EXHIBIT 99.1
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JOHN B. SANFILIPPO & SON, INC.
NEWS RELEASE
COMPANY CONTACT: Michael J. Valentine
Chief Financial Officer
847-871-6509
FOR IMMEDIATE RELEASE
FRIDAY DECEMBER 15, 2006
John B. Sanfilippo & Son, Inc. Completes Restatement & Files
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Amended Annual Report for Fiscal Year-Ended June 29, 2006
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Elk Grove Village, IL, December 15, 2006 -- John B. Sanfilippo &
Son, Inc. (Nasdaq: JBSS), a major processor and distributor of
snack and baking nut products, announced today that the Company
has filed with the Securities and Exchange Commission a Form 10-
K/A amending its annual report Form 10-K for the fiscal year-
ended on June 29, 2006.
The Company restated its annual 2006 financial statements to
reclassify approximately $54 million of debt as short term and
disclose the operating and liquidity matters which raise doubt as
to the ability of the Company to continue as a going concern.
The Company also restated the annual 2006 financial statements to
write-off goodwill, to record an income tax valuation allowance
and to consolidate variable interest entities. As a result of the
restatement, in total, the net loss increased $2.3 million to
$16.7 million. There was no effect on previously reported
operating cash flows.
Due to the decline in prices for almonds in 2006, the Company was
not able to sell almonds at prices sufficient to cover its costs.
As a result the Company was not profitable in 2006 and the first
quarter of 2007, which triggered the violation of certain
covenants of its bank loan. "While the financial statements
indicate there is substantial doubt regarding our ability to
continue as a going concern, this is primarily as a result of
uncertainty with respect to our ability to comply with future
loan covenant requirements due to poor financial results. We are
very pleased with the continued high level of cooperation between
Sanfilippo and our lenders. "We have chosen to work with our
existing lenders and seek future waivers as needed rather than
seek alternative financing at this time, such as mortgage
financing, as we believe the results should improve in future
periods now that we are in a new crop cycle. As of the end of
the first quarter of fiscal 2007, the Company also has more than
$175 million of equity; debt to equity was 71%; and operating
cash flow over the last four quarters ended September 28, 2006
was approximately $ 27.8 million," said Chief Executive Officer
Jeffrey T. Sanfilippo.
"The past four quarters ended September 28, 2006 comprised a
difficult operating year for the company, caused in large part by
the decline in the market price for almonds after the crop was
procured at historically high costs. We expect to meet our
current capital requirements for the next 12 months, and have
taken actions to alleviate some of the difficulties encountered
in 2006. Prior to 2006, Sanfilippo had a consistent record as a
growing and profitable company, and we expect to get beyond our
current difficulties," he added.
"As a company, we are proud that, despite the time and attention
required by the restatement, we have successfully retained our
focus on performance and remained fully committed to our
customers. As a result of this situation, we are adjusting some
of our practices to reduce our exposure to the fluctuating
commodity prices for our nuts that hurt our business in 2006. We
are also implementing more accurate projection models so that we
can better predict our market outlook and opportunities,"
concluded Mr. Sanfilippo.
The Form 10-K/A also discloses that in the course of the
restatement process, the Company management determined there were
material weaknesses and the Company did not maintain effective
controls to: (1) ensure the completeness and accuracy of
information communicated within the organization on a timely
basis, (2) properly assess impairment of goodwill in a complete
and accurate manner; (3) properly account for lease transactions
and (4) maintain a sufficient complement of accounting and
finance personnel with an appropriate level of accounting
knowledge, experience and training in the selection and
application of generally accepted accounting principles
commensurate with the Company's financial reporting requirements.
These same weaknesses exist for the quarter ended September 28,
2006 as well. The company has begun to implement its plan to
remediate these material weaknesses.
Due to the lengthy restatement process, Nasdaq sent the company a
notice of de-listing because it did not file its first quarter
report. Sanfilippo filed a hearing request with Nasdaq which has
been granted and which delays the de-listing until the December
20, 2006 hearing date. The Company has filed its fiscal first
quarter 2007 10-Q on Friday, December 15, 2006, and consequently
the Company does not expect that its stock will be de-listed.
The statement of Jeffrey T. Sanfilippo in this release is
forward-looking. This forward-looking statement is based on the
Company's current expectations and involves risks and
uncertainties. Consequently, the Company's actual results could
differ materially. Among the factors that could cause results to
differ materially from current expectations are: (i) if the
Company continues to sustain losses, the ability of the Company
to continue as a going concern, (ii) sales activity for the
Company's products, including a decline in sales to one or more
key customers; (iii) changes in the availability and costs of raw
materials and the impact of fixed price commitments with
customers; (iv) fluctuations in the value and quantity of the
Company's nut inventories due to fluctuations in the market
prices of nuts and routine bulk inventory estimation adjustments,
respectively, and decreases in the value of inventory held for
other entities, where the Company is financially responsible for
such losses; (v) the Company's ability to lessen the negative
impact of competitive and pricing pressures; (vi) the potential for
lost sales or product liability if our customers lose confidence in
the safety of our products or are harmed as a result of using our
products; (vii) risks and uncertainties regarding the Company's facility
consolidation project; (viii) sustained losses, which would,
among other things, negatively impact the Company's ability to
comply with the financial covenants in its amended credit
agreements; (ix) the ability of the Company to satisfy its
customers' supply needs; (x) the ability of the Company to retain
key personnel; (xi) the potential negative impact of government
regulations, including the 2002 Farm Bill and the Public Health
Security and Bioterrorism Preparedness and Response Act; (xii)
the Company's ability to do business in emerging markets; (xiii)
the Company's ability to properly measure and maintain its
inventory; (xiv) the effect of the group that owns the majority
of the Company's voting securities, including the effect of the
agreements pursuant to which such group has pledged a substantial
amount of the Company's securities that they own; and (xv) the
timing and occurrence (or nonoccurrence) of other transactions
and events which may be subject to circumstances beyond the
Company's control.
John B. Sanfilippo & Son, Inc. is a processor, packager, marketer
and distributor of shelled and in-shell nuts and extruded snacks
that are sold under a variety of private labels and under the
Company's Fisher, Evon's, Snack 'N Serve Nut Bowl, Sunshine
Country, Flavor Tree and Texas Pride brand names. The
Company also markets and distributes a diverse product line of
other food and snack items.