UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-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 ~~26, 2019~~

24, 2020

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

Commission File Number

0-19681

JOHN B. SANFILIPPO & SON, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		36-2419677
(State or Other Jurisdiction 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)

~~(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~~ (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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act. (Check One)


Large accelerated filer	☐☒	Accelerated filer	☒☐

Non-accelerated filer	☐	Smaller reporting company	☐


		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 Rule

12b-2

of the Exchange Act). ☐ Yes ☒ No

As of January ~~23, 2020, 8,821,490~~21, 2021, 8,868,587 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.

Table of Contents

JOHN B. SANFILIPPO & SON, INC.

FORM

10-Q

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

24, 2020

INDEX


	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Comprehensive Income for the Quarter andTwenty-Six Weeks Ended December ~~26, 2019~~24, 2020 and December ~~27, 2018~~26, 2019		3
Consolidated Balance Sheets as of December ~~26, 2019,~~24, 2020, June ~~27, 2019~~25, 2020 and December ~~27, 2018~~26, 2019		4
Consolidated Statements of Stockholders’ Equity for the Quarter andTwenty-Six Weeks Ended December ~~26, 2019~~24, 2020 and December ~~27, 2018~~26, 2019		6
Consolidated Statements of Cash Flows for theTwenty-Six Weeks Ended December ~~26, 2019~~24, 2020 and December ~~27, 2018~~26, 2019		7
Notes to Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1918
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		29
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		29
Item 1A. Risk Factors		29
Item 6. Exhibits		2930
SIGNATURE		3533

Table of Contents

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 theTwenty-six Weeks
Ended
   December 26,
2019 December 27,
2018 December 26,
2019 December 27,
2018
Net sales
   $ 246,423 $ 253,317 $ 464,269 $ 457,605
Cost of sales
   196,443 210,434 372,041 381,768


Gross profit
   49,980 42,883 92,228 75,837


Operating expenses:

Selling expenses
   16,103 18,189 30,215 32,260
Administrative expenses
   9,411 8,054 18,485 16,885


Total operating expenses
   25,514 26,243 48,700 49,145


Income from operations
   24,466 16,640 43,528 26,692


Other expense:

Interest expense including $232, $293, $479 and $602 to related parties
   435 798 956 1,677
Rental and miscellaneous expense, net
   274 278 678 567
Other expense
   567 486 1,133 973


Total other expense, net
   1,276 1,562 2,767 3,217


Income before income taxes
   23,190 15,078 40,761 23,475
Income tax expense
   5,729 3,814 10,374 5,605


Net income
   $ 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
   344 263 687 526
Income tax expense related to pension adjustments
   (86 ) (66 ) (172 ) (132 )


Other comprehensive income, net of tax
   258 197 515 394


Comprehensive income
   $ 17,719 $ 11,461 $ 30,902 $ 18,264


Net income per common share-basic
   $ 1.52 $ 0.99 $ 2.65 $ 1.57


Net income per common share-diluted
   $ 1.52 $ 0.98 $ 2.64 $ 1.56

For the Quarter Ended

For the
Twenty-six
Weeks
Ended


December 24,

2020

December 26,

2019

December 24,
2020

December 26,
2019

Net sales
   $ 233,575 $ 246,423 $ 443,848 $ 464,269
Cost of sales
   180,780 196,443 351,721 372,041

Gross profit
   52,795 49,980 92,127 92,228

Operating expenses:

Selling expenses
   17,694 16,103 29,778 30,215
Administrative expenses
   7,305 9,411 15,680 18,485

Total operating expenses
   24,999 25,514 45,458 48,700

Income from operations
   27,796 24,466 46,669 43,528

Other expense:

Interest expense including $165, $232, $332 and $479 to related parties
   376 435 826 956
Rental and miscellaneous expense, net
   365 274 797 678
Other expense
   629 567 1,259 1,133

Total other expense, net
   1,370 1,276 2,882 2,767

Income before income taxes
   26,426 23,190 43,787 40,761
Income tax expense
   6,541 5,729 11,090 10,374

Net income
   $ 19,885 $ 17,461 $ 32,697 $ 30,387
Other comprehensive income:

Amortization of prior service cost and actuarial loss included in net periodic pension cost
   414 344 830 687
Income tax expense related to pension adjustments
   (103 ) (86 ) (207 ) (172 )

Other comprehensive income, net of tax
   311 258 623 515

Comprehensive income
   $ 20,196 $ 17,719 $ 33,320 $ 30,902

Net income per common share-basic
   $ 1.73 $ 1.52 $ 2.85 $ 2.65

Net income per common share-diluted
   $ 1.72 $ 1.52 $ 2.83 $ 2.64

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

Table of Contents

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

   December 26,
2019    June 27,
2019    December 27,
2018
ASSETS

CURRENT ASSETS:

Cash
   $ 1,393    $ 1,591    $ 2,583
Accounts receivable, less allowance for doubtful accounts of $425, $350 and $342
   52,653    60,971    62,580
Inventories
   172,340    157,024    171,708
Prepaid expenses and other current assets
   5,992    5,754    6,943






TOTAL CURRENT ASSETS
   232,378    225,340    243,814






PROPERTY, PLANT AND EQUIPMENT:

Land
   9,285    9,285    9,285
Buildings
   109,671    109,955    109,380
Machinery and equipment
   212,532    210,962    206,663
Furniture and leasehold improvements
   5,160    5,128    5,039
Vehicles
   682    673    641
Construction in progress
   3,817    1,127    2,563






   341,147    337,130    333,571
Less: Accumulated depreciation
   233,825    228,778    222,976






   107,322    108,352    110,595
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
   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
   9,124    9,782    8,743
Deferred income taxes
   5,616    5,723    4,591
Goodwill
   9,650    9,650    9,650
Operating leaseright-of-use assets
   4,823    —      —






TOTAL ASSETS
   $ 399,703    $ 391,304    $ 411,429

December 24,

2020

June 25,

2020

December 26,

2019

ASSETS

CURRENT ASSETS:

Cash
   $ 1,763    $ 1,535    $ 1,393
Accounts receivable, less allowance for doubtful accounts of $325, $391 and $425
   60,495    56,953    52,653
Inventories
   155,371    172,068    172,340
Prepaid expenses and other current assets
   9,872    8,315    5,992

TOTAL CURRENT ASSETS
   227,501    238,871    232,378

PROPERTY, PLANT AND EQUIPMENT:

Land
   9,277    9,285    9,285
Buildings
   110,611    110,294    109,671
Machinery and equipment
   224,458    218,021    212,532
Furniture and leasehold improvements
   5,199    5,179    5,160
Vehicles
   642    682    682
Construction in progress
   6,577    2,244    3,817

   356,764    345,705    341,147
Less: Accumulated depreciation
   244,447    239,013    233,825

   112,317    106,692    107,322
Rental investment property, less accumulated depreciation of $12,422, $12,018 and $11,615
   16,701    17,105    17,508

TOTAL PROPERTY, PLANT AND EQUIPMENT
   129,018    123,797    124,830

Intangible assets, net
   10,968    12,125    13,282
Cash surrender value of officers’ life insurance and other assets
   9,017    11,875    9,124
Deferred income taxes
   7,288    6,788    5,616
Goodwill
   9,650    9,650    9,650
Operating lease
right-of-use
assets
   4,119    4,351    4,823

TOTAL ASSETS
   $ 397,561    $ 407,457    $ 399,703

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

Table of Contents

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

   December 26,
2019 June 27,
2019 December 27,
2018
LIABILITIES & STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Revolving credit facility borrowings
   $ 13,495 $ —   $ 24,541
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
   1,349 901 3,887
Accrued payroll and related benefits
   13,429 22,101 10,293
Other accrued expenses
   11,374 11,014 9,808


TOTAL CURRENT LIABILITIES
   117,736 83,906 125,515


LONG-TERM LIABILITIES:

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
   25,212 24,737 21,713
Long-term operating lease liabilities, net of current portion
   3,456 —   —
Other
   7,786 7,725 7,121


TOTAL LONG-TERM LIABILITIES
   53,051 52,843 52,541


TOTAL LIABILITIES
   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
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
   122,984 122,257 121,133
Retained earnings
   111,807 137,712 116,116
Accumulated other comprehensive loss
   (4,786 ) (4,325 ) (2,787 )
Treasury stock, at cost; 117,900 shares of Common Stock
   (1,204 ) (1,204 ) (1,204 )


TOTAL STOCKHOLDERS’ EQUITY
   228,916 254,555 233,373


TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
   $ 399,703 $ 391,304 $ 411,429

December 24,

2020

June 25,

2020

December 26,

2019

LIABILITIES & STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Revolving credit facility borrowings
   $ 9,169 $ 27,008 $ 13,495
Current maturities of long-term debt, including related party debt of $605, $585 and $565 and net of unamortized debt issuance costs of $20, $25 and $30
   3,780 5,285 7,110
Accounts payable
   52,140 36,323 70,979
Bank overdraft
   1,510 2,041 1,349
Accrued payroll and related benefits
   13,470 25,641 13,429
Other accrued expenses
   10,907 10,729 11,027
Income taxes payable
   7,012 5,141 347

TOTAL CURRENT LIABILITIES
   97,988 112,168 117,736

LONG-TERM LIABILITIES:

Long-term debt, less current maturities, including related party debt of $8,639, $8,947 and $9,244 and net of unamortized debt issuance costs of $10, $19 and $30
   12,817 14,730 16,597
Retirement plan
   32,146 31,573 25,212
Long-term operating lease liabilities, net of current portion
   2,704 2,990 3,456
Other
   7,899 7,758 7,786

TOTAL LONG-TERM LIABILITIES
   55,566 57,051 53,051

TOTAL LIABILITIES
   153,554 169,219 170,787

COMMITMENTS AND CONTINGENCIES
   0 0 0
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
Common Stock,
non-cumulative
voting rights of one vote per share, $.01 par value; 17,000,000 shares authorized, 8,983,588, 8,939,890 and 8,937,236 shares issued
   90 89 89
Capital in excess of par value
   125,032 123,899 122,984
Retained earnings
   128,070 124,058 111,807
Accumulated other comprehensive loss
   (8,007 ) (8,630 ) (4,786 )
Treasury stock, at cost; 117,900 shares of Common Stock
   (1,204 ) (1,204 ) (1,204 )

TOTAL STOCKHOLDERS’ EQUITY
   244,007 238,238 228,916

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
   $ 397,561 $ 407,457 $ 399,703

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

Table of Contents

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 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 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.~~

Class A Common
Stock

Common Stock

Capital in
Excess of
Par Value

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock


Shares

Amount

Shares

Amount

Total

Balance, June 25, 2020
   2,597,426    $ 26    8,939,890    $ 89    $ 123,899 $ 124,058 $ (8,630 ) $ (1,204 ) $ 238,238
Net income
               12,812 12,812
Cash dividends ($2.50 per share)
               (28,685 ) (28,685 )
Pension liability amortization, net of income tax expense of $104
               312 312
Equity award exercises
         221    0      0   0
Stock-based compensation expense
               622 622
Balance, September 24, 2020
   2,597,426    $ 26    8,940,111    $ 89    $ 124,521 $ 108,185 $ (8,318 ) $ (1,204 ) $ 223,299
Net income
               19,885 19,885
Pension liability amortization, net of income tax expense of $103
               311 311
Equity award exercises, net of shares withheld for employee taxes
         43,477    1    (487 ) (486 )
Stock-based compensation expense
               998 998

Balance, December 24, 2020
   2,597,426    $ 26    8,983,588    $ 90    $ 125,032 $ 128,070 $ (8,007 ) $ (1,204 ) $ 244,007


Class A Common
Stock

Common Stock

Capital in
Excess of
Par Value

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock


Shares

Amount

Shares

Amount

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 ASU
2018-02
               976 (976 ) 0
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    0      (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

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

Table of Contents

JOHN B. SANFILIPPO & SON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

   For the Twenty-six Weeks Ended
   December 26,
2019 December 27,
2018
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
   $ 30,387 $ 17,870
Depreciation and amortization
   9,225 8,535
(Gain) loss on disposition of assets, net
   (33 ) 57
Deferred income tax expense
   107 433
Stock-based compensation expense
   1,488 1,516
Change in assets and liabilities:

Accounts receivable, net
   8,316 3,041
Inventories
   (15,316 ) 2,654
Prepaid expenses and other current assets
   (345 ) (1,659 )
Accounts payable
   28,486 9,655
Accrued expenses
   (8,964 ) 2,833
Income taxes payable
   (640 ) 2,285
Other long-term assets and liabilities
   582 261
Other, net
   992 885


Net cash provided by operating activities
   54,285 48,366


CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment
   (6,465 ) (9,367 )
Proceeds from insurance recoveries
   232 —
Other
   85 44


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


CASH FLOWS FROM FINANCING ACTIVITIES:

Net short-term borrowings (repayments)
   13,495 (6,737 )
Debt issue costs
   (218 ) —
Principal payments on long-term debt
   (4,031 ) (3,588 )
Increase in bank overdraft
   448 1,825
Dividends paid
   (57,268 ) (29,074 )
Taxes paid related to net share settlement of equity awards
   (761 ) (335 )


Net cash used in financing activities
   (48,335 ) (37,909 )


NET (DECREASE) INCREASE IN CASH
   (198 ) 1,134
Cash, beginning of period
   1,591 1,449


Cash, end of period
   $ 1,393 $ 2,583


Supplemental disclosure ofnon-cash activities:

Right-of-use assets recognized at ASUNo. 2016-02 transition, see Note 3
   $ 5,361 $ —

For the Twenty-six Weeks Ended


December 24,
2020
��
December 26,
2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income
   $ 32,697 $ 30,387
Depreciation and amortization
   9,089 9,225
Gain on disposition of assets, net
   (2,530 ) (33 )
Deferred income tax (benefit) expense
   (500 ) 107
Stock-based compensation expense
   1,620 1,488
Change in assets and liabilities:

Accounts receivable, net
   (1,247 ) 8,316
Inventories
   16,697 (15,316 )
Prepaid expenses and other current assets
   (1,557 ) (345 )
Accounts payable
   16,244 28,486
Accrued expenses
   (11,993 ) (8,964 )
Income taxes payable
   1,871 (640 )
Other long-term assets and liabilities
   344 582
Other, net
   1,200 992

Net cash provided by operating activities
   61,935 54,285

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment
   (11,121 ) (6,465 )
Proceeds from insurance recoveries
   0   232
Other
   387 85

Net cash used in investing activities
   (10,734 ) (6,148 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net short-term (repayments) borrowings
   (17,839 ) 13,495
Debt issue costs
   0   (218 )
Principal payments on long-term debt
   (3,432 ) (4,031 )
(Decrease) increase in bank overdraft
   (531 ) 448
Dividends paid
   (28,685 ) (57,268 )
Taxes paid related to net share settlement of equity awards
   (486 ) (761 )

Net cash used in financing activities
   (50,973 ) (48,335 )

NET INCREASE (DECREASE) IN CASH
   228 (198 )
Cash, beginning of period
   1,535 1,591

Cash, end of period
   $ 1,763 $ 1,393

Supplemental disclosure of
non-cash
activities:

Right-of-use
assets recognized at ASU
No. 2016-02
transition
   $ 0   $ 5,361

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

Table of Contents

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 of

fifty-two

weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:

References herein to fiscal ~~2020~~2021 and fiscal ~~2019~~2020 are to the fiscal year ending June ~~25, 2020~~24, 2021 and the fiscal year ended June ~~27, 2019,~~25, 2020, respectively.

References herein to the second quarter of fiscal ~~2020~~2021 and fiscal ~~2019~~2020 are to the quarters ended December 24, 2020 and December 26, 2019, ~~and December 27, 2018,~~ respectively.

References herein to the first half or first

twenty-six

weeks of fiscal ~~2020~~2021 and fiscal ~~2019~~2020 are to the

twenty-six

weeks ended December 24, 2020 and December 26, 2019, ~~and December 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 the

Fisher, Orchard Valley Harvest,

Squirrel Brand, Southern Style Nuts

and

Sunshine Country

brand 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~~3 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 ~~27, 2019~~25, 2020 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 ~~2019~~2020 Annual Report on Form

10-K

for the fiscal year ended June ~~27, 2019.~~

25, 2020.

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.

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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%~~virtually all 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 our 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 no0 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.for any periods presented. 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


	For the Quarter Ended				For the Twenty-six Weeks Ended
Distribution Channel	December 24, 2020		December 26, 2019		December 24, 2020		December 26, 2019
Consumer	$	192,029	$	188,086	$	358,786	$	345,232
Commercial Ingredients		20,536		34,247		43,347		71,135
Contract Packaging		21,010		24,090		41,715		47,902

Total	$	233,575	$	246,423	$	443,848	$	464,269

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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 contain

non-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 lease

right-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 lease

right-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~~5.5 years.

~~Topic 842 allows for the election as an~~

It is our 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~~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 and

non-lease

components for all leases.

The following table provides supplemental information related to operating lease

right-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


	December 24, 2020		June 25, 2020		December 26, 2019		Affected Line Item in Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	$	4,119	$	4,351	$	4,823	Operating lease right-of-use assets

Total lease right-of-use assets	$	4,119	$	4,351	$	4,823

Liabilities
Current:
Operating leases	$	1,429	$	1,376	$	1,354	Other accrued expenses
Noncurrent:
Operating leases		2,704		2,990		3,456	Long-term operating lease liabilities

Total lease liabilities	$	4,133	$	4,366	$	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


	For the Quarter Ended				For the Twenty-six Weeks Ended
	December 24, 2020		December 26, 2019		December 24, 2020		December 26, 2019
Operating lease costs (a)	$	477	$	460	$	950	$	834
Variable lease costs (b)		17		15		37		31

Total Lease Cost	$	494	$	475	$	987	$	865

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

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

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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 %


	For the Twenty-six Weeks Ended
	December 24, 2020		December 26, 2019
Operating cash flows information:
Cash paid for amounts included in measurements for lease liabilities	$	810	$	770
Non-cash activity:
Right-of-use assets obtained in exchange for new operating lease obligations	$	490	$	163


	December 24, 2020			June 25, 2020			December 26, 2019
Weighted Average Remaining Lease Term (in years)		3.1			3.4			3.8
Weighted Average Discount Rate		4.3	%		4.4	%		4.5	%

Maturities of operating lease liabilities as of December ~~26, 2019~~24, 2020 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~~


Fiscal year ending
June 24, 2021 (excluding the twenty-six weeks ended December 24, 2020)	$	801
June 30, 2022		1,489
June 29, 2023		1,236
June 27, 2024		593
June 26, 2025		231
June 25, 2026		59
Thereafter		0

Total lease payment		4,409
Less imputed interest		(276	)

Present value of operating lease liabilities	$	4,133

At December ~~26, 2019~~24, 2020, the Company has one additional operating ~~leases totaling $164~~lease of approximately $83 that ~~have~~has not yet commenced and therefore ~~are~~is not reflected in the Consolidated Balance Sheet and tables above. ~~These leases will~~ The lease is scheduled

commence in the third quarter of fiscal ~~2020~~2021 with an initial lease ~~terms ranging from 3 to~~term of 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 a

straight-line

basis over the terms of the leases. There is generally ~~an immaterial amount of~~no variable lease consideration and an immaterial amount of

non-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


	For the Quarter ended				For the Twenty-six weeks ended
	December 24, 2020		December 26, 2019		December 24, 2020		December 26, 2019
Lease income related to lease payments	$	452	$	462	$	903	$	1,005

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The future minimum, undiscounted fixed cash flows under

non-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

below.


Fiscal year ending
June 24, 2021 (excluding the twenty-six weeks ended December 24, 2020)	$	983
June 30, 2022		1,708
June 29, 2023		1,737
June 27, 2024		1,766
June 26, 2025		1,228
June 25, 2026		670
Thereafter		614

	$8,706

Note 4 – Inventories

Inventories consist of the following:

   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


	December 24, 2020		June 25, 2020		December 26, 2019
Raw material and supplies	$	66,793	$	69,276	$	$$		81,135
Work-in-process and finished goods		88,578		102,792		91,205

Total	$	155,371	$	172,068			$	172,340

Note 5 – Goodwill and Intangible Assets

Identifiable intangible assets that are subject to amortization consist of the following:

   December 26,
2019    June 27,
2019    December 27,
2018
Customer relationships
   $ 21,100    $ 21,100    $ 21,100
Brand names
   16,990    16,990    16,990
Non-compete agreement
   270    270    270






   38,360    38,360    38,360
Less accumulated amortization:

Customer relationships
   (15,438 )    (14,466 )    (13,494 )
Brand names
   (9,527 )    (9,182 )    (8,838 )
Non-compete agreement
   (113 )    (86 )    (58 )






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






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


	December 24, 2020			June 25, 2020			December 26, 2019
Customer relationships	$	21,100		$	21,100		$	21,100
Brand names		16,990			16,990			16,990
Non-compete agreement		270			270			270

		38,360			38,360			38,360
Less accumulated amortization:
Customer relationships		(17,008	)		(16,223	)		(15,438	)
Brand names		(10,217	)		(9,873	)		(9,527	)
Non-compete agreement		(167	)		(139	)		(113	)

		(27,392)			(26,235)			(25,078)

Net intangible assets	$	10,968		$	12,125		$	13,282

Customer relationships are being amortized on an accelerated basis. The brand names remaining to be amortized consist of the

Squirrel Brand

and

Southern Style Nuts

brand names.

Total amortization expense related to intangible assets, which is a component of Administrative expense, was ~~$672~~$579 and ~~$1,344~~$1,157 for the quarter and

twenty-six

weeks ended December ~~26, 2019,~~24, 2020, respectively. Amortization expense for the remainder of fiscal ~~2020~~2021 is expected to be approximately ~~$1,157~~$1,008 and expected amortization expense the next five fiscal years is as follows:

Fiscal year ending

June 24, 2021
   $ 2,165
June 30, 2022
   1,896
June 29, 2023
   1,657
June 27, 2024
   1,414
June 26, 2025
   1,156


Fiscal year ending
June 30, 2022	$	1,896
June 29, 2023		1,657
June 27, 2024		1,414
June 26, 2025		1,156
June 25, 2026		861

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Our net goodwill of $9,650 relates entirely to the Squirrel Brand acquisition (the “Acquisition”) completed in the second quarter of fiscal 2018. There was no change in the carrying amount of goodwill during the

twenty-six

weeks ended December ~~26, 2019.~~

24, 2020.

Note 6 – Credit Facility

~~On February 7, 2008, we entered into a~~

Our Amended and Restated Credit Agreement ~~with a bank group providing~~dated March 5, 2020 provides for a $117,500 senior secured revolving ~~loan commitment and letter of~~ credit ~~subfacility~~facility (the “Credit Facility”). The Credit Facility is secured by substantially all our assets other than machinery and equipment, real property and fixtures.

At December ~~26, 2019,~~24, 2020, we had ~~$100,830~~$105,146 of available credit under the Credit Facility which reflects borrowings of ~~$13,495~~$9,169 and reduced availability as a result of ~~$3,175~~$3,185 in outstanding letters of credit. As of December ~~26, 2019,~~24, 2020, we were in compliance with all financial covenants under the Credit Facility and Mortgage ~~Facility.~~

Facility (as defined below).

Note 7 – 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 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


	For the Quarter Ended				For the Twenty-six Weeks Ended
	December 24, 2020		December 26, 2019		December 24, 2020		December 26, 2019
Weighted average number of shares outstanding – basic		11,493,759		11,458,524		11,485,523		11,451,542
Effect of dilutive securities:
Restricted stock units		39,767		66,863		56,534		80,640

Weighted average number of shares outstanding – diluted		11,533,526		11,525,387		11,542,057		11,532,182

There were no anti-dilutive awards excluded from the computation of diluted earnings per share for any periods presented.

Note 8 – Stock-Based Compensation Plans

During the second quarter of fiscal ~~2020,~~2021, there were ~~38,572~~54,966 restricted stock units (“RSUs”) awarded to employees and

non-employee

members of the Board of Directors. The vesting period is generally three years for awards to employees and one year for awards to

non-employee

directors.

There ~~was no~~were 0 stock option grants or other option activity during the first half of fiscal ~~2020.~~

2021.

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

Restricted Stock Units
   Shares    Weighted
Average Grant
Date Fair Value
Outstanding at June 27, 2019
   188,992    $ 46.79
Activity:

Granted
   38,572    91.47
Vested^(a)
   (36,179 )    60.56
Forfeited
   (7,439 )    63.62




Outstanding at December 26, 2019
   183,946    $ 52.77

2021:


Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value
Outstanding at June 25, 2020		166,879		$	51.62
Activity:
Granted		54,966			68.97
Vested (a)		(50,602	)		47.76
Forfeited		(1,064	)		68.66

Outstanding at December 24, 2020		170,179		$	58.27

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

At December ~~26, 2019,~~24, 2020, there were ~~58,541~~52,351 RSUs outstanding that were vested but deferred.

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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 26,
2019    December 27,
2018    December 26,
2019    December 27,
2018
Stock-based compensation expense
   $ 855    $ 900    $ 1,488    $ 1,516


	For the Quarter Ended				For the Twenty-six Weeks Ended
	December 24, 2020		December 26, 2019		December 24, 2020		December 26, 2019
Stock-based compensation expense	$	998	$	855	$	1,620	$	1,488

As of December ~~26, 2019,~~24, 2020, there was ~~$5,255~~$5,406 of total unrecognized compensation expense related to

non-vested

RSUs granted under our stock-based compensation plans. We expect to recognize that cost over a weighted average period of ~~1.7~~1.8 years.

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
   December 26,
2019    December 27,
2018    December 26,
2019    December 27,
2018
Service cost
   $ 178    $ 153    $ 356    $ 305
Interest cost
   223    223    446    447
Amortization of prior service cost
   240    240    479    479
Amortization of loss
   104    23    208    47








Net periodic benefit cost
   $ 745    $ 639    $ 1,489    $ 1,278


	For the Quarter Ended				For the Twenty-six Weeks Ended
	December 24, 2020		December 26, 2019		December 24, 2020		December 26, 2019
Service cost	$	236	$	178	$	472	$	356
Interest cost		215		223		429		446
Amortization of prior service cost		119		240		239		479
Amortization of loss		295		104		591		208

Net periodic benefit cost	$	865	$	745	$	1,731	$	1,489

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.

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Note 10 – Accumulated Other Comprehensive Loss

The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for the

twenty-six

weeks ended December ~~26, 2019~~24, 2020 and December ~~27, 2018.~~26, 2019.

These changes are all related to our defined benefit pension plan.

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




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




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

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

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


	For the Twenty-Six Weeks Ended
Changes to AOCL (a)	December 24, 2020			December 26, 2019
Balance at beginning of period	$	(8,630	)	$	(4,325	)
Other comprehensive income before reclassifications		0			0
Amounts reclassified from accumulated other comprehensive loss		830			687
Tax effect		(207	)		(172	)

Net current-period other comprehensive income		623			515
Impact of adopting ASU 2018-02		0			(976	)

Balance at end of period	$	(8,007	)	$	(4,786	)

(a)

Amounts in parenthesis indicate debits/expense.

The reclassifications out of AOCL for the quarter and

twenty-six

weeks ended December ~~26, 2019~~24, 2020 and December ~~27, 2018~~26, 2019 were as follows:

   Affected line
item in
the Consolidated
Statements of
Comprehensive
Income
   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
Amortization of defined benefit pension items:

Unrecognized prior service cost
   $ (240 ) $ (240 ) $ (479 ) $ (479 ) Other expense
Unrecognized net loss
   (104 ) (23 ) (208 ) (47 ) Other expense


Total before tax
   (344 ) (263 ) (687 ) (526 )
Tax effect
   86 66 172 132 Income tax expense


Amortization of defined pension items, net of tax
   $ (258 ) $ (197 ) $ (515 ) $ (394 )

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


	For the Quarter Ended						For the Twenty-six Weeks Ended						Affected line item in the Consolidated Statements of Comprehensive Income
Reclassifications from AOCL to earnings (b)	December 24, 2020			December 26, 2019			December 24, 2020			December 26, 2019
Amortization of defined benefit pension items:
Unrecognized prior service cost	$	(119	)	$	(240	)	$	(239	)	$	(479	)	Other expense
Unrecognized net loss		(295	)		(104	)		(591	)		(208	)	Other expense

Total before tax		(414	)		(344	)		(830	)		(687	)
Tax effect		103			86			207			172		Income tax expense

Amortization of defined pension items, net of tax	$	(311	)	$	(258	)	$	(623	)	$	(515	)

(b)

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

Note 11 – 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, ~~that~~which 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.

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Note 12 – Fair Value of Financial Instruments

~~Authoritative guidance issued by the~~

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), and because of 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 26,
2019    June 27,
2019    December 27,
2018
Carrying value of long-term debt:
   $ 23,767    $ 27,798    $ 31,061
Fair value of long-term debt:
   24,164    27,720    30,176


	December 24, 2020		June 25, 2020		December 26, 2019
Carrying value of long-term debt:	$	16,627	$	20,059	$	23,767
Fair value of long-term debt:		17,180		20,186		24,164

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 13 – Related Party Transaction

In connection with the ~~Acquisition~~acquisition of the Squirrel Brand business in the second quarter of fiscal 2018, we incurred $11,500 of unsecured debt pursuant to a promissory note (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 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 not reflected as related party debt on our Consolidated Balance Sheet ~~as of December 26, 2019. Interest~~for any periods presented. There was no related party interest paid onto this former executive officer during the ~~Promissory Note for the quarter and~~

twenty-six

weeks ended December ~~26, 2019~~24, 2020, and interest paid while the former executive officer was ~~still~~ a related party was $57 and $127 ~~respectively,~~for the quarter and ~~is reflected as related party interest on our Consolidated Statements of Comprehensive Income.~~

twenty-six

weeks ended December 26, 2019, respectively.

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~~During fiscal 2020, the building and roof were repaired and brought back 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.

their original condition.

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 permanently at the Garysburg ~~facility once we have finished~~facility. We completed shelling of the ~~current~~2019 peanut crop during the

Table 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 Contents

second quarter of this fiscal ~~2020.~~

year and the facility will continue to be used to store and ship inshell peanuts through the remainder of fiscal 2021. We also expect to spend the remainder of the 2021 fiscal year cleaning and preparing the facility for sale or other utilization in our operations. Employee separation and related closure costs were immaterial for all periods presented.

We have adequate property damage and business interruption insurance in respect to this event, 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~~policies. Insurance proceeds totaling

$2,934

were received from the insurance carrier in ~~our~~fiscal 2020, and a receivable of

$2,523

for the estimated final payment was recorded in the current second quarter. Insurance proceeds received for damage to capital equipment ~~were~~are recorded as investing activities on the Consolidated Statements of Cash ~~Flows.~~

Flows when received.

Note 15 – Recent Accounting Pronouncements

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

In ~~February 2016, the FASB issued ASUNo. 2016-02~~ “~~Leases (Topic 842)~~”. The primary goal of this 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 are required. ASU~~No. 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 became effective for the Company beginning in fiscal year 2020. Under ASU~~No. 2016-02~~ ~~the guidance was to be adopted using a modified retrospective approach, with elective reliefs, with application of the new guidance for all periods presented. In July~~August 2018, the FASB issued ASU

No. ~~2018-11~~2018-15

“~~Leases (Topic 842)~~

Intangibles – Goodwill and Other –
Internal-Use
Software (Subtopic

350-40): ~~Targeted Improvements~~~~” which provides~~

Customer’s Accounting for ~~another transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize~~Implementation Costs Incurred in a ~~cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments in this Update also provide lessors with~~Cloud Computing Arrangement that is a ~~practical expedient, by class of underlying asset, to not separatenon-lease~~ ~~components from the associated lease component, similar to the expedient provided for lessees. In July 2018, the FASB also issued ASUNo. 2018-10~~ “~~Codification Improvements to Topic 842, Leases~~~~” which affects narrow aspects of the guidance issued in ASUNo. 2016-02.~~ ~~In December 2018, the FASB issued ASUNo. 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 and~~non-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 ASU~~No. 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 the~~use-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 and~~non-lease~~ ~~components for all of our leases. Refer to Note 3 – “Leases” for additional information regarding the Company’s leases.~~

Service Contract

~~In February 2018, the FASB issued ASUNo. 2018-02~~~~“Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from 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 change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU~~No. 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~~align the ~~accounting~~requirements for ~~income taxes by removing certain exceptions, providing updated~~capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain

internal-use

software (and hosting arrangements that include an internal use software license). ASU

No. 2018-15

was adopted using the prospective method in the first quarter of fiscal 2021 and ~~specifications in certain areas and by making minor codification improvements.~~did not have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU

No. 2018-14

“

Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic

715-20):

Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans

”. The amendments in this Update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in this Update remove disclosures that no longer are ~~effective~~considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. ASU

No. 2018-14

was adopted on a retrospective basis to all periods presented in the first quarter of fiscal 2021 and had no impact on our quarterly Consolidated Financial Statements.

In January 2017, the FASB issued ASU

No. 2017-04

“Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for ~~public~~Goodwill Impairment”.

The amendments in this Update eliminate the need for entities to calculate the implied 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 ~~entities~~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. ASU

No. 2017-04

was adopted in the first quarter of fiscal ~~years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted. This~~2021 and did not have a material impact on our Consolidated Financial Statements.

In June 2016, the FASB issued ASU

No. 2016-13

“

Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

”. The main objective of this Update is ~~effective for~~to provide financial statement users with more decision-useful information about the ~~Company beginning~~expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU

No. 2016-13

was adopted using a modified retrospective transition method in the first quarter of fiscal ~~2022. We do~~2021 and did not ~~expect this~~have a material impact on our Consolidated Financial Statements.

There are no recent accounting ~~Update~~pronouncements that have been issued and not yet adopted that are expected to have a material impact on our Consolidated Financial Statements.

Note 16 – Subsequent Event

On January 27, 2021

, our Board of Directors declared a special cash dividend of $2.50 per share on all issued and outstanding shares of Common Stock and Class A Stock of the Company (the “January 2021 Dividends”). The January 2021 Dividends will be paid on March 16, 2021 to stockholders of record as of the close of business on February 26, 2021.

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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 of

fifty-two

weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:

References herein to fiscal ~~2020~~2021 and fiscal ~~2019~~2020 are to the fiscal year ending June ~~25, 2020~~24, 2021 and the fiscal year ended June ~~27, 2019,~~25, 2020, respectively.

References herein to the second quarter of fiscal ~~2020~~2021 and fiscal ~~2019~~2020 are to the quarters ended December 24, 2020 and December 26, 2019, ~~and December 27, 2018,~~ respectively.

References herein to the first half or first

twenty-six

weeks of fiscal ~~2020~~2021 and fiscal ~~2019~~2020 are to the

twenty-six

weeks ended December 24, 2020 and December 26, 2019, ~~and December 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 the

Fisher, Orchard Valley Harvest,

Squirrel Brand, Southern Style Nuts

and

Sunshine Country

brand 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”),~~Strategic Plan, includes continuing to grow

Fisher,

Orchard Valley Harvest, Squirrel Brand

and

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 grow

non-branded

business ~~at existing~~across key ~~customers in each distribution channel and expanding our offerings into alternative distribution channels.~~customers. We ~~are executing~~plan to execute on our Strategic Plan to grow our branded business by ~~continuing~~reaching new consumers via product and pack innovation, expanding distribution across current and alternative channels and focusing on new ways to ~~expand distribution of~~buy, with an emphasis on increasing our~~Orchard Valley Harvest~~ sales via

e-commerce

platforms and~~Southern Style Nutsproducts, growing~~ retailers. In addition, we intend to invest in our ~~consumer distribution channel with~~people and facilities in order to research, develop, market and sell new product offerings for our branded business and private brand ~~products and expanding distribution with new foodservice customers.~~

partners in fiscal 2021.

We face a number of challenges in the future which include, among others, ~~potential~~decreasing commodity acquisition ~~cost volatility for almonds and increasing commodity~~ costs, ~~for walnuts,~~ as well as intensified competition on pricing and for market share from both private brand and name brand nut products. Our

Fisher

recipe nut sales have been negatively impacted ~~recently~~ due to this increased competition for market share. We also face changing industry trends ~~resulting~~as consumer preferences shift to shopping in ~~retail consolidation~~smaller store formats like grocery and ~~Internet price competition for nut~~online. As restaurant closures and~~nut-related~~ ~~products.~~

other

out-of-home

dining limitations continue due to the impact of

COVID-19,

consumers are also doing more snacking and cooking and baking at home. While these developments have had a positive impact on certain aspects of our consumer business, they have had a negative impact on our foodservice business.

We will continue to focus on seeking profitable business opportunities to maximize the utilization of our 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.~~Illinois. We expect to ~~maintain~~redirect our ~~current level of~~ promotional and advertising activity ~~for~~with respect to our~~Orchard Valley Harvest~~ brands to focus on more digital and~~Fishersnack brands.~~

e-commerce

platforms to match consumer behavior. We continue to see ~~significant domestic sales and volume growth in~~strong

e-commerce

performance across our

Orchard Valley Harvest ~~brand~~

and

Fisher

recipe brands and expect that there will ~~continue~~be additional opportunities to ~~focus on this portion of our branded business as well as our~~~~Squirrel Brand~~connect these brands to consumers’ desires for more functional snacking and~~Southern Style Nuts~~ ~~brands.~~ baking and cooking ideas, respectively. We will continue to face the ongoing challenges specific to our business, such as food safety and regulatory ~~issues~~compliance and the maintenance and growth of our customer 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.

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COVID-19

Impacts

We will continue to face challenges in our fiscal 2021 as result of the

COVID-19

pandemic and the uncertainty of future local, state and federal restrictions aimed to mitigate and control the pandemic. As many of these restrictions were loosened near the conclusion of our fiscal 2020, we saw a gradual (albeit limited) increase in demand from our foodservice, restaurant, convenience store and

non-essential

retail customers. However, as conditions surrounding the pandemic deteriorated during the fall and winter of calendar 2020 and into calendar 2021, consumers were and continue to be limited in their ability to purchase meals outside their homes, and therefore, demand continued to be suppressed from our foodservice, restaurant, convenience store and

non-essential

retail customers. Although demand has been suppressed from our foodservice customers, the chart below indicates that the rate of decline is recovering from its low point in our fourth quarter of fiscal 2020, and we believe that as the

COVID-19

vaccine becomes more widely distributed and accepted by the public, and restrictions are again loosened, sales volume with our foodservice, restaurant, convenience store and

non-essential

retail customers will continue to improve and we expect to eventually return to

pre-pandemic

levels.

Also, in the first half of fiscal 2021, we have seen signs of a shortage in capacity in the transportation industry, which our transportation service providers believe is due to driver concerns related to the impacts of

COVID-19.

Compounding this driver shortage is an increase in demand driven by additional spending on consumer goods. This tightening in transportation capacity is expected to continue through the third quarter of fiscal 2021, has led to increased transportation costs and may lead to potential disruptions in service to our customers and from our suppliers.

The Company’s

COVID-19

crisis team, which was created in the third quarter of fiscal 2020, continues to meet on a regular basis to discuss risks faced by the Company and mitigation strategies. We continue to follow recommendations made by state and federal regulators and health agencies to ensure the safety and health of our employees as those recommendations change and evolve. We have implemented (among other things) a temporary work from home option for the majority of our office employees, staggered shifts and breaks, installed partitions on production lines and office space where social distancing could not be consistently maintained and installed thermal scanners to measure temperature for all employees upon arrival. We update and enhance these measures as new guidance is provided. In addition, we have extended personal time off for those who are in self quarantine or ill.

We have worked closely with our domestic and global suppliers to source and maintain a consistent supply of raw materials, ingredients and packaging. To date, none of our manufacturing facilities have been significantly impacted by this pandemic. We have contingency plans in place to help reduce the negative impact if one or more of our manufacturing facilities encounters a partial or full shut down.

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QUARTERLY HIGHLIGHTS

Our net sales of $233.6 million for the second quarter of fiscal 2021 decreased 5.2% from our net sales of $246.4 million for the second quarter of fiscal ~~2020 decreased 2.7% from our net sales of $253.3 million for the second quarter of fiscal 2019.~~2020. Net sales for the first

twenty-six

weeks of fiscal ~~2020 increased~~2021 decreased by ~~$6.7~~$20.4 million, or ~~1.5%~~4.4%, to ~~$464.3~~$443.8 million ~~from net sales of $457.6 million for~~compared to the first

twenty-six

weeks of fiscal ~~2019.~~

2020.

Sales volume, measured as pounds sold to customers, increased ~~4.8%~~1.8% for the second quarter of fiscal ~~2020~~2021 compared to the second quarter of fiscal ~~2019.~~2020. Sales volume for the first

twenty-six

weeks of fiscal ~~2020 increased 6.8%~~2021 decreased 0.7% compared to the first

twenty-six

weeks of fiscal ~~2019.~~

2020.

Gross profit increased by ~~$7.1~~$2.8 million, and our gross profit margin, as a percentage of net sales, increased to 22.6% for the second quarter of fiscal 2021 compared to 20.3% for the second quarter of fiscal ~~2020 compared to 16.9% for the second quarter of fiscal 2019.~~2020. Gross profit ~~increased by $16.4 million~~dollars remained relatively unchanged and our gross profit margin increased to ~~19.9%~~20.8% from ~~16.6%~~19.9% for the first

twenty-six

weeks of fiscal ~~2020~~2021 compared to the first

twenty-six

weeks of fiscal ~~2019.~~

2020.

Total operating expenses for the second quarter of fiscal ~~2020~~2021 decreased by ~~$0.7~~$0.5 million, or ~~2.8%~~2.0%, compared to the second quarter of fiscal ~~2019.~~2020. As a percentage of net sales, total operating expenses in the second quarter of fiscal ~~2020 was unchanged at~~2021 increased to 10.7% from 10.4% ~~compared to~~for the second quarter of fiscal ~~2019.~~2020. For the first half of fiscal ~~2020,~~2021, total operating expenses decreased by ~~$0.4~~$3.2 million, to ~~10.5%~~10.2% of net sales compared to ~~10.7%~~10.5% for the first half of fiscal ~~2019.~~

2020.

The total value of inventories on hand at the end of the second quarter of fiscal ~~2020 increased~~2021 decreased by ~~$0.6~~$17.0 million, or ~~0.4%~~9.8%, in comparison to the total value of inventories on hand at the end of the second quarter of fiscal ~~2019.~~

2020.

We have seen acquisition costs for ~~walnuts increase~~all major tree nuts decrease in the ~~2019~~2020 crop year (which falls into our current ~~2020~~2021 fiscal year). ~~We also continue to see declining acquisition costs for pecans.~~ We completed procurement of inshell walnuts during the first half of fiscal ~~2020.~~2021. 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 ~~2020~~2021 and will be recognized in our financial results at that time.

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RESULTS OF OPERATIONS

Net Sales

Our net sales decreased ~~2.7%~~5.2% to ~~$246.4~~$233.6 million in the second quarter of fiscal ~~2020~~2021 compared to net sales of ~~$253.3~~$246.4 million for the second quarter of fiscal ~~2019.~~2020. The 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,~~tree nuts, which were due to lower commodity acquisition ~~costs, also contributed to the overall reduction in selling prices.~~costs. The decline in net sales from lower selling prices was ~~largely~~partially offset by a ~~4.8%~~1.8% increase in sales volume, which is defined as pounds sold to customers.

For the first

twenty-six

weeks of fiscal ~~2020~~2021 our net sales were ~~$464.3~~$443.8 million, ~~an increase~~a decrease of ~~$6.7~~$20.4 million, or ~~1.5%~~4.4%, compared to the same period of fiscal ~~2019.~~2020. The ~~increase~~decrease in net sales was ~~due~~primarily attributable to ~~a 6.8% increase in sales volume and was largely offset by~~ lower selling prices resulting primarily for the same reasons cited in the quarterly comparison.

A 0.7% decrease in sales volume also contributed to the overall decline in net sales.

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
Product Type
   December 26,
2019 December 27,
2018 December 26,
2019 December 27,
2018
Peanuts
   15.8 % 15.7 % 16.8 % 17.2 %
Pecans
   16.2 20.5 13.0 16.5
Cashews & Mixed Nuts
   22.7 22.1 22.7 22.3
Walnuts
   8.7 10.5 7.9 10.3
Almonds
   13.2 11.8 14.8 12.8
Trail & Snack Mixes
   18.3 14.5 19.3 15.6
Other
   5.1 4.9 5.5 5.3


Total
   100.0 % 100.0 % 100.0 % 100.0 %


	For the Quarter Ended						For the Twenty-six Weeks Ended
Product Type	December 24, 2020			December 26, 2019			December 24, 2020			December 26, 2019
Peanuts		18.8	%		15.8	%		19.1	%		16.8	%
Pecans		15.0			16.2			12.0			13.0
Cashews & Mixed Nuts		23.1			22.7			23.4			22.7
Walnuts		7.2			8.7			6.9			7.9
Almonds		9.2			13.2			10.8			14.8
Trail & Snack Mixes		22.2			18.3			22.5			19.3
Other		4.5			5.1			5.3			5.5

Total		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
Distribution Channel
   December 26,
2019    December 27,
2018    Change    Percent
Change
Consumer⁽¹⁾
   $ 188,086    $ 195,478    $ (7,392 )    (3.8 )%
Commercial Ingredients
   34,247    31,454    2,793    8.9
Contract Packaging
   24,090    26,385    (2,295 )    (8.7 )








Total
   $ 246,423    $ 253,317    $ (6,894 )    (2.7 )%


	For the Quarter Ended
Distribution Channel	December 24, 2020		Percentage of Total			December 26, 2019		Percentage of Total			$ Change			Percent Change
Consumer (1)	$	192,029		82.2	%	$	188,086		76.3	%	$	3,943			2.1	%
Commercial Ingredients		20,536		8.8			34,247		13.9			(13,711	)		(40.0	)
Contract Packaging		21,010		9.0			24,090		9.8			(3,080	)		(12.8	)

Total	$	233,575		100.0	%	$	246,423		100.0	%	$	(12,848	)		(5.2	)%

(1)

Sales of branded products were approximately ~~33%~~30% and ~~45%~~33% of total consumer sales during each of the second quarter of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively.

Fisher

branded products were approximately ~~76%~~74% and ~~79%~~76% of branded sales during the second quarter of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively, with branded produce ~~and~~~~Squirrel Brand~~

products accounting for ~~most~~the majority of the remaining branded product sales.

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

   For theTwenty-six Weeks Ended
Distribution Channel
   December 26,
2019    December 27,
2018    Change    Percent
Change
Consumer⁽¹⁾
   $ 345,232    $ 334,922    $ 10,310    3.1 %
Commercial Ingredients
   71,135    68,656    2,479    3.6
Contract Packaging
   47,902    54,027    (6,125 )    (11.3 )








Total
   $ 464,269    $ 457,605    $ 6,664    1.5 %


	For the Twenty-six Weeks Ended
Distribution Channel	December 24, 2020		Percentage of Total			December 26, 2019		Percentage of Total			$ Change			Percent Change
Consumer (1)	$	358,786		80.8	%	$	345,232		74.4	%	$	13,554			3.9	%
Commercial Ingredients		43,347		9.8			71,135		15.3			(27,788	)		(39.1	)
Contract Packaging		41,715		9.4			47,902		10.3			(6,187	)		(12.9	)

Total	$	443,848		100.0	%	$	464,269		100.0	%	$	(20,421	)		(4.4	)%

(1)

Sales of branded products were approximately ~~31%~~27% and ~~43%~~31% of total consumer sales during the first

twenty-six

weeks of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively.

Fisher

branded products were approximately ~~71%~~70% and ~~75%~~71% of branded sales during the first

twenty-six

weeks of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively, with branded produce ~~and~~~~Squirrel Brand~~

products accounting for ~~most~~majority of the remaining branded product sales.

Net sales in the consumer distribution channel ~~decreased $7.4~~increased $3.9 million, or ~~3.8%~~2.1%, and sales volume increased ~~4.2%~~9.9% in the second quarter of fiscal ~~2020~~2021 compared to the second quarter of fiscal ~~2019.~~2020. The sales volume increase was driven by increased sales of private brand ~~snack nuts and~~peanuts, trail mixes and snack mixes, ~~from distribution gains with new and existing private brand customers.~~as consumer preferences have shifted to lower priced products due to current economic conditions. Sales volume for

Fisher

snack nuts ~~decreased 6.4%~~increased 30.2%, primarily as a result of ~~reduced~~increased promotional ~~activity for inshell peanuts.~~activity. Sales volume of

Fisher

recipe nuts decreased ~~29.8% from~~18.4% as a result of lost ~~holiday display~~ distribution at some customers, which was offset in part by increased sales with an Internet retailer. Sales volume

Orchard Valley Harvest

products decreased 13.0% due to reduced foot traffic at a major customer in ~~favor~~the

non-food

sector as a result of ~~their private brand recipe nuts.~~

COVID-19,

reduced promotional activity and lost distribution at some customers. Sales ~~volumeof~~ ~~Orchard Valley Harvest~~ ~~products increased 6.5%~~volume of

Southern Style Nuts

decreased 4.2% due to a reduction in merchandising and promotional activity, which was offset in part by distribution gains atwith new ~~and existing customers and the introduction of new products. Sales volume of~~~~Southern Style Nuts~~ ~~increased 42.9% due to increased promotional activity.~~

customers.

In the first

twenty-six

weeks of fiscal ~~2020,~~2021, net sales in the consumer distribution channel increased ~~$10.3~~$13.6 million, or ~~3.1%~~3.9%, and sales volume increased ~~10.0%~~7.0% compared to the same period of fiscal ~~2019.~~2020. The sales volume increase occurred for the same reason cited in the quarterly comparison. ~~Increased sales for our~~~~Orchard Valley Harvest~~ ~~and~~~~Southern Style Nut~~~~brands also contributed to the sales volume increase in the consumer distribution channel. Sales volume for~~~~Fisher~~ ~~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 ~~increased~~decreased by ~~8.9%~~40.0% in dollars and ~~14.5%~~23.6% in sales volume in the second quarter of fiscal ~~2020~~2021 compared to the second quarter of fiscal ~~2019.~~ 2020. The decline in sales volume was due to a 29.4% decrease in sales volume in our foodservice business. The sales volume decline in our foodservice business resulted from a decline in air travel and nationwide restrictions on indoor restaurant dining and closures of restaurants, all of which were attributable to

COVID-19.

In the first

twenty-six

weeks of fiscal ~~2020,~~2021, net sales in the commercial ingredients distribution channel ~~increased~~decreased by ~~3.6%~~39.1% in dollars and ~~6.3%~~25.6% in sales volume compared to the same period of fiscal ~~2019.~~2020. The decline in sales volume ~~increase,~~was due to a 35.5% decrease in sales volume in our foodservice business, which occurred for ~~both~~the same reasons cited in the quarterly ~~andtwenty-six~~ ~~week period, was primarily due to distribution gains with new food service customers and increased sales of peanut crushing stock to peanut oil processors.~~

comparison.

Net sales in the contract packaging distribution channel decreased by ~~8.7%~~12.8% in dollars and ~~2.5%~~14.1% in sales volume in the second quarter of fiscal ~~2020~~2021 compared to the second quarter of fiscal ~~2019.~~2020. The decline in sales volume was primarily ~~came from~~attributable to the unfavorable impact of lower convenience store foot traffic on one customer’s business as a ~~reduction in promotional and merchandising activity by some customers in this channel.~~ result of

COVID-19.

In the first

twenty-six

weeks of fiscal ~~2020,~~2021, net sales in the contract packaging distribution channel decreased by ~~11.3%~~12.9% in dollars and ~~7.9%~~13.2% in sales volume compared to the first

twenty-six

weeks of fiscal ~~2019.~~2020. The decline in sales volume occurred for the same reason cited in the quarterly comparison, as well as ~~from~~the loss of peanut butter business with another customer due to a ~~reduction~~temporary peanut supply shortage that existed in ~~unit ounce weights implemented by a major contract packaging customer.~~

the first quarter of fiscal 2021.

Gross Profit

Gross profit increased by ~~$7.1~~$2.8 million, or ~~16.5%~~5.6%, to ~~$50.0~~$52.8 million for the second quarter of fiscal ~~2020~~2021 compared to the second quarter of fiscal ~~2019.~~2020. Our gross profit margin, as a percentage of net sales, increased to 22.6% for the second quarter of fiscal 2021 compared to 20.3% for the second quarter of fiscal ~~2020 compared to 16.9% for the second quarter of fiscal 2019.~~2020. The increases in gross profit and gross profit margin were mainly attributable to lower commodity acquisition costs for tree nuts and the sales volume increase discussed ~~above, as well as manufacturing efficiencies, reduced manufacturing spending and lower commodity acquisition costs for pecans and cashews.~~

above.

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Gross profit ~~increased by $16.4~~was $92.1 million ~~or 21.6%,~~for the first

twenty-six

weeks of fiscal 2021 compared to $92.2 million for the first

twenty-six

weeks of fiscal ~~2020 compared to the firsttwenty-six~~ ~~weeks of fiscal 2019.~~2020. Our gross profit margin increased to 20.8% for the first

twenty-six

weeks of fiscal 2021 compared to 19.9% for the first

twenty-six

weeks of fiscal ~~2020 compared to 16.6% for the firsttwenty-six~~ ~~weeks of fiscal 2019.~~2020. The ~~increases~~increase in ~~gross profit and~~ gross profit margin in the year to date comparison ~~occurred~~was primarily attributable to lower commodity acquisition costs for ~~the same reasons cited in the quarterly comparison.~~

tree nuts.

Operating Expenses

Total operating expenses for the second quarter of fiscal ~~2020~~2021 decreased by ~~$0.7~~$0.5 million, or ~~2.8%~~2.0%, to ~~$25.5~~$25.0 million. ~~As a percentage~~Operating expenses increased to 10.7% of net sales ~~operating expenses remain unchanged at 10.4%~~ for the second quarter of fiscal ~~2020~~2021 compared to 10.4% of net sales for the second quarter of fiscal ~~2019.~~

2020.

Selling expenses for the second quarter of fiscal ~~2020~~2021 were ~~$16.1~~$17.7 million, ~~a decrease~~an increase of ~~$2.1~~$1.6 million, or ~~11.5%~~9.9%, from the second quarter of fiscal ~~2019.~~2020. The ~~decrease~~increase was driven primarily by a ~~$2.5~~$1.0 million ~~decrease~~increase in advertising expense primarily related to TVonline advertising for our branded products 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~~freight expense due to higher rates and ~~incentive compensation expense and a $0.4 million~~an increase in ~~commission expense.~~

sales pounds shipped.

Administrative expenses for the second quarter of fiscal ~~2020~~2021 were ~~$9.4~~$7.3 million compared to ~~$8.1~~$9.4 million for the second quarter of fiscal ~~2019.~~2020. The ~~increase~~decrease was primarily due to a ~~$1.0~~$2.3 million ~~increase~~gain on the estimated final insurance settlement related to the fire that occurred in ~~compensation related expenses, primarily incentive compensation, a $0.2 million increase~~our Garysburg, North Carolina facility in ~~building repairs and maintenance expense.~~

the second quarter of fiscal 2020.

Total operating expenses for the first

twenty-six

weeks of fiscal ~~2020~~2021 decreased by ~~$0.4~~$3.2 million, or ~~0.9%~~6.7%, to ~~$48.7~~$45.5 million. Operating expenses decreased to 10.2% of net sales for the first half of fiscal 2021 compared to 10.5% of net sales for the first half of fiscal ~~2020 compared to 10.7% of net sales for the first half of fiscal 2019.~~

2020.

Selling expenses for the first

twenty-six

weeks of fiscal ~~2020~~2021 were ~~$30.2~~$29.8 million, a decrease of ~~$2.0~~$0.4 million, or ~~6.3%~~1.4%, from the amount recorded for the first

twenty-six

weeks of fiscal ~~2019.~~2020. The decrease was driven primarily by a ~~$2.9~~$0.5 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~~$0.3 million decrease in travel expense due to

COVID-19

travel restrictions. These decreases were partially offset by a $0.3 million increase in ~~commission expense.~~

freight expense for the same reasons discussed in the quarterly comparison.

Administrative expenses for the first

twenty-six

weeks of fiscal ~~2020~~2021 were ~~$18.5~~$15.7 million, ~~an increase~~a decrease of ~~$1.6~~$2.8 million, or ~~9.5%~~15.2%, compared to the same period of fiscal ~~2019.~~2020. The ~~increase~~decrease was primarily due to ~~$1.5~~$2.5 million ~~increase in compensation related expenses, primarily incentive compensation, and~~gain on asset disposals, mainly resulting from the insurance settlement discussed above, combined with a $0.3 million ~~increase~~decrease in ~~building repairs and maintenance~~consulting expense.

Income from Operations

Due to the factors discussed above, income from operations was $27.8 million, or 11.9% of net sales, for the second quarter of fiscal 2021 compared to $24.5 million, or 9.9% of net sales, for the second quarter of fiscal ~~2020 compared to $16.6 million, or 6.6% of net sales, for the second quarter of fiscal 2019.~~

2020.

Due to the factors discussed above, income from operations was $46.7 million, or 10.5% of net sales, for the first

twenty-six

weeks of fiscal 2021 compared to $43.5 million, or 9.4% of net sales, for the first

twenty-six

weeks of fiscal ~~2020~~2020.

Interest Expense

Interest expense was $0.4 million for both the second quarter of fiscal 2021 and fiscal 2020. Interest expense for the first two quarters of fiscal 2021 was $0.8 million compared to ~~$26.7~~$1.0 million ~~or 5.8% of net sales,~~ for the first~~twenty-six~~ ~~weeks~~ two quarters of fiscal ~~2019.~~

~~Interest~~2020. The decrease in interest expense in the year to date comparison resulted from lower weighted average interest rates from the reduction of long-term debt and was largely offset by higher average short-term debt levels.

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Rental and Miscellaneous Expense,

~~Interest~~ Net

Net rental and miscellaneous expense was $0.4 million for the second quarter of fiscal ~~2020~~2021 compared to $0.8 million in the second quarter of fiscal 2019. Interest expense for the first two quarters of fiscal 2020 was $1.0 million compared to $1.7 million for the first two quarters of fiscal 2019. The decrease in interest expense was due to lower average debt levels.

~~Rental and Miscellaneous Expense, Net~~

~~Net rental and miscellaneous expense was~~ $0.3 million for the second quarter of ~~both~~ fiscal ~~2020 and fiscal 2019.~~2020. Net rental and miscellaneous expense was $0.8 million for the first

twenty-six

weeks of fiscal 2021 compared to $0.7 million for the first

twenty-six

weeks of fiscal ~~2020 compared to $0.6 million for the firsttwenty-six~~ ~~weeks of fiscal 2019.~~

2020.

Other Expense

Other expense consists of pension related expenses other than the service cost component and was $0.6 million for both the second quarter of fiscal ~~2020 compared to $0.5~~2021 and fiscal 2020. Other expense was $1.3 million for the ~~second quarter~~first

twenty-six

weeks of fiscal ~~2019. Other expense was~~2021 compared to $1.1 million for the first

twenty-six

weeks of fiscal ~~2020 compared to $1.0 million for the firsttwenty-six~~ ~~weeks of fiscal 2019.~~

2020.

Income Tax Expense

Income tax expense was ~~$5.7~~$6.5 million, or ~~24.7%~~24.8% of income before income taxes (the “Effective Tax Rate”), for the second quarter of fiscal ~~2020~~2021 compared to ~~$3.8~~$5.7 million, or ~~25.3%~~24.7% of income before income taxes, for the second quarter of fiscal ~~2019.~~2020. For the first

twenty-six

weeks of fiscal 2020, income tax expense was ~~$10.4~~$11.1 million, or ~~25.5%~~25.3% of income before income taxes, compared to ~~$5.6~~$10.4 million, or ~~23.9%~~25.5% of income before income taxes, for the comparable period last year. ~~The Effective Tax Rate in the comparativetwenty-six~~ week period was reduced due to a change in the rate that our deferred tax assets are measured due to the impact of Tax Reform. This change increased our net deferred tax assets and reduced income tax expense in the comparative twenty-six week period.

Net Income

Net income was $19.9 million, or $1.73 per common share basic and $1.72 per common share diluted, for the second quarter of fiscal 2021, compared to $17.5 million, or $1.52 per common share basic and diluted for the second quarter of fiscal ~~2020, compared to $11.3~~2020.

Net income was $32.7 million, or ~~$0.99~~$2.85 per common share basic and ~~$0.98~~$2.83 per common share diluted, for the ~~second quarter~~first

twenty-six

weeks of fiscal ~~2019.~~

~~Net~~2021, compared to net income ~~was~~of $30.4 million, or $2.65 per common share basic and $2.64 per common share diluted, for the first

twenty-six

weeks of fiscal ~~2020, compared to net income of $17.9 million, or $1.57 per common share basic and $1.56 per share diluted, for the firsttwenty-six~~ ~~weeks of fiscal 2019.~~

2020.

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.Facility. 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 branded products, ~~and invest in our brands (especially our~~~~Fisher~~~~and~~~~Orchard Valley Harvest~~ ~~brands),~~ consummate strategic business acquisitions such as the fiscal 2018 acquisition of the Squirrel Brand business, reinvest in the Company through capital expenditures, develop new products, pay cash dividends ~~the past 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 ~~2020~~2021 and ~~2019,~~2020, respectively (dollars in thousands):

   December 26,
2019 December 27,
2018 $ Change
Operating activities
   $ 54,285 $ 48,366 $ 5,919
Investing activities
   (6,148 ) (9,323 ) 3,175
Financing activities
   (48,335 ) (37,909 ) (10,426 )


Net increase in cash
   $ (198 ) $ 1,134 $ (1,332 )

December 24,
2020

December 26,
2019

$
Change

Operating activities
   $ 61,935 $ 54,285 $ 7,650
Investing activities
   (10,734 ) (6,148 ) (4,586 )
Financing activities
   (50,973 ) (48,335 ) (2,638 )


Net increase in cash
   $ 228 $ (198 ) $ 426


24
Table of Contents

Operating Activities

Net cash provided by operating activities was ~~$54.3~~$61.9 million for the first

twenty-six

weeks of fiscal ~~2020~~2021 compared to ~~$48.4~~$54.3 million for the comparative period of fiscal ~~2019.~~2020. The increase in operating cash flow was primarily due ~~primarily~~ to a ~~$12.5 million increase in net income driven by increased sales and improved profitability, which was partially offset due to an increased~~decreased use of working capital for inventory compared to the first

twenty-six

weeks of fiscal ~~2019.~~

2020.

Total inventories were ~~$172.3~~$155.4 million at December ~~26, 2019, an increase~~24, 2020, a decrease of ~~$15.3~~$16.7 million, or 9.7%, from the inventory balance at June 25, 2020, and a decrease of $17.0 million, or 9.8%, from the inventory balance at ~~June 27, 2019, and an increase of $0.6 million, or 0.4%, from the inventory balance at~~ December ~~27, 2018.~~26, 2019. The ~~increase~~decrease in inventory at December ~~26, 2019~~24, 2020 compared to June ~~27, 2019~~25, 2020 was primarily due to lower commodity acquisition costs for all major tree nuts and lower quantities of peanuts and pecans on hand, which was partially offset by greater quantities of walnuts on ~~hand~~hand. The decrease in inventories at ~~a higher acquisition cost, which~~December 24, 2020 compared to December 26, 2019 was ~~partially offset by~~primarily due lower commodity acquisition costs for ~~pecans.~~

all major tree nuts and lower quantities of peanuts on hand.

Raw nut and dried fruit input stocks, some of which are classified as work in process, decreased by ~~9.8~~14.2 million pounds, or ~~11.8%~~19.4%, at December ~~26, 2019~~24, 2020 compared to December ~~27, 2018~~26, 2019 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 ~~2020 increased 7.1%~~2021 decreased 4.6% compared to the end of the second quarter of fiscal ~~2019~~2020 primarily due to ~~a higher acquisition cost for walnuts, which was offset in part by~~ lower commodity acquisition costs for ~~pecans, cashews~~all major tree nuts, which was partially offset by a shift in product mix from lower priced peanuts to higher priced walnuts and ~~peanuts.~~

pecans.

Investing Activities

Cash used in investing activities was ~~$6.1~~$10.7 million during the first

twenty-six

weeks of fiscal ~~2020~~2021 compared to ~~$9.3~~$6.1 million for the same period last year. We expect total capital expenditures for new equipment, facility upgrades, and food safety enhancements for fiscal ~~2020~~2021 to be approximately ~~$17~~$23.0 million. The projected increase in capital expenditures from our previous expenditure level is due to ~~$20 million.~~a strategic investment for a new product line. 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 Activities

Cash used in financing activities was ~~$48.3~~$51.0 million during the first

twenty-six

weeks of fiscal ~~2020~~2021 compared to ~~$37.9~~$48.3 million for the same period last year. WeDividends paid ~~$57.3 million of dividends~~ in the first half of fiscal ~~2020 compared to $29.1~~2021 were approximately $28.6 million ~~during~~lower than dividends paid in the same period last year. Net ~~borrowings~~repayments under our Credit Facility were ~~$13.5~~$17.8 million during the first half of fiscal ~~2020~~2021 compared to net ~~repayments~~short-term borrowings of ~~$6.7~~$13.5 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.~~

2020.

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 ~~63%~~67% of the rentable area in the office building is currently ~~vacant,~~vacant. Approximately 29% of ~~which approximately 29%~~the rentable area has not been

built-out.

There can be no assurance that we will be able to lease the unoccupied space and further capital expenditures will likely be necessary to lease the remaining space.

Financing Arrangements

On February 7, 2008, we entered into the Former Credit ~~Facility~~Agreement (as defined below) 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,~~March 5, 2020, we entered into ~~the Consent~~an Amended and ~~Ninth Amendment to~~Restated Credit Agreement (the “Amended and Restated Credit Agreement”) which amended and restated our Credit Agreement dated as of February 7, 2008 (the ~~“Ninth Amendment”~~“Former Credit Agreement”) ~~which provided lender consent to incur unsecured debt in connection~~. The Amended and Restated Credit Agreement provides for a $117.5 million senior secured revolving credit facility with ~~our acquisition~~the same borrowing capacity, interest rates and applicable margin as the Former Credit Agreement and extends the term of the ~~assets of the Squirrel Brand business,~~Former Credit Agreement from July 7, 2021 to March 5, 2025.

The Amended and ~~for the acquisition of the Squirrel Brand business to constitute a “Permitted Acquisition” under the terms of the~~Restated 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.~~March 5, 2025. 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”).

Table of Contents

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% (“Base Rate”) 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 ~~26, 2019,~~24, 2020, the ~~weighted average~~ interest rate for the Credit Facility was ~~3.8%~~at the Base Rate of 3.5%. There were no borrowings under LIBOR contracts due to the low debt against the Credit Facility and projected positive cash flow for January. 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 ~~26, 2019,~~24, 2020, 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 ~~26, 2019,~~24, 2020, we had ~~$100.8~~$105.1 million of available credit under the Credit Facility. If this entire amount were borrowed at December ~~26, 2019,~~24, 2020, 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. On March 1, 2018 the interest rate on the Mortgage Facility was fixed at 4.25% per ~~annum for the remainder of the term.~~annum. Monthly principal payments on ~~Tranche A~~the Mortgage Facility in the amount of ~~$0.2~~$0.3 million commenced on June 1, 2008. ~~Monthly principal payments on Tranche B in the amount of $0.1 million commenced on June 1, 2008.~~

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 ~~26, 2019,~~24, 2020, we were in compliance with all covenants under the Mortgage ~~Facility.~~

Facility and a total principal amount of $7.4 million was outstanding.

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 a

ten-year

term at a fair market value rent with three five-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 ~~26, 2019, $9.8~~24, 2020, $9.2 million of the debt obligation was outstanding.

Squirrel Brand Seller-Financed Note

In November 2017 we completed the ~~Acquisition.~~Squirrel Brand 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~~As 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, 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 can~~pre-pay~~ ~~the Promissory Note at any time during the three-year period without penalty. At~~ December ~~26, 2019, the principal amount of $3.5 million of~~24, 2020, the Promissory Note was ~~outstanding.~~

repaid in full.

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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

10-K

for the fiscal year ended June ~~27, 2019.~~

25, 2020.

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 form

10-Q,

for a discussion of recently issued and adopted accounting ~~pronouncements~~

pronouncements.

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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).~~forward-looking. 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 to one or more key customers (of branded products, private label products or otherwise), or to ~~one~~customers generally, in some or ~~more key customers,~~all channels, 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, 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 transportation, compensation, medical and administrative ~~expense;~~expenses; (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;~~ downturn, particularly in light of the outbreak of

COVID-19;

(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;~~facilities or employee unavailability due to illness or quarantine; (xiv) the ~~inability~~ability 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;~~failures, including disruptions due to employees working remotely; (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.~~

competitors; and (xviii) the ability of the Company to respond to or manage the outbreak of

COVID-19

or other infectious diseases and the various implications thereof.

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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—Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form

10-K

for the fiscal year ended June ~~27, 2019.~~

25, 2020.

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 Rule

13a-15(e))

as of December ~~26, 2019.~~24, 2020. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December ~~26, 2019,~~24, 2020, 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 Rule

13a-15(f))

during the quarter ended December ~~26, 2019~~24, 2020 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 11 – “Commitments and Contingent Liabilities” in Part I, Item 1 of this Form

10-Q.

Item 1A. Risk Factors

In addition to the other information set forth in this report on Form

10-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 Form

10-K

for the fiscal year ended June ~~27, 2019.~~25, 2020. There were no significant changes to the risk factors identified on the Form

10-K

for the fiscal year ended June ~~27, 2019~~25, 2020 during the second quarter of fiscal ~~2020.~~

2021.

See Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Form

10-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 Form

10-K

for the fiscal year ended June ~~27, 2019.~~

25, 2020.

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Item 6. Exhibits

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

EXHIBIT INDEX

(Pursuant to Item 601 of Regulation

S-K)


Exhibit No.		Description

3.1		Restated Certificate of Incorporation of the Company (incorporated by reference from Exhibit 3.1 to the Form10-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 Form10-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 Form10-Q~~ ~~for the quarter ended December 28, 2000)~~

*10.3		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)

*~~10.4~~10.2		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)

*~~10.5~~10.3		Restated Supplemental Retirement Plan (incorporated by reference from Exhibit 10.16 to the Form10-K for the fiscal year ended June 28, 2007)

*~~10.6~~10.4		~~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)~~

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

*~~10.8~~10.5		2014 Omnibus Incentive Plan (incorporated by reference from Exhibit 4.1 to the Registration Statement on FormS-8 filed on October 28, 2014)


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

*~~10.9~~10.6		Amendment No. 1 to the 2014 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.12 to the Form10-K for the year ended June 30, 2016)

*~~10.10~~10.7		Form ofNon-Employee Director Restricted Stock Unit Award Agreement(non-deferral) under 2014 Omnibus Plan (fiscal ~~2017,~~ 2018, 2019, 2020 and ~~2020~~2021 awards cycle) (incorporated by reference from Exhibit 10.38 to the Form10-Q for the quarter ended December 24, 2015)

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Exhibit No		Description

*~~10.11~~10.8		Form ofNon-Employee Director Restricted Stock Unit Award Agreement (deferral) under 2014 Omnibus Plan (fiscal ~~2017, 2018, 2019~~2020 and ~~2020~~2021 awards cycle) (incorporated by reference from Exhibit 10.39 to the Form10-Q for the quarter ended December 24, 2015)

*~~10.12~~10.9		~~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 29, 2016)~~

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

*~~10.14~~10.10		Form of Employee Restricted Stock Unit Award Agreement under 2014 Omnibus Plan (fiscal 2021 awards cycle)

*10.11		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)

~~10.15~~10.12		~~Credit Agreement, dated as of February 7, 2008, by~~Amended 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~~8-K~~ ~~filed on February 8, 2008)~~


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

~~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)~~

~~10.17~~		~~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)~~

~~10.18~~		~~First Amendment to~~restated 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 Form~~10-K~~ ~~filed on August 23, 2017)~~

~~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 Form~~8-K~~ ~~filed on July 18, 2011)~~

~~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 Form~~10-Q~~ ~~for the quarter ended September 29, 2011)~~

~~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 Form~~8-K~~ ~~filed on February 4, 2013)~~

~~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 Form~~8-K~~ ~~filed on December 17, 2013)~~


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

~~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 Form~~8-K~~ ~~filed on October 3, 2014)~~

~~10.24~~		~~Seventh Amendment to Credit Agreement, dated as of July 7, 2016,~~5, 2020, 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~~10.1 to the Form8-K filed on ~~July 7, 2016)~~

~~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 Form~~8-K~~ ~~filed on July~~March 11, ~~2017)~~

~~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~~8-K~~ ~~filed on November 30, 2017)~~

~~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 Form~~8-K~~ ~~filed on October 3, 2014)~~2020)

*~~10.28~~10.13		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~~10.14		Separation Agreement, dated as of December 10, 2019, by and between the Company and J. Brent Meyer ~~(filed herewith)~~(incorporated by reference from Exhibit 10.29 to the Form 10-Q for the quarter ended December 26, 2019)

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

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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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

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Indicates a management contract or compensatory plan or arrangement.

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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 January ~~30, 2020.~~

27, 2021.


JOHN B. SANFILIPPO & SON, INC.

By

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


	For the Quarter Ended						For theTwenty-six Weeks Ended
	December 26, 2019			December 27, 2018			December 26, 2019			December 27, 2018
Net sales	$	246,423		$	253,317		$	464,269		$	457,605
Cost of sales		196,443			210,434			372,041			381,768

Gross profit		49,980			42,883			92,228			75,837

Operating expenses:
Selling expenses		16,103			18,189			30,215			32,260
Administrative expenses		9,411			8,054			18,485			16,885

Total operating expenses		25,514			26,243			48,700			49,145

Income from operations		24,466			16,640			43,528			26,692

Other expense:
Interest expense including $232, $293, $479 and $602 to related parties		435			798			956			1,677
Rental and miscellaneous expense, net		274			278			678			567
Other expense		567			486			1,133			973

Total other expense, net		1,276			1,562			2,767			3,217

Income before income taxes		23,190			15,078			40,761			23,475
Income tax expense		5,729			3,814			10,374			5,605

Net income	$	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		344			263			687			526
Income tax expense related to pension adjustments		(86	)		(66	)		(172	)		(132	)

Other comprehensive income, net of tax		258			197			515			394

Comprehensive income	$	17,719		$	11,461		$	30,902		$	18,264

Net income per common share-basic	$	1.52		$	0.99		$	2.65		$	1.57

Net income per common share-diluted	$	1.52		$	0.98		$	2.64		$	1.56


	For the Quarter Ended						For the Twenty-six Weeks Ended
	December 24, 2020			December 26, 2019			December 24, 2020			December 26, 2019
Net sales	$	233,575		$	246,423		$	443,848		$	464,269
Cost of sales		180,780			196,443			351,721			372,041

Gross profit		52,795			49,980			92,127			92,228

Operating expenses:
Selling expenses		17,694			16,103			29,778			30,215
Administrative expenses		7,305			9,411			15,680			18,485

Total operating expenses		24,999			25,514			45,458			48,700

Income from operations		27,796			24,466			46,669			43,528

Other expense:
Interest expense including $165, $232, $332 and $479 to related parties		376			435			826			956
Rental and miscellaneous expense, net		365			274			797			678
Other expense		629			567			1,259			1,133

Total other expense, net		1,370			1,276			2,882			2,767

Income before income taxes		26,426			23,190			43,787			40,761
Income tax expense		6,541			5,729			11,090			10,374

Net income	$	19,885		$	17,461		$	32,697		$	30,387
Other comprehensive income:
Amortization of prior service cost and actuarial loss included in net periodic pension cost		414			344			830			687
Income tax expense related to pension adjustments		(103	)		(86	)		(207	)		(172	)

Other comprehensive income, net of tax		311			258			623			515

Comprehensive income	$	20,196		$	17,719		$	33,320		$	30,902

Net income per common share-basic	$	1.73		$	1.52		$	2.85		$	2.65

Net income per common share-diluted	$	1.72		$	1.52		$	2.83		$	2.64


	December 26, 2019		June 27, 2019		December 27, 2018
ASSETS
CURRENT ASSETS:
Cash	$	1,393	$	1,591	$	2,583
Accounts receivable, less allowance for doubtful accounts of $425, $350 and $342		52,653		60,971		62,580
Inventories		172,340		157,024		171,708
Prepaid expenses and other current assets		5,992		5,754		6,943

TOTAL CURRENT ASSETS		232,378		225,340		243,814

PROPERTY, PLANT AND EQUIPMENT:
Land		9,285		9,285		9,285
Buildings		109,671		109,955		109,380
Machinery and equipment		212,532		210,962		206,663
Furniture and leasehold improvements		5,160		5,128		5,039
Vehicles		682		673		641
Construction in progress		3,817		1,127		2,563

		341,147		337,130		333,571
Less: Accumulated depreciation		233,825		228,778		222,976

		107,322		108,352		110,595
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		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		9,124		9,782		8,743
Deferred income taxes		5,616		5,723		4,591
Goodwill		9,650		9,650		9,650
Operating leaseright-of-use assets		4,823		—		—

TOTAL ASSETS	$	399,703	$	391,304	$	411,429


	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 25, 2020		2,597,426	$	26		8,939,890	$	89	$	123,899		$	124,058		$	(8,630	)	$	(1,204	)	$	238,238
Net income													12,812									12,812
Cash dividends ($2.50 per share)													(28,685	)								(28,685	)
Pension liability amortization, net of income tax expense of $104																312						312
Equity award exercises						221		0		0												0
Stock-based compensation expense										622												622
Balance, September 24, 2020		2,597,426	$	26		8,940,111	$	89	$	124,521		$	108,185		$	(8,318	)	$	(1,204	)	$	223,299
Net income													19,885									19,885
Pension liability amortization, net of income tax expense of $103																311						311
Equity award exercises, net of shares withheld for employee taxes						43,477		1		(487	)											(486	)
Stock-based compensation expense										998												998

Balance, December 24, 2020		2,597,426	$	26		8,983,588	$	90	$	125,032		$	128,070		$	(8,007	)	$	(1,204	)	$	244,007


	For the Twenty-six Weeks Ended
	December 26, 2019			December 27, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	30,387		$	17,870
Depreciation and amortization		9,225			8,535
(Gain) loss on disposition of assets, net		(33	)		57
Deferred income tax expense		107			433
Stock-based compensation expense		1,488			1,516
Change in assets and liabilities:
Accounts receivable, net		8,316			3,041
Inventories		(15,316	)		2,654
Prepaid expenses and other current assets		(345	)		(1,659	)
Accounts payable		28,486			9,655
Accrued expenses		(8,964	)		2,833
Income taxes payable		(640	)		2,285
Other long-term assets and liabilities		582			261
Other, net		992			885

Net cash provided by operating activities		54,285			48,366

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(6,465	)		(9,367	)
Proceeds from insurance recoveries		232			—
Other		85			44

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

CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowings (repayments)		13,495			(6,737	)
Debt issue costs		(218	)		—
Principal payments on long-term debt		(4,031	)		(3,588	)
Increase in bank overdraft		448			1,825
Dividends paid		(57,268	)		(29,074	)
Taxes paid related to net share settlement of equity awards		(761	)		(335	)

Net cash used in financing activities		(48,335	)		(37,909	)

NET (DECREASE) INCREASE IN CASH		(198	)		1,134
Cash, beginning of period		1,591			1,449

Cash, end of period	$	1,393		$	2,583

Supplemental disclosure ofnon-cash activities:
Right-of-use assets recognized at ASUNo. 2016-02 transition, see Note 3	$	5,361		$	—


	For the Twenty-six Weeks Ended
	December 24, 2020		��	December 26, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	32,697		$	30,387
Depreciation and amortization		9,089			9,225
Gain on disposition of assets, net		(2,530	)		(33	)
Deferred income tax (benefit) expense		(500	)		107
Stock-based compensation expense		1,620			1,488
Change in assets and liabilities:
Accounts receivable, net		(1,247	)		8,316
Inventories		16,697			(15,316	)
Prepaid expenses and other current assets		(1,557	)		(345	)
Accounts payable		16,244			28,486
Accrued expenses		(11,993	)		(8,964	)
Income taxes payable		1,871			(640	)
Other long-term assets and liabilities		344			582
Other, net		1,200			992

Net cash provided by operating activities		61,935			54,285

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(11,121	)		(6,465	)
Proceeds from insurance recoveries		0			232
Other		387			85

Net cash used in investing activities		(10,734	)		(6,148	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term (repayments) borrowings		(17,839	)		13,495
Debt issue costs		0			(218	)
Principal payments on long-term debt		(3,432	)		(4,031	)
(Decrease) increase in bank overdraft		(531	)		448
Dividends paid		(28,685	)		(57,268	)
Taxes paid related to net share settlement of equity awards		(486	)		(761	)

Net cash used in financing activities		(50,973	)		(48,335	)

NET INCREASE (DECREASE) IN CASH		228			(198	)
Cash, beginning of period		1,535			1,591

Cash, end of period	$	1,763		$	1,393

Supplemental disclosure of non-cash activities:
Right-of-use assets recognized at ASU No. 2016-02 transition	$	0		$	5,361


	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


	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


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


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


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


	December 26, 2019			June 27, 2019			December 27, 2018
Customer relationships	$	21,100		$	21,100		$	21,100
Brand names		16,990			16,990			16,990
Non-compete agreement		270			270			270

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

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

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


Fiscal year ending
June 24, 2021	$	2,165
June 30, 2022		1,896
June 29, 2023		1,657
June 27, 2024		1,414
June 26, 2025		1,156


Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value
Outstanding at June 27, 2019		188,992		$	46.79
Activity:
Granted		38,572			91.47
Vested^(a)		(36,179	)		60.56
Forfeited		(7,439	)		63.62

Outstanding at December 26, 2019		183,946		$	52.77


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

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

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


	For theTwenty-six Weeks Ended
Distribution Channel	December 26, 2019		December 27, 2018		Change			Percent Change
Consumer⁽¹⁾	$	345,232	$	334,922	$	10,310			3.1	%
Commercial Ingredients		71,135		68,656		2,479			3.6
Contract Packaging		47,902		54,027		(6,125	)		(11.3	)

Total	$	464,269	$	457,605	$	6,664			1.5	%


	December 26, 2019			December 27, 2018			$ Change
Operating activities	$	54,285		$	48,366		$	5,919
Investing activities		(6,148	)		(9,323	)		3,175
Financing activities		(48,335	)		(37,909	)		(10,426	)

Net increase in cash	$	(198	)	$	1,134		$	(1,332	)


	December 24, 2020			December 26, 2019			$ Change
Operating activities	$	61,935		$	54,285		$	7,650
Investing activities		(10,734	)		(6,148	)		(4,586	)
Financing activities		(50,973	)		(48,335	)		(2,638	)

Net increase in cash	$	228		$	(198	)	$	426