts of $273, $263 and $306		70,437		64,830		66,007
Accounts receivable, less allowance for doubtful accounts of $425, $350 and $342								52,653		60,971		62,580
Inventories		168,852		182,420		182,653		172,340		157,024		171,708
Prepaid expenses and other current assets		13,457		4,172		6,841		5,992		5,754		6,943

TOTAL CURRENT ASSETS		255,798		253,377		257,532		232,378		225,340		243,814

PROPERTY, PLANT AND EQUIPMENT:
Land		9,285		9,285		9,285		9,285		9,285		9,285
Buildings		108,092		107,015		106,566		109,671		109,955		109,380
Machinery and equipment		196,715		194,099		193,859		212,532		210,962		206,663
Furniture and leasehold improvements		4,951		4,842		4,803		5,160		5,128		5,039
Vehicles		535		498		453		682		673		641
Construction in progress		2,652		1,075		1,483		3,817		1,127		2,563

		322,230		316,814		316,449		341,147		337,130		333,571
Less: Accumulated depreciation		214,426		210,606		206,751		233,825		228,778		222,976

		107,804		106,208		109,698		107,322		108,352		110,595
Rental investment property, less accumulated depreciation of $10,035, $9,639 and $9,244		18,858		19,254		19,650
Rental investment property, less accumulated depreciation of $11,615, $11,212 and $10,827								17,508		17,831		18,066

TOTAL PROPERTY, PLANT AND EQUIPMENT		126,662		125,462		129,348		124,830		126,183		128,661

Intangible assets, net								13,282		14,626		15,970
Cash surrender value of officers’ life insurance and other assets		9,057		10,125		10,091		9,124		9,782		8,743
Deferred income taxes		5,979		9,095		8,109		5,616		5,723		4,591
Goodwill		9,638		—		—		9,650		9,650		9,650
Intangible assets, net		19,341		—		611
Operating leaseright-of-use assets								4,823		—		—

TOTAL ASSETS	$	426,475	$	398,059	$	405,691	$	399,703	$	391,304	$	411,429

The accompanying unaudited notes are an integral part of these consolidated financial statements.

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share amounts)


	December 28, 2017			June 29, 2017			December 29, 2016			December 26, 2019			June 27, 2019			December 27, 2018
LIABILITIES & STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings	$	30,000		$	29,456		$	12,427		$	13,495		$	—		$	24,541
Current maturities of long-term debt, including related party debt of $4,324, $474 and $457 and net of unamortized debt issuance costs of $50, $55 and $60		7,274			3,418			3,397
Accounts payable, including related party payables of $0, $178 and $32		84,834			50,047			90,787
Current maturities of long-term debt, including related party debt of $565, $4,375 and $4,359 and net of unamortized debt issuance costs of $30, $35 and $40											7,110			7,338			7,254
Accounts payable											70,979			42,552			69,732
Bank overdraft		2,894			932			2,652			1,349			901			3,887
Accrued payroll and related benefits		6,333			15,958			10,609			13,429			22,101			10,293
Other accrued expenses		9,387			10,062			9,966			11,374			11,014			9,808

TOTAL CURRENT LIABILITIES		140,722			109,873			129,838			117,736			83,906			125,515

LONG-TERM LIABILITIES:
Long-term debt, less current maturities, including related party debt of $17,682, $10,584 and $10,825 and net of unamortized debt issuance costs of $100, $124 and $150		30,832			25,211			26,925
Long-term debt, less current maturities, including related party debt of $9,244, $11,495 and $13,323 and net of unamortized debt issuance costs of $30, $44 and $60											16,597			20,381			23,707
Retirement plan		21,396			20,994			22,532			25,212			24,737			21,713
Long-term operating lease liabilities, net of current portion											3,456			—			—
Other		7,084			6,513			6,695			7,786			7,725			7,121

TOTAL LONG-TERM LIABILITIES		59,312			52,718			56,152			53,051			52,843			52,541

TOTAL LIABILITIES		200,034			162,591			185,990			170,787			136,749			178,056

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:
Class A Common Stock, convertible to Common Stock on a per share basis, cumulative voting rights of ten votes per share, $.01 par value; 10,000,000 shares authorized, 2,597,426 shares issued and outstanding		26			26			26			26			26			26
Common Stock,non-cumulative voting rights of one vote per share, $.01 par value; 17,000,000 shares authorized, 8,859,097, 8,801,641 and 8,785,938 shares issued		89			88			88
Common Stock,non-cumulative voting rights of one vote per share, $.01 par value; 17,000,000 shares authorized, 8,937,236, 8,909,406 and 8,898,827 shares issued											89			89			89
Capital in excess of par value		118,585			117,772			116,676			122,984			122,257			121,133
Retained earnings		113,008			123,190			110,130			111,807			137,712			116,116
Accumulated other comprehensive loss		(4,063	)		(4,404	)		(6,015	)		(4,786	)		(4,325	)		(2,787	)
Treasury stock, at cost; 117,900 shares of Common Stock		(1,204	)		(1,204	)		(1,204	)		(1,204	)		(1,204	)		(1,204	)

TOTAL STOCKHOLDERS’ EQUITY		226,441			235,468			219,701			228,916			254,555			233,373

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	426,475		$	398,059		$	405,691		$	399,703		$	391,304		$	411,429

The accompanying unaudited notes are an integral part of these consolidated financial statements.

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except share and per share amounts)


	Class A Common Stock				Common Stock				Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock
	Shares		Amount		Shares		Amount		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance, June 27, 2019		2,597,426	$	26		8,909,406	$	89	$	122,257		$	137,712		$	(4,325	)	$	(1,204	)	$	254,555
Net income													12,926									12,926
Cash dividends ($3.00 per share)													(34,321	)								(34,321	)
Pension liability amortization, net of income tax expense of $86																257						257
Impact of adopting ASU2018-02^(a)													976			(976	)					—
Stock-based compensation expense										633												633
Balance, September 26, 2019		2,597,426	$	26		8,909,406	$	89	$	122,890		$	117,293		$	(5,044	)	$	(1,204	)	$	234,050
Net income													17,461									17,461
Cash dividends ($2.00 per share)													(22,947	)								(22,947	)
Pension liability amortization, net of income tax expense of $86																258						258
Equity award exercises , net of shares withheld for employee taxes						27,830		—		(761	)											(761	)
Stock-based compensation expense										855												855

Balance, December 26, 2019		2,597,426	$	26		8,937,236	$	89	$	122,984		$	111,807		$	(4,786	)	$	(1,204	)	$	228,916


	Class A Common Stock				Common Stock				Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock
	Shares		Amount		Shares		Amount		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance, June 28, 2018		2,597,426	$	26		8,865,475	$	89	$	119,952		$	127,320		$	(3,181	)	$	(1,204	)	$	243,002
Net income													6,606									6,606
Cash dividends ($2.55 per share)													(29,074	)								(29,074	)
Pension liability amortization, net of income tax expense of $66																197						197
Stock-based compensation expense										616												616
Balance, September 27, 2018		2,597,426	$	26		8,865,475	$	89	$	120,568		$	104,852		$	(2,984	)	$	(1,204	)	$	221,347
Net income													11,264									11,264
Pension liability amortization, net of income tax expense of $66																197						197
Equity award exercises , net of shares withheld for employee taxes						33,352		—		(335	)											(335	)
Stock-based compensation expense										900												900

Balance, December 27, 2018		2,597,426	$	26		8,898,827	$	89	$	121,133		$	116,116		$	(2,787	)	$	(1,204	)	$	233,373

^(a)	See Note 15 – “Recent Accounting Pronouncements” for additional information.

The accompanying unaudited notes are an integral part of these consolidated financial statements.

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	For the Twenty-six Weeks Ended						For the Twenty-six Weeks Ended
	December 28, 2017			December 29, 2016			December 26, 2019			December 27, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	18,188		$	23,065		$	30,387		$	17,870
Depreciation and amortization		7,064			7,973			9,225			8,535
Loss on disposition of assets, net		319			53
(Gain) loss on disposition of assets, net								(33	)		57
Deferred income tax expense		3,116			481			107			433
Stock-based compensation expense		1,429			1,428			1,488			1,516
Change in assets and liabilities, net of business acquired:
Change in assets and liabilities:
Accounts receivable, net		(3,176	)		12,067			8,316			3,041
Inventories		15,525			(26,080	)		(15,316	)		2,654
Prepaid expenses and other current assets		(5,111	)		(2,468	)		(345	)		(1,659	)
Accounts payable		34,014			46,925			28,486			9,655
Accrued expenses		(9,124	)		(4,672	)		(8,964	)		2,833
Income taxes payable		(5,422	)		2,928			(640	)		2,285
Other long-term assets and liabilities		694			(115	)		582			261
Other, net		915			845			992			885

Net cash provided by operating activities		58,431			62,430			54,285			48,366

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(6,966	)		(6,672	)		(6,465	)		(9,367	)
Acquisition of Squirrel Brand L.P.		(21,909	)		—
Proceeds from insurance recoveries								232			—
Other		72			48			85			44

Net cash used in investing activities		(28,803	)		(6,624	)		(6,148	)		(9,323	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility		226,985			166,816
Repayments of revolving credit borrowings		(226,441	)		(166,473	)
Net short-term borrowings (repayments)								13,495			(6,737	)
Debt issue costs								(218	)		—
Principal payments on long-term debt		(2,052	)		(1,758	)		(4,031	)		(3,588	)
Increase in bank overdraft		1,962			1,841			448			1,825
Dividends paid		(28,370	)		(56,464	)		(57,268	)		(29,074	)
Issuance of Common Stock under equity award plans		16			43
Taxes paid related to net share settlement of equity awards		(631	)		—			(761	)		(335	)

Net cash used in financing activities		(28,531	)		(55,995	)		(48,335	)		(37,909	)

NET INCREASE (DECREASE) IN CASH		1,097			(189	)
NET (DECREASE) INCREASE IN CASH								(198	)		1,134
Cash, beginning of period		1,955			2,220			1,591			1,449

Cash, end of period	$	3,052		$	2,031		$	1,393		$	2,583

Supplemental disclosure ofnon-cash investing activities:
Acquisition of Squirrel Brand L.P. through note payable	$	11,500		$	—
Supplemental disclosure ofnon-cash activities:
Right-of-use assets recognized at ASUNo. 2016-02 transition, see Note 3							$	5,361		$	—

The accompanying unaudited notes are an integral part of these consolidated financial statements.

JOHN B. SANFILIPPO & SON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except where noted and per share data)

Note 1 – Basis of Presentation and Description of Business

As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. and our wholly-owned subsidiary, JBSS Ventures, LLC. Our fiscal year ends on the final Thursday of June each year, and typically consists offifty-two weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:

References herein to fiscal ~~2018~~2020 and fiscal ~~2017~~2019 are to the fiscal year ending June ~~28, 2018~~25, 2020 and the fiscal year ended June ~~29, 2017,~~27, 2019, respectively.

References herein to the second quarter of fiscal ~~2018~~2020 and fiscal ~~2017~~2019 are to the quarters ended December ~~28, 2017~~26, 2019 and December ~~29, 2016,~~27, 2018, respectively.

References herein to the first half or firsttwenty-six weeks of fiscal ~~2018~~2020 and fiscal ~~2017~~2019 are to thetwenty-six weeks ended December ~~28, 2017~~26, 2019 and December ~~29, 2016,~~27, 2018, respectively.

We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds, and other nuts in the United States. These nuts are sold under a variety of private brands and under theFisher, Orchard Valley Harvest,Squirrel Brand, Southern Style Nutsand Sunshine Countrybrand names. We also market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snacks and trail mixes, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks and other sesame snack products under private brands and brand names. Our products are sold through three primary distribution channels to significant buyers of nuts, including food retailers in the consumer channel, commercial ingredient users and contract packaging customers.

The accompanying unaudited financial statements fairly present the consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of stockholders’ equity and consolidated statements of cash flows, and reflect all adjustments, consisting only of normal recurring adjustments which are necessary for the fair statement of the results of the interim periods. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

The interim results of operations are not necessarily indicative of the results to be expected for a full year. The balance sheet data as of June ~~29, 2017~~27, 2019 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, these unaudited financial statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our ~~2017~~2019 Annual Report on Form~~Form~~ 10-K for the fiscal year ended June ~~29, 2017.~~27, 2019.

Note 2 – Revenue Recognition

We recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. For each customer contract, a five-step process is followed in which we identify the contract, identify performance obligations, determine the transaction price, allocate the contract transaction price to the performance obligations, and recognize the revenue when (or as) the performance obligation is transferred to the customer.

When Performance Obligations Are Satisfied

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are primarily for the delivery of raw and processed recipe and snack nuts, nut butters and trail mixes.

Our customer contracts do not include more than one performance obligation. If a contract were to contain more than one performance obligation, we are required to allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data.

Revenue recognition is generally completed at a point in time when product control is transferred to the customer. For approximately 99% of our revenues, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can then direct the use and obtain substantially all of the remaining benefits from the asset at that point in time. Therefore, for 99% of our revenues, the timing of revenue recognition requires little judgment.

Variable Consideration

Some of our products are sold through specific incentive programs consisting of promotional allowances, volume and customer rebates,in-store display incentives and marketing allowances, among others, to consumer and some commercial ingredient customers. The ultimate cost of these programs is dependent on certain factors such as actual purchase volumes or customer activities and is dependent on significant management estimate and judgment. The Company accounts for these programs as variable consideration and recognizes a reduction in revenue (and a corresponding reduction in the transaction price) in the same period as the underlying program based upon the terms of the specific arrangements.

Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are also offered through various programs to customers and consumers. A provision for estimated trade promotions is recorded as a reduction of revenue (and a reduction in the transaction price) in the same period when the sale is recognized. Revenues are also recorded net of expected customer deductions which are provided for based upon past experiences. Evaluating these estimates requires management judgment.

We generally use the most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration and trade promotions at least quarterly based on the terms of the agreements and historical experience. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe, therefore, no additional constraint on the variable consideration is required.

Contract Balances

Contract assets or liabilities result from transactions with revenue recorded over time. If the measure of remaining rights exceeds the measure of the remaining performance obligations the Company records a contract asset. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability. There was no contract asset balance at December 26, 2019. Contract asset balances at June 27, 2019 and December 27, 2018 were $117 and $65, respectively, and are recorded in the caption “Prepaid expenses and other current assets” on the Consolidated Balance Sheets. The Company generally does not have material deferred revenue or contract liability balances arising from transactions with customers.

Disaggregation of Revenue

Revenue disaggregated by sales channel is as follows:


	For the Quarter Ended				For the Twenty-six Weeks Ended
Distribution Channel	December 26, 2019		December 27, 2018		December 26, 2019		December 27, 2018
Consumer	$	188,086	$	195,478	$	345,232	$	334,922
Commercial Ingredients		34,247		31,454		71,135		68,656
Contract Packaging		24,090		26,385		47,902		54,027

Total	$	246,423	$	253,317	$	464,269	$	457,605

Note 3 – Leases

On June 28, 2019 we adopted ASUNo. 2016-02,Leases (“Topic 842”)using the alternative transition method under ASUNo. 2018-11, which permitted application of the new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under the previous lease accounting guidance in Topic 840. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We did not elect the practical expedients regarding hindsight or land easements. See Note 15 – “Recent Accounting Pronouncements” for additional information.

Upon adoption of the new standard, we recognized operating leaseright-of-use assets and liabilities on our Consolidated Balance Sheet of $5,361 and $5,320 respectively. We utilized a portfolio approach to establish discount rates for leases that are similar. Discount rates ranging from 4.2% to 5.8% were used when determining the present value of future lease payments. All of our lessee arrangements that were classified as operating leases under Topic 840 continue to be classified as operating leases since the adoption of Topic 842, and the pattern of lease expense recognition is unchanged. The adoption of Topic 842 did not materially impact our consolidated net earnings and had no impact on cash flows.

Description of Leases

We lease equipment used in the transportation of goods in our warehouses, as well as a limited number of automobiles and a small warehouse near our Bainbridge, Georgia facility. Our leases generally do not containnon-lease components and do not contain any explicit guarantees of residual value. Our leases for warehouse transportation equipment generally require the equipment to be returned to the lessor in good working order.

We determine if an arrangement is a lease at inception and analyze the lease to determine if it is operating or finance. Operating leaseright-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leaseright-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Implicit rates are used when readily determinable. None of our leases currently contain options to extend the term. In the event of an option to extend the term of a lease, the lease term used in measuring the liability would include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the respective lease term. Our leases have remaining terms of up to 5.4 years.

Topic 842 allows for the election as an accounting policy to not apply lease recognition requirements to short term leases, defined as leases with an initial term of 12 months or less. We have elected to use this policy, and as such, leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet. We have also made the policy election to not separate lease andnon-lease components for all leases.

The following table provides supplemental information related to operating leaseright-of-use assets and liabilities:


	December 26, 2019		Affected Line Item in Consolidated Balance Sheet
Assets
Operating leaseright-of-use assets	$	4,823	Operating leaseright-of-use assets

Total leaseright-of-use assets	$	4,823

Liabilities
Current:
Operating leases	$	1,354	Other accrued expenses
Noncurrent:
Operating leases		3,456	Long-term operating lease liabilities

Total lease liabilities	$	4,810

The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:


	For the Quarter ended December 26, 2019		For the Twenty-six weeks ended December 26, 2019
Operating lease costs^(a)	$	460	$	834
Variable lease costs^(b)		15		31

Total Lease Cost	$	475	$	865

^(a)	Includes short-term leases which are immaterial.

^(b)	Variable lease costs consist of sales tax.

Supplemental cash flow and other information related to leases was as follows:


	For the Twenty-six weeks ended December 26, 2019
Operating cash flows information:
Cash paid for amounts included in measurements for lease liabilities	$	770
Non-cash activity:
Right-of-use assets obtained in exchange for new operating lease obligations	$	163

	December 26, 2019
Weighted Average Remaining Lease Term (in years)		3.8
Weighted Average Discount Rate		4.5	%

Maturities of operating lease liabilities as of December 26, 2019 are as follows:


Fiscal year ending
June 25, 2020 (excluding thetwenty-six weeks ended December 26, 2019)	$	792
June 24, 2021		1,439
June 30, 2022		1,316
June 29, 2023		1,065
June 27, 2024		469
Thereafter		132

Total lease payment		5,213
Less imputed interest		(403	)

Present value of operating lease liabilities	$	4,810

As of December 26, 2019 the Company has additional operating leases totaling $164 that have not yet commenced and therefore are not reflected in the Consolidated Balance Sheet and tables above. These leases will commence in the third quarter of fiscal 2020 with initial lease terms ranging from 3 to 5 years.

Disclosures related to periods prior to adoption

As the Company has not recast prior year information for its adoption of Topic 842, the following presents its future minimum lease payments for operating leases under Topic 840 on June 27, 2019:


Fiscal year ending
June 25, 2020	$	1,715
June 24, 2021		1,540
June 30, 2022		1,392
June 29, 2023		1,109
June 27, 2024		464
Thereafter		133

	$	6,353

Lessor Accounting

We lease office space in our four-story office building located in Elgin, Illinois. As a lessor, we retain substantially all of the risks and benefits of ownership of the investment property and under Topic 842 we continue to account for all of our leases as operating leases. Lease agreements may include options to renew. We accrue fixed lease income on astraight-line basis over the terms of the leases. There is generally an immaterial amount of variable lease consideration and an immaterial amount ofnon-lease components such as recurring utility and storage fees. Leases between related parties are immaterial.

Leasing revenue is as follows:


	For the Quarter ended December 26, 2019		For the Twenty-six weeks ended December 26, 2019
Lease income related to lease payments	$	462	$	1,005

The future minimum, undiscounted cash flows undernon-cancelable tenant operating leases for each of the next five years and thereafter is presented below and is materially consistent with our previous accounting under Topic 840.


Fiscal year ending
June 25, 2020 (excluding thetwenty-six weeks ended December 26, 2019)	$	1,082
June 24, 2021		1,948
June 30, 2022		1,707
June 29, 2023		1,737
June 27, 2024		1,766
Thereafter		2,512

	$	10,752

Note 4 – Inventories

Inventories consist of the following:

   December 28,
2017    June 29,
2017    December 29,
2016
Raw material and supplies
   $ 80,867    $ 79,609    $ 107,735
Work-in-process and finished goods
   87,985    102,811    74,918






Total
   $ 168,852    $ 182,420    $ 182,653

~~Note 3 – Acquisition of Squirrel Brand L.P.~~

On November 30, 2017, we acquired certain assets and assumed certain liabilities (the “Acquisition”) of Squirrel Brand L.P. (“Squirrel Brand”) for a purchase price of $31,500, subject to a working capital adjustment. After giving effect to the initial working capital adjustment, the purchase price was $33,409, of which $21,909 was paid in cash and $11,500 was financed by the seller through a three-year unsecured promissory note (the “Promissory Note”). The final working capital adjustment, if any, will be completed in our upcoming third quarter of fiscal 2018. The cash portion of the acquisition price was funded from our credit facility. The Promissory Note bears interest at 5.5% per annum and is payable in equal monthly principal payments of $319, plus interest, beginning in January 2018. The Promissory Note can be prepaid without penalty.

~~The Squirrel Brand business is one of the nation’s leading suppliers of indulgent and premium roasted nuts and snack mixes under its~~~~Squirrel Brand~~ ~~and~~~~Southern Style Nuts~~ brands. Prior to the Acquisition, Squirrel Brand was a customer in our Contract Packaging sales channel for fourteen years. The Acquisition has been accounted for as a business combination in accordance with ASC Topic 805, “Business Combinations”. As a result of the Acquisition, we expanded our customer base and branded product portfolio, as well as increased our customer reach, especially into alternative distribution channels.

~~The total purchase price of $33,409 has been allocated on a preliminary basis to the fair values of the assets acquired and liabilities assumed as follows:~~

Accounts receivable
   $ 2,446
Inventories
   1,957
Other assets
   75
Identifiable intangible assets:

Customer relationships
   10,500
Brand names
   8,900
Non-compete agreement
   270
Goodwill
   9,638
Accounts payable and accrued expenses
   (377 )


Total Purchase Price
   $ 33,409

The customer relationship assets represent the value of the long-term strategic relationship the Squirrel Brand business has with its significant customers, which we are amortizing over a weighted-average life of 7.5 years. The assets were valued using an income approach, specifically the “multi-period excess earnings” method, which identifies an estimated stream of revenues and expenses for a particular group of assets from which deductions of portions of the projected economic benefits, attributable to assets other than the subject asset (contributory assets), are deducted in order to isolate the prospective earnings of the subject asset. This value is considered a level 3 measurement under the GAAP fair value hierarchy.

~~The brand name assets represent the value of the established~~~~Squirrel Brand~~ ~~and~~~~Southern Style Nuts~~ names. We applied the income approach through a relief from royalty method analysis to determine the preliminary fair value of the brand name assets. We are amortizing the brand name assets over a weighted-average life of 13.8 years.

Goodwill, which is expected to be deductible for taxes, arises from intangible assets that do not qualify for separate recognition and expected synergies from combining the operations of Squirrel Brand with the Company. There were no material contingencies recognized or unrecognized associated with the acquired business.

The purchase price allocation, especially amounts allocated to goodwill and intangible assets are based on preliminary valuations and are subject to final adjustments to reflect the final net working capital adjustment and valuations.

The following reflects the unaudited pro forma results of operations of the Company as if the Acquisition had taken place at the beginning of fiscal 2017. This pro forma information does not purport to represent what the Company’s actual results would have been if the Acquisition had occurred as of the date indicated or what such results would be for any future periods.

   Year-Ended
June 29,
2017    Twenty-six
weeks ended
December 28,
2017
Pro forma net sales
   $ 863,267    $ 479,054
Pro forma net income
   36,723    18,762
Pro forma diluted earnings per share
   $ 3.22    $ 1.64

These unaudited pro forma results have been calculated after applying our accounting policies and adjusting the results of the Squirrel Brand business to reflect elimination of transaction costs and to record additional amortization and interest expense that would have been charged, assuming the fair value adjustment to intangible assets since July 1, 2016, net of related income taxes in respect of pro forma net income and diluted earnings per share performance. Transaction costs of $500, already recorded in Administrative expenses, are excluded from the pro forma net income for the~~twenty-six~~ ~~weeks ended December 28, 2017 stated above.~~

~~Net sales of $3,976 resulting from the Acquisition are included in our consolidated financial results as of December 28, 2017 since the Acquisition closed on November 30, 2017.~~

~~Since the Acquisition, we continue to operate in a single reportable operating segment that consists of selling various nut andnut-related~~ ~~products through three sales distribution channels.~~


	December 26, 2019		June 27, 2019		December 27, 2018
Raw material and supplies	$	81,135	$	58,927	$	87,717
Work-in-process and finished goods		91,205		98,097		83,991

Total	$	172,340	$	157,024	$	171,708

Note 45 – Goodwill and Intangible Assets

Identifiable intangible assets that are subject to amortization ~~which resulted entirely from the Acquisition, are based on our preliminary purchase price allocation and~~ consist of the ~~following at December 28, 2017:~~following:


	December 28, 2017			Weighted-average amortization period (years)		December 26, 2019			June 27, 2019			December 27, 2018
Customer relationships	$	10,500			7.5	$	21,100		$	21,100		$	21,100
Brand names		8,900			13.8		16,990			16,990			16,990
Non-compete agreement		270			5.0		270			270			270

		19,670			11.3		38,360			38,360			38,360
Less accumulated amortization:
Customer relationships		(267	)				(15,438	)		(14,466	)		(13,494	)
Brand names		(58	)				(9,527	)		(9,182	)		(8,838	)
Non-compete agreement		(4	)				(113	)		(86	)		(58	)

		(329	)				(25,078	)		(23,734	)		(22,390	)

Net intangible assets	$	19,341				$	13,282		$	14,626		$	15,970

~~Gross intangible assets of $18,690 from previous acquisitions were fully amortized as of June 29, 2017.~~

Customer relationships are being amortized on an accelerated basis. The brand names remaining to be amortized consist of theSquirrel BrandandSouthern Style Nuts brand names.

Total amortization expense related to intangible assets, which is a component of Administrative expense, was ~~$329~~$672 and $1,344 for the quarter andtwenty-six weeks ended December ~~28, 2017.~~26, 2019, respectively. Amortization expense for the remainder of fiscal ~~2018, based on our preliminary purchase price allocation,~~2020 is expected to be approximately ~~$1,685~~$1,157 and expected amortization expense the next five fiscal years is as follows:


Fiscal year ending
June 27, 2019	$	3,028
June 25, 2020		2,500
June 24, 2021		2,162	$	2,165
June 30, 2022		1,894		1,896
June 29, 2023		1,659		1,657
June 27, 2024				1,414
June 26, 2025				1,156

Our net goodwill of ~~$9,638~~$9,650 relates entirely to the ~~Acquisition. The changes~~Squirrel Brand acquisition (the “Acquisition”) completed in the second quarter of fiscal 2018. There was no change in the carrying amount of goodwill during thetwenty-six weeks ended December ~~28, 2017 are as follows:~~

Net balance at June 29, 2017
   $ —
Goodwill acquired during the period
   9,638


Net balance at December 28, 2017
   $ 9,638

The Company will perform a goodwill impairment test annually during the fourth quarter of its fiscal year and more frequently if events or circumstances indicate that impairment may have occurred. Such events or circumstances may, among others, include significant adverse changes in the general business climate.26, 2019.

Note 56 – Credit Facility

On ~~July~~February 7, ~~2017,~~2008, we entered into ~~the Eighth Amendment to our~~a Credit Agreement with a bank group providing a $117,500 revolving loan commitment and letter of credit subfacility (the “Credit Facility”). The Credit Facility ~~which eliminated the quarterly restriction on cash dividends~~is secured by substantially all our assets other than real property and distributions and allows the Company to, without obtaining lender consent, make up to four cash dividends or distributions on our stock per fiscal year, or purchase, acquire, redeem or retire stock in any fiscal year, in an amount not to exceed $60,000 in the aggregate per fiscal year, as long as no default or event of default exists and the excess availability under the Credit Facility remains over $30,000 immediately before and after giving effect to any such dividend, distribution, purchase or redemption.

On November 29, 2017, we entered into the Consent and Ninth Amendment to our Credit Agreement (the “Ninth Amendment”). The Ninth Amendment provides lender consent for us to incur unsecured debt (in particular, the Promissory Note) in connection with our acquisition of the Squirrel Brand business, and for: (i) the incurrence of unsecured debt in connection with the Acquisition and (ii) the Acquisition to constitute a “Permitted Acquisition” under the terms of the Credit Agreement. The Ninth Amendment also modified our collateral reporting requirements.fixtures.

At December ~~28, 2017,~~26, 2019, we had ~~$83,825~~$100,830 of available credit under the Credit Facility which reflects borrowings of ~~$30,000~~$13,495 and reduced availability as a result of ~~$3,675~~$3,175 in outstanding letters of credit. As of December ~~28, 2017,~~26, 2019, we were in compliance with all financial covenants under the Credit Facility and Mortgage Facility.

Note 67 – Earnings Per Common Share

The following table presents the reconciliation of the weighted average shares outstanding used in computing basic and diluted earnings per share:

   For the Quarter Ended    For the Twenty-six Weeks Ended
   December 28,
2017    December 29,
2016    December 28,
2017    December 29,
2016
Weighted average number of shares outstanding – basic
   11,375,512    11,304,617    11,363,409    11,285,417
Effect of dilutive securities:

Stock options and restricted stock units
   50,786    69,200    70,824    91,539








Weighted average number of shares outstanding – diluted
   11,426,298    11,373,817    11,434,233    11,376,956

   For the Quarter Ended    For the Twenty-six Weeks Ended
   December 26,
2019    December 27,
2018    December 26,
2019    December 27,
2018
Weighted average number of shares outstanding – basic
   11,458,524    11,425,566    11,451,542    11,415,787
Effect of dilutive securities:

Stock options and restricted stock units
   66,863    53,865    80,640    69,894








Weighted average number of shares outstanding – diluted
   11,525,387    11,479,431    11,532,182    11,485,681

There were no anti-dilutive awards excluded from the computation of diluted earnings per share for ~~the current quarter andtwenty-six~~ ~~week~~any periods presented.

Note 78 – Stock-Based Compensation Plans

During the second quarter of fiscal ~~2018,~~2020, there were ~~60,582~~38,572 restricted stock units (“RSUs”) awarded to employees andnon-employee members of the Board of Directors. The vesting period is generally three years for awards to employees and one year for awards tonon-employee directors.

~~Stock~~There was no stock option activity ~~was insignificant~~ during the first half of fiscal ~~2018.~~2020.

The following is a summary of RSU activity for the first half of fiscal ~~2018:~~2020:


Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Outstanding at June 29, 2017		201,858		$	40.36
Outstanding at June 27, 2019							188,992		$	46.79
Activity:
Granted		60,582			54.41		38,572			91.47
Vested(a)		(55,956	)		38.24		(36,179	)		60.56
Forfeited		(11,038	)		33.59		(7,439	)		63.62

Outstanding at December 28, 2017		195,446		$	45.70
Outstanding at December 26, 2019							183,946		$	52.77

^(a)	The number of RSUs vested includes shares that were withheld on behalf of employees to satisfy statutory tax withholding requirements.

At December ~~28, 2017,~~26, 2019, there ~~are 60,490~~were 58,541 RSUs outstanding that ~~are~~were vested but deferred.

The following table summarizes compensation expense charged to earnings for all equity compensation plans for the periods presented:

   For the Quarter Ended    For the Twenty-six Weeks Ended
   December 28,
2017    December 29,
2016    December 28,
2017    December 29,
2016
Stock-based compensation expense
   $ 891    $ 878    $ 1,429    $ 1,428


	For the Quarter Ended				For the Twenty-six Weeks Ended
	December 26, 2019		December 27, 2018		December 26, 2019		December 27, 2018
Stock-based compensation expense	$	855	$	900	$	1,488	$	1,516

As of December ~~28, 2017,~~26, 2019, there was ~~$4,875~~$5,255 of total unrecognized compensation expense related tonon-vested RSUs granted under our stock-based compensation plans. We expect to recognize that cost over a weighted average period of ~~1.9~~1.7 years.

~~Note 8 – Dividends~~

On July 11, 2017, our Board of Directors, after considering the financial position of our Company and other factors, declared a special cash dividend of $2.00 per share and a regular annual cash dividend of $0.50 per share on all issued and outstanding shares of Common Stock and Class A Stock of the Company (the “July 2017 Dividends”). The July 2017 Dividends of approximately $28,370 were paid on August 15, 2017 to stockholders of record as of the close of business on August 2, 2017.

Note 9 – Retirement Plan

The Supplemental Employee Retirement Plan is an unfunded,non-qualified deferred compensation plan that will provide eligible participants with monthly benefits upon retirement, disability or death, subject to certain conditions. The monthly benefit is based upon each participant’s earnings and his or her number of years of service. The components of net periodic benefit cost are as follows:


	For the Quarter Ended				For the Twenty-six Weeks Ended				For the Quarter Ended				For the Twenty-six Weeks Ended
	December 28, 2017		December 29, 2016		December 28, 2017		December 29, 2016		December 26, 2019		December 27, 2018		December 26, 2019		December 27, 2018
Service cost	$	152	$	158	$	304	$	316	$	178	$	153	$	356	$	305
Interest cost		212		202		425		405		223		223		446		447
Amortization of prior service cost		240		240		479		479		240		240		479		479
Amortization of loss		41		91		81		182		104		23		208		47

Net periodic benefit cost	$	645	$	691	$	1,289	$	1,382	$	745	$	639	$	1,489	$	1,278

The components of net periodic benefit cost other than the service cost component are included in the line item “Other expense” in the Consolidated Statements of Comprehensive Income.

Note 10 – Accumulated Other Comprehensive Loss

The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for thetwenty-six weeks ended December ~~28, 2017~~26, 2019 and December ~~29, 2016.~~27, 2018.These changes are all related to our defined benefit pension plan.


Changes to AOCL^(a)	For the Twenty-six Weeks Ended						For the Twenty-Six Weeks Ended
Changes to AOCL^(a)	December 28, 2017			December 29, 2016			December 26, 2019			December 27, 2018
Balance at beginning of period	$	(4,404	)	$	(6,425	)	$	(4,325	)	$	(3,181	)
Other comprehensive income before reclassifications		—			—			—			—
Amounts reclassified from accumulated other comprehensive loss		560			661			687			526
Tax effect		(219	)		(251	)		(172	)		(132	)

Net current-period other comprehensive income		341			410			515			394
Impact of adopting ASU2018-02^(b)								(976	)		—

Balance at end of period	$	(4,063	)	$	(6,015	)	$	(4,786	)	$	(2,787	)

^(a)	Amounts in parenthesis indicate debits/expense.

^(b)	See Note 15 – “Recent Accounting Pronouncements” for additional information.

The reclassifications out of AOCL for the quarter andtwenty-six weeks ended December ~~28, 2017~~26, 2019 and December ~~29, 2016~~27, 2018 were as follows:


	For the Quarter Ended						For the Twenty-six Weeks Ended						Affected line item in the Consolidated Statements of Comprehensive Income														Affected line item in the Consolidated Statements of Comprehensive Income
Reclassifications from AOCL to earnings^(b)	December 28, 2017			December 29, 2016			December 28, 2017			December 29, 2016
															For the Quarter Ended						For the Twenty-six Weeks Ended
Reclassifications from AOCL to earnings^(c)															December 26, 2019			December 27, 2018			December 26, 2019			December 27, 2018			Affected line item in the Consolidated Statements of Comprehensive Income
Amortization of defined benefit pension items:
Unrecognized prior service cost	$	(240	)	$	(240	)	$	(479	)	$	(479	)		Other expense	$	(240	)	$	(240	)	$	(479	)	$	(479	)
Unrecognized net loss		(41	)		(91	)		(81	)		(182	)		Other expense		(104	)		(23	)		(208	)		(47	)		Other expense

Total before tax		(281	)		(331	)		(560	)		(661	)				(344	)		(263	)		(687	)		(526	)
Tax effect		111			126			219			251			Income tax expense		86			66			172			132			Income tax expense

Amortization of defined pension items, net of tax	$	(170	)	$	(205	)	$	(341	)	$	(410	)			$	(258	)	$	(197	)	$	(515	)	$	(394	)

~~(b)~~^(c)

Amounts in parenthesis indicate debits to expense. See Note 9 – “Retirement Plan” above for additional details.

~~Note 11 – Income Taxes~~

~~Income tax expense as a percent ofpre-tax~~ income (the “Effective Tax Rate”) for the quarter ended December 28, 2017 was 39.0% compared to an Effective Tax Rate of 31.6% for the quarter ended December 29, 2016. The Effective Tax Rate for the~~twenty-six~~ ~~weeks ended December 28, 2017 was 35.4% compared to an Effective Tax Rate of 32.9% for thetwenty-six~~ weeks ended December 29, 2016. The increase in the Effective Tax Rate for the quarter and six months ended December 28, 2017 was primarily related to the re-measurement of our net deferred tax assets incorporating the new federal income tax rate.

H.R.1, originally known as the Tax Cuts and Jobs Act of 2017, was enacted on December 22, 2017, and includes, among other items, a reduction in the federal corporate income tax rate from 35% to 21%, which will have a material favorable impact on our effective income tax rate and cash income taxes paid going forward. Because we have a June fiscal~~year-end,~~ the lower corporate income tax rate will be phased in during the 2018 calendar year, resulting in a U.S. statutory federal rate of approximately 28% for our fiscal year ending June 28, 2018, and 21% for subsequent fiscal years. Our net deferred tax asset balances are recorded at the tax rate expected to be in effect during the period in which the related temporary differences reverse. Therefore, this reduction in the corporate federal income tax rate required a~~non-cash~~ ~~reduction of our net deferred tax asset balances and a corresponding increase in income tax expense of $2,408 during the quarter andtwenty-six~~ weeks ended December 28, 2017. We scheduled out the expected reversal of temporary differences, including anticipated changes in our pension accrual and fixed asset acquisitions for the next six months, which required the use of reasonable estimates. Actual results could differ from those estimates, and thus further adjustment of our deferred tax asset balances are possible.

~~Windfall tax benefits related to the excess tax deduction of share-based compensation of $332 and $446 for the quarter andtwenty-six~~ ~~weeks ended December 28, 2017 partially offset the impact of the reduction of the corporate tax rate.~~

Note 1211 – Commitments and Contingent Liabilities

We are currently a party to various legal proceedings in the ordinary course of business. While management presently believes that the ultimate outcomes of these proceedings, individually and in the aggregate, will not materially affect our Company’s financial position, results of operations or cash flows, legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur. Unfavorable outcomes could include substantial monetary damages in excess of any ~~appropriate~~ accruals ~~which~~that management has established. Were such unfavorable final outcomes to occur, there exists the possibility of a material adverse effect on our financial position, results of operations and cash flows.

We are subject to a class-action complaint for an employment related matter. Mediation for this matter occurred in fiscal 2017. In August 2017, we agreed in principle to a $1,200 settlement for which we were fully reserved at June 29, 2017. The~~non-monetary~~ ~~components of the settlement are still being finalized.~~

Note 1312 – Fair Value of Financial Instruments

Authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:


Level 1	–	Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities.

Level 2	–	Observable inputs other than quoted prices in active markets. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3	–	Unobservable inputs for which there is little or no market data available.

The carrying values of cash, trade accounts receivable and accounts payable approximate their fair values at each balance sheet date because of the short-term maturities and nature of these balances.

The carrying value of our revolving credit facility borrowings approximates fair value at each balance sheet date because interest rates on this instrument approximate current market rates (Level 2 criteria), the short-term maturity and nature of this balance. In addition, there has been no significant change in our inherent credit risk.

The following table summarizes the carrying value and fair value estimate of our current and long-term debt, excluding unamortized debt issuance costs:


	December 28, 2017		June 29, 2017		December 29, 2016		December 26, 2019		June 27, 2019		December 27, 2018
Carrying value of long-term debt:	$	38,256	$	28,808	$	30,532	$	23,767	$	27,798	$	31,061
Fair value of long-term debt:		38,584		29,316		31,124		24,164		27,720		30,176

The estimated fair value of our long-term debt was determined using a market approach based upon Level 2 observable inputs, which estimates fair value based on interest rates currently offered on loans with similar terms to borrowers of similar credit quality or broker quotes. In addition, there have been no significant changes in the underlying assets securing our long-term debt.

Note 1413 – Related Party Transaction

In connection with the Acquisition ~~on November 30, 2017,~~in the second quarter of fiscal 2018, we incurred $11,500 of unsecured debt (the “Promissory Note”) to the principal owner and seller of the Squirrel Brand business, who was subsequently appointed as an executive officer of the ~~Company. The interest rate~~Company and was considered a related party. Late in the second quarter of fiscal 2020, the employment of this executive officer with the Company ceased. He is no longer considered a related party, and therefore the outstanding balance on the Promissory Note is ~~5.5% per annum and the outstanding balance at~~not reflected as related party debt on our Consolidated Balance Sheet as of December ~~28, 2017 was $11,181.~~26, 2019. Interest paid on the Promissory Note ~~during~~for the quarter andtwenty-six weeks ended December 26, 2019 while the executive officer was still a related party was $57 and $127, respectively, and is reflected as related party interest on our Consolidated Statements of Comprehensive Income.

Note 14 – Garysburg, North Carolina Facility

On October 7, 2019 we experienced a fire at our peanut processing facility located in Garysburg, North Carolina. No personnel were injured, and there was no damage to our peanut shelling and inventory storage areas. The fire occurred in our roasting room where all of the roasting equipment was destroyed. The fire also damaged some equipment in our packaging room and a portion of the roof. We have contracted with a third party to roast and salt our inshell peanuts to meet our current production requirements. We do not expect any negative impact on our customer service levels or a material adverse impact on our operating or financial results for the 2020 fiscal year.

After evaluating our options with regard to our peanut production operations, the Company is considering strategic alternatives for this facility and currently plans to permanently cease all operations at the Garysburg facility once we have finished shelling the current crop of peanuts at this facility, which is estimated to take approximately sixteen months. We have ceased roasting operations in the current second quarter, which resulted in a partial reduction in the workforce at this facility, and recognized an immaterial amount of separation costs in the second quarter of fiscal ~~2018~~2020.

We have adequate property damage and business interruption insurance, subject to applicable deductibles. To date, approximately $1,500 inclean-up costs and damage to capital assets has been incurred. Insurance claims have been filed under our property damage and business interruption policies, and an advance payment of $1,500 was ~~immaterial.~~received from the insurance carrier in our current second quarter. Insurance proceeds received for damage to capital equipment were recorded as investing activities on the Consolidated Statements of Cash Flows.

Note 15 – Recent Accounting Pronouncements

The following recent accounting pronouncements have been adopted in the current fiscal year:

In ~~March 2017, the FASB issued ASUNo. 2017-07~~ “~~Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~”. The amendments in this update require the service cost component of pension expense to be disaggregated from the other components of net periodic benefit cost and be presented in the same line items as other employee compensation costs. All other components of net periodic benefit cost (interest cost, amortization of prior service cost and amortization of unrecognized loss) must be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The amendments in this update also allow only the service cost component to be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). This update is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as long as it is early adopted in the first interim period of an annual year and financial statements have not been issued or made available for issuance prior to adoption. The amendments in this update should be applied using a retrospective transition method, however, a practical expedient is offered with regard to the prior comparative periods. The Company adopted ASU~~2017-07~~ in the first quarter of fiscal 2018. Service cost continues to be presented as a component of Administrative expense while the remaining components of net periodic benefit cost (interest cost, amortization of prior service cost and amortization of unrecognized loss) are now presented below the caption Other expense on the Consolidated Statements of Comprehensive Income. Adoption of this update required a reclassification of $533 and $1,066 in the prior year second quarter and~~twenty-six~~ ~~week period, respectively, from Administrative expense to Other expense.~~

~~In October 2016, the FASB issued ASUNo. 2016-17~~ “~~Consolidation (Topic 810): Interests Held Through Related Parties That Are Under Common Control~~~~”. This update amends ASU2015-02~~ ~~and affects reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. ASU2016-17~~ ~~is effective for the Company in fiscal 2018 and requires retrospective application. The adoption of ASU2016-17~~ ~~did not have any impact to the Consolidated Financial Statements.~~

~~In July 2015, the FASB issued ASUNo. 2015-11~~ “~~Inventory (Topic 330): Simplifying the Measurement of Inventory~~~~”. This update applies to inventory measured usingfirst-in,first-out~~ or average cost and requires inventory be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. When evidence exists that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. That loss may be required, for example, due to damage, physical deterioration, obsolescence, changes in price levels, or other causes. This update became effective for the Company beginning in fiscal year 2018 with prospective application required. The adoption of ASU~~2015-11~~ ~~did not have any impact to the consolidated financial statements.~~

~~The following recent accounting pronouncements have not yet been adopted:~~

~~In January 2017, the FASB issued ASC UpdateNo. 2017-04~~ “~~Intangibles—Goodwill and Other Topics (Topic 350): Simplifying the Test for Goodwill Impairment~~”. The purpose of this update is to reduce the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the impaired fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination, commonly referred to as “Step 2”. Under this amendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value. This update is effective beginning in fiscal 2021. We do not expect this update to have a material impact on our Consolidated Financial Statements.

In February 2016, the FASB issued ASUNo. 2016-02 ““Leases (Topic 842)”. The primary goal of this ~~update~~Update is to require the lessee to recognize all lease commitments, both operating and finance, by initially recording a lease asset and liability on the balance sheet at the lease commencement date. Additionally, enhanced qualitative and quantitative disclosures ~~will be~~are required. ASUNo. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. This new guidance ~~will be~~became effective for the Company beginning in fiscal year 2020. ~~This~~Under ASUNo. 2016-02 the guidance ~~must~~was to be adopted using a modified retrospective approach, ~~and early adoption is permitted. The Company expects this~~with elective reliefs, with application of the new guidance ~~to have a significant impact on its total assets and total liabilities, and lead to increased financial statement disclosures.~~

for all periods presented. In ~~May 2014,~~July 2018, the FASB issued ASUNo. ~~2014-09~~2018-11 “~~“Revenue from Contracts with Customers~~Leases (Topic ~~606)~~842): Targeted Improvements” which provides for another transition method by allowing entities to initially apply the new leases standard at the adoption date and ~~created~~recognize a ~~new ASC Topic 606,~~~~Revenue from Contracts with Customers~~~~, and added ASC Subtopic340-40,~~ ~~Other Assets and Deferred Costs — Contracts with Customers~~.cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The ~~guidance~~amendments in this ~~update supersedes~~Update also provide lessors with a practical expedient, by class of underlying asset, to not separatenon-lease components from the ~~revenue recognition requirements in ASC~~associated lease component, similar to the expedient provided for lessees. In July 2018, the FASB also issued ASUNo. 2018-10 “Codification Improvements to Topic ~~605,~~~~Revenue Recognition~~842, Leases~~, and most industry-specific guidance throughout the industry topics~~” which affects narrow aspects of the ~~codification. Under the new~~ guidance ~~an entity should recognize revenue to depict the transfer of promised goods or services to customers~~issued in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Several other amendments have been subsequently released, each of which provide additional narrow scope clarifications or improvements.ASUNo. 2016-02. In ~~August 2015,~~December 2018, the FASB issued ASUNo. ~~2015-14~~2018-20 “Leases (Topic 842) – Narrow Scope Improvements for Lessors” which provides specific guidance for lessors on the issues of sales taxes and other similar taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease andnon-lease components. In March 2019, the FASB issued ASUNo. 2019-01 “Leases (Topic 842) – Codification Improvements” which clarifies transition disclosure requirements for annual and interim periods after the date of adoption of ASUNo. 2016-02.

We have implemented processes and information technology tools to assist in our compliance with Topic 842. We have also updated our accounting policies and internal controls that are impacted by the new guidance. We adopted ASUNo. 2016-02 utilizing the modified retrospective transition method and did not recast comparative periods in transition to the new standard. In addition, the new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect theuse-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The adoption of this standard resulted in the recognition of operating leaseright-of-use assets and liabilities on our Consolidated Balance Sheet of $5,361 and $5,320, respectively, during the first quarter of fiscal 2020. The new standard also provides practical expedients for an entity’s initial and ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. We also elected the practical expedient to not separate lease andnon-lease components for all of our leases. Refer to Note 3 – “Leases” for additional information regarding the Company’s leases.

In February 2018, the FASB issued ASUNo. 2018-02“~~Revenue~~Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from ~~Contracts with Customers, Deferral~~Accumulated Other Comprehensive Income”. The amendments in this Update allow a reclassification from accumulated other comprehensive income (loss) (“AOCL”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in this Update also require certain disclosures about stranded tax effects. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the ~~Effective Date”~~ ~~which deferred~~change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASUNo. 2018-02 in the first quarter of fiscal 2020 and reclassified $976 from AOCL to retained earnings. Refer to Note 10 – “Accumulated Other Comprehensive Loss” for additional detail. ASU2018-02 was not applied retrospectively. No other income tax effects related to the application of the Tax Cuts and Jobs Act were reclassified from AOCL to retained earnings.

The following recent accounting pronouncements have not yet been adopted:

In December 2019, the FASB issued ASUNo. 2019-12 “Income Taxes (Topic 740)”. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions, providing updated requirements and specifications in certain areas and by making minor codification improvements. The amendments in this Update are effective ~~date of ASU2014-09~~for ~~one~~public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. ~~Consequently, this new revenue recognition guidance will be~~Early adoption is permitted. This Update is effective for the Company beginning in fiscal ~~year 2019, which is our anticipated adoption date.~~2022. We ~~have completed our initial analysis of~~do not expect this accounting ~~standard update which included~~Update to have a ~~review of all~~ material ~~customer contracts and currently do not anticipate any material changes to~~impact on our ~~revenue recognition compared to current GAAP. We are currently evaluating the method of adoption.~~Consolidated Financial Statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

The following discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements.

Our fiscal year ends on the final Thursday of June each year, and typically consists offifty-two weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:

References herein to fiscal ~~2018~~2020 and fiscal ~~2017~~2019 are to the fiscal year ending June ~~28, 2018~~25, 2020 and the fiscal year ended June ~~29, 2017,~~27, 2019, respectively.

References herein to the second quarter of fiscal ~~2018~~2020 and fiscal ~~2017~~2019 are to the quarters ended December ~~28, 2017~~26, 2019 and December ~~29, 2016,~~27, 2018, respectively.

As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. and our wholly-owned subsidiary, JBSS Ventures, LLC. Our Company’s Credit Facility and Mortgage Facility, as defined below, are sometimes collectively referred to as “our financing arrangements.”

We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds and other nuts in the United States. These nuts are sold under a variety of private brands and under theFisher, Orchard Valley Harvest,Squirrel Brand, Southern Style Nutsand Sunshine Countrybrand names. We also market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snacks and trail mixes, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks and other sesame snack products under private brands and brand names. We distribute our products in the consumer, commercial ingredients and contract packaging distribution channels.

The Company’s long-term objective to drive profitable growth, as identified in our strategic plan (the “Strategic Plan”), includes ~~growing~~continuing to growFisher,, Orchard Valley Harvest,, Squirrel Brandand Southern Style Nuts into leading nut brands by focusing on consumers demanding quality nuts in the snacking, recipe, trail and snack mix and produce categories, providing integrated nut solutions to grownon-branded business at existing key customers in each distribution channel and ~~increasing our consumer reach efforts, including by~~ expanding our ~~product~~ offerings into alternative distribution channels. We ~~executed~~are executing on our Strategic Plan ~~in the second quarter~~by continuing to expand distribution of ~~fiscal 2018 by completing the strategic acquisition of Squirrel Brand, L.P. (“Squirrel Brand”), a former contract packaging customer. In addition, we managed to grow~~ our~~Fisher~~Orchard Valley Harvest ~~recipe nut sales volume in the quarter by focusing on~~andSouthern Style Nutsproducts, growing our ~~promotional activity~~consumer distribution channel with private brand products and expanding distribution ~~despite a major~~~~Fisher~~ ~~recipe nut customer transitioning to a private label program for certain package types during the quarter.~~with new foodservice customers.

We face a number of challenges in the future which include, among others, ~~volatile~~potential acquisition cost volatility for almonds and increasing commodity costs for ~~certain tree nuts, especially cashews, and~~walnuts, as well as intensified competition on pricing and for market share from both private brand and name brand nut products. OurFisherrecipe nut sales have been negatively impacted recently due to this increased competition for market share. We also face changing industry trends resulting in retail consolidation and Internet price competition for nut and ~~nut related products, as well as significant risks associated with increasing use of fixed price arrangements with certain of our customers.~~ nut-related products.

We will continue to focus on seeking profitable business opportunities to ~~further utilize~~maximize the utilization of our ~~additional~~ production capacity at our primary manufacturing, processing and distribution facility located in Elgin, Illinois (the “Elgin Site”). and evaluate facility expansion to meet customer demand. We expect to maintain our ~~recent~~current level of promotional and advertising activity for our~~Fisher~~ ~~and~~Orchard Valley Harvest andFishersnack brands. We continue to see significant domestic sales and volume growth in ourOrchard Valley Harvest brand and ~~expect to~~will continue to focus on this portion of our branded ~~business.~~business as well as ourSquirrel BrandandSouthern Style Nuts brands. We will continue to face the ongoing challenges specific to our business, such as food safety and regulatory issues and the maintenance and growth of our customer ~~base.~~base for branded and private label products. See the information referenced in Part II, Item 1A — “Risk Factors” of this report for additional information about our risks, challenges and uncertainties.

QUARTERLY HIGHLIGHTS

Our net sales of ~~$259.1~~$246.4 million for the second quarter of fiscal ~~2018 increased 3.9%~~2020 decreased 2.7% from our net sales of ~~$249.4~~$253.3 million for the second quarter of fiscal ~~2017.~~2019. Net sales for the firsttwenty-six weeks of fiscal ~~2018~~2020 increased by ~~$2.2~~$6.7 million, or ~~0.5%~~1.5%, to ~~$473.9~~$464.3 million from net sales of ~~$471.7~~$457.6 million for the firsttwenty-six weeks of fiscal ~~2017.~~2019.

Sales volume, measured as pounds sold to customers, increased ~~0.7 million pounds, or 0.9% in~~4.8% for the second quarter of fiscal ~~2018,~~2020 compared to the second quarter of fiscal ~~2017.~~2019. Sales volume for the firsttwenty-six weeks of fiscal ~~2018 was relatively unchanged~~2020 increased 6.8% compared to the firsttwenty-six weeks of fiscal ~~2017.~~2019.

Gross profit ~~decreased~~increased by ~~$5.5~~$7.1 million, and our gross profit margin, as a percentage of net sales, ~~decreased~~increased to ~~14.6%~~20.3% for the second quarter of fiscal ~~2018~~2020 compared to ~~17.4%~~16.9% for the second quarter of fiscal ~~2017.~~2019. Gross profit ~~decreased~~increased by ~~$7.1~~$16.4 million and our gross profit margin ~~decreased~~increased to ~~15.3%~~19.9% from ~~16.9%~~16.6% for the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to the firsttwenty-six weeks of fiscal ~~2017.~~2019.

Total operating expenses for the second quarter of fiscal ~~2018 increased~~2020 decreased by ~~$0.5~~$0.7 million, or ~~2.2%~~2.8%, compared to the second quarter of fiscal ~~2017.~~2019. As a percentage of net sales, total operating expenses in the second quarter of fiscal ~~2018 decreased~~2020 was unchanged at 10.4% compared to ~~9.1% from 9.3% for~~ the second quarter of fiscal ~~2017.~~2019. For the first half of fiscal ~~2018,~~2020, total operating expenses decreased by ~~$1.4~~$0.4 million, to ~~8.7%~~10.5% of net sales compared to ~~9.0%~~10.7% for the first half of fiscal ~~2017.~~2019.

The total value of inventories on hand at the end of the second quarter of fiscal ~~2018 decreased~~2020 increased by ~~$13.8~~$0.6 million, or ~~7.6%~~0.4%, in comparison to the total value of inventories on hand at the end of the second quarter of fiscal ~~2017.~~

On November 30, 2017 we completed the acquisition of the Squirrel Brand business for a purchase price of $33.4 million (the “Acquisition”). Squirrel Brand is one of the nation’s leading suppliers of indulgent and premium roasted nuts and snack mixes under its~~Squirrel Brand~~ ~~and~~~~Southern Style Nuts~~ brands. Prior to the Acquisition, Squirrel Brand was a customer in our Contract Packaging sales channel for fourteen years. Through this Acquisition, we increased our customer base and branded portfolio as part of our goal of expanding into alternative distribution channels.2019.

We have seen acquisition costs for walnuts ~~peanuts and cashews~~ increase in the ~~2017~~2019 crop year (which falls into our current ~~2018~~2020 fiscal year). We also continue to see declining acquisition costs for pecans. We completed procurement of inshell walnuts during the first half of fiscal ~~2018.~~2020. During the third quarter, we will determine the final prices to be paid to the walnut growers based upon current market prices and other factors such as crop size and export demand. We have estimated the liability to our walnut growers and our walnut inventory costs using currently available information. Any difference between our estimated liability and the actual final liability will be determined during the third quarter of fiscal ~~2018~~2020 and will be recognized in our financial results at that time.

RESULTS OF OPERATIONS

Net Sales

Our net sales ~~increased 3.9%~~decreased 2.7% to ~~$259.1~~$246.4 million in the second quarter of fiscal ~~2018~~2020 compared to net sales of ~~$249.4~~$253.3 million for the second quarter of fiscal ~~2017.~~2019. The ~~increase~~decrease in net sales was primarily attributable to lower selling prices, which resulted from a shift in sales volume from higher priced pecans and walnuts to lower priced trail and snack mixes, peanuts and cashews. Lower selling prices for pecans and cashews, which were due to ~~increased~~lower commodity acquisition costs, also contributed to the overall reduction in selling prices. The decline in net sales ~~of snack and trail mix products in our consumer distribution channel combined with~~from lower selling prices was largely offset by a ~~2.9%~~4.8% increase in ~~the weighted average~~ sales ~~price per pound. Sales~~ volume, which is defined as pounds sold to ~~customers, increased approximately 0.9% in the quarterly comparison.~~customers.

For the firsttwenty-six weeks of fiscal ~~2018~~2020 our net sales were ~~$473.9~~$464.3 million, an increase of ~~$2.2~~$6.7 million, or ~~0.5%~~1.5%, compared to the same period of fiscal ~~2017.~~2019. The increase in net sales was ~~primarily~~ due to a ~~slight~~6.8% increase in sales ~~volume.~~volume and was largely offset by lower selling prices resulting primarily for the same reasons cited in the quarterly comparison.

The following table summarizes sales by product type as a percentage of total gross sales. The information is based upon gross sales, rather than net sales, because certain adjustments, such as promotional discounts, are not allocable to product type.


	For the Quarter Ended						For the Twenty-six Weeks Ended						For the Quarter Ended						For the Twenty-six Weeks Ended
Product Type	December 28, 2017			December 29, 2016			December 28, 2017			December 29, 2016			December 26, 2019			December 27, 2018			December 26, 2019			December 27, 2018
Peanuts		13.0	%		13.9	%		14.3	%		14.2	%		15.8	%		15.7	%		16.8	%		17.2	%
Pecans		20.5			22.5			17.4			19.0			16.2			20.5			13.0			16.5
Cashews & Mixed Nuts		26.0			23.1			25.4			23.3			22.7			22.1			22.7			22.3
Walnuts		9.8			9.6			9.2			9.2			8.7			10.5			7.9			10.3
Almonds		12.5			14.1			13.8			16.4			13.2			11.8			14.8			12.8
Trail & Snack Mixes		12.9			12.2			14.6			13.0			18.3			14.5			19.3			15.6
Other		5.3			4.6			5.3			4.9			5.1			4.9			5.5			5.3

Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

The following table shows a comparison of net sales by distribution channel (dollars in thousands):


	For the Quarter Ended										For the Quarter Ended
Distribution Channel	December 28, 2017		December 29, 2016		Change			Percent Change			December 26, 2019		December 27, 2018		Change			Percent Change
Consumer⁽¹⁾	$	181,533	$	168,778	$	12,755			7.6	%	$	188,086	$	195,478	$	(7,392	)		(3.8	)%
Commercial Ingredients		35,578		40,325		(4,747	)		(11.8	)		34,247		31,454		2,793			8.9
Contract Packaging		42,007		40,272		1,735			4.3			24,090		26,385		(2,295	)		(8.7	)

Total	$	259,118	$	249,375	$	9,743			3.9	%	$	246,423	$	253,317	$	(6,894	)		(2.7	)%

(1)

Sales of branded products were approximately ~~45%~~33% and ~~47%~~45% of total consumer sales during each of the second quarter of fiscal ~~2018~~2020 and fiscal ~~2017,~~2019, respectively.Fisher branded products were approximately ~~84%~~76% and ~~89%~~79% of branded sales during the second quarter of fiscal ~~2018~~2020 and fiscal ~~2017,~~2019, respectively, with branded produce andSquirrel Brandproducts accounting for most of the remaining branded product sales.

The following table shows a comparison of net sales by distribution channel (dollars in thousands):


	For the Twenty-six Weeks Ended										For theTwenty-six Weeks Ended
Distribution Channel	December 28, 2017		December 29, 2016		Change			Percent Change			December 26, 2019		December 27, 2018		Change			Percent Change
Consumer⁽¹⁾	$	317,501	$	303,945	$	13,556			4.5	%	$	345,232	$	334,922	$	10,310			3.1	%
Commercial Ingredients		71,987		91,045		(19,058	)		(20.9	)		71,135		68,656		2,479			3.6
Contract Packaging		84,421		76,678		7,743			10.1			47,902		54,027		(6,125	)		(11.3	)

Total	$	473,909	$	471,668	$	2,241			0.5	%	$	464,269	$	457,605	$	6,664			1.5	%

(1)

Sales of branded products were approximately ~~42%~~31% and 43% of total consumer sales during the firsttwenty-six weeks of fiscal ~~2018~~2020 and fiscal ~~2017,~~2019, respectively.Fisher branded products were approximately ~~83%~~71% and ~~87%~~75% of branded sales during the firsttwenty-six weeks of fiscal ~~2018~~2020 and fiscal ~~2017,~~2019, respectively, with branded produce andSquirrel Brandproducts accounting for most of the remaining branded product sales.

Net sales in the consumer distribution channel ~~increased by 7.6% in dollars~~decreased $7.4 million, or 3.8%, and ~~6.6% in~~ sales volume increased 4.2% in the second quarter of fiscal ~~2018~~2020 compared to the second quarter of fiscal ~~2017.~~2019. The sales volume increase was driven by increased sales of private brand snack nuts and~~Orchard Valley Harvest~~ trail ~~mixes. Sales volume for~~~~Fisher~~ ~~recipe nuts increased 3.4% due to~~and snack mixes from distribution gains with new and existing ~~customers, increased promotional activity, and a product line extension for raw peanuts. A 55.6% increase in sales volume of~~~~Orchard Valley Harvest~~ ~~produce products was driven by new item introductions and distribution gains at new and existing~~private brand customers. Sales volume forFisher snack nuts decreased ~~2.8% mainly~~6.4%, primarily as a result of reduced promotional activity for inshell peanuts. Sales volume ofFisher recipe nuts decreased 29.8% from ~~lower~~lost holiday display distribution at a major customer in favor of their private brand recipe nuts. Sales volumeof Orchard Valley Harvest products increased 6.5% due to distribution gains at new and existing customers and the introduction of new products. Sales volume ofSouthern Style Nuts increased 42.9% due to increased promotional activity.

In the firsttwenty-six weeks of fiscal ~~2018,~~2020, net sales in the consumer distribution channel increased ~~by 4.5% in dollars~~$10.3 million, or 3.1%, and ~~increased 4.4% in~~ sales volume increased 10.0% compared to the same period of fiscal ~~2017.~~2019. The sales volume increase ~~was driven by increased~~occurred for the same reason cited in the quarterly comparison. Increased sales ~~of private brand and~~for ourOrchard Valley Harvest ~~trail mixes.~~andSouthern Style Nutbrands also contributed to the sales volume increase in the consumer distribution channel. Sales volume forFisher recipe nuts decreased 30.0% in the year to date comparison as a result of lost distribution at a major customer in favor of their private brand recipe nuts.

Net sales in the commercial ingredients distribution channel ~~decreased~~increased by ~~11.8%~~8.9% in dollars and 14.5% in sales volume in the second quarter of fiscal ~~2018~~2020 compared to the second quarter of fiscal ~~2017.~~2019. In the firsttwenty-six weeks of fiscal ~~2018,~~2020, net sales in the commercial ingredients distribution channel ~~decreased~~increased by ~~20.9%~~3.6% in dollars and ~~15.8%~~6.3% in sales volume compared to the same period of fiscal ~~2017.~~2019. The sales volume ~~decrease~~increase, for both the quarterly andtwenty-six week period, was primarily due to ~~the loss~~distribution gains with new food service customers and increased sales of ~~a bulk almond butter customer that occurred in the latter part of the fiscal 2017 second quarter.~~peanut crushing stock to peanut oil processors.

Net sales in the contract packaging distribution channel ~~increased~~decreased by ~~4.3%~~8.7% in dollars and ~~declined 1.9%~~2.5% in sales volume in the second quarter of fiscal ~~2018~~2020 compared to the second quarter of fiscal ~~2017.~~2019. The decline in sales volume ~~decrease was mainly due to our acquisition of the Squirrel Brand business at the end of November 2017. Squirrel Brand sales volume for December~~primarily came from a reduction in ~~the current quarter was included~~promotional and merchandising activity by some customers in the consumer and commercial ingredients channels, while Squirrel Brand sales volume for December in the fiscal 2017 second quarter was included in the contract packaging distribution channel because Squirrel Brand was a contract packaging customer during the second quarter of fiscal 2017.

this channel. In the firsttwenty-six weeks of fiscal ~~2018,~~2020, net sales in the contract packaging distribution channel ~~increased~~decreased by ~~10.1%~~11.3% in dollars and ~~5.7%~~7.9% in sales volume compared to the firsttwenty-six weeks of fiscal ~~2017. Increased sales to an existing customer from new item introductions during the firsttwenty-six~~ ~~weeks of fiscal 2018 drove the increase~~2019. The decline in sales ~~volume.~~volume occurred for the same reason cited in the quarterly comparison, as well as from a reduction in unit ounce weights implemented by a major contract packaging customer.

Gross Profit

Gross profit ~~decreased~~increased by ~~$5.5~~$7.1 million, or ~~12.7%~~16.5%, to ~~$37.9~~$50.0 million for the second quarter of fiscal ~~2018~~2020 compared to the second quarter of fiscal ~~2017.~~2019. Our gross profit margin, as a percentage of net sales, ~~decreased~~increased to ~~14.6%~~20.3% for the second quarter of fiscal ~~2018~~2020 compared to ~~17.4%~~16.9% for the second quarter of fiscal ~~2017.~~2019. The ~~decreases~~increases in gross profit and gross profit margin were mainly ~~due~~attributable to ~~increased~~the sales volume increase discussed above, as well as manufacturing efficiencies, reduced manufacturing spending and lower commodity acquisition costs for ~~walnuts~~pecans and ~~pecans. We could not raise walnut and pecan selling prices to cover these acquisition cost increases due to prior holiday promotional pricing commitments that we made primarily to support new~~~~Fisher~~ ~~recipe nut distribution.~~cashews.

Gross profit ~~decreased~~increased by ~~$7.1~~$16.4 million, or ~~8.9%~~21.6%, to ~~$72.7~~$92.2 million for the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to the firsttwenty-six weeks of fiscal ~~2017.~~2019. Our gross profit margin ~~decreased~~increased to ~~15.3%~~19.9% for the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to ~~16.9%~~16.6% for the firsttwenty-six weeks of fiscal ~~2017.~~2019. The ~~decreases~~increases in gross profit and gross profit margin in the year to date comparison occurred primarily for the same reasons cited in the quarterly comparison.

Operating Expenses

Total operating expenses for the second quarter of fiscal ~~2018 increased~~2020 decreased by ~~$0.5~~$0.7 million, or ~~2.2%~~2.8%, to ~~$23.6~~$25.5 million. ~~Operating~~As a percentage of net sales, operating expenses remain unchanged at 10.4% for the second quarter of fiscal ~~2018 decreased~~2020 compared to ~~9.1% of net sales from 9.3% of net sales for~~ the second quarter of fiscal ~~2017.~~2019.

Selling expenses for the second quarter of fiscal ~~2018~~2020 were ~~$15.8~~$16.1 million, ~~an increase~~a decrease of ~~$0.5~~$2.1 million, or ~~3.1%~~11.5%, from the second quarter of fiscal ~~2017.~~2019. The ~~increase~~decrease was driven primarily by a ~~$0.5~~$2.5 million decrease in advertising expense primarily related to TV and magazine advertising and a $0.9 million decrease in freight expense. Partially offsetting these decreases were a $0.7 million increase in payroll related and incentive compensation ~~related expenses~~expense and a $0.4 million increase in ~~freight~~commission expense. ~~These expenses were partially offset by a $0.7 million decrease in incentive compensation expense in the current quarter.~~

Administrative expenses for the second quarter of fiscal ~~2018~~2020 were ~~$7.8~~$9.4 million compared to ~~$7.7~~$8.1 million for the second quarter of fiscal ~~2017. A $1.5~~2019. The increase was primarily due to a $1.0 million ~~decrease~~increase in ~~compensation-related~~compensation related expenses, primarily incentive compensation, ~~expense, was offset by~~ a ~~$0.6~~$0.2 million increase ~~of transaction~~in building repairs and ~~legal expenses, primarily due to the Acquisition , and an increase of $0.4 million of personnel~~maintenance expense. ~~The current quarter also included $0.3 million of amortization expense associated with the Acquisition.~~

Total operating expenses for the firsttwenty-six weeks of fiscal ~~2018~~2020 decreased by ~~$1.4~~$0.4 million, or ~~3.2%~~0.9%, to ~~$41.1~~$48.7 million. Operating expenses decreased to ~~8.7%~~10.5% of net sales for the first half of fiscal ~~2018~~2020 compared to ~~9.0%~~10.7% of net sales for the first half of fiscal ~~2017.~~2019.

Selling expenses for the firsttwenty-six weeks of fiscal ~~2018~~2020 were ~~$26.8~~$30.2 million, ~~an increase~~a decrease of ~~$0.1~~$2.0 million, or ~~0.6%~~6.3%, from the amount recorded for the firsttwenty-six weeks of fiscal ~~2017.~~2019. The decrease was driven primarily by a $2.9 million decrease in advertising expense and a $1.3 million decrease in freight expense. These decreases were partially offset by a $1.4 million increase in payroll related and incentive compensation expense and a $0.5 million increase in commission expense.

Administrative expenses for the firsttwenty-six weeks of fiscal ~~2018~~2020 were ~~$14.3~~$18.5 million, ~~a decrease~~an increase of ~~$1.5~~$1.6 million, or 9.5%, compared to the same period of fiscal ~~2017.~~2019. The ~~decrease in administrative expenses~~increase was primarily due to ~~a $2.1~~$1.5 million ~~decrease~~increase in compensation related expenses, primarily incentive compensation, ~~expense, partially offset by~~and a ~~$0.5~~$0.3 million increase ~~of transaction expenses related to the Acquisition. The currentyear-to-date~~ ~~expenses also include $0.3 million of amortization expense associated with the Acquisition.~~in building repairs and maintenance expense.

Income from Operations

Due to the factors discussed above, income from operations was ~~$14.2~~$24.5 million, or ~~5.5%~~9.9% of net sales, for the second quarter of fiscal ~~2018~~2020 compared to ~~$20.3~~$16.6 million, or ~~8.1%~~6.6% of net sales, for the second quarter of fiscal ~~2017.~~2019.

Due to the factors discussed above, income from operations was ~~$31.6~~$43.5 million, or ~~6.7%~~9.4% of net sales, for the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to ~~$37.4~~$26.7 million, or ~~7.9%~~5.8% of net sales, for the firsttwenty-six weeks of fiscal ~~2017.~~2019.

Interest Expense

Interest expense was ~~$0.8~~$0.4 million for the second quarter of fiscal ~~2018~~2020 compared to ~~$0.6~~$0.8 million in the second quarter of fiscal ~~2017.~~2019. Interest expense for the first two quarters of fiscal ~~2018~~2020 was ~~$1.6~~$1.0 million compared to ~~$1.2~~$1.7 million for the first two quarters of fiscal ~~2017.~~2019. The ~~increase~~decrease in interest expense ~~for both the quarterly andtwenty-six~~ ~~week comparison~~ was due ~~primarily~~ to ~~higher~~lower average debt ~~levels, which were mainly driven by the Acquisition.~~levels.

Rental and Miscellaneous Expense, Net

Net rental and miscellaneous expense was ~~$0.2 million for the second quarter of fiscal 2018 compared to~~ $0.3 million for the second quarter of both fiscal ~~2017.~~2020 and fiscal 2019. Net rental and miscellaneous expense was ~~$0.9 million for the firsttwenty-six~~ ~~weeks of fiscal 2018 compared to~~ $0.7 million for the firsttwenty-six weeks of fiscal ~~2017.~~2020 compared to $0.6 million for the firsttwenty-six weeks of fiscal 2019.

Other Expense

Other expense consists of pension related expenses other than the service cost component and was $0.6 million for the second quarter of fiscal 2020 compared to $0.5 million for the second quarter of ~~both~~ fiscal ~~2018 and fiscal 2017.~~2019. Other expense was ~~$1.0 million and~~ $1.1 million for the firsttwenty-six weeks of fiscal ~~2018 and 2017, respectively.~~2020 compared to $1.0 million for the firsttwenty-six weeks of fiscal 2019.

Income Tax Expense

Income tax expense was ~~$5.0~~$5.7 million, or ~~39.0%~~24.7% of income before income taxes (the “Effective Tax Rate”), for the second quarter of fiscal ~~2018~~2020 compared to ~~$6.0~~$3.8 million, or ~~31.6%~~25.3% of income before income taxes, for the second quarter of fiscal ~~2017.~~2019. For the firsttwenty-six weeks of fiscal ~~2018,~~2020, income tax expense was ~~$10.0~~$10.4 million, or ~~35.4%~~25.5% of income before income taxes, compared to ~~$11.3~~$5.6 million, or ~~32.9%~~23.9% of income before income taxes, for the comparable period last year. The ~~net increase in the~~ Effective Tax Rate ~~for~~in the ~~quarterly and~~comparativetwenty-six week ~~comparison~~period was reduced due to a ~~$2.4 millionnon-cash~~ ~~charge to income tax expense to reduce~~change in the rate that our deferred tax assets are measured due to the impact of Tax ~~Cuts~~Reform. This change increased our net deferred tax assets and ~~Jobs Act of 2017, which lowered the corporate~~reduced income tax ~~rate to twenty one percent, effective January 1, 2018.~~expense in the comparative twenty-six week period.

Net Income

Net income was ~~$7.8~~$17.5 million, or ~~$0.68~~$1.52 per common share basic and diluted, for the second quarter of fiscal ~~2018,~~2020, compared to ~~$12.9~~$11.3 million, or ~~$1.14~~$0.99 per common share basic and ~~$1.13~~$0.98 per common share diluted, for the second quarter of fiscal ~~2017.~~2019.

Net income was ~~$18.2~~$30.4 million, or ~~$1.60~~$2.65 per common share basic and ~~$1.59~~$2.64 per share diluted, for the firsttwenty-six weeks of fiscal ~~2018,~~2020, compared to net income of ~~$23.1~~$17.9 million, or ~~$2.04~~$1.57 per common share basic and ~~$2.03~~$1.56 per share diluted, for the firsttwenty-six weeks of fiscal ~~2017.~~2019.

LIQUIDITY AND CAPITAL RESOURCES

General

The primary uses of cash are to fund our current operations, fulfill contractual obligations, pursue our Strategic Plan through growing our branded and private label nut programs and repay indebtedness. Also, various uncertainties could result in additional uses of cash. The primary sources of cash are results of operations and availability under our Credit Agreement, dated February 7, 2008 and subsequently amended most recently in November 2017 (as amended, the “Credit Facility”), that provides a revolving loan commitment and letter of credit subfacility. We anticipate that expected net cash flow generated from operations and amounts available pursuant to the Credit Facility will be sufficient to fund our operations for the next twelve months. Our available credit under our Credit Facility has historically allowed us ~~to devote more funds~~ to promote our products and invest in our brands (especially ourFisherandOrchard Valley Harvest brands), consummate strategic business acquisitions such as the ~~recent~~2018 acquisition of the Squirrel Brand business, reinvest in the Company through capital expenditures, develop new products, pay ~~a special~~ cash ~~dividend~~dividends the past ~~six~~seven years and explore other growth strategies outlined in our Strategic Plan.

Cash flows from operating activities have historically been driven by net income but are also significantly influenced by inventory requirements, which can change based upon fluctuations in both quantities and market prices of the various nuts and nut products we buy and sell. Current market trends in nut prices and crop estimates also impact nut procurement.

The following table sets forth certain cash flow information for the first half of fiscal ~~2018~~2020 and ~~2017,~~2019, respectively (dollars in thousands):


	December 28, 2017			December 29, 2016			$ Change			December 26, 2019			December 27, 2018			$ Change
Operating activities	$	58,431		$	62,430		$	(3,999	)	$	54,285		$	48,366		$	5,919
Investing activities		(28,803	)		(6,624	)		(22,179	)		(6,148	)		(9,323	)		3,175
Financing activities		(28,531	)		(55,995	)		27,464			(48,335	)		(37,909	)		(10,426	)

Net increase (decrease) in cash	$	1,097		$	(189	)	$	1,286
Net increase in cash										$	(198	)	$	1,134		$	(1,332	)

Operating ActivitiesNet cash provided by operating activities was ~~$58.4~~$54.3 million for the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to ~~$62.4~~$48.4 million for the comparative period of fiscal ~~2017.~~2019. The ~~net decrease~~increase in operating cash flow was due primarily to a $12.5 million increase in net income driven by increased sales and improved profitability, which was partially offset due to ~~a $4.9 million reduction in net income.~~an increased use of working capital for inventory compared to the firsttwenty-six weeks of fiscal 2019.

Total inventories were ~~$168.9~~$172.3 million at December ~~28, 2017, a decrease~~26, 2019, an increase of ~~$13.6~~$15.3 million, or ~~7.4%~~9.8%, from the inventory balance at June ~~29, 2017,~~27, 2019, and ~~a decrease~~an increase of ~~$13.8~~$0.6 million, or ~~7.6%~~0.4%, from the inventory balance at December ~~29, 2016.~~27, 2018. The ~~decrease~~increase in inventory at December ~~28, 2017~~26, 2019 compared to June ~~29, 2017~~27, 2019 was primarily due to ~~lower quantities of pecans on hand at a lower acquisition cost, partially offset by higher~~greater quantities of walnuts on hand at a higher acquisition ~~cost. The decrease in inventories at December 28, 2017 compared to December 29, 2016~~cost, which was ~~primarily due to lower quantities of pecans on hand combined with lower pecan acquisition costs,~~ partially offset by ~~higher quantities of almonds and finished goods on hand.~~lower acquisition costs for pecans.

Raw nut and dried fruit input stocks, some of which are classified as work in process, decreased by ~~11.3~~9.8 million pounds, or ~~16.6%~~11.8%, at December ~~28, 2017~~26, 2019 compared to December ~~29, 2016.~~27, 2018 due to lower quantities of peanuts and pecans on hand. The weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal ~~2018 decreased 3.4%~~2020 increased 7.1% compared to the end of the second quarter of fiscal ~~2017~~2019 primarily due to ~~lower quantities of pecans at~~a higher acquisition cost for walnuts, which was offset in part by lower acquisition costs ~~than the prior year.~~for pecans, cashews and peanuts.

Investing ActivitiesCash used in investing activities was ~~$28.8~~$6.1 million during the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to ~~$6.6~~$9.3 million for the same period last year. The $22.2 million increase in cash used in investing activities was due to payment of the cash portion of the purchase price for the Squirrel Brand acquisition which was $21.9 million. Cash spent for capital expenditures during the first~~twenty-six~~ ~~weeks of fiscal 2018 was $0.3 million more than~~ the same period last year. We expect total capital expenditures for new equipment, facility upgrades, and food safety enhancements for fiscal ~~2018~~2020 to be approximately ~~$14.0~~$17 to $20 million. Absent any material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations and borrowings available under the Credit Facility, will be sufficient to meet the cash requirements for planned capital expenditures.

Financing ActivitiesCash used byin financing activities was ~~$28.5~~$48.3 million during the firsttwenty-six weeks of fiscal ~~2018~~2020 compared to ~~$56.0~~$37.9 million for the same period last year. We paid ~~$28.4~~$57.3 million of dividends in the first half of fiscal ~~2018~~2020 compared to ~~$56.5~~$29.1 million during the same period last year. Net borrowings under our Credit Facility were $13.5 million during the first half of fiscal 2020 compared to net repayments of $6.7 million for the first half of fiscal 2019. The increase in short term borrowings under our Credit Facility was due to higher dividends paid in fiscal 2020 and was partially offset by an increased operating cash flows.

Real Estate Matters

In August 2008, we completed the consolidation of our Chicago-based facilities into the Elgin Site. The Elgin Site includes both an office building and a warehouse. We are currently attempting to find additional tenants for the available space in the office building at the Elgin Site. Until additional tenant(s) are found, we will not receive the benefit of rental income associated with such space. Approximately ~~62%~~63% of the rentable area in the office building is currently vacant, of which approximately 29% has not beenbuilt-out. There can be no assurance that we will be able to lease the unoccupied space and further capital expenditures ~~may~~will likely be necessary to lease the remaining space.

Financing Arrangements

On February 7, 2008, we entered into the Credit Facility with a bank group (the “Bank Lenders”) providing a $117.5 million revolving loan commitment and letter of credit subfacility. Also on February 7, 2008, we entered into a Loan Agreement with an insurance company (the “Mortgage Lender”) providing us with two term loans, one in the amount of $36.0 million (“Tranche A”) and the other in the amount of $9.0 million (“Tranche B”), for an aggregate amount of $45.0 million (the “Mortgage Facility”).

On November 29, 2017, we entered into the Consent and Ninth Amendment to our Credit Agreement (the “Ninth Amendment”) which provided lender consent to incur unsecured debt in connection with our acquisition of the assets of the Squirrel Brand business, and for the acquisition of the Squirrel Brand business to constitute a “Permitted Acquisition” under the terms of the Credit Facility. The Ninth Amendment also modified our collateral reporting requirements.

The Credit Facility, as most recently amended in November 2017, is secured by substantially all of our assets other than machinery and equipment, real property, and fixtures and matures on July 7, 2021. The Mortgage Facility is secured by mortgages on essentially all of our owned real property located in Elgin, Illinois, Gustine, California and Garysburg, North Carolina (the “Encumbered Properties”).

Credit Facility

At our election, borrowings under the Credit Facility currently accrue interest at either (i) a rate determined pursuant to the administrative agent’s prime rate plus an applicable margin determined by reference to the amount of loans which may be advanced under the borrowing base calculation, ranging from 0.25% to 0.75% or (ii) a rate based upon the London interbank offered rate (“LIBOR”) plus an applicable margin based upon the borrowing base calculation, ranging from 1.25% to 1.75%.

At December ~~28, 2017,~~26, 2019, the weighted average interest rate for the Credit Facility was ~~3.00%~~3.8%. The terms of the Credit Facility contain covenants that, among other things, require us to restrict investments, indebtedness, acquisitions and certain sales of assets and limit annual cash dividends or distributions, transactions with affiliates, redemptions of capital stock and prepayment of indebtedness (if such prepayment, among other things, is of a subordinate debt). If loan availability under the borrowing base calculation falls below $25.0 million, we will be required to maintain a specified fixed charge coverage ratio, tested on a monthly basis, until loan availability equals or exceeds $25.0 million for three consecutive months. All cash received from customers is required to be applied against the Credit Facility. The Bank Lenders have the option to accelerate and demand immediate repayment of our obligations under the Credit Facility in the event of default on the payments required under the Credit Facility, a change in control in the ownership of the Company,non-compliance with the financial covenant or upon the occurrence of other defaults by us under the Credit Facility (including a default under the Mortgage Facility). As of December ~~28, 2017,~~26, 2019, we were in compliance with all covenants under the Credit Facility and we currently expect to be in compliance with the financial covenant in the Credit Facility for the foreseeable future. At December ~~28, 2017,~~26, 2019, we had ~~$83.8~~$100.8 million of available credit under the Credit Facility. If this entire amount were borrowed at December ~~28, 2017,~~26, 2019, we would still be in compliance with all restrictive covenants under the Credit Facility.

We are currently updating the Credit Facility agreement and expect the term to extend another five years. The legal costs incurred to date have been capitalized and will be amortized over the length of the new agreement.

Mortgage Facility

The Mortgage Facility matures on March 1, 2023. ~~Tranche A under~~On March 1, 2018 the interest rate on the Mortgage Facility ~~currently accrues interest~~was fixed at ~~a fixed interest rate of 7.63%~~4.25% per annum ~~payable monthly.~~for the remainder of the term. Monthly principal payments on Tranche A in the amount of $0.2 million commenced on June 1, 2008. Tranche B under the Mortgage Facility currently accrues interest, as reset on March 1, 2016, at a floating rate of the greater of (i) one month LIBOR plus 3.50% per annum or (ii) 4.25%, payable monthly (the “Floating Rate”). Monthly principal payments on Tranche B in the amount of $0.1 million commenced on June 1, 2008.

~~In January 2018 we locked the interest rates for both Tranche A and Tranche B at 4.25% beginning March 1, 2018 through March 1, 2023.~~

The terms of the Mortgage Facility contain covenants that require us to maintain a specified net worth of $110.0 million and maintain the Encumbered Properties. The Mortgage Lender is entitled to require immediate repayment of our obligations under the Mortgage Facility in the event we default in the payments required under the Mortgage Facility,non-compliance with the covenants or upon the occurrence of certain other defaults by us under the Mortgage Facility. As of December ~~28, 2017,~~26, 2019, we were in compliance with all covenants under the Mortgage Facility.

Selma Property

In September 2006, we sold our Selma, Texas properties (the “Selma Properties”) to two related party partnerships for $14.3 million and are leasing them back. The selling price was determined by an independent appraiser to be the fair market value which also approximated our carrying value. The lease for the Selma Properties has aten-year term at a fair market value rent with threefive-year renewal options. In September 2015, we exercised two of the five-year renewal options which extended the lease term to September 2026. The lease extension also reduced the monthly lease payment on the Selma Properties, beginning in September 2016, to reflect then current market conditions. One five-year renewal option remains. Also, we have an option to purchase the Selma Properties from the owner at 95% (100% in certain circumstances) of the then fair market value, but not less than the original $14.3 million purchase price. The provisions of the arrangement are not eligible for sale-leaseback accounting and the $14.3 million was recorded as a debt obligation. No gain or loss was recorded on the Selma Properties transaction. As of December ~~28, 2017, $10.8~~26, 2019, $9.8 million of the debt obligation was outstanding.

Squirrel Brand Seller-Financed Note

In November 2017 we completed the ~~Squirrel Brand acquisition.~~Acquisition. The ~~acquisition~~Acquisition was financed by a combination of cash (drawn under the Credit Facility) and a three-year seller-financed note for $11.5 million (“Promissory Note”). The principal owner and seller of the Squirrel Brand business was subsequently appointed as an executive officer of the Company and was considered a related party until the employment of this executive officer with the Company ceased late in the second quarter of fiscal 2020. The Promissory Note is unsecured, bears interest at 5.5% per annum and is payable in equal monthly principal payments of $0.3 million, plus interest, ~~beginning~~which began in January 2018. Upon an event of default, as defined in the Promissory Note, the interest rate increases to 7.5% until such event of default is cured. We ~~have the ability to~~canpre-pay the Promissory Note at any time during the three-year period without penalty. At December ~~28, 2017,~~26, 2019, the principal amount of ~~$11.2~~$3.5 million of the Promissory Note was outstanding.

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form~~Form~~ 10-K for the fiscal year ended June ~~29, 2017.~~27, 2019.

Recent Accounting Pronouncements

Refer to Note 15 – “Recent Accounting Pronouncements” of the Notes to Consolidated Financial Statements, contained in Part I, Item 1 of this form10-Q, for a discussion of recently issued and adopted accounting ~~pronouncements.~~pronouncements

FORWARD LOOKING STATEMENTS

Some of the statements in this report are forward-looking (including statements concerning our expectations regarding market risk and the impact of the purchasing decisions of major customers). These forward-looking statements may be generally identified by the use of forward-looking words and phrases such as “will”, “intends”, “may”, “believes”, “anticipates”, “should” and “expects” and are based on the Company’s current expectations or beliefs concerning future events and involve risks and uncertainties. Consequently, the Company’s actual results could differ materially. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors that affect the subject of these statements, except where expressly required to do so by law. Among the factors that could cause results to differ materially from current expectations are: (i) the risks associated with our vertically integrated model with respect to pecans, peanuts and walnuts; (ii) sales activity for the Company’s products, such as a decline in sales (of branded products, private label products or otherwise) to one or more key customers, a change in product mix to lower price products, a decline in sales of private brand products or changing consumer preferences, including a shift from higher margin products to lower margin products; (iii) changes in the availability and costs of raw materials and the impact of fixed price commitments with customers; (iv) the ability to pass on price increases to customers if commodity costs rise and the potential for a negative impact on demand for, and sales of, our products from price increases; (v) the ability to measure and estimate bulk inventory, fluctuations in the value and quantity of the Company’s nut inventories due to fluctuations in the market prices of nuts and bulk inventory estimation adjustments, respectively; (vi) the Company’s ability to appropriately respond to, or lessen the negative impact of, competitive and pricing ~~pressures;~~pressures, including competition in the recipe nut category; (vii) losses associated with product recalls, product contamination, food labeling or other food safety issues, or the potential for lost sales or product liability if customers lose confidence in the safety of the Company’s products or in nuts or nut products in general, or are harmed as a result of using the Company’s products; (viii) the ability of the Company to control expenses, such as compensation, medical and administrative expense; (ix) the potential negative impact of government regulations and laws and regulations pertaining to food safety, such as the Food Safety Modernization Act; (x) uncertainty in economic conditions, including the potential for economic downturn; (xi) the timing and occurrence (or nonoccurrence) of other transactions and events which may be subject to circumstances beyond the Company’s control; (xii) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (xiii) losses due to significant disruptions at any of our production or processing facilities; (xiv) the inability to implement our Strategic Plan, including growing our branded and private brand product sales and expanding into alternative sales channels; (xv) technology disruptions or failures; (xvi) the inability to protect the Company’s brand value, intellectual property or avoid intellectual property disputes; and (xvii) the Company’s ability to manage successfully the price gap between its private brand products and those of its branded ~~competitors; and (xiii) potential increased industry-specific regulation pending the U.S. Food and Drug Administration assessment of the risk of Salmonella contamination associated with tree nuts.~~competitors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in our assessment of our sensitivity to market risk since our presentation set forth in Part ~~I –~~ I—Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form10-K for the fiscal year ended June ~~29, 2017.~~27, 2019.

Item 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule13a-15(e)) as of December ~~28, 2017.~~26, 2019. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December ~~28, 2017,~~26, 2019, the Company’s disclosure controls and procedures were effective.

In connection with the evaluation by our management, including our Chief Executive Officer and Chief Financial Officer, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule13a-15(f)) during the quarter ended December ~~28, 2017~~26, 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of legal proceedings, see Note 1211 – “Commitments and Contingent Liabilities” in Part I, Item 1 of this Form~~Form~~ 10-Q.

Item 1A. Risk Factors

In addition to the other information set forth in this report on Form10-Q, you should also consider the factors, risks and uncertainties which could materially affect our Company’s business, financial condition or future results as discussed in Part I, Item 1A – “Risk Factors” of our Annual Report on Form10-K for the fiscal year ended June ~~29, 2017.~~27, 2019. There were no significant changes to the risk factors identified on the Form10-K for the fiscal year ended June ~~29, 2017~~27, 2019 during the second quarter of fiscal ~~2018.~~2020.

See Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Form10-Q, and see Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in the Company’s Annual Report on Form10-K for the fiscal year ended June ~~29, 2017.~~27, 2019.

Item 6. Exhibits

The exhibits filed herewith are listed in the exhibit index below.

EXHIBIT INDEX

(Pursuant to Item 601 of RegulationS-K)


Exhibit No.		Description

3.1		Restated Certificate of Incorporation of the Company (incorporated by reference from Exhibit 3.1 to the Form~~Form~~ 10-Q for the quarter ended March 24, 2005)

3.2		Amended and Restated Bylaws of the Company (incorporated by reference from Exhibit 3.2 to the Form~~Form~~ 10-K for the fiscal year ended June 25, 2015)

*10.1		1998 Equity Incentive Plan (incorporated by reference from Exhibit 10 to the Form10-Q for the quarter ended September 24, 1998)

*10.2		First Amendment to the 1998 Equity Incentive Plan (incorporated by reference from Exhibit 10.35 to the Form~~Form~~ 10-Q for the quarter ended December 28, 2000)

*10.3		~~Form of Option Grant Agreement under the 1998 Equity Incentive Plan (incorporated by reference from Exhibit 10.57 to the Form10-K~~ ~~for the fiscal year ended June 30, 2005)~~

*10.4		Amended and Restated John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement Number Two among Michael J. Valentine, as trustee of the Valentine Life Insurance Trust, Mathias Valentine, Mary Valentine and the Company, dated December 31, 2003 (incorporated by reference from Exhibit 10.35 to the Form10-Q for the quarter ended December 25, 2003)

*~~10.5~~ 10.4		Amendment, dated February 12, 2004, to Amended and Restated John B. Sanfilippo & Son, Inc. Split-Dollar Insurance Agreement Number Two among Michael J. Valentine, as trustee of the Valentine Life Insurance Trust, Mathias Valentine, Mary Valentine and the Company, dated December 31, 2003 (incorporated by reference from Exhibit 10.47 to the Form10-Q for the quarter ended March 25, 2004)

*~~10.6~~ 10.5		Restated Supplemental Retirement Plan (incorporated by reference from Exhibit 10.16 to the Form10-K for the fiscal year ended June 28, 2007)

~~Exhibit No.~~
~~Description~~
*~~10.7~~
10.6    2008 Equity Incentive Plan, as amended (incorporated by reference from Exhibit 10.24 to the Form10-K for the fiscal year ended June 28, 2012)
*~~10.8~~
~~Form of Employee Restricted Stock Unit Award Agreement under 2008 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to the Form8-K~~ ~~filed on November 12, 2009)~~
*10.9
~~Form ofNon-Employee~~ ~~Director Restricted Stock Unit Award Agreement under 2008 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to the Form8-K~~ ~~filed on November 8, 2010)~~
*10.10
10.7    Form of Indemnification Agreement (incorporated by reference from Exhibit 10.01 to the Form8-K filed on May 5, 2009)
*~~10.11~~
10.8    2014 Omnibus Incentive Plan (incorporated by reference from Exhibit 4.1 to the Registration Statement on Form~~Form~~ S-8 filed on October 28, 2014)


Exhibit No.		Description

*~~10.12~~ 10.9		Amendment No. 1 to the 2014 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.12 to the Form~~Form~~ 10-K for the year ended June 30, 2016)

*~~10.13~~ 10.10		Form ofNon-Employee Director Restricted Stock Unit Award Agreement(non-deferral) under 2014 Omnibus Plan (fiscal ~~2015 awards cycle) (incorporated by reference from Exhibit 10.35 to the Form10-Q~~ ~~for the quarter ended September 25, 2014)~~

*10.14		~~Form ofNon-Employee~~ ~~Director Restricted Stock Unit Award Agreement (deferral) under 2014 Omnibus Plan (fiscal 2015 awards cycle) (incorporated by reference from Exhibit 10.36 to the Form10-Q~~ ~~for the quarter ended September 25, 2014)~~

*10.15		~~Form of Employee Restricted Stock Unit Award Agreement under 2014 Omnibus Plan (fiscal 2015 awards cycle) (incorporated by reference from Exhibit 10.37 to the Form10-Q~~ ~~for the quarter ended September 25, 2014)~~


Exhibit No.		Description

~~10.24~~ 10.16		Security Agreement, dated as of February 7, 2008, by the Company in favor of WFF, as administrative agent for the Lenders (incorporated by reference from Exhibit 10.2 to the Form8-K filed on February 8, 2008)

~~10.25~~ 10.17		Loan Agreement, dated as of February 7, 2008, by and between the Company and Transamerica Financial Life Insurance Company (“TFLIC”) (incorporated by reference from Exhibit 10.3 to the Form8-K filed on February 8, 2008)

~~10.26~~ 10.18		First Amendment to Credit Agreement, dated as of March 8, 2010, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent and Burdale Financial Limited, as a lender (incorporated by reference from Exhibit 10.19 to the Form10-K filed on August 23, 2017)

~~10.27~~ 10.19		Second Amendment to Credit Agreement, dated as of July 15, 2011, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent, and Southwest Georgia Farm Credit, ACA for itself and as agent/nominee for Southwest Georgia Farm Credit, FLCA, as a lender (incorporated by reference from Exhibit 10.1 to the Form8-K filed on July 18, 2011)

~~10.28~~ 10.20		Third Amendment to Credit Agreement, dated as of October 31, 2011, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent, and Southwest Georgia Farm Credit, ACA, for itself and as agent/nominee for Southwest Georgia Farm Credit, FLCA, as a lender (incorporated by reference from Exhibit 10.34 to the Form10-Q for the quarter ended September 29, 2011)

~~10.29~~ 10.21		Consent and Fourth Amendment to Credit Agreement, dated as of January 22, 2013, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent, and Southwest Georgia Farm Credit, ACA, for itself and as agent/nominee for Southwest Georgia Farm Credit, FLCA, as a lender (incorporated by reference from Exhibit 99.1 to the Form8-K filed on February 4, 2013)

~~Exhibit No.~~
~~Description~~
~~10.30~~
10.22 Consent and Fifth Amendment to Credit Agreement, dated as of December 16, 2013, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent, and Southwest Georgia Farm Credit, ACA, for itself and as agent/nominee for Southwest Georgia Farm Credit, FLCA, as a lender (incorporated by reference from Exhibit 99.1 to the Form8-K filed on December 17, 2013)


Exhibit No.		Description

~~10.31~~ 10.23		Sixth Amendment to Credit Agreement, dated as of September 30, 2014, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent, and Southwest Georgia Farm Credit, ACA, as lender. (incorporated by reference from Exhibit 10.1 to the Form8-K filed on October 3, 2014)

~~10.32~~ 10.24		Seventh Amendment to Credit Agreement, dated as of July 7, 2016, by and among John B. Sanfilippo & Son, Inc., Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and the administrative agent, and Southwest Georgia Farm Credit, ACA, as a lender. (incorporated by reference from Exhibit 99.2 to the Form8-K filed on July 7, 2016)

~~10.33~~ 10.25		Eighth Amendment to Credit Agreement, dated as of July 7, 2017, by and among John B. Sanfilippo & Son, Inc., Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and the administrative agent, and Southwest Georgia Farm Credit, ACA, as a lender. (incorporated by reference from Exhibit 99.1 to the Form8-K filed on July 11, 2017)

~~10.34~~ 10.26		Consent and Ninth Amendment to Credit Agreement dated as of November 29, 2017, by and among John B. Sanfilippo & Son, Inc., Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and the administrative agent, and Southwest Georgia Farm Credit, ACA, as a lender. (incorporated by reference from Exhibit 99.1 to the Form~~Form~~ 8-K filed on November 30, 2017)

~~10.35~~ 10.27		First Amendment to Security Agreement, dated as of September 30, 2014, by the Company in favor of Wells Fargo Capital Finance, LLC (f/k/a WFF), as administrative agent for the lenders. (incorporated by reference from Exhibit 10.2 to the Form8-K filed on October 3, 2014)

*~~10.36~~ 10.28		Employment agreement, dated as of November 30, 2017, by and between the Company and J. Brent Meyer (incorporated by reference from Exhibit 10.36 to the Form10-Q for the quarter ended December 28, 2017)

*10.29		Separation Agreement, dated as of December 10, 2019, by and between the Company and J. Brent Meyer (filed herewith)

31.1		Certification of Jeffrey T. Sanfilippo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended

~~Exhibit No.~~
~~Description~~
  31.2
   Certification of Michael J. Valentine pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
  32.1
   Certification of Jeffrey T. Sanfilippo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended


Exhibit No.		Description

32.2		Certification of Michael J. Valentine pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Indicates a management contract or compensatory plan or arrangement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on ~~February 5, 2018.~~January 30, 2020.


JOHN B. SANFILIPPO & SON, INC.

By

		/s/ MICHAEL J. VALENTINE
		Michael J. Valentine
		Chief Financial Officer, Group President and Secretary


Accounts receivable	$	2,446
Inventories		1,957
Other assets		75
Identifiable intangible assets:
Customer relationships		10,500
Brand names		8,900
Non-compete agreement		270
Goodwill		9,638
Accounts payable and accrued expenses		(377	)

Total Purchase Price	$	33,409


	Year-Ended June 29, 2017		Twenty-six weeks ended December 28, 2017
Pro forma net sales	$	863,267	$	479,054
Pro forma net income		36,723		18,762
Pro forma diluted earnings per share	$	3.22	$	1.64


Net balance at June 29, 2017	$	—
Goodwill acquired during the period		9,638

Net balance at December 28, 2017	$	9,638


~~Exhibit No.~~		~~Description~~

*~~10.7~~ 10.6		2008 Equity Incentive Plan, as amended (incorporated by reference from Exhibit 10.24 to the Form10-K for the fiscal year ended June 28, 2012)

*~~10.8~~		~~Form of Employee Restricted Stock Unit Award Agreement under 2008 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to the Form8-K~~ ~~filed on November 12, 2009)~~

*10.9		~~Form ofNon-Employee~~ ~~Director Restricted Stock Unit Award Agreement under 2008 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to the Form8-K~~ ~~filed on November 8, 2010)~~

*10.10 10.7		Form of Indemnification Agreement (incorporated by reference from Exhibit 10.01 to the Form8-K filed on May 5, 2009)

*~~10.11~~ 10.8		2014 Omnibus Incentive Plan (incorporated by reference from Exhibit 4.1 to the Registration Statement on Form~~Form~~ S-8 filed on October 28, 2014)


~~Exhibit No.~~		~~Description~~

*10.16		~~Form ofNon-Employee~~ ~~Director Restricted Stock Unit Award Agreement(non-deferral)~~ ~~under 2014 Omnibus Plan (fiscal 2016,~~ 2017, 2018, 2019 and ~~2018~~2020 awards cycle) (incorporated by reference from Exhibit 10.38 to the Form10-Q for the quarter ended December 24, 2015)

*~~10.17~~ 10.11		Form ofNon-Employee Director Restricted Stock Unit Award Agreement (deferral) under 2014 Omnibus Plan (fiscal ~~2016,~~ 2017, 2018, 2019 and ~~2018~~2020 awards cycle) (incorporated by reference from Exhibit 10.39 to the Form10-Q for the quarter ended December 24, 2015)

*~~10.18~~		~~Form of Employee Restricted Stock Unit Award Agreement under 2014 Omnibus Plan (fiscal 2016 awards cycle) (incorporated by reference from Exhibit 10.40 to the Form10-Q~~ ~~for the quarter ended December 24, 2015)~~

*10.19 10.12		Form of Employee Restricted Stock Unit Award Agreement under 2014 Omnibus Plan (fiscal 2017 awards cycle) (incorporated by reference from Exhibit 10.19 to the Form10-Q for the quarter ended December ~~26,~~29, 2016)

*~~10.20~~ 10.13		Form of Employee Restricted Stock Unit Award Agreement under 2014 Omnibus Plan (fiscal 2018, 2019 and 2020 awards cycle) ~~(filed herewith)~~(incorporated by reference from Exhibit 10.20 to the Form10-Q for the quarter ended December 28, 2017)

*~~10.21~~		~~Retirement Agreement and General Release with Walter “Bobby” Tankersley, effective August 25, 2016 (incorporated by reference from Exhibit 10.19 to the Form10-K~~ ~~for the year ended June 30, 2016)~~

*10.22 10.14		Amended and Restated Sanfilippo Value Added Plan, dated August 20, 2015 (incorporated by reference from Exhibit 10.11 to the Form10-K for the year ended June 25, 2015)

~~10.23~~ 10.15		Credit Agreement, dated as of February 7, 2008, by and among the Company, the financial institutions named therein as lenders, Wells Fargo Foothill, LLC (“WFF”), as the arranger and administrative agent for the lenders, and Wachovia Capital Finance Corporation (Central), in its capacity as documentation agent (incorporated by reference from Exhibit 10.1 to the Form~~Form~~ 8-K filed on February 8, 2008)


~~Exhibit No.~~		~~Description~~

~~10.30~~ 10.22		Consent and Fifth Amendment to Credit Agreement, dated as of December 16, 2013, by and among the Company, Wells Fargo Capital Finance, LLC (f/k/a WFF), as a lender and administrative agent, and Southwest Georgia Farm Credit, ACA, for itself and as agent/nominee for Southwest Georgia Farm Credit, FLCA, as a lender (incorporated by reference from Exhibit 99.1 to the Form8-K filed on December 17, 2013)


~~Exhibit No.~~		~~Description~~

31.2		Certification of Michael J. Valentine pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended

32.1		Certification of Jeffrey T. Sanfilippo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended

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